Home > Videos > The economics of the streets we want…

The economics of the streets we want…

…and what we typically get

StreetFilms profiles Chuck Marohn of Strong Towns and scratches the surface of the underbelly of our transportation/land-use system that is addicted to pushing the cost forward, what he’s dubbed the Growth Ponzi Scheme. Lately, Chuck’s been weighing in on Detroit.

The basics of the Growth Ponzi Scheme? Via Strong Towns:

What we have found is that the underlying financing mechanisms of the suburban era — our post-World War II pattern of development — operates like a classic Ponzi scheme, with ever-increasing rates of growth necessary to sustain long-term liabilities.

Since the end of World War II, our cities and towns have experienced growth using three primary mechanisms:

  1. Transfer payments between governments: where the federal or state government makes a direct investment in growth at the local level, such as funding a water or sewer system expansion.
  2. Transportation spending: where transportation infrastructure is used to improve access to a site that can then be developed.
  3. Public and private-sector debt: where cities, developers, companies, and individuals take on debt as part of the development process, whether during construction or through the assumption of a mortgage.

In each of these mechanisms, the local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange — a near-term cash advantage for a long-term financial obligation — is one element of a Ponzi scheme.


Are we in balance?


  1. Bob Atallo
    July 29, 2013 at 1:16 pm

    Planners have known this for at least 30 years. The problem is developer control of city councils, and councils willing to go along so they can build their empires. Typically, the only one in city hall trying to put a stop to it is the city planner, and after 10 years of defeats, s/he will typically give up. I lasted 21 years but needed psychiatric care. And growth ultimately got out of control anyway.

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