Economics

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Nov. 25, 2009

pro-market, pro-business and public health

Posted by Peter Boumgarden under Economics, Politics | Tags: , |
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In a recent article in National Affairs, University of Chicago finance and entrepreneurship professor Luigi Zingales maps out the following distinction between pro-business and pro-market and its relationship to entrepreneurship:

When the government is small and relatively weak, the way to make money is to start a successful private-sector business. But the larger the size and scope of government spending, the easier it is to make money by diverting public resources. Starting a business is difficult and involves a lot of risk — but getting a government favor or contract is easier, and a much safer bet. And so in nations with large and powerful governments, the state tends to find itself at the heart of the economic system, even if that system is relatively capitalist. This tends to confound politics and economics, both in practice and in public perceptions: The larger the share of capitalists who acquire their wealth thanks to their political connections, the greater the perception that capitalism is unfair and corrupt.

In other words, when the government is constrained, but with a pro-market orientation, entrepreneurship can flourish because there is some link having the right idea and the right initiative and market success, however tenuous. In contrast, with greater government involvement, market success is primarily facilitated by government support, thus giving greater weight to having the right connections, having the right financial support, etc.

In the United States, a system which Zingales calls highly pro-market without being pro-business until recently, 1 in 4 American billionaires were self-made in 1996. In contrast, in many other countries with a capitalism mix more pro-business than pro-market, “the wealthiest people tend to accumulate their fortunes in regulated businesses in which government connections are crucial to success… energy, real estate, telecommunications, mining. Success in these businesses often depends more on having the right connections than on having initiative and enterprise.”

Zingales

As of late, I have been thinking a good bit about this idea of systems that enable or constrain entrepreneurship, and its application to specific social sector markets. Take health care as an example. Stripped down to the basics, health care quality is jointly a function of 1) access, and 2) quality of care. Debates on the merits of different systems center on the right or wrong mix of these two factors, with people seeing overall quality by differently weighing one factor over the other. “People can’t get care!” scream those calling for health care reform, to which the opposition says “but we have the highest quality services out there, and our innovation is off the charts.” Other countries are praised for their universal coverage, but criticized for lower quality of care, treatment, and services.

David Brooks recently framed the trade-off as such:

Reform would make us a more decent society, but also a less vibrant one. It would ease the anxiety of millions at the cost of future growth. It would heal a wound in the social fabric while piling another expensive and untouchable promise on top of the many such promises we’ve already made. America would be a less youthful, ragged and unforgiving nation, and a more middle-aged, civilized and sedate one.

Apart from the contrast in values, the question still remains how the system enables movement towards (or away) from each of these goals. Put simply, the question remains how each of these systems enables or constrains the emergence of innovation related to the goals of access and/or quality.* For an organization like Partners in Health, who works in Haiti, Peru, Russia, USA, Rwanda, Lesotho,  and Malawi, are there specific aspects of certain markets that allow innovation to flourish over others, and if so, what are these, and towards what end do they allow growth?

Starting with Zingales’ guiding framework (pro-market, pro-business as related to ease of entrepreneurship), in the next post I will attempt to map out some thoughts on what such a framework might mean for entrepreneurship and innovation related to health care access and quality.

* By systems, I mean the mix of government, culture, incentive structure, etc that all might influence the ability of a system to improve in health care access or quality.

 

Sep. 9, 2009

An Orthogonal Health Care Option

Posted by petertuuk under Economics, Politics
[4] Comments 

“On the right, there are those who argue that we should end the employer-based system and leave individuals to buy health insurance on their own.”

Barack Obama 9/9/09

I’m not sure this is such a right-wing idea since it would be accomplished by raising taxes and regulating insurance markets. But it is a good idea. Here’s why.

It seems like there are two complaints with our current health care system.

The first is that we are spending too much on health care. This is a funny problem to have. We never get this with food or cars or anything. In those markets when people spend too much they start buying less smoked salmon and more potatoes or less Acuras and more Hondas. Or maybe they keep driving the old clunker. These decisions are made on a person-by-person basis. The funny thing about health care is that nobody feels like they are paying for it. Everyone understands, after a two-year campaign to beat it into our skulls, that we spend too much on health care. But few feel like they use too much.

