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Letters to the Editor

Growth of what?

January 16, 2011

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To the editor:

The editorial “Poor example” (Jan. 13) asserts that the city is difficult for new business. The evidence offered is the denial of the rezoning sought by Lowe’s, which is claimed to cost the city 120 jobs and new sales taxes. This is not correct. The number of retails jobs is not a function of the number of stores. Rather, it is a function of the amount of retail spending which depends upon the income of the population. Adding new stores does not add income; it simply relocates that spending from old stores to the new ones, with no net gain in jobs.

The same is true for sales taxes. The vendors do not pay the sales taxes; the shoppers pay the taxes. Adding a Lowe’s would not add spending to the community; it would only relocate it from other vendors with no net gain in sales taxes.

The editorial claims that the city confronts a problem because of citizens who are opposed to growth. Growth of what? Too often, the proponents of growth use the term to mean growth in real estate. When developers build housing faster than population growth, older neighborhoods suffer. When developers build retail space faster than the growth in retail spending, older shopping centers suffer. When this happens, politically influential developers gain at the taxpayers’ expense.

What we need is growth in wages. This raises our standard of living. This is the growth we should pursue, not the growth of real estate beyond our needs.

Comments

Eybea Opiner 4 years, 1 month ago

What do you mean, the number of jobs is not a function of the number of stores? Of course there is a correlation. A new retail outlet will always require at least one new job. Certainly, if there isn't enough spending stores may lay off, or businesses may close.

I think what the writer misses is the fact that new businesses often create demand. Those folks in rural areas, or Lecompton or Perry who might be going shopping in Topeka would instead come to Lawrence for their Lowe's purchases. While coming to Lawrence they would likely do other shopping here rather than Topeka.

The 125 jobs at Lowe's would, in turn, create a demand for other goods and services.

Lawrence is too full of people who don't see beyond a state paycheck in their concept of economics.

just_another_bozo_on_this_bus 4 years, 1 month ago

Just because it's been claimed that Jesus could turn water into wine, and feed hundreds with one loaf of bread and a couple of fish doesn't mean it's a good basis for economics.

jafs 4 years, 1 month ago

The possibility of attracting out of town customers is, actually, one that McClure doesn't take into account in his analysis.

Jake Hess 4 years, 1 month ago

It seems to me it is the other way around Solomon... demand creates the need for more businesses. If there's no demand for goods and services, real estate expansion will merely produce a flat net gain, as Kirk suggests in the article. The Lowe's example will probably see plenty of shoppers if it were built, but at the expense of other businesses--which is just how economies and healthy competition works. But without increased demand for Lowe's products--like if it fails to fill a void or niche in the market--it will not invent growth, but merely increase the services base in town. If people really want more services nearer to where they live, then demand exists for a retailer to fill that void. If a retailer wants to build a store without healthy demand from the community, however, it seems to me that the business will not be a functional investment in the community.

coderob 4 years, 1 month ago

For biblical metaphors, I like robbing Peter to pay Paul on the idea that we're competing with other cities in Kansas for customers.

jafs 4 years, 1 month ago

Actually, it seems to me that if we start spending less, and being more self-sufficient, that wouldn't help the economy much, since it depends on spending.

Scott Morgan 4 years, 1 month ago

Solomon, Exacto..........why can't our planners understand. This past Christmas season the following happened and not by design. I want to spend my money here.

We are not the only ones.

My bride and I shop Topeka and live near Lawrence. We make the drive to Topeka for essentially one store Macy's. Hey, since we're here, lets travel the little mall. Kaching, kaching, kaching, OK, Dicks Sporting Goods nearby, kaching! Hey, let's check out K-Mart, kaching.

oh, and don't forget a nice lunch at Red Lobster. We purposely avoided any store Lawrence has, but spent 90% of our holiday budget in Topeka.

Richard Heckler 4 years, 1 month ago

The 125 jobs is pure speculation which ultimately would depend on spending.

While were speculating we can say Lowe's would put people out of work at Home Depot when adding new stores does not necessarily add income; it simply relocates that spending from old stores to the new ones, with no net gain in jobs. Aka borrowing from paul to pay peter.

"Those folks in rural areas, or Lecompton or Perry who might be going shopping in Topeka would instead come to Lawrence for their Lowe's purchases. While coming to Lawrence they would likely do other shopping here rather than Topeka."

