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Yes, exactly. There is both a social and an economic argument here. Strong Towns mostly makes the economic argument. The economic argument in this case is: w

by mhneu 8y ago

Yes, exactly. There is both a social and an economic argument here. Strong Towns mostly makes the economic argument. The economic argument in this case is: when the market selects for the lowest price at the present time, without taking into account long term trends, you get big box stores which are more sensitive to boom and bust economic cycles than locally owned small businesses are. So we must look at a longer time horizon than most financial firms or public companies do. Because society works on longer time horizons than public companies. We as a society should decide we want many retail and restaurants that keep an area strong over decades, rather than a few big box stores that can go out of business as the business cycle changes (in part because they are more dependent on high debt loads and low margins). If that's what a society wants, it cannot depend on a totally unregulated market, which in practice has a short-term view - a negative externality of not considering long time horizons. Strong Towns is saying 10% lower prices today in exchange for higher uncertainty and stability in the medium and long run is not what society should want. It's also saying society should not subsidize big box stores and malls by paying upfront costs for roads and utilities to those malls, because maintenance costs are much higher than for dense downtowns. Those are all good economic arguments.

hueving 8y ago
Why do you think a small business can weather a downturn better than a big one? I saw tons of small businesses wiped out in the 2009-11 time frame.
- electricEmu 8y ago
  I saw a ton that thrived. I think you'd need some additional evidence to show a trend. There's cursory evidence in either direction.
- bzbarsky 8y ago
  > Why do you think a small business can weather a downturn better than a big one? That's not the argument. The argument is that more smaller businesses might reduce existential risk for the town even if the risk of individual business failure is larger. To give a concrete example, let's say you have the choice between 10 small businesses and 1 large business. Let's assume that during a recession the large business has a 10% chance of failing and small businesses have a 20% chance of failing. Now say you go through 20 recessions. With the 10 small businesses, 2 fail during every recession; new ones come in to replace them during the intervening expansions. During the recessions, you have to deal with the reduced tax revenue and the somewhat higher unemployment. With one large business, there's an 88% chance that it will fail during one of those 20 recessions. And if it does, you (as in the town the business is based on) have nothing to fall back on to tide you over until the following expansion. As a town you trade off being pretty sure that your revenue will drop by 20% during a recession and just planning for that to having it not drop at all sometimes and drop to 0 other times. If the latter happens, your town dies. All of this, of course, is a matter of what scale you look at things at. Maybe we should be OK with some towns dying and their residents moving to other towns. But in that case we need to actually plan for that instead of being all surprised when it happens.

by mhneu 8y ago

hueving 8y ago

Why do you think a small business can weather a downturn better than a big one? I saw tons of small businesses wiped out in the 2009-11 time frame.

electricEmu 8y ago
I saw a ton that thrived. I think you'd need some additional evidence to show a trend. There's cursory evidence in either direction.
bzbarsky 8y ago
> Why do you think a small business can weather a downturn better than a big one? That's not the argument. The argument is that more smaller businesses might reduce existential risk for the town even if the risk of individual business failure is larger. To give a concrete example, let's say you have the choice between 10 small businesses and 1 large business. Let's assume that during a recession the large business has a 10% chance of failing and small businesses have a 20% chance of failing. Now say you go through 20 recessions. With the 10 small businesses, 2 fail during every recession; new ones come in to replace them during the intervening expansions. During the recessions, you have to deal with the reduced tax revenue and the somewhat higher unemployment. With one large business, there's an 88% chance that it will fail during one of those 20 recessions. And if it does, you (as in the town the business is based on) have nothing to fall back on to tide you over until the following expansion. As a town you trade off being pretty sure that your revenue will drop by 20% during a recession and just planning for that to having it not drop at all sometimes and drop to 0 other times. If the latter happens, your town dies. All of this, of course, is a matter of what scale you look at things at. Maybe we should be OK with some towns dying and their residents moving to other towns. But in that case we need to actually plan for that instead of being all surprised when it happens.