Freeman

ARTICLE

Ghost Towns

MAY 01, 1963 by JOHN C. SPARKS

Mr. Sparks is a business executive of Canton, Ohio.

The board of directors of our Chamber of Commerce had met to discuss the city government’s pro­posal to participate in the federal urban renewal program. A fellow-director turned to me—not in the tone of inquiry, but more to nail down his argument: "Would you stand by and see our business sec­tion become a ghost town?"

The question probably was mis­directed because I happen to be fond of ghost towns—figuratively speaking. Many features of the twenties and thirties, then alive and vibrant, are today merely ghosts of the past; and my fond­ness for them arises precisely be­cause they are ghosts.

Let me explain. A livery stable, thriving at the time I was born, went out of business six years later. The automobile had dis­placed the horse. The reason why I am fond of that ghost is that its owner did not apply to Washing­ton for livery stable renewal.

The livery stable is but one of the ghosts of the past. Ghost canals wind through Ohio and other parts of the country, no longer serving as a means of transportation. There are ghost lamp factories, ghost icebox fac­tories, ghost streetcar tracks em­bedded in many city streets, ghost movie houses, and ghost back-lot rest-rooms all outdated by electric lights, modern transportation, home refrigeration units, televi­sion, and inside plumbing.

In business, there are ghosts of early office equipment—awkward typewriters, hand-cranked calcu­lating machines, and laborious duplicating facilities that would make one barely legible copy every four or five minutes—in contrast with modern electronic data proc­essing equipment, high-speed dup­licating processes, electric type­writers, and calculators.

How sympathetic would we be to the efforts of yesteryear’s office equipment manufacturer to keep his outdated products on the mar­ket through a government renewal program? Would we deliberately preclude better quality and lower costs in the products we buy, by subsidizing obsolete business methods and facilities? Not likely, especially when we have a choice in a free market. Yet, in today’s changing urban areas when the owners of downtown properties at­tempt to salvage them through ar­tificial and ineffective government urban renewal programs, it is as though livery stable owners of the early twenties were seeking fed­eral aid to keep in operation the horse and buggy.

As it happened, not many livery stable owners were utterly con­sumed under the cruel blow of economic defeat. Many converted their buildings and operations in­to uses consistent with the chang­ing consumer demand for services and products.

A sign of our time is the ora­torical and almost sacred crusade to save physical properties in the formerly bustling downtown sec­tions of our cities. Another sign, cousin of the first, is the fervent chamber-of-commerce endeavor "to bring industry to our city."

Justifiable Pride

I wish it understood that I en­thusiastically support the owners of property who profit through the free choice of willing customers. I cheer them and admire their ability to serve mankind with their valuable products and serv­ices. Particularly, my praise goes to those downtown owners who recognize that their prosperity in the past came from economically filling the wants of their custom­ers and who now roll with the changing times and continue to serve customers well and profit­ably. To these merchants who have retained and kept up-to-date their competitive skill—rather than run­ning to Washington for aid—goes my genuine admiration.

I also want it known that I have pride in my own community, the people I know, the companies whose home offices are here, the local athletic teams, the home­town girl who made good in the Metropolitan Opera, the nation’s President who came from this city, the excellence of the fine arts, the theater, and other civic achievements. I want my city to have prosperous business, cultural, and recreational activities; let there be no mistake about that.

But, a city prospers through strict adherence to old-fashioned basic principles. If we let those principles become ghosts, then ours is indeed a ghost town.

How Cities Grow

In order to obtain a clearer per­spective, let us reflect on how cities got to be cities in the first place. Usually, there were eco­nomic benefits to be derived in the general locality: potential port facilities, crossing of two railroad lines, nearness to special raw ma­terials, and various other factors. Some communities have numerous economic assets, while others de­velop more precariously with a single attraction. Various mining towns of the West are "ghostly" examples of communities whose single purpose no longer exists.

A Southwestern oil town lost 90 per cent of its 25,000 population when reserves of oil in the vicinity declined. Recently, the remaining 10 per cent, the uneconomic left­overs in that oil town, sought re­covery of their lost property values through the federal government and were awarded funds taken from others all over the country)

Cities are not ordained to be—they are born of the economic decisions of many persons who have decided to live there rather than somewhere else. These persons, one can be certain, were not se­lecting the locality on some willy-nilly, illogical basis. A job was available, business prospects were good, or a service was needed. Why else would people decide to live in a smoky, smelly industrial city? Cities have grown because there were sound economic rea­sons for people to live there.

On the other hand, the process can and does reverse itself. In some instances the raw materials simply give out. Examples are abundant, however, where the movement toward other locations has been pushed along by the un­wise actions of local citizens. Oc­casionally, an individual may act unwisely to the detriment of his community, but this is not the sort of thing that would be imitated by very many people. When whole communities act unwisely, the cause invariably may be traced to those organizations that have the power to coerce their fellow citizens.

Governmental Forces Lead to Community Deterioration

After thoroughly examining the possibilities, including labor union activities and the nature of union power, one may conclude that in reality there is only one organiza­tion—the government itself—with the coercive powers in ques­tion here. People acting through the power of their local govern­ment (the same thing applies to states experiencing the exodus of industry) take actions that de­tract from their economic assets. Ever-increasing tax rates and new forms of taxation are common ex­amples of unwise action. The ex­cuse always includes the alleged growing needs of the community, but never explained is why the functions of police and fire protec­tion, road maintenance, and public education forever require a higher percentage of the total wealth and earned income.

