Sustainable communities by Bruce Morlan

pyramid scheme[show_avatar]As a known and practicing True Believer in economic and social freedom, I am sometimes accused of reneging on the promise freedom gives in order to drink kool-aid with the dewey-eyed true believers whose tenets are whipped together as a frothy promise  in the mirrored halls of hope rather than having been tested in the crucibles of truth that our experiences represent. The politicians’ promise to provide perpetual  “growth” becomes a pyramid scheme that feeds on our ability to (1) consume on demand,  (2) provide a larger population to feed the economic engine, and (3) find the raw materials to feed the engine.  This represents a pyramid that only a Madoff or a pharaoh could appreciate.

Now, however, we have seen three shocks to our system in the past 50 years or so.

  • The Limits to Growth (1972) is a simplistic treatment, but, although practical applications might require advanced math, basic understandings can be developed from even simple board games that reasonably depict the relationships in that math. And the lessons are clear, even with economic substitution, there are some limits that cannot be ignored.
  • The realization that population demographics (at least age demographics) are undergoing a fundamental restructuring.
  • The possibility that the primary consumers on the planet (that’s us) are getting nervous, with “retirement” funds suddenly gone dry, we may be seeing the demise of the consumer as king.

So what practical application do we see from this nexus of information? As a member of a local planning commission I have been pushing for continuing reality checks-based reviews of our assumptions as we plan our way into the future.  In a world where we have reasons to believe that the population is leveling off, do we really want to continue to pursue the past as if it were the future?

One of the problems we face is that the Northfield city staff is still serving up that old-timey religion of “growth for its own sake” kool-aid and the machinations they are playing out on the proposed new annexation just west of town are just further examples of how a bureaucracy can blindly chase an old dream without asking the fundamental questions that can make the difference between building a city that becomes a light on a hill or merely building yet another bonfire for our vanities.

We, as concerned taxpayers, need to reign in this runaway process before it tramples our dreams and leaves us with nothing but a big bill to be paid.  To paraphrase a popular movie, “the staff is writing checks that the taxpayers can’t cash!’

40 thoughts on “Sustainable communities by Bruce Morlan”

  1. Bruce: Wouldn’t the building of a new City police and fire station combined with building an addition to the library be a better example of a runaway process that leaves us with a big bill?

    The City has spent very little on the annexation. And, it is doubtful that anything is going to be spent until there is some kind of ecomonic feasibility. That contrasts with the City projects that aren’t required to be tested by the crucible of experience.

    It seems silly to lament the annexation when we are spending $271,000 building a bike trail when the city streets work just fine. Or, when we spend $500,000 to build a parking lot.

  2. Bruce,
    It seems that David has made a good point. When we already have policies in place that allow us to save dollars, old habits die hard.

    I am intrigued by your expression “crucible of experience”, can you explain?

  3. Bruce- One of the requirements for a city to function as a provider of services (fire, police, garbage & snow removal, etc.) is that it must have a tax base to support that. Since taxes are collected from assessments on real property, the only way to increase this base is to increase the tax rate (political suicide) or increase the amount of taxable property (annexation). What I hear from the opposition to this annexation is not a lament over an increased tax base. It is a lament over losing farmland and threatening a half mile long trout stream. At least the property is contiguous and does not require a leap-frogging annexation like Dundas and Bridgewater. The two questions is whether the population of Northfield considers this progress and whether we want to grow. At least this move provides the possibility of future income to support the services for future growth.

  4. David, your point about the new police and fire station is good, but I was more talking to the idea that Northfield can expand its tax base and somehow cover the cost of those expansions. This is a sort of pyramid scheme and like most such schemes, if the numbers are crunched correctly they are exposed as such. Unfortunately, the people with most skin in the game (the taxpayers) do not seem to be able to get the politicians and the staff to do that crunching. Their actions are driven by an allegiance to the ways of the past that I suggested are no longer valid (past performance is no guarantee of future success).