There is too much psychic distance between consuming these services and paying for them. Doctors get paid by health insurers, health insurers get paid by employers, and the employers pay them by not paying us. Since folks never see the money they never miss it. The normal means of cost control, people thinking about how much they can afford, is gone. It’s people at Medicare, Aetna, or some new government agency who look at the costs but regular folks in Grand Rapids who decide whether or not to consume the service. If we want to save money on health care, we need to use less of it. Since we’d like to use infinity amount of health care, it’s either markets or rationing keeping us below that bound.

This comes up because our health insurance system is not really risk pooling so much as obfuscation. When every office visit (even the predictable one) is paid for by “insurance,” the only effect is to trick people into thinking they’re not paying for their own health care. But somebody has to pay for it. And that somebody is everybody. We pay in the form of lower wages and higher taxes. Insurance ought to be for the unexpected. If people know they’re going to use a certain amount of health care we’d be better off if they just saved the money and paid the doctor instead of the employer giving to the insurance company which will in turn give it to the doctor for us.

I have something crazy in mind: I need some medical care. I see some advertisements. One doctor offers the best care in town. Maybe a PA or NP promises close to the same quality at a lower price. I call around and ask what it would cost to have my thing done. They give me their price. I pick the one I think is the best deal, because I know and care how much my consumption costs. To get to this point is tricky. It would take something like taxing employer provided health insurance (getting rid of this removes one roadblock between consumption and cost), a tax-free, rolling-over health savings account for most everything, and a high deductible health plan for emergencies. Throw in a no-discrimination-for-preexisting-conditions regulation and you’re starting to get there. The point is we need people to know and think about how much health care they buy.

I guess this raises the second problem with what we’ve got today; that of distributive justice. Some people are poor and because of their poverty they are unable to buy much health care. If we think poor people are too poor, maybe we should just give them money. Or maybe seed their HSA and pay their HDHP premiums. Just as food stamps help people eat without the need for government farms (except for farm subsidies, but let’s not go there) and a U.S Grocery Service, so too we can provide for the poor without resorting to tax-paid doctors and treasury-backed insurance plans. Sure this gives people extra incentive to be poor, but the same is true for any redistribution program. Given the choice between people dying in the streets and people suckling at the taxpayer teat, I guess the moral hazard is something we have to live with.

Though the incessant red-blue squabbling obscures it, the future does not have to belong to some point between status quo and government-provided care. This doesn’t have to be a one-dimensional problem.

 

Aug. 15, 2009

Innovation and Human Health

Posted by Peter Boumgarden under Economics | Tags: |
[8] Comments 

Over at her Atlantic blog, Megan McArdle poses an interesting question to the supporters of universal health care. She starts with the following facts:

There are 45 million uninsured people in America.  But there are 300 million people who are going to die of something we can’t cure.

…

If the innovation spurred by the private sector could save 1% of the people who currently die each year, the number of people we’d be killing along with the private sector would necessarily be hugely larger than the number of people we’d save by implementing such insurance, since the most grotesquely exaggerated estimates released by interest groups pin the latter figure at around 0.8% of deaths in America (a much smaller number than the number who are estimated to be killed by access to the system–nosocomial infections and treatment side effects).

Moving to her point, she outlines the following question:

What P(less innovation) would it take for you to abandon the quest for single payer?  How many billions of lives would you be willing to gamble on your speculation about alternative innovation mechanisms?

To the statistically inclined among us, her comparison of lives saved in different systems is an interesting approach. But, while compelling, I think its important to look at Megan’s argument a bit more closely.

First, McArdle’s claim of 300 million people dying from something we can’t cure yet is a bit misleading. I assume she is basing this number on a count of the number of people in the US, coupled with the fact that all these people will die. There is a bit of an unfair framing to this point in that it suggests that in the best case scenario, we can save 300 million people. But, if ‘saving’ cannot mean never dying, what does she mean?

