The Suburban Ponzi Scheme and Ferguson, MO

Charles Morahn makes a very interesting observation about Ferguson, MO (boldface mine):

I’ve spent some time on Google looking at the area where the shooting took place and the QuikTrip that was the flashpoint for events that followed. While this is a fairly ubiquitous pattern of development here in the United States, there are some important things to note. What I see with Ferguson is a suburb deep into the decline phase of the Suburban Ponzi Scheme. The housing styles suggest predominantly 1950’s and 1960’s development. We’re past the first cycle of new (low debt and low taxes), through the second cycle of stagnation (holding on with debt and slowly increasing taxes) and now into predictable decline. There isn’t the community wealth to fix all this stuff — and there never was — so it is all slowly falling apart.

Decline isn’t a result of poverty. The converse is actually true: poverty is the result of decline. Once you understand that decline is baked into the process of building auto-oriented places, the poverty aspect of it becomes fairly predictable. The streets, the sidewalks, the houses and even the appliances were all built in the same time window. They all are going to go bad at roughly the same time. Because there is a delay of decades between when things are new and when they need to be fixed, maintaining stuff is not part of the initial financial equation. Cities are unprepared to fix things — the tax base just isn’t there — and so, to keep it all going, they try to get more easy growth while they take on lots of debt….

Ferguson isn’t all decline, however. They have the now infamous QuikTrip and all the other stroad development types that thrive on places in decline. Multiple car lots – some abandoned – strips malls, drive through restaurants, a Dollar Store and then you have a quarter million dollars of infrastructure supporting these storage sheds. This is an investment that employs nobody, creates little value and doesn’t even use the sewer/water/sidewalk that has been built there at enormous public cost…

When places like this hit the decline phase – which they inevitably do – they become absolutely despotic. This type of development doesn’t create wealth; it destroys it. The illusion of prosperity that it had early on fades away and we are left with places that can’t be maintained and a concentration of impoverished people poorly suited to live with such isolation.

Once we reach that stage, what opportunities does our development approach provide? The Ferguson planning documents are full of talk of infill and using tax subsidies to attract development. We can see what infill looks like. Here is a photo of the approximate location where Michael Brown was shot. Note the infill housing on each side. Our zoning codes dictate clusters of housing that are at one price point. Single family residential. Multi-family residential….

We’re entering a really dangerous phase of this Suburban Experiment. While we once believed that the path to prosperity was the “American Dream”, a house in the suburbs and an ownership society (FDR saw this as a social equity issue as did GWB), it is now evident that this approach creates poverty. It not only creates it, it locks it into place in a self-reinforcing cycle. Like I’ve said before, how we respond to this is the social challenge of this generation.

I love the word stroad–strip mall plus road. But I digress. When I look back at the Northern Virginian county in which I grew up–and which, at that time and still today, is one of the wealthiest counties in the country (Fairfax), I see a similar dynamic. Within the county, the less dense areas that also have high property values are doing fine. Likewise, higher-density areas aren’t decaying either. There’s enough of a tax base. But the ‘muddle in the middle’ is in trouble–or being torn down and turned into one of the two winning strategies. At the county level, the major impetus behind the Tysons Corner urbanization-like-thingee was not the sudden conversion of the Fairfax County Board of Supervisors towards a belief in sustainable urban living (STOP LAUGHING! STOP LAUGHING NOW!). They needed the tax revenue, and building ‘out’–that is, sprawl–was no longer economically viable, in part because the county never recouped the costs of massive stereotypical suburban expansion.

The only thing I would add to Morahn’s analysis is that the cost of transportation is almost never considered. When it is considered, the cost of suburban living is quite high.

Ultimately, this shouldn’t be surprising. After World War II, there was a massive housing shortage, especially for families. The suburbs were massively subsidized by the federal government to alleviate this shortage. But this was a short-term solution, which, in hollowing out cities that had a far more maintainable infrastructure, has led to some very long-term problems.

One more thing we’re going to have to fix. Or we could just BENGHAZI! BENGHAZI! BENGHAZI!

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2 Responses to The Suburban Ponzi Scheme and Ferguson, MO

  1. anthrosciguy says:

    So much of the stroad development now is being done with attached multi-year tax breaks too. Even worse than before. Throw in the overbuilding of malls over the past few decades and the problem is bigger yet.

  2. MaryL says:

    I could get more worked up about this if I’d not experienced the decimation of villages and towns with policies favoring city expansion for 80 years . Go take a look at beautiful old towns in upstate new York that were once self sustaining and were emptied out when jobs moved to enormous factories in urban areas. Many so called suburbs pre existed the leaching filthy cities they border. When jobs return to these towns it’s only a crisis for property owners in the cities which are broke and broken in spite of 100 years of subsidy. We have jobs and community in the suburbs. Poverty is coming to my town because we built units for the elderly and poor because that’s what happens in communities. Overall we are stable. My kids walk to school the library and to village center.
    The rationale for property subsidies ultimately benefits banks because the cost of the subsidy is baked into the price and the other parts of the tax code. Through my local taxes I subsidize social services and policing, medicaid, elder care, water bills and a host of public programs in the city that I’ll never benefit from. That’s redistribution.
    The real Ponzi scheme is financing any asset with a short term life with long term bonds. Think roads which last 20 years financed with 50 year bonds. Or that stadium downtown or the water facilities. I’ve never lived in a suburb in as bad shape as LA, Pittsburgh, DC, St Louis–and I’ve lived in all those metro areas.
    The thing is, to you the city is all the educated bourgeoisie that wants to live in the middle of an arts center, great shopping, museums, and no inconveniently unemployed citizens sleeping on your stoop. Ridiculous Romanticism. All I see is filthy ugly decrepit unnatural places with neighbors who’d just as soon I drop dead as say hello. I don’t know what city you pine for but grousing about the burbs is not going to improve your own property value or make living in Georgetown more affordable or end poverty. See Jane Jacobs. Great cities decay burn and rebuild. A great many of us love being somewhere else.

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