[Vision2020] Some comments for Jeff Harkins

[Jeff Harkins]

Hi Joe,

It will take a while to work through all your 
comments.  Just be patient.  I am not going to be 
trite, but I will defer some of the issues by 
pointing you to some of the seminal works that 
have been done in economics.  As will be obvious, 
I accept the conclusions of that seminal work.

I will try to organize my response by parceling 
your comments and offering my observations for that section.

Here goes .....

At 08:45 AM 3/4/2006, you wrote:
>Dear Jeff,
>
>Thanks for your interesting and thoughtful 
>comments in response to BJ’s post and my own post. I have a few comments.

Thank you

>In reply to BJ, you wrote:
> >Quality of life is a qualitative assessment -
> >and only measurable at the individual personal
> >utility level. It is virtually impossible to
> >compare the utility of one person's "quality of
> >life" with that of another person.
>
>You are correct that it is difficult to quantify 
>quality of life and to have a quantifiable 
>comparison of one’s quality of life over 
>another’s. Not impossible, by the way, but 
>there are no agreed upon standards for such 
>quantification and comparison. But even if it 
>were impossible to quantify quality of life, 
>that wouldn’t mean that you couldn’t compare 
>one’s quality of life with another’s. This 
>is what BJ means when she says that numbers 
>don’t tell the whole story. What matters most 
>is quality of life and by your own assessment, 
>it is difficult if not impossible to quantify 
>quality of life. Thus, numbers don’t tell the whole story.

The conclusions reached by Von Neumann, 
Savage,  Morganstern, Senn and Arrow refute your 
position absolutely.  Quality of life cannot be 
quantified and compared across 
individuals.  Interpersonal utility is just that 
- personal.  Arrow's work (Nobel prize winning) 
is perhaps the best source to reference, wherein 
he concluded that once you are in a group dynamic 
setting it is "impossible" to assure that you 
will have reflective and transitive outcomes 
through voting. Check it out - his "Impossibility 
Theorem" is significant.  As one element of that 
theorem, Arrow demonstrated that decision makers 
will trade one position for another as a means of 
allowing one another to both optimize and/or 
satisfice on one or more preferred positions - in 
layman's terms, I will trade you this (which I 
really care about) for this other thing, which I 
also care about.  Check out the Arrow work - it might shift your paradigm.

Bottom line, I can compare and rank two or more 
"quality of life" positions and you can compare 
and rank two or more "quality of life" positions, 
but it is impossible for me to provide an 
absolute argument that could absolutely refute 
your ranking of those positions as long as you 
said I prefer A to B.  Let me provide a simple 
example.  I prefer vanilla to chocolate ice 
cream.  You prefer chocolate to vanilla.  I am a 
policy maker and I say that Joe is simply 
ill-informed and if he just could see the world 
as I see it, he would prefer vanilla to 
chocolate.  I am sure that I know what is best 
for Joe. So I make sure that more vanilla is 
produced than chocolate.  You however, trust your 
taste buds and despite all argument to the 
contrary (and I have seen you make this argument) 
- you say, I don't care what you say or what you 
like, I know that I like chocolate more than 
vanilla - you should make more chocolate!

The strategy economists recommend to resolve this 
particular "resource scarcity and resource 
allocation" problem is to let consumers vote 
their preferences with their consumption 
dollars.  The more dollars they have, the more 
they get to satisfy their wants.  This encourages 
them to work smarter or harder or whatever.  If 
you (and fellow consumers) all prefer chocolate, 
ice cream production will shift from vanilla to 
chocolate (unless of course, I, as the policy 
maker fetter that production and redirect back to vanilla.

Here is a question for you to consider - in such 
a situation, what would you do?