    John, I have in the past suggested that increasing taxes could be the taxpayers preference (though you claim it is political suicide). If taxpayers are presented in a fair and balanced way that the alternative is more traffic jams, more crime, and ultimately, more demands for infrastructure in a growth scheme that may ultimately cost them more anyway, they may choose higher taxes in the short term. All I am asking is that the staff and the politicians be honest and open and look at, and present well, the true costs of choices before the choices are made. For example, why can’t staff produce a single graph showing the expected cash flow and taxation issues over the next 50 years, accounting for obvious cash bumps (like a new city hall, etc.). Run that graph with and without the annexation and let us make an informed decision. This is what I used to do for a living, it is what I taught graduate students to do for their organizations, and it is what I believe can save us from some of the faulty processes of the past.

    1. Bruce- You mean these graphs are not available? I must be getting senile. I thought this step would have already been completed. How we can make any rational decision without this information is beyond me. And I fully agree with your statement, “past performance is no guarantee of future success.”

  5. Bruce: One of the most invidious pyramid schemes is government spending. The idea is that we can continue to grow government services, and that the taxpayers, especially businesses and the rich can or should pay for it.

    I don’t have much trouble with the annexation and private development of that land because it is moderated by two factors: first, private development has to be self-sustaining or no one will build; second, business development has a much greater return on infrastructure than does residential development.

    On the other hand, government expenditures don’t have the same controls. Without the market to moderate, and without any guide to an expected return on the infrastructure, there is no benchmark to tell us when enough government is enough.

    I just don’t see how we can keep building $8.5 million dollar libraries and $271,000 bike paths to handle the “demand” if we don’t have the same rate of growth in the private sector to pay for these shrines. This kind of government spending is not sustainable; heck, it isn’t even rationally related to an economic end.

    If government can’t even moderate its own growth within some reasonable limits, who really believes that it can do a reasonable job of controlling private spending?

    1. David,

      You say:

      One of the most invidious pyramid schemes is government spending.

      Surely you don’t really believe that *all* government spending is a pyramid scheme. (I don’t think you mean “invidious” either, for that matter … maybe “insidious”?) How would you distinguish between pyramidal and non-pyramidal (columnar?) spending? And what “benchmarks” would you propose that could tell us when enough government is enough?

      Bruce and David,

      I think most of us favor “informed decisions.” Sure, it would be nice if we could confidently predict return on infrastructure investment 50 years out. And it’s easy enough with mathematical software (or a pencil, for that matter) to spin out various scenarios for 50 years — or 500, for that matter.

      But all such scenarios, useful as they may be as part of planning, depend exquisitely on a lot of imperfectly known parameters and initial conditions, as well as on the basic model chosen to approximate reality. They depend, too, on future inputs (interest rates, demographic changes, what Faribault decides to do in 2023, butterflies flapping their wings in China) that can’t possibly be known now, let alone controlled from Northfield.

      So, methinks, you gents seriously underestimate the difficulty of predicting ROI over long periods. And Bruce’s assignment of blame to “staff and politicians'” refusal to be “honest and open” is — at most — half true.

      Bruce says:

      We, as concerned taxpayers, need to reign in this runaway process before it tramples our dreams and leaves us with nothing but a big bill to be paid.

      By “process” do you mean the west side annexation plan, or some more general trend toward socialist tyranny? And by “reign” do you mean “rein”?

    1. ME…

      I would like for all the people who were NOT at the annexation design charrette to have heard this statement by Mark Koegler, principle of the design firm hired ( 200-250K) to Master Plan the annexation sites… he said: …annexing nearly 1000 acres… the absorbtion rate for a city the size of Northfield … even in 30-40years… it cannot be done.

      You better believe him, folks: if you’re willing to pay this really competent firm 200-250K dollars, then you better believe he knows what he’s talking about.

      This will not bring “tax relief” within most of today’s taxpayer’s taxpaying lifetimes , and the council and the EDA have to be able to provide some extrapolation of future costs and the recovery of same. Too much ‘happy talk’ from those entities; no even qualified factual info.

      When a planning commissioner asked the Community Development Director if the PC would have at least estimates on those numbers before they (PC) make their recommendation, the answer was not clear.

