Monday, October 19, 2026

The Courtyard Urbanist Reminds Us Sprawl Costs Us All

(c) by Mark Dempsey 

The Courtyard Urbanist, blogger Alicia Pederson, decries the supposed savings of big-box retail with a detailed cost breakdown of how much storage space and delivery expense customers of big-box stores like Costco need to add when they live and shop in suburban sprawl. After all, Costco sells in such large quantities that buyers couldn't possibly consume them all right away, so they need storage space and must drive to pick up the goods.

Ms. Pederson compares the expenses demanded by sprawl big-box shopping to the city experience of walking to smaller stores. "In a city, you can live with a smaller kitchen, pantry, and refrigerator because the neighborhood itself functions as your pantry. Multiple grocers, bakeries, pharmacies, etc are storing things nearby until you need them. In the burbs, the stores are farther away, so households have to buy in bulk and store things at home."

A car is not optional in sprawl, either.  Sprawl dwellers must own, maintain, store and insure an automobile--typically one for each driving-age adult. Never mind shopping at the big box store, if people living in sprawl want to work, or go to school, or even go to the park, they typically must drive. 

Owning a car amounts to a regressive tax. How much? "Owning and operating a new vehicle costs $11,577 a year. A pickup costs about $6,402 a year more than a small sedan, and a medium SUV about $4,200 more (AAA, 2025)."

In addition to the vehicle and extra garage space for that second freezer, other costs include:

"1. The time. The average American shopping trip is 8 miles, as of 2017 (NHTS). People who shop for groceries on a given day spend 46 minutes in the store, not counting the drive (USDA ERS). [The fastest-growing demographic in the US is the over-85 set so one could add the assisted living bill to this figure because our elders are less able to drive, and cannot age in place.]

"2. The public bill. Across 17 studies, compact development costs 38 percent less than conventional suburban development in upfront roads, sewers, and water lines (Smart Growth America). Someone pays the difference, usually through local taxes and fees.

"3. What nobody prices. Social isolation, sedentary days, and a sparse community life. I won’t put numbers on these, but these social and health effects add color to the picture here."

I'd add that the US's epidemic of obesity, heart disease and diabetes could be connected to that sedentary lifestyle in which what passes for exercise is pressing the gas pedal and brake.

Unfortunately, Ms. Pederson believes "Land use (zoning) shapes ALL of this." 

If only that were true! True, zoning is part of what shapes land use, but the kind of development approved by local governments still typically needs construction and permanent financing. Banks are reluctant to lend on projects outside sprawl norms.

Sprawl itself has its roots in "white flight" from a racially integrated central city, and has been blessed by the government agencies that guide home loans--FNMA, GNMA, FHA, etc. As one planner says, "It's not 'Form follows function,' it's 'Form follows finance.'"

Another omission in Ms. Pederson's account is the enormous profit available from land speculation. When the speculators can buy outlying agricultural land for a few thousand dollars an acre, then increase that land's value 50 to 100 times more by persuading local government to permit development, then the incentive is to avoid compact, infill development, and try to make more edge city sprawl. The fact that the speculators get huge tax breaks on that profit--1031 exchanges--only adds to their fortunes.

In Germany, the developers must sell that outlying land to the local government at the ag land price, then repurchase it at the upzoned price. All of the egregious profit--the "unearned increment"--accrues to the public rather than some speculator's private fortune. And it shows, too. The arts budget for just the City of Berlin exceeds the National Endowment for the Arts for the entire US. 

In fairness, there are land speculators who have tried to benefit the County. Former State Treasurer Phil Angiledes had an approved sprawl map for his Laguna West development and he courageously set that aside for a pedestrian-friendly, mixed-use development designed by Peter Calthorpe. 

Such designs require density if they are to be financially viable. According to UC Berkeley planner Robert Cervero, they must build at least 11 units per acre to provide enough customers for neighborhood commerce and transit to become financially viable. 

