Our world is obsessed with growth. Headlines celebrate growth in jobs, GDP, housing starts and consumer spending.
Revenue and earnings growth are the Holy Grail for businesses. Entrepreneurs grow their companies. Of course, everyone wants to earn more money.
Few would question these goals. But let’s take a critical look at our methods and results.
Businesses achieve earnings growth by reducing expense or by growing revenue. The easiest way to grow revenue is to just show up in a growing market.
That’s a major mission of chambers of commerce and economic development groups, and it’s behind the ideology that “growth is good.” Attracting new businesses to town increases the size of the local market.
On the surface this appears profitable for everyone. But close inspection shows red ink at the bottom of the community profit and loss statement.
It only appears profitable because we ignore or hide many costs. Only a few businesses actually profit from this growth, aided by shifting costs of market growth onto the community at large.
These “off-the-books” costs of market growth make headlines nearly every day, but they’re not identified as such.
El Paso County faces huge cuts to meet a budget that can’t keep up with its growing population. Backlogs and budget shortfalls plague our cities, schools, law enforcement and state transportation department.
Diseconomies of scale apply to the costs of water and free-flowing transportation. Colorado Springs Utilities customers will be required to invest more than $3 billion during the next water supply expansion. That’s an ignored cost of growing the market – so a few may profit.
After 15 years of brisk local growth, where is the profit? The average teacher or bookkeeping clerk doesn’t get a raise for every thousand acres paved for new subdivisions. But he is saddled with increasing taxes to pay for road improvements necessitated by that growth. He does put up with longer police and fire response times and increasing waits for his street to be plowed.
If you own a business, perhaps you’ve believed this market growth adds to your revenue and profits. Not likely.
Each new subdivision sprouts its own grocery stores, copy centers, restaurants and furniture stores – often chains that compete with you and immediately suck the profits out of town.
We all lose from this local market growth. Pick any large metro area for comparison. Without exception, taxes are higher, air less healthy, traffic congestion worse, costs of doing business higher and there are more competitors.
Where personal income is higher, it’s consumed by higher cost of living. Few were enriched through the growth of that market.
It’s clear that our state doesn’t have the unlimited water supply necessary to fuel continued expansion. We will have to switch to a strategy that doesn’t depend on this vanishing supply of raw material.
The only question is do we switch earlier – while we can still enjoy local produce, fish in flowing rivers, play ball on real grass and easily replace lost jobs? Or must we wait until clean air and green lawns are a distant memory, we’re mired in Los Angeles-style traffic gridlock and we’re no different than the unattractive places many of us chose to leave?
There are ways to maintain a healthy local economy that don’t depend on a doomed expansion strategy. The sooner we abandon the distractions of expansion-oriented economic development strategies, the sooner we can focus on sustainable, genuinely effective methods.
Then our entire community can enjoy true prosperity rather than an illusion based on playing hide-and-seek with growth costs.
Our community is gullible and shortsighted to take on market expansion costs for the small number who profit – especially since expansion is liquidating all we love about our community (clean air, fresh water, magnificent vistas, great hiking, biking, skiing and a pleasant commute).
We can maintain a healthy, prosperous local economy by being smarter and more efficient. Our grandchildren will thank us for having the foresight to preserve the irreplaceable natural capital that makes our community so unique and attractive.
Dave Gardner is founder and chairman of SaveTheSprings (www.savethesprings.org) and is producing the documentary, “Choking on Growth: Our Misguided Quest for Prosperity.” He can be reached at email@example.com