It is against the big box national retailer model. It is in favor of smaller businesses with local interconnections in denser areas, which creates are more resilient economy (which is where the "nostalgia" comes in). It's not against public investment, it just thinks it should be spent on a different model. Money quote:

> In the pursuit of the shiny and new, the efficient and the low-priced, we turned our backs on decades of small business wealth creation. We walked away from all of these stores — all these families and their local bank deposits, local newspaper ads, local insurance brokers, local accountants, softball team sponsorships, Fourth of July floats, Crazy Day sales and after school jobs — and, as the old saying goes, put all our eggs into one basket.

The economic argument in this case is: when the market selects for the lowest price at the present time, without taking into account long term trends, you get big box stores which are more sensitive to boom and bust economic cycles than locally owned small businesses are.

So we must look at a longer time horizon than most financial firms or public companies do. Because society works on longer time horizons than public companies. We as a society should decide we want many retail and restaurants that keep an area strong over decades, rather than a few big box stores that can go out of business as the business cycle changes (in part because they are more dependent on high debt loads and low margins). If that's what a society wants, it cannot depend on a totally unregulated market, which in practice has a short-term view - a negative externality of not considering long time horizons.

Strong Towns is saying 10% lower prices today in exchange for higher uncertainty and stability in the medium and long run is not what society should want. It's also saying society should not subsidize big box stores and malls by paying upfront costs for roads and utilities to those malls, because maintenance costs are much higher than for dense downtowns.

Those are all good economic arguments.

That's not the argument. The argument is that more smaller businesses might reduce existential risk for the town even if the risk of individual business failure is larger.

To give a concrete example, let's say you have the choice between 10 small businesses and 1 large business. Let's assume that during a recession the large business has a 10% chance of failing and small businesses have a 20% chance of failing.

Now say you go through 20 recessions. With the 10 small businesses, 2 fail during every recession; new ones come in to replace them during the intervening expansions. During the recessions, you have to deal with the reduced tax revenue and the somewhat higher unemployment.

With one large business, there's an 88% chance that it will fail during one of those 20 recessions. And if it does, you (as in the town the business is based on) have nothing to fall back on to tide you over until the following expansion. As a town you trade off being pretty sure that your revenue will drop by 20% during a recession and just planning for that to having it not drop at all sometimes and drop to 0 other times. If the latter happens, your town dies.

All of this, of course, is a matter of what scale you look at things at. Maybe we should be OK with some towns dying and their residents moving to other towns. But in that case we need to actually plan for that instead of being all surprised when it happens.

There's cursory evidence in either direction.

The unfortunate truth is that free trade naturally results in income/wealth inequality, on individual and geographic levels, because it highly incentivizes economies of scale. Rather than 30 different widget makers selling widgets at $5 each, you get one widget maker selling widgets at $4.80 each, because it's more efficient (less overhead per widget). Everybody gets more/cheaper widgets, but the communities containing those other 29 widget makers may lose significant portions of the money coming into their communities - while the community with the remaining widget maker becomes wealthier than ever. And instead of 30 small business owners becoming wealthy, you may get one extremely wealthy widget business owner along with slightly wealthier stockholders.

When this happens to all industries all at once, it increases mean economic wellbeing, but decreases median economic wellbeing - and because goods become more efficient to produce due to economies of scale, it also puts downward pressure on wage labor, increases public spending on social assistance, etc.

That mostly applies to industry as opposed to retail, but to me that's the other half of the story: most communities aren't able to keep bringing as much into their community because of the consolidation/outsourcing of industry. And then the corporate retailer model increases the rate at which money leaves the community too.

I know someone who took a couple introductory economics courses will want to chime in "but trade makes everybody better off on average, because it allows economic participants to specialize at what they're already good at". But in the real world, when someone loses their job or small business due to big-industry consolidation/competition, they may no longer be able to get a job doing what they used to do, because now less people are needed to do that job, as it was made more efficient. So now they need retraining, or they go on social assistance - and the cost of that retraining or social assistance may not outweigh the economic benefits of consolidation.

