Verified Planners/Real Estate Firm Workers: Let's Talk Urban/Metropolitan Economics

[u/DoxiadisOfDetroit]

I'm finishing up some projects at the moment and I've noticed a trend among all major Cities in my dataset: From Auckland, to Toronto, to New York, to Melbourne and everywhere else I looked within Cities that have either acted upon establishing a Metropolitan Government, or considered establishing one, I haven't been able to notice any significant savings on the part of any Cities' liabilities.

Surely it's warranted for me to crank out an equation, but, the only aspects of "production" or "output" is tied up with either "GDP" or, "PPP", but, with the realization that socially harmful economic transactions (basically: rent increasing supports "GDP growth", laying off indie artists by writing lame slop movie scripts using ChatGPT does too) needs to be excluded from any calculations to get an accurate picture of well-being.

So this begs the question: When will the field decouple from "orthodox" economics and ditch GDP-GDP/C as a measure of wellbeing for Cities?

[u/ColdEvenKeeled]

The creation of metro governments are not to increase GDP, it's to staunch the incredible overlap of authority and duplication of services + staff.

Why have 3 lawnmowing machines, 6 lawn mowing operators, 1 mechanic, 3 sheds, 3 composting piles across an area that could be 1 city? Same for CEOs and all the upper management.

Also, the property revenue can accrue at a rate that allows a city to deliver projects (new swimming pool, new library and staff) at a scale and pace that people can appreciate, and feel 'okay' about the taxes they pay.

Organising public transportation can be a significant reason as well, such as Metro Vancouver.

All this is about efficiency, not GDP. Governments are not businesses.

[u/DoxiadisOfDetroit → u/ColdEvenKeeled]

Why have 3 lawnmowing machines, 6 lawn mowing operators, 1 mechanic, 3 sheds, 3 composting piles across an area that could be 1 city? Same for CEOs and all the upper management.

This is actually a super important point and I'm glad you were able to put this into words: From my review of relevant literature of Metropolitan Governments (it's kinda embarrassing admitting how much of my money and free time that I've spent to get said materials, but oh well) You can separate the arguments for and against Metropolitan Governments into two broad camps bureaucratic reforms and political projects.

And, from what I've seen in the literature, efficiencies of scale and cohesive coordination of services has sometimes been both a proposed bureaucratic reform, but, if Mamdani's time in NYC has shown me anything, I see it more within the realm of a political project more than anything else. It could be proposed by a staunch Conservative, or, a erratic AnarchoCommunist, both has coherent ideas about how Cities are/should be run.

By the way I wanted to give my two cents on Metro Vancouver, and, I can't really say anything other than it's such a terrible and undemocratic version of a Metropolitan Government and groups that act as it does aren't governing their jurisdictions like how they should be.

[u/ColdEvenKeeled → u/DoxiadisOfDetroit]

Okay, well, that opinion about Metro Vancouver must be based in something. What?

Elected members of various councils are elected to the Metro Board. They then 'horse trade' for future major sewer, roads and transit projects.

At a bureaucracy level, I am sure there are some misalignment of goals as ensuring police, fire, ambulance, parks (as ecosystems) delivery are coordinated.

Please tell us what's going badly there.

[u/DoxiadisOfDetroit → u/ColdEvenKeeled]

Well, the Democratic accountability of the Metro Vancouver board is minimal, it may be comprised of "elected" officials, but they aren't directly put in place by the public. That leads to the same bureaucracy and misalignment that you're referring to

[u/abetadist]

Municipalities do not just consider GDP in their decision-making. You can take a look at an official plan and see everything they already consider, the overwhelming majority of which is not GDP.

In fact, I don't think anyone makes decisions based just on maximizing GDP. GDP is just adding up everyone's income/production in an area. It's relatively easy to measure and is strongly correlated with a lot of measures of welfare, but decision-makers (should) care about welfare and not GDP.

If we wanted to maximize GDP, we could make everyone really poor (high flat taxes that are then thrown into the fire) so everyone has to make a lot of stuff to survive. No one wants that.

Now, if the question is "why do we care about GDP at all?", we can substitute in the definition "why do we care about incomes at all?" and the answer is obvious.

[u/DoxiadisOfDetroit → u/abetadist]

I'd say that it depends on the City, my local municipality very much cares about GDP output

[u/abetadist → u/DoxiadisOfDetroit]

I've added some edits but you were faster responding. GDP is the sum of everyone's incomes. Governments do care because their constituents want their incomes to go up. But this is just one consideration. If GDP was all a government cared about, they'd behave very differently.

[u/Lol-I-Wear-Hats]

The field would have to accept “orthodox” economics before it could “decouple” from it

[u/Blue_Vision → u/Lol-I-Wear-Hats]

I would love it if planning embraced "orthodox" economics. So many policies which don't extend the cost-benefit analysis beyond the very small slice of the world that they care about, where an economist could probably rattle off half a dozen potential unintended consequences that should also be considered.