      What if this highly competent and responsible consulting firm comes up with projections that do not mesh with the council/EDA ‘happy talk”?
      Will this master plan then sit on the shelf, as others have done?

  6. Kiffi, maybe you can explain what is going on with the annexation process. In all past annexations I am aware of a landowner or developer came before the city and ask that their land be annexed. Then the city worked with them through the city process, the developer paid all the costs, and the land was eventually annexed to the city. Once the land was annexed, the developer installed the required infrastructure and then marketed the land for sale.

    In the current process it seems very, very confusing to me. Is the city the developer? Is the city going to own the land at sometime? Why is the city paying a consultant to do planning on land I do not believe they own?

    Paul, I cannot speak for David L, but I think he may be talking about the growth of government, and that we have created governments that rely on an ever expanding number of people to send them taxes. We know that cannot sustain itself. Some have tried to ‘fix’ the system by suggesting that we take more from the taxpayers. We also should know that is not sustainable as we will eventually run out of people that have the funds to send to the government. Looking at our Minnesota government, if the state was spending dollars per capita like we did in 1970….with only the standard application of inflation, I believe we would have a current state budget about $8-10 billion less than our current state budget….and we might not be in the pickle we are now in. We are in this pickle because state government has been spending dollars at a rate far in excess of inflation, and of late, far in excess of the growth of the private economy.
    This is unstainable at all levels. We are watching our federal government burn through trillions of dollars they don’t have. Where does it end?

  7. Paul: It is difficult to say what are “good” benchmarks for government because of the lack of value-based economy. In a government economy (the sub-economy of citizens getting services from their government), we have a vote-based, not value-based system. Because the benchmarks are usually based upon winning votes (or public favor), spending is much different than when spending is based upon econmonic return to be received on the economic investment.

    There are necessary services of the City like sewer and water that are “columnar” expenditures. These services are properly in enterprise funds and have its own accounting so good benchmarks for government spending is easy – run it like a cooperative business.

    But, for services that are not necessary, like parking lots, bike paths, and libraries, the burden should be on the government entity to say what benchmarks are being used, why those are good benchmarks, and to give the alternatives. The benchmarks should include both the economic return and the non-economic return.

    For the most part, the City (government) doesn’t even try to establish benchmarks. In fact, with the Safety Center and the library, the City’s biggest struggle appears to be whether they are even going to submit the expenditures to the vote-based sub-economy (i.e. submit it for referendum).

    Before we spend too much time and effort trying to control “growth” by private industry, we need to figure out how we can control the “growth” of public expenditures. That growth is entirely within our control but shows no signs of slowing in spite of the evidence that the private spending (and resultant taxes) is going to be decreasing for years to come.

  8. Ray: I can NOT begin to explain it… there doesn’t seem to BE a truly rational explanation. “The Powers that Be” have been saying that we must balance out our residential taxes by acquiring more land for industrial development.
    That has been the Mantra, for a while now.

    The NW property owners DID ask to be annexed, and as I recall it was a kind of convoluted process with the council waiving the annexation ordinance requirement for a concept plan, previous to approving the annexation. Then the council did approve it, and the EDA, which has been the lead agency(?) entered into some sort of contract for someone (a firm/Dunbar?) to negotiate with the property owners…
    Negotiate what you might ask? and reasonably do so…
    I’m not sure; I live with an EDA member but he’s a ‘minority vote’, and I don’t even want to bring it up, because I’ll have to hear, once again, how the contract was not there for them to read when they were asked to vote to approve it! (That seems to be the standard procedure for this EDA, so you can understand the position of a minority vote… responsibility for public $$ and all that bothersome sort of detail!

    So now, Yes, the council has approved the EDA expenditure of Master Planning property that NF has annexed, but does not own, and ,does or does not yet, have contractural control over.

    You’re a business man, does it make sense to you?

    I couldn’t begin to answer the infrastructure question you raised, and when Tracy Davis raised it at the Planning Charrette, Mr. O’Connell didn’t answer it either.

    The one thing I do feel confident about in this process, is that the money spent for Master Planning is being spent with the right consultant.