>Also in response to BJ, you wrote:
> >To maintain the status quo in
> >growth (.6% to .7%), we must find a way to house
> >about 150 - 200 families each year in Latah
> >County - that is a mathematical fact.  The
> >challenge in all of this is that those families
> >must have a way to feed and house themselves -
> >they must have economic opportunity.
>
>The mathematical fact is a conditional one: IF 
>growth continues at a rate of .6% to .7% per 
>year, then 150 ­ 200 families will need housing. 
>The mathematical fact is not the claim that 
>“we must find a way to house about 150 - 200 
>families each year in Latah County.” It takes 
>more than just the conditional, mathematical 
>fact to support that value claim. First, it 
>takes the truth of the antecedent of the 
>conditional: that Moscow will continue to grow 
>at the same rate. Second, it takes other value 
>claims, like “grow or die,” with which folks like BJ and I would disagree.

I think I have responded to this point a couple 
of times, so I will keep my response brief. My 
point on the growth issue was to refute the 
"highly emotional but devoid of fact" comment by 
Mr. Antone Holmquist.  If you need Holmquist's 
quote, let me know.  Agreed, the mathematical 
argument is conditional - conditional on the 
growth rate.  Before we digress too  far, please 
note that the rate that I used was the average 
growth rate for the last 25 years or so.  If we 
look at more recent history, we have years which 
reported negative growth.  IMHO, I think a growth 
rate that matches the inflation rate will be 
enough to maintain the "status quo".  Of course 
that presumes that we don't make any 
mistakes.  IMHO, I think we would be well served 
to provide a growth that exceeds the regional 
cost of living rate.  We have seen first hand 
what happens to our local economy when wages 
don't keep up with inflation. Voters get snarly - 
they won't support school needs, they won't 
support public infrastructure investments 
(courthouse remodel or the 1912 building), their 
disposable income falls (relatively) and they 
begin to become very cost conscious (more will 
shop at discount centers) etc. Then, people begin 
to leave the area looking for a community which 
has a more prosperous set of opportunities - 
there is evidence that we are in this stage.

>In response to my post, for instance, you note 
>that: "UI will see declining support in Moscow. 
>Demands for educational facilities in the growth 
>areas (e.g. CdA, Twin Falls) are already 
>pressuring the legislature for resources to 
>enhance the educational infrastructure in those 
>communities. While the UI will be getting some 
>of those dollars, the dollars will be spent in 
>those communities, not Moscow." This seems to 
>indicate that the growth rate for Moscow might 
>remain stable. I’m just not sure why this 
>would be a bad thing for Moscow. (I’m not even 
>sure why it would be a bad thing for UI but that is another matter.)

I am not sure what point you are making here - 
but the current facts are indisputable - funding 
for UI in Moscow is declining (relatively), wages 
are significantly below regional peer 
institutions and disposable income is less than 
past periods.  But I am very interested in your 
arguments that would support your view that a 
decline "would not be a bad thing for Moscow and 
for UI.  Please advise me about this.

>In response to my post you wrote:
> >Now comes the economics part.  The literature in
> >economics is well-founded and clear.  When you
> >fetter markets, you increase cost.  When you
> >increase costs, you make your community less
> >desirable for attracting the investment capital
> >necessary to fuel growth.  Creating barriers to
> >entry is a very slippery slope to navigate - it
> >usually results in enormous unintended consequences.
>
>Two points are worth mentioning here. First, 
>there is a real problem when you assume that 
>economics is a science in the same sense that, 
>say, physics is a science. I can accept that 
>generally when you fetter markets, you make your 
>community less desirable. But I refuse to accept 
>that this is a law of nature on the same level 
>as, say, the law of gravity. I think that our 
>community will be more desirable. I know lots of 
>folks who have moved to Moscow specifically 
>because of the desirability of the community. 
>Most of these folks would find it to be a less 
>desirable place than it is now were we to allow 
>for unregulated growth determined by the 
>economic benefits of large corporations like Wal-Mart.

