Wealth Generation and Infrastructure Payback

I discovered the Strong Towns campaign recently, a venture co-founded by Charles Marohn and Jon Commers, that is pursuing a rethink of the way we organise our communties and community infrastructure.  You can find their website at www.strongtowns.org.

Chuck's approach appears somewhat Kunstler-esqe, but I think he has a better handle on the economics of the situation than James Howard Kunstler, at least, I find it communicated in a less abrasive way.  I have seen many folks turned off of Kunstler's message, simply because he mercilessly tramples on the sacred cows that most westerners hold dear.  Chuck's approach is much more about what we're missing, and the price we're really paying, than decrying what we are enjoying.  Perhaps others may have a different impression.

I'll attach the TED talk video at the bottom, but the key point that I would like to get across is the incredible economic distortions that can appear when funding for infrastructure is obtained firstly by force, and secondly from outside the locality of the particular infrastructure, and finally, as a result of the expansion of debt, at private, municipality, state and federal levels.

As Chuck mentions in the video, there are vast swathes of public infrastructure that have no chance in a decade of Sundays of being economically viable - even from that nebulous social "greater good" sense that is so often touted.

Also note in the video, the comment on the accumulation of private debt, which vastly exceeds that of the US Treasury debt.  This accumulation of private debt, at least part of which is in the form of real estate mortgages, has facilitated the increase in revenue into state and municipal coffers by way of inflated property tax revenue.  The decline in house valuations, combined with defaults and foreclosures has taken its toll on state and municipal revenues, and exposed the gaping holes in these unsustainable budgets.

Note that even if house prices stabilized, the valuation to income multiples were grossly out of proportion to historic norms, that the lifestyles of the residents could not have been sustained while the states and municipalities were extracting taxes proportional to those valuations.  This is probably a factor in the escalation of personal debt by way of HELOCs and the like.

So here is Chuck's talk.  Keep these points in mind when you watch it.