Perhaps the solution to an individual is to move, but that can cause a community to enter a death spiral if enough people leave and the cost-per-person of public services increase. The community needs investment so that a new industry can bring in money, but if all the small businesses died, there may not be local investors with capital to invest, and bigger investors may not see investment in a new industry in small community as optimal because there aren't enough people able to work in that industry - a chicken/egg problem.

I'm not arguing that trade itself is bad, but it's not the unequivocal good that many perceive it to be. There are externalized costs and negative butterfly effects that can come from the type of consolidation that free trade enables - and those are harshest at the local level. Sure, widgets may be cheaper, and on average (mean) the economy improves (assuming the externalized costs are less than the improvement in efficiency - which they may not be). But that improvement means little if the resulting wealth/income go to a small number of people, with many more people losing their smaller amounts of wealth/income, all so people could save $0.20 on a widget.

Because govts subsidize building roads, but not maintaining roads, this gives a big advantage to new malls, which get built more cheaply than they should be. To the disadvantage of existing downtowns, which have high maintenance costs which the government does not subsidize.

So a core of the Strong Towns argument is a real economic argument. It's just a more complex economic argument than merely calling for a totally unregulated market. It's an economic argument that takes into account externalities, distortion through road building policies, and societal-level timescales (3 decades, not 3 years.)

what do you mean that "governments subsidize building, but not mainteenance"?

who pays for maintenance?

In the failure case, no one.

That is, government funds get assigned to building new roads in preference to maintaining existing ones.

The owners of big box development put 5% or less down on the property, and the sustainability of the property is mostly based on arcane tax and accounting rules. That’s why these developments rise and fall so quickly — after 15 years, the write offs for interest payments and depreciation are less valuable.

Additionally, in most cases the locality eats significant capital costs and indirect costs from storm water management, to water and sewer, to roads and traffic signals. Larger infrastructure costs like highway ramps, etc are paid for by the Federal government. There’s a vicious cycle as the big box development gets less valuable (and tends to fail) just in time for the maintence expenses associated with the infrastructure to start spiking.

That development model only works for large enterprises. Your small retail chain has to tie down real capital to lease or build, and has to pay higher taxes because they need the clustering effect of a business district to function. But they don’t get the subsidies — Congress isn’t building an access road to a small company parking lot.

The key political question could perhaps be stated as, how do you balance the median vs. the mean? A society which focuses on maximum efficiency will almost certainly have higher inequality, but also higher average wealth.

I think it's up to each region/nation to navigate this tradeoff. I do worry that the current political climate in the US really underweights the gains from trade, though. We've had 30-40 years of the most open trade regime in human history and it's raised the US standard of living immensely. I hear people all the time saying, well the median income isn't going up, but that ignores (a) how many things are free today (e.g. Gmail) and (b) how much healthcare prices have escalated (which is paid by firms, absorbing cash that might otherwise flow directly to employees as wages). I think people today actually have it quite good. I'm afraid we might take for granted what got us here and shoot ourselves in the foot with all this protectionist sentiment.

I do wonder if the disconnect between policy and many of the negative effects I outlined in my previous post is due to the fact that decision/policy makers are disproportionately likely to be the ones benefitting from this trend. And for us as developers, especially so in the US, we're the ones directly benefitting from an industry that naturally lends itself to extreme consolidation in certain cases (e.g. a team making software for thousands of people may not need to expand that much to serve millions or even billions of people. See: whatsapp) and living in the countries with a competitive advantage in this industry. And we also mostly live in large cities with multinational corporation headquarters, so we're insulated or even benefitting from what's happening to smaller communities.

