The “does it scale” test

After spending a few days in NYC on business, I came back to Dayton and immediately was reminded of why we’re Dayton and NYC is well, NYC. Don’t get me wrong- I was glad to be home and despite eating some of the best food of my life (recurrent theme- amazing prosciutto). I walked into a friends business and heard him lament about how he gave up on asking permission to add on to his business- so he just went ahead and did it.

When it took 5 months to get approved for a fence, or 9 months to get an occupancy permit because of a bathroom (even though the law doesn’t require you to have a public restroom), it’s easy to understand why he skipped asking permission this time.

Dayton doesn’t have near as many small businesses as NYC- and although I’m sure there are regulatory issues out the wazoo in the big city- how would they have any if for every change someone was checking with a fine tooth comb to make sure every i was dotted and t crossed? Just the shear number of business signs in NYC- was every single one approved by zoning? By a Landmarks Commission? Do our petty rules stop and hurt us more than help us? How would NYC do a property re-appraisal every three years for tax purposes? Could they? No way in hell.

Which brings me to the “does it scale” test. We can claim we can honestly and fairly assign a tax value through some arcane, flawed process, spending millions arbitrarily assigning values to property- or we could go by the only real and fair way of assigning value- the purchase price or the current asking price if the property is on the market.

The does it scale rule also applies to tax breaks and “economic development” incentives. If you gave the same deal to every single business – would it grow tax revenue or shrink it? After all, isn’t that the premise of all these government redistribution of taxes- taking tax dollars that are paid by all to give to a few in the hopes that they increase revenue in the future? This is the “strategy” that is used to justify everything from tax breaks to corporations like GE for their new building on UD property- and everything that has gone on at Austin Landing. However if those breaks were extended to everyone, equally, we wouldn’t have any money left for government to do what it’s supposed to do- like police neighborhoods and clean and light the streets.

A college professor I once had believed that pricing decisions were the most important business decisions ever made (I never agreed with him, because I believe in the Peter Drucker theory that there are only two fundamental drivers in business- marketing and innovation and pricing is a small part of the picture) and that the right price is what decides success. For instance, in the scheme of where to locate your business- if we only look at tax burdens- we skip all the other things like the cost of labor, the accessibility and cost of natural resources, quality of life etc.

NYC has a ridiculous cost of housing when compared with Dayton Ohio- yet, housing is in high demand keeping construction and development booming. Yet, Dayton has an incredibly cheap cost of living- which isn’t attracting people in droves, proving price is not the driving factor in economic development and regional growth. When I described what a million dollar house is like in Dayton to people in NYC you can watch their eyes glaze over. Talking with a former employee over $13 sandwiches, he doesn’t even own a bike since he doesn’t relish carrying it up 4 flights of stairs and taking up room in his micro apartment. Yet, his company subsidizes his monthly all access MTA pass by almost 80% costing him $22 a month, so that he doesn’t have to own a car or a bike (and bike share is coming to NYC sponsored by Citi soon). The investment by government in public transit- which does scale- and is available to all makes much more sense than subsidizing a parking lot for a local restaurant with tax dollars.

When it comes to the presidential election, the “does it scale” rule can be applied to choose your candidate (well, if they were actually held to some level of honesty and integrity and were liable for false advertising claims made during campaigns) – do the policies they talk about scale? Do the policies work equally for all, or only well for a few? No matter if we are talking about tax breaks or military spending- what is the cost benefit analysis when we scale it either larger or smaller?

The most striking example of a daring departure from “standard thinking” on use of tax dollars, is the economic impact of taking an old elevated railway line and turning it into an elevated walking garden/park- “The Highline.” A hulking rusting remnant of a once vital part of an economic engine could have been torn down and sold for scrap- or re-imagined as a park. The impact of the park is rising real estate prices, reinvestment all along the Highline and a valuable addition to the public trust. It’s an investment for all, that’s scaling well. If you’re not familiar- make sure to read the link.

These are just my first thoughts on “does it scale”- I’m sharing it with you for you to add your thoughts. Things I think that have scaled well in Dayton have been Metroparks (although I still don’t think Riverscape was well thought out), the library system, our bike paths, Sinclair Community College (Montgomery County only)- can you add some others?

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2 Responses

  1. truddick September 24, 2012 / 8:48 am
    Don’t agree with basic premise.  New York City is the first occupant of the ecological niche,

    Evolutionary theory now holds that there’s a process of punctuated equilibrium.  After a mass extinction there are lots of empty niches in the ecology; new species evolve relatively quickly to fill them.  Then evolution slows down, and new species rarely emerge even if the existing species is rather oddly adapted (say, tree kangaroos).

    The same sort of process seems to occur in businesses and also in cities.  When will a new online auction site displaced eBay?  What new cola beverage will compete with Coke/Pepsi?  Anyone thinking of starting a new major football league?

    New York City is what it is because it had the geographical advantage of a major ocean port and was connected to the Erie canal,  Once it grew into the pre-eminent big-city trade and business center, that niche was taken.

    And I doubt any native New Yorkers would say that they have less regulation than Dayton.

    Dayton will thrive if it tries to be Dayton, not if it tries to imitate a city of different circumstances.

    That’s not to say that practical approaches, like your notion of scale, should be rejected.  I’m just rejecting your analogy, 

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  2. David Esrati September 24, 2012 / 10:36 am

    @truddick- I don’t know if I was using NYC as an analogy- just as point of reference. The “does it scale” rule has to work both ways- does it scale up- and does it scale down- if it does both, it’s probably fair.

     

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