Consider the top medical kllers in the United States– heart disease, cancer and stroke– which, taken together, are likely to be one’s cause of death approximately 38% of the time. The best case scenario from an innovation standpoint is that new treatments are created for each of these diseases, and as a result, no one dies from such causes. Specifically, in the best case, we have about 115 million people whose lives can be ‘saved,’ to use Megan’s language.

But what does this mean, and for how long are such lives extended? Take heart disease as an example. The average age of a first heart attack is 66.  The average age of a stroke onset is closer to 70. The trends in cancer are much more variable. Given that the average life expectancy in the US for males is 75, in this ideal possible world, you have a situation in which 100+ million people gain a significant chunk of time in their lives, moving towards or beyond the average life expectancy.  To understand this benefit in a calculation, it might be helpful to move beyond the abstraction of ‘saved’ to really explicate what is meant here… what kind of benefits we might expect in terms of life expectancy.

As for system reform, Megan argue that if the probability of lower innovation is high, we should maintain the current structure because, even given all its current ills, it is at least sufficiently innovative (i.e. it creates products which benefit future generations). If this probability is low, then moving towards greater coverage might be the right thing as we won’t be sacrificing the future while still benefitting the current users of the system. She sides with the former approach as a result of seeing the probability of lower innovation as quite high (see her case HERE).

Personally, while I also also see a good chance of innovation dropping, I do not see this probability deterministically. In other words, if we know some insight on the causes of lower innovation, why not tinker with these structures to counterbalancing such tendencies in a revamped system. If the problem is monopoly, why not create greater market structure, even if that operates inside a coherent structure. Or maybe the answer is tax incentives for venture firms pursuing medical innovation. Perhaps increased innovation requires re-opening dried-out scientific grant funding pools, and finding a way to target them towards more pressing medical needs.

All in all, if we value increased health coverage as a matter of principle (see a previous argument I made here), then I think there are ways to arrange an alternative system that maintains strong innovation while still pursing this end, even if it takes some experimentation to find the right balance. If this is the case, why not try to have our cake and eat it too?

 

Jun. 15, 2009

health, health care, and rights

Posted by Peter Boumgarden under Culture, Economics, Politics | Tags: |
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Picture 1My basic argument, rather crude in hindsight though it does reflect my gut instincts, is that a right to healthcare implies a right to health. Consider the ongoing debate concerning the cost and efficacy of medical care. If decency demands that the state provide medical care, this inevitably raises the following question: if the state is left holding the bag, so to speak, surely the state can demand that one lead a basically healthy life, hence the ever-expanding imperatives of public health. A right to healthcare implies a right to health, or rather an entitlement to health. If this isn’t a recipe for an unlimited state, what is?

-Reihan Salam

Reihan makes some good points, but I am not sure I buy his coupling of the right to health care and the right to health. While I am by no means a health care expert, I think it is important to nail down some of the philosophical starting points of a health care debate before the nitty-gritty policy details. So, here goes one feeble attempt.

First, it seems as though there is a range of potential claims when talking about rights, health, and healthcare, all with different policy implications. Specifically:

  • Everyone has a right to health
  • Everyone has a right to the best health care
  • Everyone has a right to sufficient health care
  • Some people have a right to the best care, some people have a right to sufficient care
  • No one has a right to health care, but people can get care to the extent they can afford it

As Reihan helpfully argues, the first point is difficult both theoretically and pragmatically.  On the theory side, its hard to know what equal ‘health’ really entails. If taken to imply actual health equality, the point is complicated in that people start with different levels of baseline health, and make different healthy life choices given this freedom (what to eat, whether to smoke, if and when to work-out). The state cannot guarantee that all individuals will be equally healthy in so much that outcome is contingent on a number of factors outside the guarantor.  You can guarantee me the right to play in the NBA, but if I am not that athletic by birth and sit around all day and eat sour patch kids and super-sized fries, this ‘right’ will be violated when David Stern doesn’t call out my name on draft day.

Perhaps this could effectively be re-stated as a right to not have one’s ability to live a healthy live infringed upon.  This would be broader than health care coverage, in that it deals directly with the state providing healthy conditions for living, basic services, etc., but not so broad as to assume that all people will be equally healthy at end end of the day.