I grew up in a non-coastal city that is neither doing well nor poorly. It doesn't have a lot of wealthy people to "bootstrap" itself into success by means of capital, nor is it an attractive enough investment opportunity for outside investors (low education with brain-drain chicken/egg problem), but it has a few competitive industries and is somewhat of a local resource and business hub. But once you go into the smaller communities in the region around the city, you really see the phenomenon I'm talking about. A big way money enters most of these communities is through farming or other resource extraction (if they're fortunate enough to have these), but the main way is through social security payments. These places would be perfect for low-medium cost manufacturing because they have large numbers of unemployed, working class people who are down to earth enough to take pride in that kind of work.

Those communities are often forgotten when it comes to policy, likely because they are individually small, not culturally important, have some opinions we would consider backwards, and most importantly because they have no wealthy/powerful people to vouch for them. But outside of big cities and regional hubs, where decision makers do reside, this is what a pretty large portion of America consists of.

This is a totally false history. The Reagan administration "granted more import relief to U.S. industry than any of his predecessors in more than half a century" (Secretary of the Treasury James Baker), with non-tarrif barriers (NTBs) that were "three times those of other leading countries."[1][2]

[1] https://chomsky.info/199705__/

[2] See also Chomsky, Noam. "Industrial Policy for the Nineties." World Orders, Old and New. New York: Columbia University Press, 1994. 106-119. https://www.amazon.com/World-Orders-Old-Noam-Chomsky/dp/0231...

If anyone wants to learn more about why economists almost universally, on both the right and the left, oppose barriers to trade, I'd recommend two things:

1) Learn how to calculate the deadweight loss due to trade barriers. There are a dozen good videos on YouTube explaining this. It's an elegant proof, but may take a few times through to really get: https://www.youtube.com/watch?v=zhD--UeRiOI

The distributional effects are generally acknowledged in any class discussing this, often including seques into trade assistance programs and how those work. In general though, focusing on local job losses tends to skew our intuitions, which are naturally bad at realizing the sheer magnitude of potential benefits. One way to grasp that is (2)...

2) Read a few of the countless studies on the cost per job saved of protectionist measures. Usually we ask consumers to spend hundreds of thousands more, sometimes millions more, for each job earning $30-60k per year.

Here's a table listing some of them: https://www.forbes.com/sites/timworstall/2017/01/24/sure-pro...

Textiles, tires, there are a bunch of great studies that transparently lay out their methodologies, written by people who have taken more than just a couple econ classes.

Again, completely agree that there are distributional impacts within a country (although it's important to note that, taken globally, trade generally reduces inequality, transferring capital to poorer countries). But of the distributional impacts within a country, if you just taxed the category of good half of the savings to consumers, you would generally be able to pay everyone in the affected industry a lifetime severance equal to their salary (often double it), and still raise the purchasing power of everyone in the country. That would make literally everyone better off while hurting no one, if we just had the stomach for it.

We need the biz owners to have skin in the game, and benefit from growth, not from strip-mining the wealth from an over-financialized model.

"the model does not produce returns (ie local tax income less infrastructure maintenance and public service liabilities) that justify the investment"

It doesn't make this case at all. It alludes to it, as if decades of tax revenue and benefits were imaginary, but it doesn't make a credible case.

Resilience is just a simplification, online retail among other things is killing malls and that's ok. It's trying to fight that trend that's a losing strategy.

So suburban cities are living off depreciation of those long term public assets.

One of my observations living in SF. And having watched northern California sprawl for 50 years is this.

There are real downsides to living in a dense city. Probably 20,000 people per square mile. That is made far far worse by the surrounding sprawl. And the people living in the low density suburbs aren't having it that much better. Oh you can go from place to place fast, but the places are farther away. And it it cancels unless you're on the edge.

Cities tend to build and replace infrastructure bit by bit; when first built out, they built infrastructure piecemeal, and as they upgrade to cope with higher populations they also do it piece by piece. So they have to replace things often, but usually only small amounts of infrastructure. To reflect this, tax rates stay at a slightly higher rate.