    Considering the ‘success’ you had with your well reasoned minority report on the Safety Center process, I don’t see any hope for any minority report/opinions here. The mammoth PR position is that it is going to provide property tax relief; don’t hold your breath, please.

  9. I am under the distinct impression that the US military forces fight not only for us, but for China and others inasmuch as China would not like to be bothered by the pesky terrorists any more than anyone else as their business plan does not include the wrecking of any of their sources of minerals, fossil fuels, etc, etc from any of the five or six continents where they currently do business. We fight, we buy their goods, they lend us money, the Chinese people come into the 21st century and the wheels go round and round and the tapestry is threaded tighter and tighter. Any outstanding loans would surely be forgiven. Yes?

  10. Paul, actually, as an analyst I do not underestimate the difficulty nor do I overestimate the power of the projections. The analytical tool used to help deal with the shortcomings in long term projections is sensitivity analysis. While the analyses do tend to demonstrate how poorly we are able to project into the future as uncertainties accumulate, they still provide a framework for making decisions that is less arbitrary than “hey, lets burn several hundred million years of sequestered carbon and see if it changes anything”. And yes, if one’s experience with long term projections is the Club of Rome’s “The Limits to Growth”, one may have a very jaundiced eye when looking at any projective economic models. But blindly making decisions without even trying to project forward is, I would suggest, like investing in Madoff hoping that the rumors that he is running a pyramid scheme aren’t true (pollyannish greed), or at least hoping to get your share before the source of new money dries up (cynical greed).

    As for pyramid schemes in general, at Politics and a Pint I sometimes suggest that the mathematics of all of the following represent pyramid schemes of ever greater size (a pyramid of pyramids): Cash gifting (how stupid are we), Petters ($3.6B), GM’s retirement system ($20B), Madoff ($64B), Social Security ($20T), economic systems based on growth ($TTT?). In my opinion, all of these systems count on the fact that new arrivals will start out by putting in more than they are taking out, and when that cohort is ready to take out more than it puts in, the system will have even more new arrivals to provide their money (or labor) to subsidize the payouts the system promised. When the increases ultimately fail to materialize (and they must fail), the systems collapse.

  11. Bruce:

    I agree with everything you said. However, I don’t understand why you think the annexation falls into one of the pyramid schemes. In my opinion, public pyramid schemes like Social Security and universal health care tend to last much longer than private schemes because they continue to get propped up by higher and higher taxes. So long as the government requires a reasonable payback on its investment on infrastrucure for the annexed lands, it would seem that such investments are much wiser for government than to borrowing money to build a non-returning economic investment (like a library).

  12. Bruce, David,

    Whether Social Security and universal health care are really pyramid schemes, as you assert, depends on definitions. If “pyramid scheme” means, for you, any program that depends on future funding that is (like everything in the future) to some degree uncertain, then so be it. But that definition seems to me both too broad and too cynical. Do you really see proponents of such programs as confidence tricksters, out to hoodwink the citizenry? Or are the pejorative “pyramid” and “scheme” just rhetorical funnin’ around?

    I’d describe Social Security (and universal health care, assuming we get some) as a modified pay-as-you-go program — modified in the sense that SS has for many years and for good reasons taken in more than it pays out. Eventually this balance will change, if nothing is done, but that’s hardly evidence of fraud. On the contrary, a program that always and forever takes in more than it pays out would be actuarially unsound.

    The point with any pay as you go program is to maintain a rough balance of income and outflow, keeping predictable demographic changes in mind. This may require adjustments over time, but that’s hardly pyramid scheming.

    Whether SS will actually be able to cover planned payments in years ahead is a fair question, but a more complicated one than a slogan like “pyramid scheme” suggests. My (inexpert, to put it mildly) impression is that SS presents a smaller problem than Medicare — with or without the health care reforms now contemplated. Either way, we’re going to have to get serious about what we want and how to pay for it.

  13. Bruce, David, Ray,

    Y’all seem to take it as obvious that government spending has been growing like kudzu in recent decades.

    Is this really so? It depends on what you measure.

    Ray says, correctly, that had Minnesota state spending per capita grown at only the rate of inflation in recent decades, the state would now be spending a lot less than it does.