The difference between the second and third premises is tricky, because its hard to know what care is ‘best,’ and what is just ‘sufficient.’  This point is helpfully explored by Atul Gawande in his recent New Yorker article, which Peter Tuuk linked to in a recent post.  We often assume that more care is better care, thus validating its extra cost; unfortunately, the comparison of average healthiness between areas that pay a lot for care and those that do not is tenuous at best.

Our current systesm seems couched somewhere between the 4th and 5th premise.  It is similar to the former in that there are currently differences in “quality” (or at least quantity) of care for people in different systems. Certain providers cover a wider variety of treatments than others, and others limit the doctors who you can see, thus controlling ‘quality’ if certain doctors and treatments are better than others. We are closer to the 5th premise in that the government does not formalize a rights system like we do with public education, for example.

In an ideal world, I would argue that the state should build a system off of some sort of combination of the first, third and fourth premises. Specifically, I think the government should look to create environments for its citizens where health is most possible, if pursued appropriately (1st premise).  I also think the state should move to providing universal care for its citizens, even if that does not take a fully public system (3rd premise).  So, perhaps the state should find a way to provide appropriate care (which, as shown in the McAllen article, might actually be better), while acknowledging that there should be options for increasing this coverage (4th premise).

I am less sure on what this might look like in practice. Tyler Cowen makes some pragmatic suggestions to deal with the false cost/effective trade-off in Medicare, some of which could be applied more broadly to a universal coverage system:

If we are willing to take comparative-effectiveness studies seriously (me- which imply most cost does not equal better treatment), we could make some significant cuts in Medicare costs right now. We could cut some reimbursements rates, limit coverage for some of the more speculative treatments, like some forms of knee and back surgery, and place more limits on end-of-life-care.

Reihan, on the other hand, takes his argument to an economic outcome based perspective. He writes, “we’re more likely to keep the role of state limited if we eschew rights-talk and instead think of the state’s role in healthcare as fundamentally about managing economic risk.” Thus, in line with Graetz and Mashaw and their thesis in “True Security”, he suggests “no family will go bankrupt due to an economic shock caused by serious illness.”  While not a bad alternative, I wonder if we can really discount the fact that this ‘shock’ is not primarily about the economics, at least for the families involved. Why not try to implant a system where adequate (read: not necessarily most expensive) care can be provided during the shock, which limits both the health and economic shock footprint for the individuals/families in question? Doing it in a cost-effective manner however is still an issue…

 

Jun. 10, 2009

McAllen vs Mayo

Posted by petertuuk under Economics | Tags: |
[10] Comments 

For the newest issue of the New Yorker, Atul Gawande travels to McAllen, Texas to try to understand why that county has higher health care costs than anywhere else in the United States. He pins the blame on perverse economic inscentives that pay doctors more for more procedures. The doctors, as gatekeepers to the system, exercise great latitude in how care that is meted out. He points to one example of a physician-owned hospital that

has a reputation (which it disclaims) for aggressively recruiting high-volume physicians to become investors and send patients there. Physicians who do so receive not only their fee for whatever service they provide but also a percentage of the hospital’s profits from the tests, surgery, or other care patients are given. (In 2007, its profits totalled thirty-four million dollars.) Romero and others argued that this gives physicians an unholy temptation to overorder.

This is a strange market in which neither of the parties who will make a decision as to how much care is to be rendered have any incentive to opt for a lower number. The patient feels like more is better, because better-safe-than-sorry. The doctor knows that more is better, because his pocketbook says so. And for him, the specter of future malpractice litigation for unprovided care is just one more reason. The big loser in this process is everybody who isn’t there. We pay higher insurance premiums or higher taxes.

The author provides another model however. He points to the Mayo Clinic in Rochester, Minnesota. The key difference between Mayo and other health care providers is that Mayo doctors, like all the other employees there, are paid a salary. Their inscentives are not to treat as many patients as possible, but to treat those patients they do see well. When the numbers are tallied, the Mayo Clinic produces above-average outcomes at below-average costs.