Suburbs, on the other hand, generally explosively grow in spurts, and put in all the infrastructure in spurts. So for 30 years they don't have to worry about replacing things and have low tax rates, but when you start getting to EOL people start getting higher and higher assessments to pay to replace all this high-quality infrastructure at the same time. This causes people to leave for that newer suburb that hasn't reached that point, which shrinks the tax base of the older suburb, which then has to raise assessments higher, which starts off a deadly tax spiral. On top of that they are often raising taxes to replace infrastructure on a much smaller tax base to begin with since their density is so low.

As a case in point, Nassau County in Long Island had the original suburbs, but now the taxes are so expensive because of all this infrastructure replacement that everybody is leaving. You are starting to see this in a lot of the first-generation suburbs; not only in Long Island, but also in New Jersey, and other infamous examples include places like Ferguson, MO.

More over, people living in a suburb only pay for a part of the roads they use in their daily commute. My (dense) borough actually did a study that showed 80% of the traffic going through our streets were people who would not stop there, for example because they are commuting between a suburb and the city center nearby. So city dwellers pay for roads that are mostly used by other people. And since the traffic we get this way is quite intense, there's a good amount of road repair each year.

Regarding public transportation, I wish this was an issue that more people understood. Yes, it takes higher taxes to build public transportation infrastructure (although buses have pretty low upfront costs), but that public transportation could replace your need for a car, saving you a lot of money. Even if you personally don't use public transportation, it has a lot of external benefits: less traffic, less air pollution, brings in workers who may have been priced out of working in a certain area.

So a person who lives in the suburb but works and shops in the city will be paying most of their property taxes in the city, via their employer and the shopkeepers.

It's taxation without representation. Perhaps they should also get a pro-rated vote. :-) It could be based on time spent in each location, or economic activity in each location, or simply 1 part for each kind of activity spent in each place.

PS: They also do vote based on who they work for and what shops they do business with.

Some other forms of tax are much higher in the city, for example income taxes on higher earners, and some corporate taxes in the case of NYC, but there are also an incredible array of services provided.

Your premise that city taxes are "always higher" isn't something you can assert without offering evidence. The reality is that taxes in dense cities are usually different than in less dense areas, and reflect different priorities. Higher or lower depends a lot on who you are and what you're measuring.

What are "the suburbs" here? Westchester? Nassau? Which parts of Long Island? Which parts of New Jersey? Each has different characteristics. Likewise, NYC property taxes have characteristics all of their own.

NJ is known as a high property tax state. That's true but you need to understand why. Why is because so many NJ residents work in NYC and pay NYS income taxes rather than NJS income taxes.

As for the high-tax NY suburbs like Westchester... it's complicated but the tl;dr version is school spending, inefficiencies and state-mandated defined benefit pension plans [1].

As a general rule though, NY state single family home ("SFH") owners pay disproportionately low property tax rates compared to those in multi-dwelling units ("MDUs") ie apartments, which is NY state's (fortunately tamer) equivalent of CA's Prop 13. Upstate SFH dwellers have voted themselves tax breaks in the form of caps on property taxes. Apartment dwellers however have to property taxes based on Assessed Rental Value ("ARV").

A $3m brownstone in Prospect Park might have property taxes of ~$700/month. A $3m condo in Midtown Manhattan will likely pay $1300-2000/month in property taxes (so ignoring common charges). And that's AFTER the condo and coop tax abatement, which is a "temporary" decrease that's been continually passed by the NYS legislature every few years continually since 1996. Without that, those apartment rates would be up to 50% higher.

But it gets worse. Those who pay the lowest taxes of all (as a portion of their property values) are... foreign billionaires who buy ultra-luxury condos on 57th Street, CPW, Park Avenue and 5th Avenue.

I applaud your effort to correct the GP's misconceptions but you've also made some sweeping generalizations yourself.

[1] http://www.westchestermagazine.com/Westchester-Magazine/June...

That's a very handwavey response to a serious question.