    But that’s not the whole story. Personal income in Minnesota has grown much faster than inflation over recent decades, too. Measured as a percentage of personal income in Minnesota, state spending has remained almost constant over the last 40 years, or perhaps even declined a bit. See

    pages 5 and 6 are especially interesting.

    Whether this 40-year history represents too-high or too-low government spending is another question. The fact that Minnesota has done better economically and on quality-of-life measures than most other states may suggest that whatever we’ve been doing hasn’t been entirely in vain. And perhaps the future will be different from the past.

    But the idea that state spending is at historic highs is, by this reasonable measure, simply false.

    1. Paul,

      It is also true that spending in most parts of state government have gone down in the last decade with one glaring exception, the rising cost of health care. In state government there are two parts to the story. One is the same for everyone else where see constant increases in the cost of private insurance; the other is increasing costs of caring for a growing elderly population and disabled. Without some reform this will consume our entire budget. This is not an easy problem to solve. I believe reform that Minnesota Health plan would offer would greatly reduce the administrative costs and bring order to our current health system. But to continue as we have will not be sustainable.

  14. This should be called the dreadle (sp?) thread, for the amount of ‘spin’ present… and it’s also the appropriate time of year.

    First of all , my good friend Bruce, the term “pyramid scheme” has a definite connotation of illicit activity, which does not come just from the physical structure, i.e. one person eventually involving many… but has the implication of illegal money management/distribution.

    No matter what you might think of the management or effectiveness of Social Security, the above was obviously not the intent. To use then, a pejorative term to describe such a gov’t program is prejudicial, and smacks of a degree of ‘spin’ not necessary for a person as thoughtful as you in order to make their point.

    So… let’s not make false intellectual arguments, i.e. ‘spin’, in order to prove a point… leave that to the NF City Council when they are discussing “The” , or “A”, new Safety Center!

  15. Public education is a “pyramid scheme” because it spends money with the hope of a future economic return. Sixth graders won’t add much to the overall economy for quite some time, but we do spend a lot on them right now. And the system is propped up somewhat artificially by the government in the form of compulsory attendance laws. Would anyone (David?, Bruce?) be willing to simply shutter the doors of the local public schools (in exchange for a big tax reduction), and allow each family to decide how much (if any) formal education its children should have (or that they can afford)? Would we be at a competitive disadvantage with Champlin or Chaska or Chanhassen if those distrcts maintained a public school system?

    Still, annexation just for the sake of increasing the tax base just doesn’t seem right to me. And it feels to me like it rarely works out because with annexation comes an expansion of city services — police, water, sewer, snow removal, steet maintenance, and much more — that pretty much eats up the new revenue. No net gain.

  16. I lived in Columbus, OH for a while. Nice city. In the 1970’s, Columbus was very aggressive in annexing surrounding land, to the point where the city ultimately encompassed almost all of Franklin County. The city enjoyed a reputation as an economically very healthy city while other Ohio cities (Cleveland, Cincinnati, Akron, Dayton, Toledo) were hurting. Annexation slowed, then ceased, and Columbus now is in the same economic boat as most other cities. The annexation fix, if that’s what it was, lasted a decade or so (not bad) but ended with a bit of a thud.

    Reminds me of that old joke: A Texas rancher, accused of being a land-grabber, demurred, saying, “I jist only want that land what’s next to mine.”

  17. In all this discussion about property and tax bases, it seems to me that what makes a community sustainable is the people, not the property. Property is really of no value if there is no one to live and work on it. It has potential, but it is people who actually increase wealth and add to the tax base. Whether they have a business within the city limits that produces a profit and provides local jobs, or whether they work outside the community and bring their income into the city, it still seems that it is people who are an important aspect of a sustainable community.

  18. Bruce,

    I totally get the point you are making. What happens if Macro economic “Growth” is no longer possible due to the contractions in the foundations (natural resources, fossil fuels,debt leverage, etc) that support this growth? Your link to Eric Zencey’s article is very illuminating in this regard, especially the part about EROI, which I believe is the primary foundation to our modern industrial “growth” experience. As Eric said you would have to be stupid not to make money in this environment!