Predictably, Calthorpe's design had some lower-density neighborhoods surrounding twenty-unit-per-acre two-story apartments at the development's core. Unfortunately, construction financing for apartments was not available when it was time to build, so the subtle sabotage of seven-to-the-acre homes prevailed. Commerce and transit limp along in Laguna West as a consequence.

As for zoning: in practice it often fails. In California, it's typically "use-based," and decided years before any building occurs. Designating parcels as residential, apartments, industrial or commercial relies on the best guess of what the market will demand years before that demand arrives. This means there's a cottage industry of attorneys and other consultants lobbying to change those premature zoning designations, and a host of land speculators ready to hire them.

We could have form-based rather than use-based zoning that simply designates building sizes, but that would upset too many well-funded apple carts, so it's ignored even by professional planners. 

Finally, in fairness to Costco, they have built a store in Los Angeles with apartments above it. Adding apartments to existing shopping centers would create built-in customers and transit hubs. Some reports say such "lifestyle centers" that combine commerce and residences even show higher per-square-foot sales than single-use malls.

As malls fail because of online competition, there are signs such mixed-use plans are in the works, but precious few have been built in the US. 

_____

The author was a real estate broker, appraiser and loan officer for nearly two decades, and sat on a Sacramento County Planning Advisory Council (CPAC) for nearly one decade. Local residents may recognize that there's a two year term limit for CPAC members, but, says the author, no one else was dumb enough to apply.

 

 

 

Saturday, October 17, 2026

Why isn't Brazil as productive as Switzerland?

 

Whither Interest Rate Hikes?

 



Sunday, October 11, 2026

Conventional and Unconventional Economics

(c) by Mark Dempsey

1. The Conventional Economics Narrative 

The conventional story says national debt is a (growing) problem. The bigger it gets, the worse it is for the economy. The cost to pay it off, in higher taxes or lower spending--probably Social Security benefits and Medicare--would crush the economy. To top it off, the interest bill is compounding the problem, finally exceeding military spending.

This narrative is so ingrained in conventional economics that two respected, conventional economists--Reinhart and Rogoff--have even theorized about when such debt becomes too much of a burden for any economy to bear. They normalized the comparison of different currencies and historical periods by comparing economic performance with the ratio of debt to GDP.

Their conclusion? When a nation's debt exceeds 90% of GDP, the economy suffers in its wake. The constantly cited example is Greece, whose debt was roughly 125% of GDP. This led to bond markets demanding higher and higher yields (35!) until the European Central Bank stepped in and backstopped the Greeks' debt. The Greek economy suffered a worse downturn than the Great Depression.

So...is that an accurate story? Short answer: No.

2. Debunking the Conventional Narrative 

First, the assumption behind the debt panic in the US is that dollars grow on billionaires. This is obviously untrue; the government makes all the legal dollars any time it needs them. This is called monetary sovereignty, and the US has it. Greece does not.

That's right, Reinhart and Rogoff were comparing apples to oranges, not separating monetary sovereigns (US, UK, Japan) from non-sovereigns (Greece and the rest of the EU). Not only that, the spreadsheet on which they based their conclusions had a mistake in its formulas, pointed out by a graduate student. Their work is so slopping, I wouldn't let them mop my kitchen.

Perhaps the most convincing refutation of their 90% figure, however, is Japan. For decades, Japan has had debt that is roughly 240% of GDP. Conventional economists would say the bond markets would treat this as a sign Japan is a risky borrower, and predict those markets would demand a risk premium to fund BOJ (Bank of Japan) debt. Would the bond vigilantes demand more than 35%?

The truth is that the BOJ debt sold, until recently, for nearly 0% yield. That rate has increased to near 5% in recent months, but it's still nowhere near the Greek experience. The BOJ can issue yen at will, and there is no risk BOJ bonds will become unpayable.

