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Sunday, August 28, 2016

Economic Folly in Flagstaff

Flagstaff, the world's first "dark sky city," has astronomical housing prices for the sake of astronomy.

Ten years ago as an undergraduate student at Northern Arizona University in Flagstaff, my cousin Jake called a walk-in closet his home for a semester; or maybe it was for the entire school year. Regardless, before my wife and I recently relocated (temporarily) to Flagstaff, it would’ve served me well to recall Jake’s choice of this tiny abode and heed it as a warning about housing prices in this little mountain town.

Anyone who has spent time in Flagstaff, with skiing in its backyard, an hour northeast of Sedona, and just 80 miles southeast of the Grand Canyon’s South Rim might think it was simply local housing market conditions that drove Jake to reside in less than 30 square feet.  However it would be a mistake to blame the amenities of mountain views and proximity to other attractions for the astronomical housing market.

Dark Sky, Sky High

In reality, it has to do with actual astronomy. Flagstaff is home to the U.S. Navy’s Lowell Observatory, and nearly fifteen years ago it was declared the world’s first international dark sky city. This limits Flagstaff’s development and contributes to its housing shortage.

But Flagstaff’s housing shortage is not only limited by a collusion of the city council with the federal government and the non-profit International Dark Sky Association. Proposition 413, an initiative to preserve 300 acres of city-owned land in north-central Flagstaff and petitioned by 4,000 voters, will be on the ballot for residents this November.

So with a widely recognized housing problem, the solution is to put a large swath of land off limits to real estate developers? To prevent development that would increase the supply of housing and thus reduce housing prices, especially benefiting the city’s low-income residents?

Apparently, instead of trusting the free market to better Flagstaff’s residents’ lives, the solution is, predictably, more government. In a public opinion poll, raising taxes on wealthy, second home buyers was offered as a “solution” in an attempt to discourage these scapegoated individuals from purchasing second homes, thus freeing up supply.

Fighting for Fifteen

Another one of Flagstaff’s government “solutions” follows in the footsteps of Seattle and D.C., two cities that are now facing mounting job losses for low-income workers. Proposition 414, an initiative to arbitrarily raise the city’s minimum wage to $15 per hour by 2021, is on Flagstaff’s ballot in a couple months.

Questions for Flagstaff’s residents: is one’s wage – the price of their labor – impervious to the law of demand: that is, that higher prices will result in less quantity demanded, meaning fewer jobs? And keeping this in mind, by raising the minimum wage will employers be coerced into hiring more employees at these higher prices or is Proposition 414 actually an unemployment law that will benefit some employees at the expense of other employees?

Government “solutions” are never the answers to government-created problems.

What happens to those low-income residents whose productivity will not exceed the next mandated wage increase to $10 per hour? Is not a rung on the economic ladder about to be cut for them? Is the hurdle not about to be raised?

And if this is supposed to give low-income residents financial boost, why incrementally raise their wages over five years instead of immediately? Government, which, unlike the entrepreneurs who create the jobs, is bereft of market feedback, cannot determine both the exact wage increase and timing for economic prosperity. Why not $11 per hour by 2017, or $15 per hour by 2020?

It is government restriction that should be blamed for the financial struggles of Flagstaff’s residents. Televisions, cars, cellphones, or any other product or service provided by the free market does not suffer long-term shortages: only those services provided by, or limited by, government.

For all of these reasons and to ensure greater prosperity for its residents, Flagstaff voters would be wise to resist the centrally planned, economically fallacious ideas embodied in Proposition 413 and 414. Government “solutions” are never the answers to government-created problems.