Topeka has larger stores, more choices and maybe lower prices. College town economics is not always that attractive to everyday shoppers.

"The 125 jobs at Lowe's would, in turn, create a demand for other goods and services." No net gain if Home Depot employees were laid off and certainly no net gain if Home Depot were to close.

George Lippencott 4 years, 1 month ago

Professor McClure

Help me here.

I agree that if the only people purchasing are those already here a new store just redistributes the sales.

That said, Lowe's was trying to draw sales from a broader area than Lawrence - would that not help our sales tax income?

I recall a recent study published here in which it was suggested that we are not overbuilt from a retail standpoint. Did I misunderstand something?

In a larger context, I guess we have a problem with Darwin. New stores drive out old if they offer a better deal to us, the customers. If they do not, they will fail. Do you really presume to be better at deciding who lives/dies than the market? Is the existing to be preserved just to preserve it?

notanota 4 years, 1 month ago

It would only help our sales tax if Lowes were paying it. My understanding is that most of these new businesses are given tax incentives that negate any impact shoppers would have on the local tax base.

George Lippencott 4 years, 1 month ago

Well, I have a problem with that and have posted on our give away programs.

jafs 4 years, 1 month ago

That's fine - it just means you can't count on a net gain if a new store simply puts an old one out of business.

George Lippencott 4 years, 1 month ago

If it costs less and people can live a better life as a result is that bad?

jafs 4 years, 1 month ago

Nope.

But the question is whether it's a net economic gain for the city.

George Lippencott 4 years, 1 month ago

Net economic gain for the city. The city exists IMHO to serve us the citicens. Things that benefit us are good. What do you mean by "benefit the city"? Who determines such were there such things? Giving tax breaks and going into property rental is not the hisotric purview of a city. Tends to open our lawgivers up for various problems with focus.

jafs 4 years, 1 month ago

The arguments that are generally used to support growth are that it will be a net gain economically - that the city will have more jobs, more revenue, etc.

If we simply replace one store with another, that will not happen.

David Reynolds 4 years, 1 month ago

George yes that is what the Progressives want in the city of Lawrence (preserve just to preserve it). They try to manage growth (a violation of Darwinism) to achieve their idealistic concept for Lawrence.

I also ask the question: Who shall decide what is best for Lawrence? Life on earth and the free market have a built in gene that propels it to survive in spite of the obstacles imposed.

Preservation for the sake of preservation is Lawrence's tax revenue leakage problem. Some in Lawrence are so adverse to "big box retailers" they are willing to burden themselves with ever increasing taxes just to not allow them in town.

This is one of the way species die, by not adapting to changing conditions. Lawrence has a bright future doesn't it?

notanota 4 years, 1 month ago

I hate seeing it phrased as "X number of jobs" without looking at the kind of jobs. Is a job at Lowes a career position? I'm sure there are a dozen or so management positions that are, but the majority of the jobs are probably retail positions no different from WalMart or Target. I'm just guessing here, and I'd love to see the numbers if I'm wrong.

If we focused on getting skilled labor positions, tech industry, green industry, etc - things that require a college degree and pay well, then we'd stop forcing all the skilled Lawrencians to commute. Once that happens, you'd have no problem attracting retail to the area, because enough people would be here and have money, which also means you wouldn't need to provide tax incentives.

But I guess big boxes that move money out of the community are preferable to incentives to stay these days.

notanota 4 years, 1 month ago

Because retail is a bad investment unless it's something really unique that would attract regional shoppers. Lowes does not fit the bill. An IKEA or some other store along those lines would fit the bill.

George Lippencott 4 years, 1 month ago

Nota what if it offers me a better deal or better choice?? Perhaps "old Man" current store owner is demanding too much profit for his Cancm hideaway and a new store will stop that or drive him there early to my benefit!

Richard Heckler 4 years, 1 month ago

"Adding new stores does not add income; it simply relocates that spending from old stores to the new ones, with no net gain in jobs.

The same is true for sales taxes. The vendors do not pay the sales taxes; the shoppers pay the taxes. Adding a Lowe’s would not add spending to the community; it would only relocate it from other vendors with no net gain in sales taxes."

Sounds a lot like economic displacement NOT economic growth = unfriendly to new business and long time existing business.

Developers are very expensive budget items. Flooded housing markets are unfriendly to property values,local tax revenue cookie jars and taxpayers.