3. What is National Debt, Really? 

So, what is national debt, really? It's like bank debt. Your bank account is your asset, but to the bank, it's a liability, a debt the bank owes you. You can ask the bank to reduce its debt because you hate the word "debt," but they would just make your account smaller. Not exactly sensible.

National debt is the mirror image of the private sector's surplus. That's not exotic economics, it's double-entry bookkeeping.

The conventional economic narrative obscures two other significant facts. First: monetary sovereigns do not need to borrow the money they make literally without limit. This means no interest payments are necessary. Such payments are "welfare for rich people" says one heterodox economist (Warren Mosler).

4. Inflation Limits Debt Issuance, but only in theory 

An entirely theoretical argument says that the central bank issuing too much currency is what causes inflation. Its most eloquent advocate was Milton Friedman ("Inflation is always and everywhere a monetary phenomenon"). 

But a study of 56 historical hyperinflations published by the libertarian, right-wing Cato Institute demonstrates that those were initiated by central banks run amok, printing too much money, exactly zero times. That's zero!

This is the final conventional  objection to the unconventional narrative that sovereign currency issuers can pay any debt, no matter how large. Why that would cause [hyper] inflation! Except the historical hyperinflations always begin with a shortage of goods, not a surplus of currency. This is true of Zimbabwe (food) and Weimar Germany (manufactures). Even the US inflation of the '70s began when OPEC restricted its shipments of that critical commodity, oil. 

Steve Keen on Government Debt

 



The conventional wisdom is that excessive government debt, and large government deficits, are the roots of all economic evil. When you see the financial dynamics of the economy in an integrated way, the conventional wisdom is conventional stupidity. 

The mainstream textbook view that a government deficit is negative public saving, reduces total saving, crowds out private investment, and slows economic growth, is the exact opposite of the accounting truth. 

Using double-entry bookkeeping, I show a government deficit is a CRITICAL step in creating fiat-based money, and it actually increases the money available to the private sector, not reducing it as textbooks argue. 

Government bonds do not take money from the public, as textbooks assert, and of the three ways in which they could be sold–to the central bank, to private banks, or the non-bank private sector–the current system is the worst choice. 

I use simulations in Ravel [software] to compare these three bond-sale arrangements using the same government deficit. I conclude that government debt and deficits need to be understood as part of the broader financial system rather than through a household-debt analogy, and from this perspective, they are not a “bug” of the system, they are a feature

...

See also "How Economists Will Destroy Capitalism" from Keen 

Saturday, October 10, 2026

Homelessness

 

Accountability

 

 

So you don't have to expand the tweet:

 

over budget? - California's High Speed Rail project was approved in 2008, with a 2020 completion and a $33 billion cost. What's f*king insane, is the latest estimate puts the cost at $126 billion, and full operations coming in 2040. - Auditors (apparently) expose waste. Politicians blame contractors. Contractors blame the government. Consultants blame the planning. The buck gets passed until the the f*ck up falls into the ether, along with all the others, and you as the tax payer foot the bill. At worst, if they're unlucky, the politician might lose an election a few years later. But still likely carrying on in another public position. πŸ‡¨πŸ‡³ The Chinese model China fixes this severe lack of oversight with, you guessed it, accountability and actual consequences. - Officials stay responsible during and after the project. Even if they've already change positions, been promoted or retired. Serious budget overruns, reckless planning or project failures bring strong penalties including demotion, dismissal, forced reassignment, disciplinary action, or criminal charges. - Auditors and development regulators monitor budgets and timelines during construction. Severe delays or reckless overspending can freeze funding, revoke project approvals and blacklist construction firms from future government contracts. - Builders and other contractors face fines, loss of qualifications and blacklisted from future government contracts for serious violations or poor performance. -- A possible slap on the wrist vs criminal charges. What are we doing here? 🀦‍♂️ 

The Courtyard Urbanist Reminds Us Sprawl Costs Us All

(c) by Mark Dempsey  The Courtyard Urbanist, blogger Alicia Pederson, decries the supposed savings of big-box retail with a detailed cost b...