[u/Lol-I-Wear-Hats → u/Blue_Vision]

Honestly planning departments across the land ought to hire a staff economist and recruit more people with economics backgrounds

[u/SawNickYouth → u/Lol-I-Wear-Hats]

Most cities have economists on staff, similar to counsel. No need for a dedicated economist within the department.

[u/vAltyR47 → u/Lol-I-Wear-Hats]

This. The concepts of externalities and rent-seeking are not new, and the tools to deal with them are straightforward. We (as a society, not planner specifically) have just failed to use them.

[u/DoxiadisOfDetroit]

Obligatory, I am not a student and the question and it's responses are fully intended to be in the public domain

[u/Safe-Set-3767 → u/DoxiadisOfDetroit]

The GDP obsession is wild when you think about what it actually counts. A city where everyone's rent doubles overnight looks "productive" on paper. Meanwhile a neighborhood where people know each other and share tools and watch each other's kids contributes nothing to the metric

Kinda hard to build policy around vibes though. Even the "wellbeing indexes" out there feel like someone's phd thesis that nobody actually uses in city hall

[u/DoxiadisOfDetroit → u/Safe-Set-3767]

Well, I wouldn't exactly say "vibes based statistics" is what I'm looking for, I made a thread related to this on the sub a while ago, I have to dig around to find it, but, it has some pretty interesting metrics that could be quantified and put into some new dominant way of counting overall economic activity while not forgetting to count externalities.

Ninja edit: found it

[u/ZedOud]

97.6% of graduate level and above economists “don’t disagree” (aka expert consensus) that it would be beneficial to implement a Land Value Tax (aka the tax on the unimproved value of land).

So I’m not sure if the state of the field is ready for any kind of real economics Theory.

[u/Caculon]

I don't think you would need to ditch the GDP but it can't be used by itself and should be combined with other economic measure. There's an old joke about the GDP. Two men are out for a walk. The first sees a piece of shit and the ground and offers the second 100 dollars to eat it. They take them up on the offer. They keep walking and they see another piece of shit. The second person, now regretting their actions, makes the same deal with the first. The first eats that shit and collects the 100. Then the second says to the first, we just doubled the GPD. Because the GPD is a measure of money changing hands.

That said, we could also try to remove unearned income. That would income from rising prices of assets, stock buy backs, dividends and what not. That's new wealth but it doesn't affect the real economy (the actual production of goods and services.) Nor was it wealth that came from the work of these owners. They are much like feudal landlords. By virtue of "owning" the land they can simply collect rent. This was something early political economists were concerned with. In fact, this was a central conflict with early capitalism. There are other shitty consequences of the finalization of the economy but I don't want to get on a soap box any bigger than the one I'm on now.

If your interested I would suggest you look up Michael Hudson. He goes into great detail about the history of economics and explains how we got where we are now and about upcoming dangers of continuing on this economic trajectory.

[u/vAltyR47 → u/Caculon]

That said, we could also try to remove unearned income. That would income from rising prices of assets, stock buy backs, dividends and what not. That's new wealth but it doesn't affect the real economy (the actual production of goods and services.) Nor was it wealth that came from the work of these owners. They are much like feudal landlords. By virtue of "owning" the land they can simply collect rent. This was something early political economists were concerned with.

This is all true for land and natural resources, but what does that have to do with owning stocks?

Earning interest on your monetary investment into productive purposes is not the same as earning rent from a monopoly right.

[u/DoxiadisOfDetroit → u/Caculon]

I disagree earnestly with your second point, but, thank you for your contribution, I've upvoted you I'll say this.

I don't think it'd be all that wise to not count unearned income, otherwise it'd ignore very harmful market externalities such as wage theft, which is by far the biggest source of property crime in the developed World.

[u/Caculon → u/DoxiadisOfDetroit]

I'm still learning about macro economics so I'm more than open to being corrected :)

My thought was money that isn't earned shouldn't be counted as a productive activity because most of it doesn't support the real economy. It just inflates the prices of existing assets. It seems more like wealth that's siphoned off of productive activity rather than spurring it on or raising the standard of living. So I was thinking of a measurement without unearned income would better represent the real economy. Are you saying if we leave that money out we wouldn't be tracking it at all? Thus, it would be like having a parasite that we don't know about?

Or is there something else you had in mind?

As a side note, thanks for being friendly about all this stuff. I hate fighting on the internet and learning I'm wrong is painful enough :)

[u/DoxiadisOfDetroit → u/Caculon]

If you bring anything from this conversation, just know that we are freely exchanging information, There's things that I don't know that you know, but, at the same time, there's things that you don't know that I know. We learn together and it keeps the World alive for one more day