Wednesday, May 23, 2012

Why America is going bankrupt: Barcelona vs Atlanta

If people are trying to figure out why middle class incomes are stagnant, here is one place to look:Comparing Atlanta and Barcelona 

Would the free market - the driver of efficiency, ever have resulted in such a sprawling mess as Atlanta?  Of course not.  It got that way, like so many other American cities, thanks to government subsidies.  The government builds the roads, the utilities, the power grids.  It fights the wars to secure the oil.  Government regulates that businesses must have abundant parking spots (a subsidy for cars), offers cheap parking on the street for a few quarters; government zones land and centrally plans its use.

Imagine the wasted resources in infrastructure.  The wasted fuel costs.  Time wasted in transit.  What about the redundancy?  Atlanta must need 30 times the gas stations, 30 times the McDonalds.  Atlanta will need more airports, more parks.  I can only imagine the scale of the waste if we could somehow quantify it.  It must be on the order of trillions of dollars.  The US economy is more productive than Europe's, no doubt, but somehow the Europeans manage to maintain equal if not higher standards of living than Americans (maybe not for long thanks to the Euro crisis, but that is incidental).  I would argue that their superior organizational efficiency is a big part of it.

Some are quick to disagree; they point out that Europe is much older so their cities were already built up and became smaller by default.  That is only half true:  after all, most great American cities were well established by the year 1900.  The car didn't really come into its own until a decade or two later.  Make no mistake - America centrally planned this mode of development.  We could reverse this process by putting an end to the subsidies and the government works projects and let the markets or local citizens plan their transit.  Unfortunately, instead of free market solutions, we get 300 billion dollar highway bills for the next 5 years, calls to "drill baby, drill" or to "bomb, bomb Iran".  And that is just from the "pro-free market" political party.

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