Not an Externality

Let’s try this again.  First run generated lots of questions (updated 10/2/16)

“When they build homes without parking, developers create a negative externality by making street parking less convenient.”

I have heard this in one form or another dozens of times.  Here is one way to respond beyond “that is not remotely accurate” (which is also true).

Developers are not creating a negative externality because developers aren’t doing the parking. People are doing the parking–people who have as much right to public spaces as anybody else.

Analogy 0:

We have some public land dedicated for use as tennis courts.

Somebody (whether developers or do it yourselfers) build some homes without tennis courts of their own.

Some of the residents in those homes decide they want to play tennis and therefore use the courts.  This may make finding an open court less convenient, but it is not an externality. Nothing is externalized: the new residents, like the old residents, are all waiting in the same queue.

A change in the ratio of Residents Who Want to Play Tennis to tennis courts is just that.

“Concurrency” would mean something like deciding to keep the ratio constant. But the onus for doing that is not on either home builders or newcomers, it’s on “residents” as a whole.

There is no negative effect on 3rd parties (a negative externality) from “building the homes” themselves.  And assuming all residents and builders are paying their legally obligated taxes and fees, the costs of however many tennis courts we want to have are internalized for all the parties involved (just as the time to find a tennis court is internalized for the Residents Who Want to Play Tennis).

(Just replace “tennis courts” with “street parking” and “Residents Who Want to Play Tennis” with “Residents Who Want to Park on the Street.”)

This doesn’t mean it may not be a hassle, but it’s not a negative externality.

FAQ

But what about developers?

They will have the same level of difficulty finding an available public tennis court oran available public parking space as anyone else.

But I mean don’t they get away with something by building homes without parking or tennis courts?

No. Imagine a developer builds two factories. He sells one factory to a company who hand-weaves baskets.  He sells the other to a company that burns coal to power a forge.  If the latter operates without adding a proper scrubber to its smokestack, that pollution is a negative externality.  But its on the operator, not the developer. The developer doesn’t get away with anything because the price the second company would have been willing to pay would take into account the need to add a scrubber. (And by not mandating scrubbers in every factory building, the first company doesn’t have to pay for something they don’t need).

 

Analogy 1:

Imagine a Town that starts out with just two voting machines in its single polling place.  As the population grows, there are still just two voting machines. So voting gets less convenient for everyone, including the long-time residents who remember when there was no waiting time in line to vote.

The Town is not creating an externality by either failing to add more machines or allowing new residents. Nor are people who are all “voters” regardless of how short or long a time they have lived in Town creating an externality by showing up to vote.

“Spending time looking for a space” or “walking from a space further from your destination than you’d like” is like waiting in line to vote.

Everyone has a right to access the machines.  Everyone has a right to access public parking spaces.

As the ratio of people to either one grows, it may make doing either less convenient, but its not an externality.

And if we want to do something about it, it’s a collective responsibility rather than solely that of newcomers.

Analogy 2:

Imagine this same Town was founded with a little green as its central park.  As the population grows, finding space to play Frisbee or have a picnic gets more and more difficult.

Those building new homes are not creating a negative externality. Nor are people who are all “residents” regardless of how short or long a time they have lived in Town creating an externality by showing up to usethe park.

Everyone has a right to access publlic parkland.  Just like everyone has a right to access public parking spaces.

As the ratio of people to ether one grows, it may make finding a spot for your picnic blanket or your Subaru less convenient, but it is not an externality.

And if we want to do something about it, it is a collective responsibility rather than solely that of newcomers.

 

 

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