Growth Is Bad -- and So's No Growth

By John Hood

April 20, 2003

RALEIGH, N. C. -- Let's make up our minds, shall we? Is urban growth good? Or is it bad?

I was struck by the confluence of two headlines in North Carolina newspapers on Easter Sunday. In The Charlotte Observer,

This is rhetorical cleverness, but it isn't persuasive on empirical grounds. It assumes a level of knowledge, an ability to construct a real-time and all-encompassing model of an urban economy, that is simply impossible.

readers were treated to a pretty distressing story about how "urban sprawl" had gobbled up most of Mecklenburg County. Meanwhile, up the interstate in Greensboro, the News & Record reported that slow growth in that region was worrying city officials.

Over the years, I've run across similar seemingly contradictory arguments about growth. I've heard advocates of higher-density development say that low-density development -- what they call "urban sprawl" and I call "urban freedom" -- was fueling too growth and that it was likely to hurt future growth by jamming roads and schools. I've heard advocates of mass transit say that building more highways would just worsen traffic congestion, while quietly but tacitly admitting that only increased congestion would induce significant numbers of commuters into their proposed trains.

Now, don't get me wrong. I've heard these entire arguments. I know that their practitioners deny any contradiction and attempt, sometimes impressively, to make all the propositions fit together. My favorite example of this was when I was debating growth policy with a prominent civic leader, who grandly proclaimed that it was his belief that there was a "sustainable" growth rate for a city (I recall he said something like "three and a half percent," though I can't remember the precise number). Grow slower, and the city can't sustain its tax base sufficiently to provide good services. The tax rate must rise. Grow faster, however, and the demand for public services will rise faster than the tax base. The tax rate must rise.

This is rhetorical cleverness, but it isn't persuasive on empirical grounds. It assumes a level of knowledge, an ability to construct a real-time and all-encompassing model of an urban economy, that is simply impossible. Perhaps Goldilocks, having to sample only three bowls of porridge, can speedily find the lukewarm one. But to extend the metaphor, urban planners would have to alternatively burn and freeze the roofs of their mouths thousands or millions of times before they found "it" -- the perfect right amount and rate of growth.

As far as the Charlotte and Greensboro stories go, the Goldilocks resolution goes something like this: yes, rapid growth is bad when it is primarily residential growth. Because such growth doesn't "pay for itself" by generating more property and other tax revenue than governments must spend to serve the residents, it must be counterbalanced with sufficient non-residential growth. The more industrial and commercial development, the better off the community. Greensboro's problem is that the counterbalance is lacking. Charlotte's problem is that its growth rate is too high.

Sounds plausible. But having poked around these issues for some years now, I can't seem to find the data these folks claim is so readily available to prove this argument. I'm not at all sure that, over time, residential development doesn't full recompense the government for the costs associated with serving its inhabitants (particularly in a state such as North Carolina, where income and sales taxes play a larger role in funding education). Indeed, the evidence I have seen on the issue suggests that the only form of residential development unlikely to "pay for itself" in this sense is high-density, multi-family dwellings -- the very kind preferred by many Smart Growthers. On the tax issue, Charlotte's tax burden is far higher than Greensboro's, so it would be difficult to prove that a healthy downtown and business sector is the key to keeping the tax rate low, at least based on these two cases.

Besides, some of the same politicians complaining about too much growth and too little growth at the same time -- which is really an argument for some kind of governmental perpetual-motion machine of planners and regulators to "manage" and "balance" growth -- are also the ones who pass the high taxes and the counterproductive regulations that chase business away.

There's probably some clever rhetorical flourish to disguise this contradiction, too. I guess I'll hear it eventually.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.


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