    I believe currently, all the above foundations of growth are maxed out and are beginning to recede in unison, which will result in Zero, or worst negative growth.

    Zero Growth = Static Income

    Negative Growth = Static Income – Debt Interest – Increasing Energy Costs( due to lower EROI) – Unfunded Pubic Liabilities

    Severve Negative Growth = Falling Income(due to Neg Growth) – Debt Interest – Increasing Energy Costs(due to even lower EROI) – Ever larger Unfunded Public Liabilities due to falling incomes

    The above negative growth scenario would apply to all levels personal, local(NF) and National. For NF to be in at least a zero growth economic position it would, I think, be important to minimize the factors that subtract from income.

    To decrease the increasing energy costs I feel it would vital that any NF city expansion would include some energy generation system on a very large scale (e.g. municipal wind/gas power plant). Being near major gas lines and the rail would be key, I feel, to location. City planning thinking circa 1909, I think, will be more important than Circa 2005(housing bubble).

    A negative growth would collapse many, if not all of the institutional systems we take for granted today.


    The description Pyramid Scheme from a systems sustainability and economic growth perspective seems appropriate. The opening Wiki definition “A pyramid scheme is a NON-SUSTAINABLE business model” would apply to a negative growth scenario. Madoff ran his operation for decades in a positive growth bull stock market/ economy. it was not until the market turned Negative that his operation was exposed. Same can be said for Social Security fund. As long as the economic pie continues growing the system works. As with Madoff, when growth goes to zero or negative the structure can no longer function as promised. Any guesses which cost in the Neg growth formula above will be thrown under the bus first?

  19. Lots of good comments.

    Paul Z.: I think you are right. “Pyramid scheme” is probably not accurate. “Unsustainable” is probably better.

    Bruce, Jim: Any model that calls for the City to spend money on the business park in hopes or expectations of future revenue have to be discounted for the risk involved. And, if the goal is to get more tax revenue so that we can spend it all is foolhardy. In my opinion, the goal should be to permit business to grow or come to Northfield in an economically organic method.

    Still, I maintain the the most insidious 🙂 kind of unsustainability is government spending. Social Security and Medicare are good examples on a national level. But, we are prone to the same unsustainable thinking on the local level. Where will the cost of an expanded library come from? Presently, it looks like it is coming from future taxes. It is money that we don’t have, and don’t know if we will ever have. Continued expansion of government services is a declining economy is a recipe for financial disaster.

    It seems to me that, in a democracy, control over wants takes a sincere discipline. “No new taxes” is a bad public policy; but, it is better than “more taxes” without some idea of how we are going to restrain our appetite. And, the attitude that we have taken on the Streetscape, “spend it on whatever comes along” is the silliest policy of all. (One FOOT of bike path is 3,000 meals for Feed My Starving Children.)

  20. David,

    You say:

    Where will the cost of an expanded library come from? Presently, it looks like it is coming from future taxes. It is money that we don’t have, and don’t know if we will ever have.

    Northfield library expansion may or may not be wise (I’m inclined to favor it). Either way, you set a very high bar if you oppose public expenditure whenever paying for it depends on future tax income — money we don’t have now. Held rigorously to this standard we’d never build a road, a school, or a sewer, unless we’d saved up for it in advance.

    Or maybe you oppose tax-financing only for foolish or needless expenditures. Fair enough, but does library expansion or a bike path clearly meet this test? That’s certainly not obvious to me. Having a good library is arguably a good investment, even in the financial sense, if it promotes education, keeps young families in town, gives kids an alternative to stealing hubcaps, etc.

    1. Paul: From my experience on the Streetscape Task Force, and being marginally involved in the Safety Center, I can detect no discernable economic standard to determine which public expenditures are worthy (wise) and which are unworthy. Shouldn’t we at least try to define wise and unwise?

      Moreover for expenditures that are being financed in the future, like the library, I haven’t heard any projections about where the money will come from. It appears that the expectation is that future tax growth will pay for the expenditure. At some point, as Bruce points out, the growth will be unsustainable. It is the same mathematical principle as not pumping too much carbon gas into the atmosphere.