I am not going to offer additional comments on 
this line of thinking at this time.  I defer 
first to the utility argument above and to your 
economist friends at WSU.  I am sure that the 
econ profs there can do a much better job of 
discussing the science of economics than your 
humble accounting prof from UI.  My economics was 
framed at Univ of Washington and hence would 
probably have no credibility in Cougar land.

However, IMHO, I think Moscow would benefit 
significantly by growth - and you should eat more vanilla ice cream.

>Second, you may be right that in restricting 
>markets we run the risk of unintended and 
>unfortunate consequences. But there are also 
>unintended and unfortunate consequences that 
>will result if we allow the “growth at any 
>cost” model that we’ve adopted until 
>recently. In my opinion, restricting growth is 
>less risky. It is interesting that you point to 
>Rhode Island as an example of what Moscow can 
>become. That seems to support my very point. If 
>I wanted to live in Rhode Island, I’d have 
>moved there. I'm from New Jersey which makes 
>Rhode Island look like Moscow. I wanted to get 
>away from that. (Not that I don't still love New 
>Jersey. I just don't want to live there.)

One of the advantages of tenure is that you do 
not have to worry so much about downsizing and I 
agree with you - restricting growth is less risky 
FOR YOU.  But there are lots of other folks with 
their own personal utility preferences.  Many of 
them see it very differently than you.

Ah, I lived in RI for 15 months (sabbatical).  As 
noted earlier, I found the place charming, loaded 
with history, an abundance of natural resources 
(Narragansett Bay was at the top of my list).

And they have done a remarkable job in having a 
population about equal to Idaho, packed all into 
a land area just a bit smaller than Latah 
County.  I am not advocating that we make Latah 
County into RI, but I simply point to the fact RI 
has found a way to build a relatively desireable 
place to live (with a bunch of universities - 
some of them quite good) and they have invested 
much of their growth dividend in green space and 
public access areas.  That's all - they made wise 
choices and managed their investments reasonably 
well. But their taxes are too high.

> >But I also see that MCA is predisposed to
> >an anti business posture.  And the
> >group seems to reflect a complete
> >insensitivity to the fact that any cost you
> >impose on business is going to be
> >passed right back to consumers.
>
>As most of you know by now, I am not a 
>spokesperson for MCA. It is a varied group with 
>many various opinions on these topics. I’ll 
>only say that since there are many business 
>owners among the MCA it is incorrect to 
>characterize it as anti-business. Speaking for 
>myself only, I am anti-unfettered growth. I’d 
>like Moscow to encourage businesses that fit 
>well with our current quality of life and our 
>collective plans for the future. Noting several 
>of the other interesting points that you’ve 
>made in your replies, Jeff, I realize that there 
>is a great deal that I have to learn about 
>economic development. I look forward to working 
>with you and others, through ventures like New 
>Cities. If we combine the intellectual resources 
>of our community, I have every hope that we’ll 
>arrive at some consensus that will allow Moscow 
>the opportunity to grow while still maintaining 
>those special characteristics that we all value.

My perception of MCA is based not on how the 
group works with its own members, but how it 
behaves as a force in the community. Thus far, 
they are working to serve the interests of 
business represented within the membership of 
MCA.  I do not see them as working to advance the 
interests of business outside the MCA.  Perfect 
role for a membership group - I have no problem 
with their positions as they relate to those 
businesses that belong to MCA.  This is perfectly 
predicable behavior - and in perfect alignment 
with the conclusions reached by Arrow.  It also 
suggests we will have the formation of more 
groups so that all interested parties have a 
means of advancing their interests.

I do find it interesting (and heartening) that 
you and other folks arrived here in Moscow in a 
period of unfettered growth and found it 
delightful.  I am also encouraged that it appears 
that the worst thing that has happened here in 
the past 15 years of so is that WalMart wants to 
build a supercenter here.  Perhaps this opens the 
field of dialogue so that we can collectively 
satisfice and/ or optimize our personal utility functions.

The challenges we face are interesting but not irreconcilable.


>Best, Joe
>
>
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