The Money Just Isn’t There

14 thoughts on “The Money Just Isn’t There”

  1. this is definitely already happening now. Tent cities are popping up everywhere, rents are beyond what wages can support. I can’t imagine what it will be like 10 years from now.

  2. Like Brian, I am skeptical about this post. I believe the 20th c. development pattern is lousy, and I think we are going to move away from it, but I wonder if you’re overstating the extent to which the money is not there. I love Chuck Marohn’s work, too, but I have not yet seen, even from him (and this is his specialty) a really thorough look at the numbers in one municipality. In my own (admittedly unusual) city, we are doing great, moneywise, and in the town I work in we are also doing okay. In both places, our schools budget far, far exceeds our infrastructure budget, as it apparently does in Brian’s city. My city just completed a huge, huge sewer system restoration, and it only cost 100 million dollars. This is big, but it’s not so big compared to our annual operating budget of 550 million dollars. I don’t doubt that in the next decades a number of municipalities will go broke, but general tone of this post isn’t convincing to me, especially in conjunction with your swipe at the unsustainability of the federal budget (which seems reasonably sustainable to me in the absence of unprecedented adverse shocks like environmental catastrophe or peak oil apocalypse, neither of which your post seems to rely on.).
    I love your blog (your previous post was brilliant), and you might be right; I’m just not yet convinced.

    1. I’m not a doomer. I just think things run in big cycles. I also think the globalized hyper efficient just-in-time supply chains we’ve come to rely on for all our daily needs leaves the system brittle and vulnerable to shocks. The fact that we’ve spent the 2008 crisis years slapping trillion dollar patches on everything just means the system is that much easier to knock over when the next bit of fuss hits us. Here’s a quick question for you. Take today’s ridiculously and artificially low interest rates and jack them up to 10%. The stock market and real estate bubbles convert to a smoldering crater. Then how do the numbers look for your town?

      Here’s one possible scenario that I favor that doesn’t require “Peak Oil” or “Economic Collapse.” Things get ugly in the Middle East. Maybe the Ras Tanura oil port blows up. Maybe the tankers are no longer able to pass through the Strait of Hormuz. Something like that. Anyway, 20% of the world oil supply is cut off overnight. That does very bad things to the global… everything. Shortages, delivery disruptions of all kinds, price spikes… The Amazon drones will not be delivering frozen yogurt to your door. That kind of shock will drag on for a significant amount of time as everyone scrambles to reorganize. When gas is being rationed and the pumps go dry for a few months we’ll see exactly which places can survive and which turn to dust.

      1. Maybe you’re right! I can easily imagine other unpleasant scenarios! On the other hand, your rhetoric (“smoldering crater”, “turn to dust”, “pumps go dry for a few months”, “ridiculously and artificially low”, etc.) seems a bit overheated to me. Anyway, I think my town will be fine–we’re about as walkable as it gets in America outside of Manhattan. Thanks again for your great blog.

      2. The supply chain is a *lot* less just-in-time than you think it is. I don’t know if you’ve been paying attention to the internals of Amazon and Alibaba operations, but they’re both massive warehousing operations. I follow the freight networks in the US as a hobby, and there would be *no* delivery disruptions if we lost 20% of the world oil supply. None. The gas pumps would stop providing gasoline for people’s cars; the diesel would keep flowing, because so much less of it is used and it’s recognized as critical.

  3. My town (South San Francisco, 61k people) had a record high 2015 operating budget (police, fire, parks/rec) of $125m and a capital budget (streets, sewer, etc.) of $40m. Putting aside whether that’s a reasonable amount for a town of our size (not), the way they get these revenues is really really complicated. Property taxes, sales taxes, permits, county taxes, gas taxes, muni bonds… no wonder nobody wants to do the math.

    But let’s say we had to go it on our own. That’s roughly 2700k per capita or 7800 per household. High but do-able given the demographics.