Empty homes for any reason simply do not produce the tax revenue necessary to fund a community. Negative tax revenue growth comes back on current live in property owners by way increased user fees(taxes),sales taxes etc etc.

The increase in taxes as such are known as tax subsidies to the real estate and building industry. This is NOT sensible business.

With increased numbers of houses you have increased demand on services, and historically the funding of tax revenues generated by residential does not pay for the services they require from a municipality.

Developers consistently increase our tax liabilities: How you ask?

*Over built retail

*Over built residential

*Demanding a new $100 million sewage treatment plant which is on the backs of taxpayers

George Lippencott 4 years, 1 month ago

merrill, what are you babbling about?? If a new store provides a better cheaper solution, it should drive out the old. Am I to infer that you want to be the central planner for Lawrence?? What are your qualifications for such a job other than being anti- growth of any form?? People have to live somewhere. If the national population grows, are we so arrogant that we think all the other cities should take up the load while we build more amenities for those already here??

tomatogrower 4 years, 1 month ago

Mr. McClure's is a bit simplistic and there are more factors that would determine whether or not Lowes would be a good thing, but his main point is that we should be focusing on bringing in real jobs. The only retail employees who make good money are the managers. Our efforts need to be in bringing in more companies who pay real wages, without giving away all our revenue. Where are our negotiating skills. Companies come in a ask for huge tax breaks. Is there any negotiation going on? Is it their offer or nothing? I don't mind giving some tax breaks, but in capitalism, the investor should be taking the risks. If they aren't willing to contribute to the community in which they live, then they aren't willing to be good citizens. We don't need anymore jobs for working college students, we need jobs for people who live here full time. Then maybe a Lowes would be more than welcome, and profit here.

Richard Heckler 4 years, 1 month ago

In a nutshell the more any bedroom community expands so do the tax bills. Bedroom communities have no way to pay for themselves. Bedroom communities are home to thousands of commuters. Lawrence is unique in that it is a reasonable distance from tons of retail opportunities. Leave it at that.

The Lawrence niche is art,music and education not shopping. Build on art and education = students have been very good for the Lawrence economy of so many many decades.

Where is the: 1. Vo-Tech campus 2. Business College 3. Kaw Valley Art Institute for Downtown Lawrence (Kansas City can only accept so many. The rest go across the nation). Not everyone interested in Art and Design is attracted to a conventional 4 year college. http://www.AmericansForTheArts.org/Economicimpact

The whole concept behind pushing homes and new retail is simply to convince the public that we must support the real estate/development community no matter the cost to ourselves.

George Lippencott 4 years, 1 month ago

merrill most communtiites have a property tax that pays a goodly portion of the costs to run the government Some communities share in sales tax revenue. Some communitites have a piggy back income tax. The issue is not that people require services and willingly tax themselves to receive them. The problm becomes real when the community starts to play people against each other and raises taxes for things only a few want. There never is enough for people on that track!!!

independent_rebel 4 years, 1 month ago

Build on art, music, and education? I have no words but to tell you and Kirk to please go build a commune somewhere. Western Kansas needs a few liberals, how about there?

coderob 4 years, 1 month ago

The problem lies with the idea that you can create jobs in the service sector. Traditionally in economics, you can assume that there are two types of jobs, basic jobs and service jobs. A basic job is something like mining or manufacturing that gets exported to the rest of the world. Service jobs like haircutting or working in retail are only there to support basic jobs. In other words, you can't create service jobs without creating basic jobs first.

The only real argument for Lowe's creating economic growth in Lawrence would be if people were wasting lots of time and driving hours to get to a Lowe's. Like it or not, we've got Home Depot. But, hey, Home Depot vs. Lowe's is a totally different discussion.

jafs 4 years, 1 month ago

As long as people make enough in service jobs to live on, why are they any different from any others?

Why do we need to produce things that are exported to the rest of the world?

I agree, of course, that we have seen a huge loss in manufacturing due to outsourcing and NAFTA.

Ron Holzwarth 4 years, 1 month ago

"Why do we need to produce things that are exported to the rest of the world?"

I'm certainly not an expert, but I think that as long as we are a net importer as we have been for many years, we will continue to see a decline in the value of the dollar relative to other currencies.

If all we do is buy from the rest of the world with money that we essentially just printed up ourselves, and have nothing to sell to other countries, how long would that situation last?

