Hacker News Reader

Completely agree. Add to this the tiny (wealthy) municipalities built into existing communities that create favorable tax scenarios for themselves while living close to and using public infrastructure that they effectively aren't paying for. The Westlake and Rollingwood municipalities in the Austin area come to mind.

2019 taxes paid on a $1M home in Rollingwood: $2,053 [0]

2019 taxes paid on a $1M home in Austin: $20-30k

0: https://www.statesman.com/news/local/rollingwood-taxes-set-i...

Aren't there county property taxes in addition to city taxes that should create a more balanced situation? If I recall correctly, the places I've lived in (where those weren't the same entity) had both.

County funds don’t pay for city infrastructure. They’re two separate entities with different financial responsibilities. They don’t just share tax revenue with each other.

I realize that, but there's no universal definition of "city infrastructure." It really doesn't mean anything consistent.

Many municipal projects that are accessible to non-residents of a city (e.g. roads but not typically schools) are partially funded by counties, states, and the federal government.

When I put your values into this calculator (https://tax-office.traviscountytx.gov/properties/property-ta...), I found that the house in Rollingwood would have about 2K in City of Rollingwood taxes (just as you said), but the house in Austin would only have about 4K in City of Austin taxes, not 20-30K. All other property taxes were the same between the two properties. The overall property tax burden in Austin (adding county, school, etc taxes) for a million dollar house would be 20,298, while in Rollingwood (with the same additional tax categories), it would be 18,388. Certainly the taxes in Rollingwood are lower, but with hardly as big of a gap as you wrote. How did you get your numbers?

Sprawl taxes are badly badly needed in the united states.

Really it's just the inherent assumptions of the "science" of economics. Nature and wildlife are worthless, except maybe as backdrops for the bay window of a McMansion. Maybe a park provides tourism?

Oh you mean destroying all the wildlife and natural preserves of the world might destroy us all in a couple centuries (but a blink of the eye on geological timescales)? Nah, no concern. We only care about the quarterly revenues.

It's not just the tragedy of the commons. That old economic saw is just about inconveniencing your fellow humans by shitting on things they need. It still doesn't encompass any notions of conservation.

Game theory is misapplied reductionism and oversimplification of the real world (which is what economics is too, which is why that is the darling math discipline of economics).

Uh... Economists advocate making carbon and land prices reflect their true costs. Identifying, studying and correcting market failures, internalizing externalities etc are some of the most fundamental concerns of Economics as a field.

That is a niche movement, especially the one publicly espoused by "economics". The public face of economics, and therefore the one used to justify policy enaction is highly skewed by think tanks, endowed chairs, consultancies, and restricted hiring into the fed and other economics policy seats.

Economics can only produce costs on what it can measure and accurately estimate.

Economics can't even produce accurate estimations on the restricted space of human economic activity.

How can it POSSIBLY produce accurate estimations for the multiple orders of magnitude more complicated biological and natural worlds?

In fact all that does is provide fear, uncertainty, and doubt to the regressive economists and the polluters, and allow them plenty of denial room as they externalize costs of pollution and dumping and destruction on society as a whole.

This is a "science" where the mere mention of any regulation is still considered fundamentally wrong to a powerful, well-funded, and very public sizable portion of the intellectuals. And since that aligns with the rich and privileged of the world, it will continue to be the most public and pronounced aspect of the "science".

Sprawl might be reversing. The younger generation are having smaller families and don't like driving. This means less "big house" buying and shorter commutes. They are more open to the idea of crowding toward the center of a city. The Great Recession taught them how to avoid big expenditures.

It's sort of a "Tragedy of Systems." It's very easy for negligent or malicious actors to make bad decisions in a system context, but to have the consequences of those decisions not manifest in the same time or place as where the decision occurred. This makes it really easy to screw things up without suffering the consequences in complex systems, and people often make decisions for their personal benefit ignorant of or willfully ignoring the consequences.

I like how you phrased that and take it to the system level to think about it.

It reminds me of Indianapolis, Cleveland, and their metropolitan areas. In 1969 Indianapolis created a "Unigov" merging with its surrounding county, and all of the suburbs within it.[0]

The Unigov concept has been studied a lot. General view is it was a net positive, with one of those benefits being a shared vision, shared tax base, etc.

Contrast that with the city of Cleveland and its metropolitan area. The city and its suburbs are distinct places. Suburbs on the east side and west side compete with downtown to give economic incentives to draw businesses away from each other.

For example, American Greetings (the card maker) moved its long-time HQ from Brooklyn, Ohio (a Cleveland suburb) to Westlake, Ohio (another Cleveland suburb). Westlake lured American Greetings with incentives that Brooklyn could not match.

The net benefit to the region is likely nil, but the benefit to Westlake, and the loss to the other suburb is demonstrable.

[0] https://www.cgr.org/consensuscny/docs/CaseStudies_ec-unigov5...

I think all of the above comments hint at this but don't state this explicitly:

One of the general problems with growth is that it always and necessarily plateaus, and the growth stage has different dynamics compared to the plateau stage. When your town/business/country is growing it is easy to leverage the future because there is more wealth to spare.

In the growth period, investing in a new park/office space/spending program is totally rational if it helps improve growth and quality of life now, given that repaying that debt will be easy later. But once growth slows down, our expectations of progress must also wane. This is hard for many people to accept because they think that past growth was paid for with past success, when the reality is that it was paid for with current success.

> because they think that past growth was paid for with past success, when the reality is that it was paid for with current success.

Wow, great contribution. I appreciate so much when anyone can pull a nugget out of my ramblings and explain it back to me in a clearer way.

To add on to what you said and to bring this back to infrastructure, I think another challenge in the plateau phase is that you either need to spend a lot to keep old infrastructure working or massively reinvest to upgrade the infrastructure. If you've plateaued without expectations of future success, where do you get the funds to do either?

I think "externalities" are the tragic part of many systems.

It would be interesting to have a "simcity" or "simearth" that a democratic society could run before making decisions about taxation or climate laws or policy.

It might also be good to implement policies with an expiration date, and update the model as things play out. Then cancel policies that haven't met the promises.

(Of course this is all probably nerd fantasy)

I think you're seeing it pretty clearly :)

This stuff works exactly like a Ponzi Scheme, that's actually something Strong Towns explores in a lot of detail. There's a topic page about it here: https://www.strongtowns.org/the-growth-ponzi-scheme/

> in a lot of detail

You aren't kidding. It's a 5-parter! Thanks for linking this. It's in my Pocket queue to dig into.

>the ROI calculation that nobody does on infrastructure catches up with the town

This is municipalities using cash accounting instead of accrual accounting. Infrastructure has a known lifespan, and instead of amortizing the cost of replacement over it, the cost is realized all at the end when it must get replaced.

Pretty simple solution: infrastructure investment is handled at the State-level.

If there are infrastructure investments that go beyond a state's borders, you rely upon National-level government to debate and allocate infrastructure investment.

> Game theory? Tragedy of the Commons? What all is at play here and then as importantly, how do we do better?

Market failure. Independent actors working for their own self-interest will create a failure in long-term thinking. You address this the same as any other market failure: you create a larger, 3rd party entity which is trusted. This trusted entity allocates funds and makes bigger decisions that the smaller groups of people cannot do efficiently.

You'd also need to do that for

* schools * police/fire/ambulance * pretty much any locally allocated service

Which would pretty much be political suicide in any state.

Not really. The important bit is that some-degree of resource should be left to higher-level stuff.

Ex: Few people bats an eye at FAFSA, which encompasses a nation-wide accreditation system for colleges and nation-wide student loan assistance.

There are national-level Police forces: ICE, FBI, and ATF to name a few. Obviously, political groups have taken issue with how these agencies operate, but their efficacy cannot be denied: they can do things more efficiently than local police forces.

Colleges get their tuition from students, so the location of where the student's family lives is mostly irrelevant outside of in-state vs. out-of-state.

Schools are funded by local property tax and the districts are drawn pretty locally, as are police and fire. They are also subject to the same vicious cycle of people move in -> demand better services -> local taxes go up -> the rich childless leave -> tax base suffers -> local taxes go up, etc.

Larger level government authorities are not more trustworthy than local ones and are likely to have their loyalties further from me geographically than the untrustworthy local government.

The alternative is to live with market failure: watching your locality make poor investment decisions that transfers wealth to neighboring cities and counties.