If there is an organizational structure for providing a better product at a lower cost, why has this method not come to dominate the industry? If anything, there is money to be made by opening up a place like Mayo Clinic, advertising great care, charging a penny less than they guy next-door, and keeping the cost margin as profit. But who loses here? Not the patients, who get better care. Not the insurers (or taxpayers), who get lower costs. Only the doctors, who don’t have the opportunity to make big money ordering all sorts of extra procedures. But if doctors want to perpetuate the existing order by clinging to sub-standard products at higher costs, there are a few GM employees who can tell the rest of that story.

Of course all the standard charter school selection biases apply. The patients could be more motivated and disciplined at Mayo Clinic. Or maybe the health care providers could be special in a way that doesn’t generalize to most settings. Why don’t we have better care?

 

Mar. 29, 2009

TOMS, Fads, and Indie-Music

Posted by Peter Boumgarden under Culture, Economics | Tags: |
[2] Comments 

I recently picked up my first pair of TOMS shoes.  For those of you not familiar, (ex-Amazing Racer) Blake Mycoskie started TOMS in 2006 with a goal of using his company to get free shoes to those in need.  Their business model stands on a one-for-one model where every pair purchased leads to a pair given to a child in need. Since its inception, TOMS has given over 10,000 pairs of shoes to children in Argentina, and 50,000 + to children in South Africa.

TOMS on the GWOC

TOMS on the GWOC

The shoes themselves are interesting– simple, yet strangely charming. Many of them are  canvas based with a simple rubber sole.  My pair (pictured on the Great Wall of China on the left… they LOVE to travel) has a canvas upper with a rubber sole meshed with rope– for extra traction.  It is fair to say that, in a real turn of events unforeseen by the masses, Mycoskie and his TOMS crew is bringing the loafer back!

Facilitated such fast growth is the popularity of their social impact model. They just released an AT&T commercial, Dateline (I believe) just told their story on national TV, and their founder recently visited the white house for a social entrepreneurship award.  No word on what pair Barack rocks in his spare time, but I would imagine its probably the University Ash Rope (also seen, surprisingly, to the left…).

One interesting thing to watch regarding TOMS in the future is how their business model will transition as they continue to grow in size and popularity.   With company/cause combinations like TOMS, the drive behind sales is more complex than just social impact.  Specifically, people buy TOMS because they are contributing to an important cause, but also because they are different in doing so, and want to be seen by others as such. In a strange way, it’s kind of like Indie Rock following.  One of the things many groups struggle with is how they maintain their original fanbase shifts as their popularity explodes. Those who got into the band early see the group as changed from their newfound popularity as their fan-base shifts. For the early adopters, liking the group is not nearly as exciting when you are not the only one.  With regards to TOMS, those who got into the show for its social cause might be less impressed by those who get on the bandwagon later (the ‘Peters,’ if you will), seeing them as groupies rather than purists.  At a certain point, companies like TOMS reach a tipping point where, for the early adopters, the TOMS they first supported is not the TOMS they see now, even if the mission is the exact same.  A shift in TOMS’ network of association will shift the way TOMS is seen by it’s potential customers.

UPDATE: After reading this post, my friend Karin wrote me saying, “Nice post but I don’t know if I agree with that indie band perspective.  I like to think that people who support causes like this aren’t doing things just for the sake of being different.” I agree with her, so I want to add a clarification.

I think our motivations are often mixed and multi-faceted.  People buy TOMS because they buy into the cause, but not ONLY because of this.  For example, if I made a show company with the same mission, but my shoes looked like pieces of newspaper formed over a piece of shaky cardboard, I would be out of business fast because my customers would avoid shoes that are not attractive do not serve their function sufficiently.  The same is the case with TOMS. I do not think that the primary motivation behind buys TOMS is appearing unique (and this specification motivation would be stronger with following the next big band), but I think that is one of many factors. Consequently, if that motivation disappears as TOMS fails to provide the unique experience for the customer, I think its possible that some people will look to fulfill their altruistic motivation in other ways.

