Tag Archives: subsidies
Christopher B. Leinberger: The Long Recovery
The lead article in this Sunday’s New York Times Business section was entitled “Ruins of an American Dream”. The accompanying picture, shown in the article, was of fully framed but incomplete single family homes in Merced County, California; the far fringes of the San Francisco Bay area. Selling prices on average in Merced County have fallen by 50% over the past year… 50% is a number never, ever achieved in American history. The Great Depression never saw anything approaching this decline in housing values. We are in new, uncharted territory.
As I have quoted in the past, Jim Kunstler’s most famous line is that drivable sub-urban development “represents a prodigious, unparalleled misallocation of resources”. We are just beginning to realize how much of a mistake we have committed as a society. We have put in place a series of subtle but effective subsidies that make it economically idiotic to do anything but to build drivable sub-urban development. We have and continue to charge drivable sub-urban infrastructure at prices that would have to be increased by 10 to 20 times for them to cover the costs our society have expended to extend the roads, cable, power lines, sewer, and water lines and ever other of the 15 categories of infrastructure. Then, just to make sure we got a mono-culture of development, we have and continue to make low density, car-dependent sprawl the law of the land through our zoning.
Those houses pictured in the article will all have to be bulldozed. They have been exposed to the sun and rain for over a year and given the cheap building materials used today. They are now structurally ruined. What we have not yet come to realize is that the same fate will await tens of thousands of foreclosed and soon-to-be foreclosed completed house on the fringe. The market pendulum began to swing back toward demanding walkable urban development over the past decade or so, well before energy prices exploded, but the subsidies and zoning laws (not to mention NIMBY opposition) continue to stunt the efforts to give the market what it wants… and needs.
This country is just beginning to recognize that we have been going down the wrong path over the past 10-20 years. The market and the world have changed but the subsidies and laws that dictate how we invest 35% of the country’s wealth have not. We have to first recognize that we have a massive problem; only then can we begin the painful process of correcting it. This is going to take a generation to do but the longer we ignore the extent of the problem, the more painful it will be.
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Christopher B. Leinberger is a land use strategist, developer, teacher, consultant and author, helping to make progressive development profitable. He is currently a Visiting Fellow at the Brookings Institution in Washington, D.C. He is the author of The Option of Urbanism: Investing in a New American Dream from Island Press.
About Christopher B. Leinberger
Christopher Leinberger is a land use strategist, developer, teacher, consultant and author helping to make progressive development profitable. He is currently a Visiting Fellow at the Brookings Institution in Washington, DC, focusing on research and practices to help transform traditional and suburban downtowns to places that provide “walkable urbanism.” Leinberger is also a professor and director of the Graduate Real Estate Program at the University of Michigan. In addition, he is a founding partner of Arcadia Land Company, a progressive real estate development firm. He was co-chair of the New Mexico Governor Richardson's Task Force on Our Communities and Our Future and served on the Planned Growth Strategy Implementation Task Force and the Impact Fee Task Force in Albuquerque. He also serves on the advisory boards of The Conservation Fund and the Enterprise Foundation. Leinberger has written award-winning articles for publications such as the Atlantic Monthly, the Wall Street Journal, and Urban Land magazine. He has been profiled by CNN, "The Today Show," and National Public Radio. He lives the Dupont Circle area of Washington, DC with his wife, Lisa.
Terry Tamminen: A Level Playing Field
Everyone hates their taxes being spent on subsidies — unless it’s to subsidize their own industry. It’s time for an honest debate about the role of subsidies in a 21st Century economy and, at least, a restructuring to a more level playing field.
Examples? When I served in California state government, the Schwarzenegger administration tried for three years to push through a solar incentive package. Ultra-conservative State Senator Tom McClintock rose during the debate in red-faced indignation and bitterly opposed any subsidy of an industry that couldn’t stand on its own two feet. I’ve heard that argument repeatedly, often by the same politicians who support massive subsidies to the oil and coal incumbents, despite the fact such “incentives” are hardly needed to get fossil fuels out of the ground.
The latest salvo comes from President Bush, who yesterday said it was time to end subsidies to “multimillionaire farmers.” He was addressing a point about sharp increases in food prices, making wealthy agribusinesses even wealthier, partially the result of rising fuel costs and ill-conceived government mandates/incentives to produce ethanol. Ironically, the President told Congress he would veto any bill than shifts even a small portion of the $100 billion/year subsidies given to oil companies towards alternative energy sources.
Given that oil companies are recording profits that are the highest in the history of commerce — not just in the oil business, in the history of ALL commerce — it is hard to fathom. Moreover, some say the incentives are still needed to keep oil companies investing in new oil exploration and to build more refinery capacity. But few new discoveries are being made or exploited and refinery expansion lags demand by an increasing and exponential pace. So much for performance-based subsidies.
The role of subsidies should not be annuities for wealthy campaign contributors, but should be used as a way to level the playing field when incumbents have been given a similar (or far greater) head start. They should be strategically used to jumpstart businesses that will provide multiple benefits to the people — in the case of incentives for renewable fuels or clean energy technology, the benefits are domestic jobs, reduced dependence on a shrinking fuel source, exports, improved public health by reducing pollution, and a planet that is less at risk of biting us in the backside with ever more drastic climate change impacts.
Those multiple benefits are something the incumbents can’t provide — and it’s time to tilt the playing field in the direction of positive outcomes and end the fossil-fueled, taxpayer-funded boondoggles to the rich.
Posted by: Terry Tamminen, author of Lives Per Gallon, The True Cost of Our Oil Addiction. Visit him at www.terrytamminen.com.
About Terry Tamminen
From his youth in Australia to career experiences in Europe, Africa and the United States, Terry Tamminen has expertise in business, farming, education, non-profit, the environment, the arts, and government. Tamminen is a U.S. Coast Guard-licensed ship captain, has run a real estate company, a recreational services business, a tropical fish breeding business, a sheep ranch, and assisted Nigeria with the creation of their first solid waste recycling program. An accomplished author, Tamminen’s latest book, Lives Per Gallon: The True Cost of Our Oil Addiction, is a timely examination of our dependence on oil and a strategy to evolve to more sustainable energy sources. Tamminen helped to found and lead the Santa Monica Baykeeper, the Environment Now Foundation, and the Frank G. Wells Environmental Law Clinic at the University of California Los Angeles. In 2007, he was named the Cullman Senior Fellow and Director of the Climate Policy Program of the New America Foundation, and an Operating Advisor to Pegasus Capital Advisors. Tamminen was appointed as the Secretary of the California Environmental Protection Agency and the Chief Policy Advisor to the Governor. He continues to advise the Governor on energy and environmental policy. He currently travels throughout the world, lecturing and providing private consulting services to clients, including several Governors and Canadian Premiers on climate and energy policy.
