Stretching the Mind

Accounting and economics seem to just zing (is that a proper verb?) right over my head. You want a little “heads up” on the economy and the talking heads never agree. Are we going up, going down, or going bust? Like you, I want as much warning as practical to prepare for the worst. Why such diversity of opinion between economists? Cowboy philosopher Will Rogers said, “An economist’s guess is liable to be as good as anybody else’s.”

While reading “Biblical Economics” by R. C. Sproul, Jr., I learned about Adam Smith, history’s first economist, according to Sproul. Smith espoused the theory of the “invisible hand”. Quote from the book: “Simply put, the invisible hand is the force that takes the combined interests of all members of society and creates a well-ordered marketplace.”

I learned that Adam Smith’s theory (Nature and Causes of the Wealth of Nations, published 1776) starkly contrasts with that of John Maynard Keynes. Smith’s ideas are the foundation of contemporary conservative thought; Keynes’ ideas drive contemporary liberal thought that government manipulation produces a “more ordered and prosperous society than that produced by the blind forces of nature working in a free market.”

I wanted to discover their respective belief systems to better understand their values. It seems to boil down to this: Adam Smith advocated savings and Keynes thought too much saving was a market evil. Smith believed in natural market equilibrium – Keynes believed government should regulate markets to manage stability.

I tried to imaging a shift in time with a fledgling Ford Motor Company manufacturing Model T cars and Barak Hussein Obama’s car czar controlling the carmaker. What would that look like? I imagine Obama would condemn Henry’s excessive profits and demand he resign. Putting in place his hand-picked bureaucrat, Obama now has control of Ford Motor Company and the UAW now owns controlling interest. The company stops production of Model T cars in favor of smaller, lighter, less-safe European-style go-karts. Toyota goes up; Ford goes broke.

Texas Examples of Natural Economics

Houston is the largest city in the Lone Star State. Critics have long decried how the lack of zoning infringes on historical places.

True, historical buildings have evolved from their original to modern uses. The Rice Hotel, for example, where President Kennedy rested before heading to his fate in Dallas, was my overnight lodging in 1967 when undergoing Armed Forces evaluation. It was an important and useful hotel. Now, it is a useful mixed-use development with shops, loft apartments and restaurants. The old Republic of Texas Capitol stood on this same site from 1837 to 1839. Under contemporary obsessive-compulsive “hysterical-society” thinking, the Rice would never be built. That land would be a tax-exempt museum, a tax burden for upkeep and operations these 170 years – in perpetuity. Imagine the property tax revenue loss to the City of Houston and Travis County. Land owners want their lands to be put to best use to optimize capital formation. In other words, lying fallow, while settlers come alongside, causes the land value to incrementally grow over time. Later, primitive structures further elevate the value of the land. As population expands and the demand for products and services becomes greater, the owner demolishes the old and builds new buildings so that he can match services to the growing consumer demand.

Poor old Houston, just think what a stink-hole outpost of commerce you could have been if only you would have followed the central-planning mentality of Planning and Zoning Commissions.

Houston is successful because it did not suffer the small-mind central-planning philosophies of a P&Z commission. (Please: do not misunderstand. I do not want to live in Houston – actually, I do not want to live in Rockwall, my city of residence for over 22 years. I want to live (perchance to dream) on the west beach of Galveston Island, but my wife warns me, “You would be so lonely there”.) Character sets Houston apart from all other Texas cities. Commercial centers are natural places to transact business. Residential areas, aside from the H.O.A. neighborhoods, are natural places to live and raise children. Houston is the singularly most successful city in the Lone Star State due to natural, capitalistic economics.

In my hometown of Palacios, an old seaside city in Matagorda County, rags-to-riches stories pepper its history. When my Hispanic neighbor, a fisherman, found his niche, he augmented his small enterprise, made a lot of money and employed several people. When it came time for a new house, he did not move to a gated community, he tore down his shack and built an excellent two-story residence on the same property. Like Houston, old borders new.

What’s the Problem?

Central planning is the problem. While true that central planning prepares developments with vital infrastructure, it creates a carbon-copy, synthetic environment. Not everything driven by municipal planning is bad. Planning should accommodate natural economics instead of artificially controlling it. When government talks about control, government talks about limitation. Bureaucrats who control land development, limit land development to the extent of their theories and life experiences.

The big drivers in P&Z planning are the real estate developers. That’s okay with me, because a property owner should be able to develop his land for the best use of the time. Problems arise from central planning when the small-minded planners, using their presumably superior intellects, decide for what purpose a land owner can use his property.

Here in Rockwall, micro-manager planners, including City council members, niggle (is that a real verb?) over placement and architecture of commercial signage. By the way, our most comical commercial sign lies invisible to the public, between right-of-way and a two-story office building at the intersection of Turtle Cove Blvd. and Ridge Road. What kind of battle would the property owner face if he/she elects to install a visible sign?

I suggest a property owner has the highest authority to decide us of his/her land.

Disclaimer

Lacking formal education, my thinking and writing follow simple-minded, common-sense research and life experiences. I invite comments and criticisms.

A blog about capitalism and socialism will follow.