Granted, tourism is an exception. But the USA is not all that popular of a tourist destination for people from other countries.

jafs 4 years, 1 month ago

That could be.

I just wondered why the post claimed that you need to create "basic" jobs first, and then "service" jobs.

For example, if somebody works in a restaurant (a service job) and makes enough money to live on, it seems just as good to me as if they worked in a factory.

George Lippencott 4 years, 1 month ago

I think it is wonderful that we want more high paying jobs. Our competitiors are the triangle in NC, the beltway around DC and other very attractive places. Just exactly what do we have here that would lead to a major technical corporations coming?. Those other places have all the goodies we have (and more much more) and tax less.

notanota 4 years, 1 month ago

They may tax less, but they have to pay their employees more for cost of living expenses, which means a net loss to operate in DC or other "highly attractive" locations. Besides, higher paying skilled labor jobs is exactly the sort of thing you do want to use tax incentive carrots to attract.

George Lippencott 4 years, 1 month ago

Absolutely, but that does undercut the argument about paying good wages. I wil lalso point out that the cost of living in Lawrence approached that we experienced outside the DC beltway (housing , food , servcies at al)

Carol Bowen 4 years, 1 month ago

Many of the economic terms above are beyond my comprehension, but as a simple-minded Lawrencian, here are my thoughts.

  1. Too many exceptions and tax breaks are requested. Lawrence should let the free market fend for itself.
  2. Generally, we have too much retail, and retail is not a good source for jobs.
  3. An exception, is the need for competition. Lowe's would be an asset.
  4. Topeka and Kansas City can pull more regional shoppers than we can. We need to figure out what Lawrence has that would pull regionally. Sports is one. What else?

Carol Bowen 4 years, 1 month ago

Corky, Where did I mention government control?

  1. I am trying to say that Lawrence should not work so hard to attract retail.
  2. If Lowe's wants to come to Lawrence, we should allow it to do so.
  3. I do not understand what you are saying, but I probably agree with you.

My main thought is that Lawrence should not try to be something it is not.

LloydDobbler 4 years, 1 month ago

We need to have a logical and controlled model for residential and retail growth. To support sustained growth in those areas, we need to focus our efforts on manufacturing and product development. We have been talking about and spending money on biotech and life sciences industries, but have yet to be successful in luring any major developments. An earlier post indicated the Research Triangle and the DC Beltway as our competitors...only in our dreams! We are not even close to being there. When our leaders understand that we need outside help to support large scale, high paying high tech development, then and only then will it happen.

BigPrune 4 years, 1 month ago

Mr McClure is wrong in his conclusion. Case in point: The Legends

It is a fact that Lawrence is one of the MOST difficult cities to do business in the entire country, and the letter to the editor writer helped make it that way, when his "progressive" commission passed the development code in 2005. It essentially made Lawrence one of the most restrictive cities in the nation. Try to rent a retail space in this town and see how long it takes to get approval. The time and expense gambled keeps the mom and pop store from even trying, and regional and national retailers balk at the idea they would have to spend so much time and expense for one store in Lawrence when they could spend the same amount putting in 10 stores in other cities across the nation. Thus we have vacancies.

MIT does urban planning for third world countries. Lawrence is NOT a third world country. We are NOT Kenya with an average yearly income of $400 per year.

Perhaps the letter to the editor writer should get a job in the real world, if a non-government employer would allow long hair and handle bar mustaches.

deec 4 years, 1 month ago

The Legends is very heavily subsidized by Wyco, the state, and BPU. You may like shopping and eating there, but please do not hold any part of that area up as a model of free market enterprise.

tomatogrower 4 years, 1 month ago

The Legends is also one of those special tax districts, so you pay an extra tax that actually goes to the developers, not the government.

LloydDobbler 4 years, 1 month ago

We have to stop blathering about retail. Retail comes when there is sufficient industrial base to support it.

bisky1 4 years, 1 month ago

i am amazed to see a lte from a writer of this ilk say companies do not pay taxes they collect them, the world is not lost even a liberal can be edumactid

BigPrune 4 years, 1 month ago

The developer was subsidized, but The Legends' tenants pay the equivalent of $50 per square foot to just rent a space in the middle of nowhere with very little (proportionately) population - which squashes the LTE writer's much "heralded" philosophy.

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