 

Mar. 14, 2009

Hong Kong and Chinese Innovation

Posted by Peter Boumgarden under Culture, Economics
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Hong Kong Skyline

Hong Kong Skyline

I am sitting here in my aunt and uncle’s university apartment in Hong Kong, having just returned from a run to the ocean and back.  In short, I am living the (jet-lagged) life.

Though I have only been in China for a few short hours, I must say how impressed I am with the city, and especially their technological development and reliance on public transit.  In Hong Kong for example, 90% of all trips take place using public transit. To a guy based in St. Louis with one rail line through the center of town, this is an astonishing number and I am feeling a bit behind the times. In addition, hearing my uncle (a pretty smart man himself, in that physics sort of way- http://www.physics.princeton.edu/www/jh/research/austin_robert.html) talk about Hong Kong as the city of the future really gave my visit an added level of mystique.

It is, however, interesting to contrast this impression with James Fallows’ recent piece on China in the Atlantic (http://www.theatlantic.com/doc/200904/chinese-innovation).  Here is a teaser:

The outbound buses and the better air were our local indicators of the economic contraction being felt in practically every corner of the world. And there were signs of it everywhere in China. Container ships sitting, moored and idle, in the harbor of Hong Kong. Revenues down in Macau’s casinos. Seas of empty seats aboard a small Airbus on the Shanghai-Beijing shuttle flight. (The first time I took that trip, in 2006, it was aboard a 747 with every seat full.) A report that a million or more of this year’s university graduates were still looking for jobs. Protests across the country, as real-estate developers and small-factory owners went bankrupt—and disappeared without paying employees months of back wages. Thousands of factories in Dongguan, in Guangdong province just north of Hong Kong, had been the real-life incarnation of the world’s stereotype of low-wage Chinese workers turning out low-value goods—cheap dolls and toys, Halloween masks, the bulk of the world’s Christmas presents and decorations. Within months the area was transformed into China’s rust belt.

You never know which statistics to believe in China, but in January a local official in Dongguan told me that at least 1 million factory workers had recently lost their jobs within five miles of where I was, and probably another million in nearby manufacturing areas of Guangdong province. The electronics supplier Foxconn, whose gigantic compound in Shenzhen turns out components for Apple, Dell, HP, and countless other companies and which had recently employed more than 250,000 workers, sent all its employees on a one-month unpaid furlough late last year. Reports in the Chinese press said Foxconn might lay off 100,000 worldwide.

Haven’t yet finished the article… it’s sitting on my desk here… but China’s response to the global financial crisis will be an interesting thing to watch over the next few years. Hong Kong has provided a model of Westernized growth and financial prowess for the rest of the country to follow, but this might not be the model that best fits a changing global economic environment (i.e. is a heavy reliance on global finance a sustainable way to orient a city… will this model have to adjust, etc.). What civic and market approaches across China best facilitate a dynamic adjustment to a changing environment– and thus prevent a further slide into poverty– will be fascinating to see.

 

Mar. 6, 2009

Understanding Unemployment

Posted by Peter Boumgarden under Economics
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unemploymentratemint2H/T Scatterplot (http://scatter.wordpress.com/2009/03/06/what-is-the-unemployment-rate/)

 

Mar. 3, 2009

Homeowners and Community Investment

Posted by Peter Boumgarden under Culture, Economics
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Over in the comments of Richard Florida’s blog, George asks an interesting question in response to my summary of Richard’s argument in The Atlantic.

Own or Rent?

Own or Rent?

George writes:

How do you place the idea of “more fluid in living” along side the theory that buying a permanent place (a house) leads to building a stronger community because the people are more invested in that more permanent location, thus improving schools, small business, etc.?

This is an interesting question… here is my response (with a few edits):

The general argument behind Richard’s original piece is that diversity in a city facilitates diverse social interaction, and consequently results in more creative output by individuals in that community/ city. In addition, there will be greater diversity with less homeownership, as renting allows people to more fluidly move between locations, city to city, as needed. A city where people do not move may be a cause of further decreased diversity over time as people become more similar to those they interact with, or so goes the argument of those in social networks and induced homophily literature- (Centola Axelrod, etc.) Imagine a city where 0% of people move. We would expect these people to converge in preferences, tastes, careers, etc. over time, thus leaving the city more homogenous as a whole.