      The library will have a certain “carrying cost” once it is built. If the debt load will be $500,000 per year, and additional operating costs are $500,000 per year then we have to figure out where an additional $1.0 million will come from. At the very least, the City should be able to say that we will build the library if the tax revenues at a certain level, and we won’t build if they are at this level. The idea that we are going to build come hell or high water is foolish. It’s like saying that we will pump carbon gas into the environment until we decide to change.

  21. Re: the idea of expanding the library…
    I am in our fabulous library 3-4 times a week. I take a lot of books out, so have a lot of various due dates, hence often there.

    For anyone concerned with the integration of our hispanic/latino neighbors more fully into the community, the value of the library is obvious.
    Often one hears that that portion of our community doesn’t feel comfortable, or doesn’t feel welcome in the downtown. Well, it doesn’t seem to be the case at the library.. Thanks to the Gates Foundation there is a lot of free computer access at the library, and the Latino community is making heavy use of that amenity, and both adults and kids of all ages.
    I have heard that the numbers are also strong for participation in the free pre-school programs; check with Lynne Young for accurate info on that subject.

    If that were the single reason to keep the library growing it would be enough.

    In hard economic times, the wealth of free library services is a ‘value added’ need, not just an amenity, for the community… and one of the most inclusive that exists in Northfield.

  22. Paul, I think what David L. and others are talking about in spending and government growth is illustrated well by your example of the percentage of state government growth as compared to income. I can see absolutely no link between the two. State government should grow at the rate that it minimally needs to grow to deal with the functions it is charged to deal with. I’m sure you as a math professor could go to work and tell me how much more robust our state would be if in fact government grew at a per capita rate much closer to inflation instead of at a rate of over 5% per year for the past few years. There would be a lot more private dollars in the economy because we would have left more of those dollars with the individuals and families that earned them. Instead, the state—and many local governments—have plied thier hands deep into our personal pockets and extracted the dollars that they want to spend.

    I know many of the liberal persuasion are very fixated on the percentage of taxes paid by the ‘wealthy’ as compared to us working folks. But, as I’ve said many times in the past, a huge percentage of the taxing decions made by the wealthy are personal choices. A millionaire may live in the house simple next door and pay a very small percentage of his/her income in real estate taxes. Contrast this with a ‘keep up with the Joneses’ couple that lives far beyond their means, essentially paycheck to paycheck, that may live in an expensive home on a hill and pay a large real estat tax. Their percentage of taxes paid is much larger—-but it is their choice.

    1. Ray,

      State income and state spending don’t always move in lockstep, and I certainly don’t advocate that they start doing so. But to see “absolutely no link” seems to me simplistic — or maybe I miss your point. State expenditure as a fraction of state income seems eminently sensible as one, if not the only, gauge of whether we’re over- or under-spending relative to historical norms.

      Indeed, government “should grow at the rate that it minimally needs to grow to deal with the functions it is charged to deal with.” Who could disagree?

      But all the hard questions remain open: What does “deal with” mean, for instance? Has Minnesota successfully “dealt with” the adequate support of education? With transportation and communication infrastructure? With early childhood and family education? With funding the court system? With pension and health care obligations to state employees? With environmental safeguards?

      Thanks for your confidence in my math skills! Math might indeed help in assessing how much less our state might have spent under various scenarios. But assessing “how much more robust our state would be if in fact government grew at a [lower] rate” is not just a math story problem. “Robustness” (nice word!) requires not just saving money but also, sometimes, investment in our state’s human and physical resources. Not every investment is wise, of course, but neither is every refusal to invest.

  23. Everyone, thanks for the many interesting comments. One clarification I’d like to make is that when I use the term “pyramid scheme” I am thinking of a business model that assumes that next year will have more assets to draw from to pay current obligations. In a strictly business sense this could mean “more new investors” (Madoff), “more workers” (GM planning to grow) or “more people paying taxes” (Social Security operating not as a pay-as-you-go system). While the term may be pejorative, I claim “rhetorical license” – just as global warming fanatics claim the world will be destroyed if we do not try to fix it and global warming deniers claim our economic systems will be destroyed if we try to fix it.