And the more the community government interferes with the private affairs of its citizens, the less effectively it fills the proper police function of protecting the life, freedom, and property of its citizens. A community may acquire a reputation as an undesirable labor market, for example, due to unruly labor organizations that successfully defy the rights of in­dividuals—owners of industrial plants, other citizens, and even their own members—while the police of the community do noth­ing to stop such unlawful prac­tices.

Thus, unwise community action makes the community economically unattractive to businesses already located there as well as to those contemplating the area for plant expansion or decentralization.

People Change

Communities themselves evolve; the habits and desires of the peo­ple change. It is evident that many people now find the suburbs and the countryside more to their liking than the city surroundings they preferred two or three dec­ades ago. These are independent economic decisions; and merchants must react competitively if they are to continue to serve their cus­tomers well. There is no magic line (municipal corporation limit) within which exists a sacred right to a perpetually prosperous life for property owners, merchants, or even city officials themselves.

Cities were a result of people coming together. Today there is a new concept of decentralized liv­ing. Furthermore, those who now live outside the "magic" corpora­tion lines are not living without police and fire protection as is sometimes implied. These services are often obtained exactly to the extent that each property owner or resident wants and contracts for them. Shopping centers fur­ther illustrate self-containment, as they usually construct their own streets and sidewalks and provide police protection—not at public expense, but at the expense of those who use them. Indeed, the evolution of shopping centers is in the direction of complete com­munity services, including the rec­reational and cultural, all provided by individuals through free ex­change.

Once a community embarks on a wrong course, it encourages the exodus of established business and population and discourages the coming of new people and new in­dustry. Increased restrictions and taxes, coupled with failure to pro­tect life and property in the com­munity, spell trouble ahead.

Paradoxically, the trouble feeds upon itself through the frantic adoption of fallacious remedies. Rising taxes start the decline of values and the exodus of industry and people. Then planners con­demn additional properties, strangling any business life left in the community. Their sincere ob­jective is to displace these "sub­standard" areas with "planned" modern apartments, thriving busi­nesses, beautiful parks. And they expect the program to pay for itself through increased valua­tions and property taxes. They forget to explain why businesses and investors should be attracted by high taxes.

The next step is to seek federal aid, which usually requires a pro­portion of local matching funds.

For such funds, many cities are turning to municipal income taxes, adding one more reason why peo­ple and businesses move away.

Artificial Lures

In recent years, we have seen increasing competition between lo­calities to lure business. One de­vice is to promise property tax ex­emption for ten to twenty-five years. Sometimes the communities will construct and lease factory buildings at bargain rates. But businessmen tempted by such at­tractions might well speculate as to who will foot the bill for other newcomers after one’s own com­pany has had the initial "free ride." An economy based on sub­sidy leaves much to be desired.

The distraught efforts of com­munity leaders to save their towns from unfavorable economic deci­sions sometimes produce unusual results. One small city, having lost its largest manufacturer, sought to bolster its local economy by way of a federal housing project. Con­struction workers and supply com­panies may benefit temporarily, but what real reason can there be for adding to the surplus of hous­ing in a community that people are leaving to find jobs.

Another city’s leaders believe they have found a way out. Their state prohibits dog racing; so they have asked for an exception that would give them a monopoly. This could prove very profitable as a tourist attraction—until an­other community cries for its equal rights!

These are but samples of the ludicrous measures by which civic leaders strive to stem the receding economic tide in their home towns; and all they accomplish is to speed the decline. Government action af­fords no solution to the problem, unless the action be to repeal re­strictions and taxes. When the promise and threat of government urban renewal hangs over a com­munity, correct economic decisions about investments and entrepre­neurial risks are postponed, both downtown and in the suburbs.

What of the Future?

Communities develop around the common economic interest of many people, and communities will change as those interests change. Attempts to start at the wrong end of the process are doomed to un­happy results. No government planner can anticipate accurately the economic choices of tomorrow, next week, next month, or next year—not even for one individual and certainly not for an entire community. The result is bound to be a ghost town economically, no matter how sturdy its physical construction from the ill-gotten federal funds.

If new industry is to be at­tracted to an area, there must be sound economic reasons: avail­ability of peaceful and intelligent workmen; access to raw materials and to markets; police protection of peaceful citizens and private property, but otherwise a mini­mum of government intervention and taxation. If a community will offer these attractions, display a refreshing attitude not to meddle in business affairs, add a dash of patience, and let these facts be known, new business will come. The market place works that way.

Give me a ghost town any day in preference to ghost principles. To attempt to perpetuate artifi­cially the economic decisions of the past is to abandon sound prin­ciples and deny all hope for fur­ther economic progress. And the sad result will be a ghost nation.

Footnotes

¹ "Small Towns Scramble To Get Slum Removal Aid from Uncle Sam," Wall Street Journal, July 3, 1961.

 

 

***

Ideas on Liberty

Subsidies for Ghosts

If the people of an overpopulated community are subsidized with grants from the outside, regardless of the purpose for which the money might have been intended, they will not be encouraged to move to greener pastures or to develop the resources of their own area.

OSCAR W. COOLEY

ASSOCIATED ISSUE

May 1963

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