    Of course these numbers are going to go up as the city ages and debt comes due. 5 million of the above budget is just debt interest! How much will that increase? How much will sewer and streets cost us in the future? Who knows. Do they even know?

    Personally, I think things will vary quite a bit from town to town. SSF has some advantages (strong downtown, large commercial sector) that neighboring Daly City doesn’t. And the boom won’t last. Then we’ll see the strengths and weaknesses of individual towns laid bare.

    1. It’s true that some towns will hold up better than others. But every town is connected to every other town in a complex economic system. If too many towns go down (as they absolutely will) the few marginally healthy towns will be pulled down by the sheer weight of the larger system.

      In the end the old institutions will be wiped clean by a series of cascading failures. Lots of gnashing of teeth, scapegoating, vote-the-bums-out-of-office, and us-against-them activities. Historically this takes the form of war. Pick an enemy. Arabs, Russians, Chinese… Or perhaps a more insidious internal struggle involving the on-going culture wars.

      The “good” news is that these upheavals are so nasty that they don’t last long. People become exhausted after about four years. That’s typically how long it takes for everyone to become so miserable that they just want to stop fighting and go back to any form of peace with new rules. Then we quietly try to forget the unpleasantness. 1776. 1865. 1945. I’m thinking… 2025-ish.

      1. Be careful. Don’t just parrot thinkers or organizations that happen to coincide with your preferences. Do at least some math to test your theory, even if it’s crude.

        As you can see from the back of the napkin above, the financial sky is not falling in SSF. Based on the age of infrastructure (built out by the early 1950s), and that fact that it’s mostly car-dependent, we should be having a Strong Towns crisis about now. But for various reasons, we’re not.

        However, San Jose has all kinds of financial trouble. Why is that? Sprawly development is a factor but there’s expense problems too. Also, Big Tech ($$$) loves anywhere but San Jose, which has to bear the burden of the housing infrastructure for all those workers.

        My point is that narratives are seductive but the real world is complicated on the ground. “The Money Just Isn’t There.” Well, sometime it is and sometimes it isn’t. All kinds of theories about overpopulation, peak oil and such have come and gone. Those doesn’t mean those ideas are wrong per se, but getting the particulars right about the future is really hard. There are a lot of variables and we should be vigilant about personal bias and check it with data.

        1. I don’t think SSF is representative. It’s high-income from being in the Bay Area near SF, has a fairly strong downtown and fairly high density (by American suburb standards). It *should* be one of the best.

          When I looked at my own town of Orange, CA I expected it would look OK. Like SSF, it should be above average – in OC, an above-average income area, has a traditional if lower-density downtown, and has train access. But, actually, long term the finances are a mess. They get 1/4 to 1/3 their income from development fees – and that’s obviously not sustainable.

          In the familiar pattern, any additional development will be low-density excessively zoned cul-de-sacky development which will be even less financially stable than what we have now. Fortunately, there’s actually not a lot of development going on now, and the city is meeting its budget by tapping an enormous slush fund they set up earlier. I really have to admire the city’s self-control keeping that reserve fund but it’s only got a few years left. Their good financial discipline won’t save them from the fundamental problems of their poor town planning.

          Worse, Orange really is above average and your average American city is going to be in a worse situation. It’s got to be really grim for a lot of places out there.

          1. OC’s a disaster in many ways.

            Frankly, if you look at nearly any Rust Belt city which hasn’t *already* gone bankrupt, the survivors are in pretty good shape. So is most of New England. It’s the Sunbelt which is chock-full of loser cities. Some of the other areas of the country are more complicated.

            Yeah, it’ll be grim in Arizona: no water, no electricity, no agriculture, no manufacturing, no natural resources, boiling heat. It’ll be grim in Miami, because it’ll be underwater. Pittsburgh will be just fine.

      2. Your assumption that the marginally healthy towns will be pulled down by the collapsing system is not borne out by history. Recheck your assumptions. What actually happens with big economic shifts is that the stronger towns develop as new centers of commerce and activity while the weaker towns dwindle into suburbs.

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