On page 342 of his 2008 book, The Ascent of Money: A Financial History of the World, author Niall Ferguson quotes former Federal Reserve Governor Frederic Mishkin. The quoted statement included this thought:
“…the financial system [is] the brain of the economy… If capital goes to the wrong uses or does not flow at all, the economy will operate inefficiently, and ultimately economic growth will be low.”
I’m taking this sentence out of context, of course. But because it included the term “economic growth”, and because I’ve been thinking about “growth” while working on this editorial series, it caught my eye.
In the book, Federal Reserve Governor Mishkin doesn’t specifically state that the essential goal of human existence is “economic growth”, and I doubt he would ever say such a thing. But he does refer to the “financial system” as the brain of the economy — which aligns well with central thesis of author Ferguson’s book: that the development of modern monetary systems — paper and digital currency, banking, mortgages, stock markets, the smooth movement of capital across national borders, and so on — “has been one of the driving forces behind human progress… as vital as the advance of science or the spread of law in mankind’s escape from the drudgery of subsistence agriculture and the misery of the Malthusian trap.”
Here’s a Wikipedia explanation of the Malthusian trap, an “over-population” theory in a 1798 book by Thomas Robert Malthus that drew scientific criticism as soon as it hit the bookstores… but has nevertheless remained a colorful part of the popular imagination, as indicated by author Ferguson’s mention of the theory in his own 2008 book.
I bring up the Mishkin quote because many people (including, perhaps, Mr. Mishkin himself) embrace the idea that economic growth is necessary to the continuation of the human species. The idea then infects government policies, including local government policies in a small town like Pagosa Springs.
An alternative concept of a healthy world focuses on ‘sustainability’. But even some sustainability advocates see ‘growth’ as a necessary feature. Or maybe, as unavoidable.
In Parts One and Two of this editorial, I touched briefly on population growth in Archuleta County, as correlated with the growth of spending by our County government. A period of remarkable population growth took place here between 1990 and 2007, when our population more than doubled, from about 5,350 to about 12,430 full-time residents — an average growth rate of nearly 5% per year. This population growth was accompanied by business development, the construction of a new high school, and the beginnings of Pagosa’s first community hospital… and the continuation of certain infrastructure problems.
This relatively demographic population growth came to a screeching halt, beginning in 2007, and population growth didn’t become noticeable again until about 2015. Since 2007, the growth rate of the Pagosa community has averaged less than 1%.
The growth of often-vacant second homes and vacation rentals, meanwhile, continued at an impressive pace.
Yesterday we considered the growth of the Archuleta County government spending, which — much to my surprise — showed very little excessive growth, when comparing the 2007 budget to the 2020 budget and allowing for inflation and population growth. The amount of new debt recently accrued by the County Commissioners was a different story, however.
How did the our municipal government — the Town of Pagosa Springs — do, during the same period of slow population growth? At recent Town Council meetings, we’ve been hearing about ‘record’ sales tax collections, and since the Town government is funded mainly through sales tax, my initial assumption is that the Town budget is very healthy.
Or perhaps, suffering from obesity?
The Town spending in 2007, under then-Town Manager David Mitchem, was admittedly a bit strange. The original budget predicted expenditures of $7.2 million, but the Great Recession had got off to an early start in Archuleta County, and the Town — under conservative leadership — ended up spending only about $5.3 million in 2007. Clearly, a culture of austerity had begun. (A culture that was not shared by the County government, which might help explain why the County nearly went bankrupt in 2008.)
If we were to use that austere number, $5.3 million, and project the budget for 2020 allowing for inflation and population growth in the community, the Town budget would have amounted to about $7.1 million in 2020.
But by 2020, the culture at Town Hall had taken a different, and somewhat more exuberant, direction. When the 2020 budget was estimated at the end of 2019, the Town staff planned to spend about $12.9 million.
Then the pandemic arrived, and — as it would appear — Americans who had been planning expensive vacations in distant lands, revised those plans, and drove to convenient American vacation spots like Pagosa Springs, where the infection rates were low, and plane flights were not required. (Note: the infection rates in Pagosa Springs are not particularly low at the moment.)
By the end of the year 2020, the Town had managed to collect about $19.8 million in revenues — mainly in sales tax and lodgers tax — and had spent about $13.7 million, about $800,000 more than their planned budget. As we can see, this level of expenditure in 2020 was about twice what a person might have estimated — $7.1 million — based on population growth and inflation since 2007.
In fact, the Town now expects to end its 2022 budget year with over $6.9 million sitting in its various savings accounts, according to the budget that will be presented at tonight’s Town Council meeting.
Several interesting issues will be discussed at the meeting, including a proposed ordinance that would allocate a portion of the Town Lodgers Tax to workforce housing efforts.
The agenda packet also includes a 200-page “Archeological Assessment” of the long-abandoned Pagosa Springs Cemetery, located on South 10th Street. The last person to be interred there — Marinda B. Keith — appears to have been buried in 1902.
From the Council packet:
The Town received a grant in the amount of $15,000 to conduct an Archaeological Assessment of the old Pagosa Springs Cemetery on S. 10th St. The cemetery was established by the old Fort Lewis military post before it moved to Hesperus. For many years, the Town and its residents have sought answers about the original cemetery, such as: How many people were buried there and how many were moved? How many unmarked graves are located there? Who were the people interred there? What is the condition of the headstones and markers and what can be done to protect them or restore them? Through a competitive bid process, Dr. Ruth Lambert (Blue Canyon Cultural Consulting LLC) and team were selected to conduct a surface and subsurface exploration, review historical records, and work with volunteers to gather information to help answer these questions and more…
I’m sure some of our Daily Post readers will be relieved that we now have 200 pages of expert analysis concerning the eleven people known to be buried in the Pagosa Cemetery, who still have functional headstones, and the 13 individuals who were subsequently relocated to the Hill Top Cemetery, on the north side of town.
Other interesting issues will be discussed tonight, as well.