The Growth Ponzi Scheme

A great series of 5 posts from Charles Mahron at Strong Towns on how the suburban growth pattern we’ve seen in the US for the last 60 years is indistinguishable from a growth Ponzi scheme.  We use federal (or sometimes state) money to make capital investments, but leave the maintenance and operational costs to local governments, which usually have no revenue source sufficient to fulfill that obligation — because this type of development does not come anywhere close to being economically productive enough to pay its own way in terms of tax revenues.  For a while you can continue this by making ever larger capital transfers for more growth… but like all Ponzi schemes, it eventually collapses in ruin.

Suburbs == Ponzi scheme

Charles Marohn of Strong Towns on Grist, explaining the way in which American suburbs are a giant Ponzi scheme.  Essentially, since WWII there have been several rounds of up-front financing for suburban expansion, including federal dollars, and debt leveraging supposed future increases in tax revenues resulting from the growth.  Along with these capital investments come long-term O&M obligations.  Unfortunately, the obligations are too large, and we’ve only been able to meet them with new influxes of capital, but that’s flamed out.  Sprawl is inherently expensive to build and maintain, and doesn’t create enough real value to support itself in the long run.  How long will it take to internalize this reality culturally?