Service Learning in Public Economics

I agree with Rachel on the point that nobody with extraordinary talent should be constrained simply because other people aren’t performing at his or her level. However, I think that the issue of “making suitable assignment of initial endowments” (i.e., initial allocation of resources in society) is more complicated than moving the starting blocks so that everyone ends up in exactly the same place.

To cross the finish line holding hands is not exactly a suitable arrangement for American society. For almost all of us, there will always be someone who is paid more, lives in a nicer neighborhood, a bigger house or whose title holds more prestige than our own. This isn’t necessarily a bad thing, though. It’s important for a healthy society to recognize greatness and motivate excellence. I don’t think many Americans would be able to function efficiently in a world without leaders and bosses, but I don’t think those leaders and bosses should be honored or paid in excess, while their followers and employees go completely unrecognized and can hardly pay for their groceries.

It’s the excess in our society that bothers me when it comes to allocation of wealth and resources. It’s not about stripping America’s wealthiest of all the assets they’ve accumulated over generations and plopping them down in a 3-bedroom colonial with the rest of middle-class America. That would make the wealthiest Americans very unhappy, I imagine. Pareto improvements are supposed to make others better off without diminishing anyone else’s satisfaction. However, because of our culture of rampant consumption and excess, I think so many people have a horribly skewed vision of what makes them unhappy. I think that, realistically, many of the wealthiest families in America could stand to pay a lot more taxes and not suffer terribly crippling lifestyle changes.

An awesome little video that explains our culture of excess and the resulting mindset is Annie Leonard’s The Story of Stuff.

On Friday I read this article in the NY Times, “Cities turn to fees to fill budget gaps.”

At first read, the thought of an accident response fee was horrifying. I honestly imagined injured motorists, who had in the past refused to pay their response fee, being let alone to hobble off to a hospital after a highway accident, with broken bones sticking out of their skin, because they were on the city’s list of defaulters. Then I realized that’s pretty unrealistic. City safety services (fire, police, etc.) have a pretty serious obligation to respond to situations in which public safety is affected. If you’re cut and bleeding, an ambulance will probably show up whether you want it to or not. These response fees are probably not going to jeopardize public safety.

The woman interviewed in this article said that her $316 response fee wasn’t fair. Is it fair to make someone pay for a police response to a collision when, by law, you must call the police when damages exceed some specified amount? I haven’t been able to come to a conclusion on that.

The article implied that the fee would be charged to the party at fault. So the most simple response to her “No fair!” cry is that maybe she should have made more of an effort to avoid crashing her car. However, don’t we already have enough incentives not to crash our cars? You can already be fined for speeding or reckless driving, plus your car insurance is adversely affected by accidents, and you usually have to pay something to fix the damage to your car. Not to mention the prospect of serious bodily harm. I’m not sure a city could play the accident prevention angle when defending an accident response fee. It seems like the only actual reason for the existence of these fees is to increase local government revenue. I mean, it doesn’t seem to serve a dual purpose.

According to the article, “Politicians tend to regard fees as more palatable than taxes, and more focused too. If a state needs to finance an infrastructure to oversee fishing, why shouldn’t fishermen foot the bill? But groups like the nonpartisan Tax Foundation in Washington worry that governments are now using fees to shore up budget shortfalls rather than cover specific costs incurred by specific users.”

Who can say that the money from accident response fees is actually paying for that kitty-litter stuff firemen use to clean up blood and oil? Would citizens see this as more fair if they received an itemized response fee?

More generally, are response fees and other fees more effective or efficient than everyone paying more taxes overall? What do these methods of collecting revenue do to community and individual indifference curves? Could you graphically explain preferences for fees versus taxes? This article raised an incredible number of questions in my mind, and I am hoping to discuss some of them in class next week.

Dr. Perry forwarded us an interesting article from the News & Advance today, “Hundreds in Lynchburg appeal jump in home values.” One of the things I like about the online edition of the paper is that readers are able to leave comments, which I often find more enlightening than the articles themselves. Some people make very good intelligent points, while others tend to spew emotion and pick on others’ comments, but it’s nonetheless an interesting forum.

One reader wrote that “a $10,000 increase in your assessment means you pay $8.75 more per month in taxes on our $1.05 rate” and that she would be willing to fork over the extra cash, because she would like to see improvements in city infrastructure. So I wondered what area of Lynchburg she lives in, where she drives to get to work, what fraction of an hour she might work to earn $8.75, how many kids she has, etc. Furthermore, if her $8.75/month were not spent on improvements in her own neighborhood, would she be so willing to pay?

Essentially, this article explains that the largest percent increases in assessed home values were for smaller and older homes; naturally in more low-income areas in the city than not.  However, I wonder if those areas where people are paying around 7% more property taxes are seeing the city spend maybe 7% more on infrastructure improvements in their neighborhood. Probably not.