If it's true that dense cities are more efficient then it follows that dense cities should be cheaper, when all evidence points to the opposite effect. By the original reasoning Boise and Boulder should have very expensive tax burdens and New York should be nearly free.

At the federal spending it's major metro areas that are funding much of the country. Delaware get's back 1/2 what it puts in and South Carolina get's back almost 8x what it puts in. Those are absolutely massive tax flows which fund things like rural hospitals. But also a lot of infrastructure like new roads.

Even within states if you look at Virginia the DC area provides most of the revenue which is then spread around the state.

But, this ends up far more complex than just the local property tax situation.

And really, your argument implies that people in Japan pay US taxes when they buy Coca Cola. At some point things are indirect enough it's a meaningless connection.

Coming back from the military, I kept the same "look around at all times for threats" and it was absolutely exhausting.

"hyper-vigilance" I think is the term. Still have some of it but it's easier to live with in Norcal than the concrete jungles of the Los Angeles sprawl. Can focus on trees and the tweets of birds instead of innumerable pedestrians and cars and noise...

Cities on the other hand have to pay for the upkeep on their existing infrastructure, as well as replacing that infrastructure.

Replacing infrastructure is much more expensive than building it out in the first place. A lot of suburbs will fail when it comes time to replace their infrastructure. It just hasn't happened yet because in the United States you can keep building out forever. Furthermore people move away from areas burdened by the costs of replacing infrastructure.

The entire rust belt is being brutalized by the fact that formerly suburban areas have collapsed. The urban areas were already brutalized in the 50s, 60s and 70s by white flight.

Map: https://www.telegraph.co.uk/finance/personalfinance/tax/1206...

But — if you converted the wealth located in the suburbs, into high density, costs would go down, the revenue base is the same, so taxes could fall.

To me the argument seems backwards, people live where they want, they incur certain relative higher or lower costs due to it, but so what. The amount of money we are talking about here is relatively benign, if you were upfront with people about the choices being made with tax revenue, you could easily finance (with people’s own existing tax revenue) their own decisions on where to live. Where’s the fire.

Property taxes in the northeast US are absolutely insane.

The sales tax is floored by the state sales tax which makes up more than half of the total.

The Cook County minimum sales tax is 8% with lots of localities matching Chicago’s 11%.

All told I imagine tax rate in the Chicagoland area largely depends on a whole equation of property value/tax & consumption. But I’d be shocked if Chicago was universally more expensive than its suburbs.

The figures are presented: even now, post dis-investment, the downtown generates $344k tax and the mall $120k tax, and the latter (1) required the city to pay for all the aforementioned services; (2) reduced the taxes produced by the core. The mall probably couldn't have been built without the subsidies from the town, and they never made sense. Good subsidies have a return greater than one; mall subsidies have a return less than one plus make you dependent on retailers that can disappear overnight even if they have an operating profit.

The "mall" in question is in the middle of a suburb. The "subsidy" of infrastructure that was required regardless seems spurious. Further, both areas "required the city to pay for all the aforementioned services". For that matter, maintaining roads and water/sewage in dense areas is dramatically more expensive than less dense areas.

"even now, post dis-investment, the downtown generates $344k tax and the mall $120k tax"

The article quotes current, failed mall taxes. After most tenants have moved out and the mall is in disarray. Secondly, saying that a 9 block area of mixed retail/commerce pays more taxes than a single mall seems outrageously laughable.

The word "subsidy" almost always appears in articles fomenting nonsense to pander to prejudices. The correlation between it and articles of little actual value is about 1.0.

It does not: "... produce 287% more property tax than the entire mall property. And that's before the Herberger's goes away"

> Secondly, saying that a 9 block area of mixed retail/commerce pays more taxes than a single mall seems outrageously laughable.

Not if that single mall takes up more space than those 9 blocks (which it does)

https://www.cnbc.com/2018/02/22/koch-group-big-tax-breaks-to...