Boise and the Law of Unintended Consequences
Today I read a story in the Wall Street journal about the changes occurring in Boise ID due to influx of population (Boise ID feels the growing pains WSJ April 15, 2018 ) . Why the influx of people to this rural western state capital? The same things that have kept residents in Boise for years apparently…beautiful scenery, small town feel, great recreational amenities, affordable housing, low cost of doing business…wait, when did this story become an economic development marketing piece? This article starts out sounding like it was written by the city’s economic development team, even including a quote from a CEO who relocated his company from Redwood City, CA (N. Silicon Valley) and doubled the number of employees after the move. Later in the piece you read about “…low crime rate, affordability and scenery have attracted Californians especially.”
And then comes this:
“But…as Idaho and (Boise) have boomed, ...is struggling to cope with byproducts of its success: soaring housing prices, labor shortages and worsening traffic.”
I do not claim to know what Boise’s leaders envisioned as they crafted and executed the strategies that have lead the community to this moment. I do know that from an economic development perspective the growth in jobs and companies is EXACTLY what economic developers want for their communities.
It is here we must say hello to “The Law of Unintended Consequences” (The Encyclopedia of Economics ) or “LUC”as I will call it. While primarily ascribed to impacts caused by government regulation, LUC is also used in terms of policy in general. American Sociologist Robert Merton identified five sources of unintended consequences (The Unanticipated Consequences of Purposive Social Action, 1936). One source is truly applicable here, “Imperious Immediacy of Interest” where:
“…the actor’s paramount concern…excludes the consideration of further or other consequences of the same act….and precisely because a particular action is not carried out in a psychological or social vacuum, its effects will ramify into other spheres of value and interest.”
In other words, we strive for more jobs, more companies and more people without concerning ourselves with how those changes will truly and fully impact our community. [When was the last time you heard that type of discussion in a City Council meeting on economic development that did not start with someone in the NIMBY section of the audience!]
Create a community where people want to live and there will be impacts caused as people move there! Increased housing demand will lead to rising housing prices (it is called supply and demand). More people means increased traffic, increased needs for water and waste disposal, etc. New construction means the look/feel of a place will change and not necessarily for the better. Sure there may be some better paying jobs, but at what cost? Amazon changed Seattle forever (When Amazon Comes to Town - Politico, Oct 17, 2017 ~ housing costs, homelessness, traffic, ex-urban sprawl ~ are you HQ2 finalists paying attention?!). Silicon Valley’s livability woes are well documented, despite its being the global hub of innovation. Austin, TX; Greenville, SC; Denver and Colorado Springs, CO; Sioux Fall; SD are further examples of LUC resulting from failing to truly assess the burdens accompanying success. The question economic developers and community leaders need to ask themselves is this:
“If we succeed, how will our community, and our way of life, truly look?”
With all the strategic planning and visioning I have seen in my long career I have yet to see this question asked and answered with eyes truly open, looking for what might not be easy to accept. If asked, it is always glossed over by phrases like “better paying jobs”, “more revenues for schools and parks”, or “our kids will not have to move away anymore”. One phrase I heard while in a planning session on an Amazon HQ2 proposal was “whoever gets this, it changes who they are”. The question is, will it be for better or worse?
Perhaps economist Frederic Bastiat has the best advice for us in economic development when he said:
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. ~ Frederic Bastiat, “What is Seen and What Is Not Seen” 1850.