My guess is that the most property tax dollars are not necessarily spent on the people who pay the most taxes, especially in a city like Lynchburg where there are huge variations in neighborhood income (take the historic district in Garland Hill and Tinbridge Hill, for one example). I don’t know how the city budget works here in Lynchburg, but I’d be curious to know how equitably infrastructure improvements, and other spending projects, are distributed across the city.

Now that we’re not going door-to-door to administer surveys, I want to reevaluate what we’re actually measuring. Last Thursday we dropped surveys off at the Johnson Health Center and the Yoder Center. It’s still unclear how many surveys we will collect in the coming weeks, but I feel positive about the level of interest in our work. All the staff we spoke with at both locations were so helpful.

I would guess that many of our participants will be Tinbridge Hill residents, so we still might be able to gauge neighborhood satisfaction there. However, it is clear that the sample will be biased, because people who show up at the Yoder Center and community meetings tend to be older, long-time residents. There is a question regarding age on the survey, so we will be able to determine the average age our participants once we collect all our data.

We will also be collecting surveys from people who live outside of Tinbridge Hill. We have yet to see what kind of responses we get from non-Tinbridge residents, but I think that collecting even just a few responses from other neighborhoods will supply us with additional useful knowledge. I hope that this group of surveys might shed some light on differences between College Hill, Tinbridge Hill and other Lynchburg neighborhoods. It might illuminate some neighborhood strengths or problems in other places that perhaps the LNDF and other non-profits are not aware of. These non-Tinbridge resident surveys will also give furture Econ 217 students a jumping-off point, should they wish to evaluate neighborhood satisfaction in another Lynchburg neighborhood. So, although this was not our original plan, I think we will be collecting some important information that we would not have otherwise had access to.

After writing up my research proposal, I have become acutely conscious of just how far-reaching this project is. It was actually difficult to keep my introduction and theory sections focused on what we are doing here and now, especially after taking a closer look at the articles that Denise Sewell referenced in her work. I really had to slow down and remind myself what we are capable of accomplishing in the last half of this semester. The context of our work is enormous–regarding the LNDF, the city, the Tinbridge Hill neighborhood itself, the College, and the field of public economics. That’s HUGE! It’s also very exciting.

We are beginning our data collection this week and I am looking forward to talking to Tinbridge residents and seeing how our residential satisfaction survey does in practice. Of all the additional variables I proposed we include, I hope most to discover that nearby vacant properties have an impact on residential satisfaction. We have yet to discover exactly how many vacant properties there are in Tinbridge Hill, but I’ve spotted a few as we’ve driven through the neighborhood. However, I am pretty convinced that vacant properties are a real serious issue in Lynchburg. In 2006, the city produced a very nice Powerpoint presentation that explains the effect of vacant properties on property values and the city’s tax base (unfortunately I don’t have an electronic copy of this document). While that’s all very relevant and distressing, they don’t even mention issues of safety or neighborhood well-being. The following statement is from the website of the National Vacant Properties Campaign:

At the very least, property abandonment in the United States is a significant waste – a waste of the individual resources making up the property, of the building itself, and of the infrastructure supporting it. But the damage caused by leaving buildings and land behind for greener pastures is even more of a tragedy than that waste. The most obvious victim might be the family living next to a house that’s become a vermin-infested drug den. But these abandoned properties hurt us all by lowering property values, creating serious environmental hazards, draining our inadequate police and fire services, and pulling apart the social networks of our neighborhoods.

Clearly, vacant properties cause a multitude of problems.

During the proposal-writing process, I also became very interested in the GIS maps that the Lynchburg City Assessor’s office has made accessible online–a resource that, according to Dr. Perry-Sizemore, has only been in existence for a few years. I have pulled a map of Tinbridge Hill that includes parks in the sage-green areas and historic districts in the blue-green areas. The Yoder Community Center is also labeled in the center of the map. Laura Dupuy, executive director of the LNDF, said that one challenge to housing development in this neighborhood is that the parcels of land are so small–which is also illustrated on this map.

First of all, I spent this weekend in D.C. at Powershift 2009, which was a completely amazing, awesome event.  I mention this here because every policy conversation and every debate about how to preserve or reclaim environmental quality in our communities concerned the taxing and spending habits of the government.  Whether or not anyone recognized it or verbalized it, these were conversations about public goods and the roles of government and non-profits.

I went to two workshops I found extremely relevant to this course: one concerning class divides in the environmental movement, and the other concerning the linkages between the economy and climate change.  The integration of topics at Powershift was phenomenal.  The loudest message was that without an economic solution, an environmental solution does not exist.  Without alternative employment for workers in coal plants, we can’t possibly shut down those coal plants.  A movement or policy that can’t reach beyond middle class communities is flawed, and probably unjust.  Without making green technology accessible to people of all incomes, technological innovations can’t be as meaningful or productive.  The role of economists in environmental issues has never been clearer to me. It actually appears that this role of an economist is applicable to other topics of social and political change.  Any and all changes require tradeoffs, economic and otherwise, which I believe economists have some of the best tools to evaluate.  Thankfully, I’m discovering that I can probably do work with any topic I want after I graduate.