If you want to work together, the cities need to form up a larger scale contract and work together. If you are willing to compete against your local cities, you are allowed to do that as well.

That's not the alternative. The state transfers my wealth even farther away, not just to my neighbors. The federal government, even farther away.

The market transfers your wealth away to those who are willing to provide services for a cheaper price. At some point, you gotta work together if you want to counteract this force.

The market allows me to voluntarily trade my wealth for goods and services that I perceive as having equal or greater value than what I'm giving up in trade. Every single voluntary purchase is a net benefit to both me and the seller.

The same can't be said for involuntary trades, like those that filter through the government. This is the situation we're discussing right now. The government took your money and spent it on some pet project, probably tied to a donor. They then opened that project to "the public," some of whom use it without paying in. That is definitely a problem. But it is not solved by moving up to the next tier of government. That only makes the situation worse, because the pet project/donor is more likely to be even further from you geographically. At least with the local government there is some chance you will benefit from the project, and you have more ability to oversee and change local political priorities.

And yet, such situations lead to market-failure situations.

For the most part, I'm a free-market capitalist. But every philosophy has an error if you take it to the extreme. In the case of pure capitalism, you cannot deal with "market failures" (in particular: externalities, monopolies, cartels, tragedy of the commons...) with purely market-driven economics.

Its a known fact. The only solution to market failures is to stop using the market as a tool.

--------

Government policy should be to default to capitalism, but if an externality (or other market failure) is identified, you should use the Government as a tool to correct the market failure.

Ideally, you should minimize the Government's enforcement. Regulation is poorly accepted by the lay population who fail to understand its importance. But since 3rd party intervention are provably the ONLY solution to a market failure (indeed: its the DEFINITION of a market failure: when a 3rd party has to intervine)... your choices are as follows:

1. Accept the market failure as reality. (Ex: allow monopolies to exist. Allow externalities to warp the costs. Etc. etc.)

2. Create a 3rd party (usually Government) to regulate or force people to leave the market driven approach.

------

> The same can't be said for involuntary trades, like those that filter through the government. This is the situation we're discussing right now. The government took your money and spent it on some pet project, probably tied to a donor.

Case in point for market externality: City A uses up too much water from a river, such that City B no longer has enough water to survive. Gathering water from a river is extremely cheap, and maybe City A and B lived in peace before... but today cities can grow exponentially. And the increased usage by City A has led to City B's downfall.

This is a realistic situation on the Colorado River, where cities upstream have taken so much water that the Colorado River no longer flows to the ocean. To ensure that cities downstream even get enough water, there is a multi-city and multi-state agreement to ensure that Nevada, California and Arizona split the water appropriately.

Unfortunately, the agreement is flawed. But some agreement is better than no agreement at all.

------

The free market "solution" is that City A gets all the water, because its upstream. There's no reason for City A to cooperate with City B, any cooperation at all means that City A (from a free-market perspective) "loses" water that it feels like it deserves.

When people talk about infrastructure built by one municipality being used by people who avoid taxes by living across a political boundary they don't usually mean rivers. What are you talking about?

> avoid taxes by living across a political boundary

If you're really worried about that issue, then just use toll roads owned by the local municipality. Sometimes there's a simple market solution to some problems. So I'm not really concerned about problems where the market has a solution.

The issue with your way of thinking: is that in general... you will eventually come across an externality which cannot be addressed by market-driven thinking. Realize that capitalism is a tool that works in specific circumstances (basically any circumstance without a market failure / externality).

You're arguing against things I didn't say and don't believe. All of my comments assume the context of this discussion which is people moving just beyond political borders to avoid taxes and then using the public infrastructure of the place with the high taxes. Nothing I've stated was intended to be universal or without exceptions.

Alright. So its an externality. At the end of the day: the people who benefit from the infrastructure aren't paying for the use of it.

Public infrastructure needs to be built, but if a local government builds it, other people come and the local government fails to get paid. Local government needs to tax those other people somehow, but they're outside the jurisdiction.

So the solution is to use the state-government taxes (or national government taxes, if it crosses state lines) to pay for the infrastructure.

-----

I mean, do you not agree that its a market failure situation? If you agree its a market failure, the only solution is a 3rd party enforcing its will to override the market.

Its proven. The free market cannot solve any externality. Its a true market-failure situation.