The South Africanization of America's Cities and Our Budding Debt Crisis

The Real Threat

Welcome back, and thank you for reading! Today’s article is a subject I’ve long wanted to write about, but needed to do a good bit of research on first, so as to tackle the problem well. If you are not already a paid subscriber, please consider upgrading your subscription for just a few dollars a month to support this project and read articles like this in full; your generosity is what makes this possible, and I really appreciate it. If you find this article valuable, it would be hugely helpful if you could like it by tapping the heart at the top of the page to like the article; that’s how the Substack algorithm knows to promote it. Thanks again!

The water is rust-colored and undrinkable in Flint, Michigan, with residents fearing once again catching Legionnaires’ Disease every time they take an unfiltered sip.¹ The water is so unsafe and unreliable in Jackson, Mississippi, that the Army Corps of Engineers had to make emergency fixes before people started dying.² Detroit went bankrupt,³ and it is surrounded by neighborhoods so unsafe and deserted that they seem like deadly ghost towns.⁴ Kansas City’s crime catastrophe is now so bad that residents refer to it as a “Mad Max” city.⁵

Every year, the potholes around the nation seem to grow a bit more jarringly obvious, the boil water advisories a bit more frequent, and the blighted neighborhoods a bit more expansive and decayed. That’s not to say everywhere is hellish. But a slew of places are, and that number grows by the year. What’s worse, most municipalities are already staring down the barrel of a financial gun,⁶ and are thus unable to do anything to handle the crisis other than hope it’s somehow averted by chance.

Hope, however, is no strategy. Rather, we ought to examine the coming catastrophe for what it is, and then use what we’ve learned to fix it. Such, at least, is what Charles Marohn Jr. tries to do in his Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity, a book with immense promise that turns out to be one of the dumbest and most dishonest books I’ve yet read.

I’ll explain why in the article that follows, first articulating Mahon’s general argument without much criticism of it, and then explaining what factor he refuses to countenance that makes the entire book extremely dumb.

A note on sources: In addition to reading Strong Towns, I read a few other books about city building in America and England to consider the alternatives and the history of how we got here. Those books were Nature's Metropolis: Chicago and the Great West by William Cronon, Gotham: A History of New York City to 1898 by Edwin Burrows, The Growth of Victorian London by Donald Olsen, and Lords and Landlords: The Aristocracy and the Towns, 1774-1967 by David Cannadine. Unlike Strong Towns, all of those books were absolutely fabulous and well worth reading. Gotham and Nature’s Metropolis, in particular, were incredibly interesting and delightful to read.

Why Are America’s Cities Facing a Catastrophe?

Though the overall book is quite bad, the central thesis Marohn makes in Strong Towns is a reasonable one that is worth examining in some depth, as the natural result of it—a municipal debt crisis—is certainly real and has the potential to become a catastrophe.⁷

The basic point Marohn makes is that America's urban and suburban development changed much for the worse in the post-WWII era, going from being organic and piecemeal to being premised on massive developments involving the expenditure of vast state resources.

Listen to the audio version of this article here:

[AUDIO] Diverse Cities and The Coming Municipal Debt Catastrophe

As he tells it, our growth and development were originally characterized by organic growth that saw natural developments in response to economic or geographic conditions, prudent uses of resources, and gradual building around the edges. This is the sort of organic city-building one reads about in almost any history of a town on the frontier or of the great cities, from London’s explosion in Georgian and Victorian England to the rise of New York City from a small village to a vast metropolis of world-spanning importance.

But then, buoyed by immense resources in the post-war era and enabled by the automobile and asphalt road, we moved to the now-classic sort of suburban development we all have seen, the sort in which everything is built at once in the hope that the development catches on and somehow works out. As he puts it, “Today we build individual homes, as well as complete neighborhoods, all at once, to a finished state. There is no starting small and adding on as resources allow…”

Paired with such an approach is an emphasis on standardization, which will theoretically lead to less expense, but in reality tends to lead just to dreary uniformity and widely dispersed amenities. As Marohn tells it:

Standardization of the core product and assembly methods has made the home-building process hyper-efficient, theoretically driving down the cost per square foot. The price of a home has not gone down, however; the amount of square feet per structure has merely gone up. Financing mechanisms force home builders to build to a final state, and they force buyers to enter the market with a fully mature home at a high price point. The true entry-level product has been squeezed out.

…

Zoning, as well as land covenants and property associations, create uniformity across each new neighborhood that is built. Not only are all homes on a given cul-de-sac built within a few years of each other, they are all built in a tight price range. Homes are clustered together by price, with a buffer between them and homes in a different price point. Homes for the modestly wealthy, or those who can make the payments of a modestly wealthy family, are in a completely different pod from homes for the very wealthy…

Naturally, there are a great many downsides to such an approach, in addition to the general dreariness of being surrounded by hundreds of homes that are filled with near-identical people and built to one of just a few identical floor plans.

For one, building everything all at once—from the houses and their roofs to the roads and utilities that run underneath them—is immensely expensive and requires a plethora of public and private debt. Thus, it carries consequences that, like those associated with the very spiritually similar monocrop agriculture, can be quite devastating at all once.⁸

What happens when the road starts to fill with potholes and the water pipes start to crumble at the same time as the roofs develop holes and the house paint starts to chip, across the entire development? If in a particularly posh area, it might all be fixed, particularly if compact and revenue-generating enough—like Mayfair and Belgravia in London—to justify the new expenditure.⁹ But if in an outlying area? Well, then it’s more likely to just be abandoned as people drift on to greener pastures, and those who remain behind will be left with crumbling infrastructure as the municipality is left with debt it can’t repay.

