How Government Destroys Cities

, Malcolm A. Kline, 2 Comments

Academics have long vexed over urban studies, putting the flight out of major cities down to everything from technology to racism.

boom towns book cover

Yet and still, in the last half century, “some cities were not declining despite these immutable forces and some cities turned around despite these forces,” Stephen J. K Walters pointed out in a seminar on November 20, 2014 at the Cato Institute. Walters is an economist at Loyola University in Baltimore.

“If you want a healthy city, secure the property rights that go with capital,” Walters advised. One way of doing so is through tax cuts.

When California voters passed Proposition 13 in the late 1970s, the Golden State’s major cities experienced something of a Renaissance. For example, “Between 1950 and 1975 San Francisco doubled its tax rate and lost 100,000 residents,” Walters pointed out. “San Francisco raised property taxes 18 times between 1950 and 1975.”

“When Proposition 13 passed, it saved San Francisco from itself.” People actually started moving there again.

Proposition 13 capped taxes across the board in California at one percent. And, “Within four years of Proposition 13, San Francisco’s tax revenues exceeded their pre-Proposition 13 levels,” Walters noted.

Walters is the author of Boom Towns: Restoring the Urban American Dream, which is published by the Stanford University Press.  As well, Mark Zupan, an economist with the University of Rochester, pointed out that Oklahoma City experienced a turnaround after the state passed a right to work law.

Zupan was on the panel with Walters.


2 Responses

  1. econjack

    November 26, 2014 1:05 pm

    Why is anyone surprised by this? The Kennedy and Reagan tax cuts all saw huge increases in capital inflows and increased economic growth. The fastest growing economy in the world recently cut personal and corporate tax rates and has reduced the gov’ts share of GDP by one-third. The country: Chile. The Laffer Curve shows the impact quite clearly. The problem is, Washington measures its power by its ability to take money from the productive sector and give it to the unproductive sector, thus making the latter dependent on the gov’t.

    Obama says the rich don’t pay their fair share. Really? The top 10% of income earners pay 71% of all federal taxes. If anything, they need a tax break. We need them and their investment to keep the economic engine growing. How many of you were hired by a poor person? After all, a rising tide lifts all boats. Also, while Obama complains about taxes on the rich, who does he think wrote the tax code? Point the finger at yourself, sir.

  2. terry1956

    November 27, 2014 11:04 am

    According to a Uncommon Knowledge interview of Amity Shales on her book Coolidge towards the last years of Coolidge’s service as president over 90% of Americans no longer paid federal income taxes because of the large rate cuts and the expansion of the threshold.
    In Nathan Lewis book ” Gold the Once and Future Money” he references that from 1950 to 1970 Japan cut taxes every year but the government revenue still grew 16 fold.
    In many of those years because of a balanced budget mandate the legislator had to meet before the end of the fiscal year to spend the surplus.
    I looked it up in the world Almanac and on US government websites, during that same period US federal revenue grew only 5 fold, really the only tax cut was the 30% tax cut that JFK wanted and LBJ got through Congress but LBJ later increased some taxes again.
    In that period 50 to 70 the unemployment rate of Japan averaged less than 2%( in the US it likely was more than double that) and the real per capita income from 52 to 72 doubled every 10 years making the annual real average 7.2%. shows when it doubled in the US.
    Ok you see that in 2009 dollars the real per capita GDP in the US was 15,649 dollars and by 2013, 61 years later the US failed to do what Japan did in the first 20 years because if so the real GDP in the US would have been at least 62,596 in 2009 dollars, bringing that up to 2013 dollars it would have been over 16,000 in 1952 so over 64,000 if it had doubled twice by 2013 41 years longer than it took Japan to do that but as you can see by 2013 the real per capita GDP in the US even in 2013 dollars was still less than 60,000.
    Japan started to go down hill in the 1970s when they start to raise taxes again and push through other neo Keysian polices including unsound currency and banking.
    If the US per capita GDP had doubled an average of every 10 years from 1952 to 2013 by the end of 2013 the per capita GDP would have been over 1.9 million dollars in 2013 dollars.
    Ok at the measuring worth website you see that the real per capita in 1913 was under 7,000 dollars in 2009 dollars and under 50,000 by 2013 in 2009 dollars thus in 100 years it had failed to double three times and if it had doubled at least three times in the 100 years the average annual growth would have only been around 2.16% but it was less.
    If the growth had average only 3% the per capita GDP by 2014 in 2009 dollars would have been over 122,000 dollars. With 4% it would have been over 322,000 dollars and at just a little over 5% it would have doubled 7 times and would be over 800,000. at 6%= over 2.1 million
    At 7.2% or doubling 10 times to over 6.9 million dollars.
    historically in the US the average and median income of the family bread winner has been at, over or not far below the per capita GDP so with the median income being 1.9 million a year there would be no need at all for government education, healthcare, welfare or social security. if average and median income was at least 190,000 a year then there would be no need of the above. an annual average per capita growth over the 61 years of just 4.5% would have resulted in a per capita of over 218,000.
    government could do only actual public goods things such as defense, police, courts, jails/prisons, roads and public transport which today totals around 1.7 trillion dollars out of the over 6.2 trillion in federal, state, county and local government spending.
    League of Nation stats said by 1929 before the stock market crash the unemployment rate of the US was the lowest or maybe it was the second lowest at 1%.
    The LN stat was referenced in the book ” New Deal,Raw Deal”, with stats from other sources showed how the US declined in ranking by the late 1930s.
    the measuring worth site use to have the data charts on Japan’s growth but some reason they have been taken down ( maybe the wayback machine has the data archived).
    I found the historical unemployment rate of Japan with just a search engine.
    Also during the Coolidge years and the Japan years of 1950 to 1970 despite the stuff spouted by the globalist and ” free traders” the US there was a protectionist policy in the specific period of the specific nation and tighter controls over immigration.
    In the Coolidge years the protectionism was mostly done through import taxes but in Japan the import taxes were low so the protectionism was done through other means.

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