    All these schemes work fine until the underlying assumptions fail. The explosive growth in Northfield is fueled by a similar belief in an economic model that is probably unsustainable. Let’s see some sensitivity analyses addressing these possibilities BEFORE we buy into the promises. Or is the consulting firm only about glossy handouts promising “Futureland”? Hah! “Where is that flying car I was promised in the middle of the last century?”

    1. Bruce,

      Thanks for explaining your rhetorically licentious use of “pyramid scheme”.

      Does the same license also apply to Northfield’s “explosive growth” (in spending, I imagine)? If not, could you quantify the “explosion” a bit?

    2. The lead principle of the “consulting firm”, Mark Koegler said, in the design charette, that Northfield could not absorb 1000 acres of industrial commercial development in 30-40 years… absolutely can’t be done, he said.
      So don’t blame the professionals for all these ridiculous assumptions about ‘rescue by increased C/I tax base’. If they don’t listen to the consultants they hired, and are paying 200-250K to give their professional opinion, well… the error in thought process is easy to lay at a ‘doorstep’…
      After hearing that statement by Mr. Koegler at the design workshop, I wonder if the storyline will change?

    3. Bruce,
      Your point about using a sensitivity analyses to address a number of “realities” is a good one. It first accepts that we have the ability to see various “realities” or future, create these possibilities, model them, and then present them to our neighbors. You mention that when assumptions fail, we end up with social costs due to investments previously made on promises gone bad.

      If we want more growth to achieve increase tax base and create jobs, surely this is a good vision. How we get there is the important thing. However, a vision for the future is just that, a vision. The problem is when we treat this future as a reality.

      Realities do change, just compare the last year! Despite this predictable event, has our vision changed? Probably not, but the reality in achieving this goal should be adjusted. I think this is your point about using a sensitivity analyses. It allows us to understand future realities and prepare for them accordingly. Perhaps this strategic thinking can help us determine the “true costs of choices before the choices are made” and present these to our neighbors. These costs should include social and environmental costs, not economic.

  24. Ray Cox and others who are interested in how the proposed annexation for an industrial park in Briudgewater Township fits into the Northfield scheme of things, I hope you will attend the Northfield Planning Commission meeting Tuesday, Dec. 15, 7 pm at City Hall.

    Unfortunately, Bridgewater Township Board meets the same night with important items on the agenda such as accepting Leif Knecht’s resignation and appointing an interim supervisor to serve until township election in March. We can’t be both places.

  25. Discussions around the amount of government spending make for nice statistical discussions. More important that that is the question “What is it that we want our government to do for us? ” What is it that our govenrment can do better for us, that we can do for ourselves?

    The answer to this question will dictate the amount of taxes necessary to support our government.

    Pawlenty had a great amendment which forced government to make plans on actual income versus projections.
    This would be an important step, since government is incapable of making adjustments once projections don’t come true.
    Case in point our current MN budget shortfall. Instead of adjusting spending to the realities of income (what a strange concept)the answer is raise taxes???
    How many here can do that at home with their own budget? I was planning to take my family to Florida this winter with my yearly bonus….due to the poor economy I didn’t get a bonus..guess what?? I am not going.

    The same rules should apply to our state budget.

    On the issue of sutainable economy. Maybe if we stop supporting banks and car makers with artificial money we would get closer to an honest economy.
    Maybe if we stop putting people in houses they can’t afford we would get closer to an honest economy. Maybe if we stopped supporting projects we don’t have any money for we would get a sustainable economy.

    In my mind a sustainable economy does not come from government. It comes from free markets. Regulations of keeping people honest are a necessary evil, but supporting unsustainable business models are doing more damage than good.
    In a free market if certain aspects of it become unsustainable the market will eliminate them..everything else is just a centralized, top down, insufficent market economy. There is enough historical evidence that those have never worked.

  26. One more food for thought..Who will decide what is sustainable? Who will decide what is a reasonable standard of living?

    Here is a hint……mostly those who are well of already and won’t be affected by it.

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