Letter from Pittsburgh: Undermining Market Economics

Colin McNickle
|
Posted: Nov 11, 2016 3:45 PM
Letter from Pittsburgh: Undermining Market Economics

Pittsburgh Mayor Bill Peduto often fancies himself as a devotee of the late Jane Jacobs, the iconic scholar of the mid 20th century who turned “urban renewal” on its ear.

It was in the 1950s and 1960s that Jacobs pulled no punches in her disdain for central urban planners of the day, including those in Pittsburgh, who clear cut large swaths of inner cities in the name of renewal but, instead, produced edifices to a brand new species of urban dysfunction.

As Jacobs described the malady in her great “The Economy of Cities” in 1969, “Capital that might have been available for young enterprises has been devoted to manipulating the people of Pittsburgh and to immensely expensive urban renewal and highway programs that have not helped the economy at all.”

And while Peduto certainly has parroted many of Jacobs’ more sensible protestations about many of Pittsburgh’s urban renewal mistakes of the last century, how odd it is that he would propose a new and large set of hoops for publicly subsidized development to jump through -- regulations that appear, incredibly, to downplay the need for jobs-producing, growth-enhancing and economy-bolstering enterprises.

The new regimen in known as P4 -- for “people, planet, place and performance.” The program includes a list of 12 metrics that must be applied, everything from environmental sustainability to inclusiveness and accessibility to a wide population.

Worse, there’s a quite confusing and, at times, contradictory set of sliding criteria for project approval.

“To say the least, this set of project evaluation and approval criteria will face many obstacles and create costly complications for project planners and the approval process,” says Jake Haulk, president of the Allegheny Institute for Public Policy (in Policy Brief Vol. 16, No. 48).

“Given the difficulty of the comparatively easier estimations of dollar costs and benefits of a proposed project inherent in the need to make many assumptions and take into account political influences, project evaluation will become exponentially more difficult,” left not to hard and fast numerical considerations -- the measure of sound economics -- but to the kind of purely subjective judgments that Jane Jacobs surely would mock for its rank hubris.

For this is not market economics but government command economics.

How can the use of taxpayer money be justified for projects that, in the name of social re-engineering, are not predicated on enhancing the tax base?

“It is highly likely that the effort to de-emphasize the economic benefits of development in favor of promoting a long list of social, ecological and other goals will end up wasting a lot of taxpayer money,” predicts Haulk, a Ph.D. economist.

“Given the long and sad history of failures of social engineering in Pittsburgh, one would think that the visionaries who now think they can mold the world in a certain way through imposing a laundry list of desirable outcomes on development -- many of which conflict with each other (and that adds enormously to the cost and time to get projects approved and completed) -- would be a little less sure of themselves.”

Haulk reminds that Pittsburgh’s population has continued to fall over the last quarter century. There has been no net increase in employment. And the city school system has gone from bad to worse.

Additionally, Pittsburgh continues to spend too much and tax too much as it chases development schemes that do not produce the desired outcomes, he adds.

“More reliance on market competition, a friendlier business climate and

fewer efforts to control the businesses already in the city would be a much better approach for the future of Pittsburgh,” Haulk concludes.

Or as Jane Jacobs concluded nearly 50 years ago, “Pittsburgh is a good illustration (of central planning failure) because so many irrelevant things have been tried there, so ambitiously.”

Then as now.