And yet, for certain types of entrepreneurship, such as community development initiatives, the motivation comes from commitment to a place. Take St. Louis as an example– some of the more interesting development projects of late have come from people who are ‘committed’ to the city as life long residents. This seems to be the underlying tension as local entrepreneurship often flows both out of good ideas from diverse interaction (allowing people to build across diverse perspectives) and a commitment to the value of a pursuit in that specific place. Thus, entrepreneurship comes both out having a good idea, and a motivation from seeing it as having value (either financially or personally).  Does being a renter make one less likely to see local investment/ community development projects as good ideas, or valuable use of one’s time? Does it make them more likely to leave a town of less ‘value’… perhaps the cities most in need of the ‘creative class’ pursuits? Will increased ‘flow’ of human capital only serve to make the good towns better and the bad cities worse in a survival of the fittest sort of dynamic? It seems in the example of Detroit that this would be the case, as homeownership has been one major thing that has prevented a more fluid population drain from the city. Hence Dr. Florida’s example of Detroit still being one of the largest cities in the U.S. despite a long period of economic decline. If there was less homeownership in the 1980s, 1990s and 2000s, would Detroit be at a better place– more vibrant, more capable or more renewed– or would it just be more barren, under-populated and economically under developed? Is this even the appropriate level of analysis? Moving from ‘a city’ as an entity, what about those people who could have left had they been renters… would they be at a better place, more prone to creative pursuits?

These are some honest questions for which I do not have much in the way of an answer.  What do you think?

 

Mar. 1, 2009

The Cost of Community: Part I

Posted by John Boumgarden under Culture, Economics, Miscellaneous
[4] Comments 

Serenbe homes

Serenbe, Georgia

Over breakfast this morning, my eye caught an intriguing article in the New York Times, “Heads Up – Outside Atlanta, a Utopia Rises.” The article deals with an issue close to my heart, that of New Urbanism. Written by Kevin Sack, the piece traces the development of Serenbe, Georgia, a new development thirty miles outside the ever-consuming sprawling entity known as Atlanta, Georgia.

Serenbe, Georgia, initially started as a weekend retreat and place of solitude for acclaimed culinary couple Steve and Marie Nygren. In 1995, the Nygren’s purchased a 60-acre farm as a weekend retreat from the chaos of Atlanta. Soon their weekend retreat transformed into a vision for a sustainable community, founded on the following ten New Urbanism principles: walkability, connectivity, mixed use and diversity, mixed housing, quality architecture and urban design, traditional neighborhood structure, increased transportation, green design, sustainability and quality of life. The article briefly addresses the values of New Urbanism, choosing instead to focus more on the unique culinary heritage of Serenbe Community and the resulting impact on the community today.

New Urbanism, according to their website, offers the following definition:

Giving people many choices for living an urban lifestyle in sustainable, convenient and enjoyable places, while providing the solutions to peak oil, global warming, and climate change.

Notable communities founded on New Urban principles include Seaside, Florida; Celebration, Florida; and Kentlands, Maryland, among others.

Seaside, Florida

Seaside, Florida

For me, one of most interesting principles of New Urbanism is its commitment to mixed used and diversity. New Urban communities seek to blend demographic and social heterogeneity into their communities, and yet, when wealth is not equally distributed across demographic lines, diversity is difficult to achieve when the introductory prices of houses are $300,000 – $500,000, as is the case in Serenbe, Georgia.

So how should the tension between diversity and housing quality be addressed? Should New Urbanist communities continue to espouse the importance of mixed use and diversity as a principle, or sacrifice these components in order to create the idyllic community that results from high realty prices? In addition, why is diversity important if it continues to remain at the center of New Urbanism. While New Urban communities and designers propagate the importance of diverse communities, they offer limited reasons as to why diverse communities need to exist. Is ‘diversity’ just another buzzword used without justification? If we as a society and community value diverse communities (something I very much believe in), how can we best explain the rationale behind this intent to live in community with diverse others? In the following series, I will attempt to address these questions.

 

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