I also some have comments that pertain to the actual experience of this public economics course.  Last Thursday, Dr. Barnes took us on a tour of downtown Lynchburg and the 5th Street area.  It was great to see the city’s plans in action.  Plus, it was a gorgeous day.  I was fascinated to see exactly where many of the plans made on paper have been implemented.  The planning for things like sidewalks, road signs, bus stops–things I wouldn’t have actively considered when planning to revitalize a neighborhood–were surprisingly detailed with measurements and illustrations.  Dr. Barnes said that much of the opposition to these plans call the changes something like useless aesthetic improvements. I would disagree with that.  Even if some of the plans for 5th Street and downtown are aesthetic (bigger newer signs, prettier sidewalks, sitting areas), I would argue that citizens in a more beautiful neighborhood are happier, more comfortable and more likely to go out and engage in the community.  I’m sure that’s something someone out there in the vast world of academia has studied.  It honestly seems ignorant to write off these neighborhood improvements as purely aesthetic and therefore useless.  I can vaguely remember downtown Lynchburg when I visited R-MWC three years ago, and I would say that even the improvements thus far make it a more pleasant place to be, which is never a bad thing.

Click here for some photos from our field trip.

I liked Dr. Perry’s remarks about consumption and investment benefits from this course so much that today I am going to try to comment on the benefits that I hope to gain from this experience.

When I first arrived at college, I had intended to pursue global studies or political science, but I eventually found myself more attracted to economics.  The economic toolbox I began building felt concrete and powerful.  I have learned that scarcity is a real challenge, markets can fail and financial systems can crumble, and this creates injustices.  Bad things happen to hard-working people, and often there are not enough resources to go around.  I figure that these are pretty much the same injustices that result from political failures and irresponsibility.  I think that this public economics course is beginning to bring me closer to my interests in politics, policy, and government that help people who truly need help.

One of the consumption benefits I hope to gain from this experience is to add to my economic toolbox.  I enjoy theories and definitions. Despite how exhausting studying can be, learning for the sake of learning is important to me.  The investment benefits of building that toolbox are the inevitable application and exercising of those theories, during internships, senior seminar, grad school and whatever career I pursue.

Other consumption and investment benefits I hope to gain from this course are centered around my goal to help people; to bring people up from a place of barely hanging on (to money, family, jobs, homes, health, etc.) and help them build a happier, more productive life.  I consider my educational investment a path towards reaching this goal.  I consider the service part of this course a means to directly fulfill that goal.

Another consumption benefit I hope to gain from this course is more knowledge of Lynchburg. I know I already said I am excited to learn more about Lynchburg.  Our discussions continue to open up the city to me in a way I haven’t experienced before.  Living in Lynchburg has been a very meaningful experience to me because I was raised in a very different community (Amherst, MA).  Plus, being politically active in Lynchburg has given me a sense of obligation to know more about the city and the interests of its citizens.

I mention my hometown and I realize that another investment benefit from this course that I have been considering is bringing all my knowledge and skills back to what I consider my primary community, the place I grew up.  I’ll probably expand on this later, but there is a city in Western Massachusetts called Springfield, that has been struggling with poverty, business growth, violence and gangs for as long as I can remember.  One year it was voted the 19th most dangerous city in the country.  However, both of my parents work in Springfield, I had my prom there, we go to doctors appointments there, play high school sports there, and visit museums and symphony hall there.  Though I never lived in Springfield, it is an important city to me.  In the future, I would definitely like to spend some time working in Springfield and I hope that the experiences and knowledge gained in this course will allow me to do so successfully.

This class has given me the same feeling that you get when you meet someone new, and then suddenly see them everywhere you go.  This semester, I’m up to my eyeballs in Lynchburg City stuff.  My internship brought me to the Lynchburg Chamber of Commerce offices on Memorial Ave. last week.  We drove up 5th Street last Tuesday and I noticed the giant hole in the road where the roundabout is going.  At Riverside Park on Saturday I thought about what a beautiful public resource that land is.  A few weeks ago, right after our first class, I read about the shooting outside the public library and wondered what the city needs to do in order to stop horrible things like that from happening.  The comments on that article saddened and concerned me.  In all this thinking about the things I’ve seen here in Lynchburg, it has occurred to me that public economics surrounds us.

I’m really excited to learn more about Lynchburg.  I’ll admit that I completely underestimated the opportunities and experiences that this city could provide me in my academic career.  The complications and challenges of evaluating the impact of non-profits really appeals to me at this moment.  It seems to boil down to, “What’s important?”, “How important is it?” and “How do we find that out?”  This is all easier said, of course.  Denise Sewell’s senior thesis, Neighborhood Development in College Hill, impressed and intrigued me.  I realize that it’s a brave thing to take the first stab at any research question.  Measuring satisfaction seems to be a tricky topic (like “happiness economics” which is also something I’ve been curious about lately).  Her methods were thorough, if somewhat preliminary given the constraints of time and resources, and I think this gives us a lot to work with and improve upon.  I’m looking forward to a good class discussion tomorrow.