7 Days of Piketty: Wednesday, or "Piketty's Three Big Mistakes."

I'm publishing seven days of links to web material about Thomas Piketty and his book, Capital in the Twenty-first Century.

Today, another critic.

Piketty's Three Big Mistakes, by Noah Smith (Bloomberg View)

 ... Rognlie has three observations that cast doubt on Piketty’s big thesis.

The first is that Piketty doesn’t take depreciation into account. As capitalists accumulate more and more machines, buildings and other hard assets they have to pay more and more to maintain that physical capital. Trucks need new tires. Offices need renovation. What Rognlie notices is that this upkeep cost has been increasing over time.

Nowadays, more than in the past capital goods are often in the form of computers, software and other high-tech products that go obsolete very quickly. That means that capitalists have to spend more money replacing these things. A lot of what looks like more money going into owners’ pockets is really just an increased cost of doing business.

Rognlie isn't the first to make this point -- it has been made by James Hamilton of the University of California-San Diego and by Benjamin Bridgman of the Bureau of Economic Analysis.

But Rognlie adds two other important points ...

"Not all development is fiscally productive. Urbanization, or more accurately, sub-urbanization, is not necessarily prosperity."

File under "Things that occur to me as I listen to the mayor brag about Breakwater and Summit Springs."

Or, "Things that I know local media won't ask when the mayor brags about Breakwater and Summit Springs."

Now, can we talk about the extreme degree to which "Summit Springs" sucks as a name for a development?

PLAYING “MONEYBALL” WITH YOUR CITY - AN APPEAL TO FELLOW CITY MANAGERS (AND OTHER STRONG CITIZENS), by Michael Kovacs (Strong Towns)

If you’re a sports fan, especially a baseball fan, you’ve probably seen the movie Moneyball with Brad Pitt. It's the true-to-life story of the Oakland A’s and how manager Billy Beane, with a small budget to pay salaries, uses the expertise of his assistant’s math and statistics to figure out that players who get on base can make a big determination of whether a team will win or lose. They go on to win their first playoff series in years and made the playoffs for four consecutive years on their low budget. It's a great movie. I highly recommend it.

Cities are a lot like a sports team, and what we do is similar to what Billy had to do. He had salary money and used it to get players for a value, who could get on base. As City Managers, we help set the direction of our cities with our planners and councils, and as we build out, we have a finite amount of land along with our finite ability to maintain and replace (ideally) the infrastructure we accept. We use up land in our respective city limits/extraterritorial jurisdictions, and accept infrastructure dedicated from developers in order to create tax base from the value of private investments made.

SNIP

It’s time to start deploying tactical planning, growing slow and steady, building on our existing grids, getting denser while creating place, and showing the real costs of developments to our policy makers. Let’s start going for walks and base hits. Get on base, and our cities will start winning.