Then there is the matter of wasteful spending and improvident use of scarce resources, even ignoring the potential outgrowths of building everything at once. Because the assumption has long been continued access to bountiful resources, those that were easy to access have been squandered, and the spiraling consequences of tacking more and more spending on to deal with new problems is becoming far too expensive. Marohn points to ever-expanding traffic lanes and ever more numerous strip malls as key examples of this. As he tells it, instead of redeveloping blighted locales, building in a way that requires less travel time, or otherwise being thrifty with resource expenditure, we’ve thrown ever-increasing piles of good money after the bad in the hope that it eventually works out and delivers enough tax revenue to pay for the upkeep and paying off the debt.¹⁰

The matter of roads and their expense is a particularly big focus of Small Towns. While Marohn might not hate the automobile as much as most urbanists, he does frame it as having not fulfilled its promise: what was originally a substitute for riverine transport or trains, a way of connecting two relatively dense places, instead became a way of turning huge swathes of land into areas only accessible by car and road.

Cities filled with parking lots as highways sliced through cities, vast regions of single-family homes cropped up in ever-larger belts around increasingly empty urban cores, and immense amounts of municipal debt were poured into building the paved road infrastructure that made it all work. Marohn insists this “financial disaster” happened because Americans wanted to “flip the economic chessboard” and escape from the very expensive (but also very livable) walkable urban cores to the less expensive and more private outer belts of suburbs.¹¹

The last big issue with this pattern of development is that it is largely unremunerative. Whereas city growth in the days of old was not just geographically constrained (thus limiting new utility additions) but also largely constrained by what private resources were available for it and thus based on rational, informed trade-offs of costs and expected financial rewards, now cities tie themselves to vast development projects that produce a very low per-acre financial benefit, and are immensely expensive to build and maintain.¹² That means that municipalities are often losing money hand over fist even when they grow and attract new residents and new businesses; the way in which our new developments are built just doesn’t make financial sense at the city level.

The result, as Marohn sees it, is that we’re all converging on becoming what he sees Detroit as being: a city destroyed because it became spread out and connected by a vast network of inefficient paved roads and saddled with the municipal debt necessary for building them and the utilities that make the locales connected by them work:

When you take a prosperous and stable city, spread it out at tremendous cost over an enormous area, denuding and bisecting the original fabric as part of the transition, then saddle it with decades of liabilities, you end up with Detroit. Like all bankruptcies, it happened slowly and then all at once. Detroit is not some strange anomaly. It's just early. It's just a couple of decades ahead of everyplace else.

And it is not that those problems will happen at some far-off date. The bill’s already due, and it is leading to: 1) blighted areas of cities that went from being relatively affluent suburbs to burned-out hellscapes,¹³ and 2) cities already struggling to pay their debts while also needing to raise ever more money to create the stimulative growth that might help them out of the hole they’ve long kept digging. So, formerly prosperous areas turn to blighted areas as the bill comes due, and there are no resources left to fix that. As Marohn puts it:

The liabilities from this experiment would now start to come due, particularly for local governments. The infrastructure investments being induced created a lot of transactions - a lot of economic growth - but the lack of productivity meant there wasn't enough wealth to maintain everything once the financial sugar high wore off. Cities like Ferguson, Missouri, which was an affluent suburb of St. Louis in the first generation of the post-war boom, now had to sustain all those miles of roads, sidewalks, and pipes with a stagnating tax base not up to the challenge. Ferguson would go on to become notorious for decline and blight, a distinction it shares with most of America's immediate post-war suburbs.

Similarly, he later notes that the pairing of existing, already financially unproductive investments with attempting the same thing on an even larger and more expensive scale is just making municipalities ever more insolvent and is the sort of insanity that can’t long continue:

Our cities made decades of bad investments, sacrificing their stable wealth in exchange for new growth as part of a continent-wide experiment. Most local governments are functionally insolvent, having more long-term obligations than they have revenue potential. They react to this imbalance by trying to grow even more. The fundamental lack of financial productivity in our development pattern has made our governing systems fragile, despite our best intentions. Calls for more efficiency, greater centralization, and much more spending reveals a lack of awareness, along with an embedded desperation. This can't continue.

If it can’t continue, then it won’t. When it doesn’t continue, that will mean whole neighborhoods and the infrastructure that supports them falling into disrepair, city finances being wracked by high interest payments on unremunerative investments and a fleeing tax base, and huge financial losses as those developments that can no longer exist go belly up and remain unbought.

In the end, we might see a wave of private and public defaults, a crisis in markets as much municipal debt goes to zero, and huge waves of Third World-tier problems like rolling blackouts and dangerously dirty water. As a result of the crisis wave of municipal bankruptcies, we’ll see a disaster of impoverished investors and those relying on pensions while precluding any future renewal or growth based on debt. Thus, more flight and blight will follow as all the unproductive investments are cleared out.

Or, at least, that’s what Marohn indicates is coming.

Why Strong Towns is Terrible and Nearly Pointless

The one big thing that Marohn misses is what makes his book nearly pointless, except insofar as it points out the looming debt catastrophe and related consequences: