Monday, September 8, 2014

Petaluma’s Measure Q: The Argument Over Government Efficiency

My last two posts have been about Measure Q, which will be on the Petaluma ballot this fall.   It’s a sales tax measure intended to address the municipal budgetary issues lingering after the great recession.  There are many similar tax measures on ballots across the country, so in writing about Measure Q, I hope that I’m touching up the issues that are being raised in many municipalities.  Although I’ll leave it to individual readers to translate the discussion below to their particular communities.

The connection between urbanism and Measure Q, and its multitude of siblings, is clear, but nonetheless awkward.  Much of the municipal financial malaise which Measure Q targets is the result of 70 years of unjustified faith in the land-use paradigm of drivable suburbia.  As has been long predicted, the costs of the failed experiment are coming home to roost and cities everywhere are struggling with the results.

But the response of too many cities, including Petaluma, isn’t to use the requested new tax proceeds to change land-use models, but instead to use the dollars to double down on their bets on drivable suburbia.  This decision leaves urbanists, such as me, in a quandary.  While willing to help pay off the debts of failed suburbia, we’d prefer not to be a part of further wrong-headed “investments”. 

In my last two posts, I wrote about how genetic coding lingering in my DNA after four centuries may be leading me to support Measure Q and about my responses to objections raised by readers.

Before leaving Measure Q, at least for awhile, I want to touch upon one final objection that is often made to increased municipal taxes.  Perhaps it hasn’t been raised on my blog or in emails to me, but it requires only a short search to find the objection splattered around the internet.

And that argument is that cities have plenty of money to fulfill their mission and only fail because they are appallingly inefficient.  Admittedly, it may be only a few folks who hold that opinion, but elections something swing on a few folks or the few other folks who listen to fringe opinions.

So, I want to write about the fallacy of government inefficiency.  If you still choose to vote against Measure Q, that’s your decision.  But I don’t want government inefficacy to be one of your reasons, because we’ll need to believe in government if we are to make the turn toward urbanism.  It was government that played a key role in codifying and organizing our turn toward suburbia and we’ll need government to play a similar role as we back out of that failure and head elsewhere.

By chance, I wrote about the fallacy of government inefficiency in a draft post several months.  I excised the words in final editing because the post ran too long, but I saved the text and it works fine here.

“Let me touch upon a couple of points that are often raised in opposition to proposed tax hikes.  First, some will claim that if government was more efficient, then the new taxes wouldn’t be needed.  Second, some will argue that they can’t afford the new taxes.

“In response to the former, I agree that government is inefficient.  So are households where, on average, 40 percent of purchased food is thrown away because of spoilage and where many spare bedrooms are filled with unused exercise equipment.  So are corporations which often make poor strategic decisions and fail to support important initiatives because of board room politics.

“It’s the nature of people, especially groups of people, to be inefficient.  Given an adequacy of resources, we often let inattention, personal agendas, and bickering take priority over efficiency.

“It’s an intriguing goal to suggest that government be more efficient than the rest of us.  But as a basis for ballot box decisions, it’s idealistic and misguided.

“In response to the concern about the affordability of new taxes, it’s certainly possible that a tax increase will be difficult for some to afford.  But I suggest that the difficulty is more related to how we distribute income and share tax burdens.   These are worthy topics of discussion, although far beyond the scope of an urbanism blog.  And I don’t think we can afford to hamstring our governments while we pursue philosophical discussions on topics that we’ve ducked for years.”

At the time, I exchanged emails on the subject with an economist cousin, who also had thoughts to share.  (A note about my family: I have a remarkable set of cousins, all of whom have attracted similarly remarkable spouses.  There may not be many of us, I have only three first cousins, but when we sit down over a holiday dinner, there is a mechanical engineer, a forester, an attorney, an artist, a former economics professor, and others.  Even better, we all get along, with conversations that are as insightful as they are spirited.  I deeply appreciate having this family.)

My cousin’s comments, only slightly edited for clarity, follow:

“I agree with your thoughts about government, although I would also add this: Government is more inefficient than people or private companies because it takes on more difficult tasks.  It’s relatively easy for the private sector to be efficient.  Farmers, for example, know the prices (even future prices) of what they produce, so it’s easy for them to optimize.  But government undertakes a task only when the market prevents the private sector from operating efficiently.  And these tasks are often very hard:

·         “Public goods, e.g. national defense, fireworks, lighthouses - Due to the free-rider problem, the private sector won’t provide these kinds of goods, so it’s up to government to do it.  This is hard enough in itself because it’s hard to decide how much of different kinds of defense services to provide without price signals to guide you, but it also allows public officials to misallocate resources, e.g., by insisting that obsolete defense programs be funded so as to create jobs in a certain district.
·         “Natural monopolies, like the postal service - With farmers, the profit motive leads to a somewhat efficient outcome.  But with a natural monopoly, the profit motive leads to an inefficient outcome.  So when the postal service loses money (which is optimal), it’s seen as confirming the idea that government does things inefficiently.  Congress also interferes here, e.g., by insisting that post offices be run out in the middle of nowhere.

·         ”Transfers - Any organization that gives out money and benefits is going to have to deal with fraud, even private companies, e.g., double-dippers at the free sample booths at Costco.  The government does more of this than the private sector, and is therefore more vulnerable to fraud.

·         “Externalities - Economists have long advocated market-based solutions to externalities, but these would involve taxes, which are often unacceptable, and subsidies, which are counted as expenditures in budgets.  Congress often prefers regulation because the costs are hidden in that they’re passed on to consumers in the form of higher prices.

“Ultimately, government has an imposingly difficult set of tasks, much like Ginger Rogers dancing backwards in high heels.”

I’m not sure I grasp every point she offers, but at least I know where to begin the Christmas dinner conversation.

In my next post, I’ll speculate about why it’s so hard to start community discussions about urbanism.  After that, I’ll tackle football and urbanism.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (


  1. I am not super well informed on the tax so perhaps you will correct me, but my thoughts is that its a bad idea in general to tell people you want a tax to build something (in this case the Rainier connector) that you know is very unlikely to be built with the funding, or that is even a good idea to be built. Because if Rainier doesn't get built people are going to remember that's how it was sold and its going to be very hard to go back to the voters the next time you want money for something. There is always going to be needs for more tax money so I have no problem with that and I don't agree that government is always inefficient (that's untrue) but I do have big concerns over telling people you want a tax for something that has a very little chance of actually being built. The voters will remember that you failed to deliver the next time you go to them.

    Hope this makes some sense. I personally don't feel the cross-town connector is worth the many millions it will take to build it. We have other more pressing needs for scarce tax dollars.

    As for how it impacts the urbanist agenda, the proverbial quote is the road to hell is paved with good intentions and in this case - paved is a good word. Cities never set-out to make themselves chain store suburbia strip malls like Petaluma is doing. But it happens because the business and pro-development concerns always criticize any candidate who opposes developers as "anti-business" and "anti-growth". Ironically, its the cities like San Francisco, Berkeley and Oakland that push developers the hardest and oppose the strip mall growth approach that are doing the best economically and are where people want to live and are doing better then cities that have bent over to developers like our City Council is doing. So, when I see candidates labeled as "anti business" by the Chamber of Commerce or opposed by the public sector unions who only care about getting their big pensions funded - those are the candidates I want to support.

    My two cents, or maybe just one cent.

    1. Roger, thanks for commenting. You raise an interesting point about whether the city is poisoning the well for future tax measures by promising the Rainier Connector when fulfillment of that promise will definitely be deferred and perhaps never met.

      Personally, I don't think that'll possibility will happen. I suspect that, if the tax measure passes and if Caltrans finds money for the modifications to 101, then the Rainier Connector will be built. And Caltrans generally finds the funds it seeks for "investments" in our "economic prosperity", even when the work proposed is neither.

      But if the tax measure passes and Caltrans can't find the funds, then yes, the failure to build the Rainier Connector will likely increase cynicism about government, which isn't a good thing.

      On your other points about the value of the Rainier Connector and the success of more urban cities, I concur.

  2. Dave, I have a comment and a question.

    1. Your discussion of natural, normal inefficiency is simply brilliant for me. It makes perfect sense to the intuitive sense I have always felt about both families and government, and your analytical articulation of it is valuable (and cognitively efficient).

    1. The thing I do NOT know, really, and want to know about the decades-long argument about the much-ballyhooed Rainier Crossing is this: what actual benefits would it truly provide for our community, economy and character? And what would the actual costs and consequences amount to?

    You have probably addressed this in precious blogs. Can you direct me to them or inform me of the secret key to doing a search for same?

    Thanks, Barry

    1. Barry, thanks for the kind words on the former. On the latter, there are several benefits I could ascribe to the Rainier Connector, although economists might argue for weeks about the value of each. (1) Rainier would add a key missing link in the traffic grid and well-gridded cities, because of the additional trip routes that are available, are more efficient. (2) Rainier would allow more cross-town trips, so people would have increased options of places to do business or friends to visit. (3) If Rainier decreases traffic congestion, which I suspect is unlikely, trips would be quicker. (4) There are potential development parcels that can be best accessed by Rainier, so there may be short-term jobs in housing construction and long-term property tax revenues. The latter, as always, comes with the uncertainty about whether they're adequate to cover the long-term incremental costs of the new development. (5) Of course, Rainier itself would also provide short-term construction jobs. It's hard to assign firm values to some of those benefits. So, it's ultimately a judgment call whether the benefits are worth $100 milliion plus long-term maintenance, although my assessment is that the benefits fall well short of the costs.