Economic case for major urban park investment program
In the 1990’s, the technology investment boom financed major productivity improvements in American society, including the internet, cell phones, wifi, and widespread penetration of the PC. Real wealth was created as the S&P 500 increased 435% during the decade.
Between 2000 and 2008, the bubble in commercial and residential real estate created no major productivity improvements and the stock market actually declined 8.5% during the decade. We created DEBT, $9 trillion of commercial and residential mortgage debt. We are left with an excess of residential and commercial real estate, much of which is underutilized or vacant. The total value of U.S. real estate has fallen by over $10 trillion or 33% from the peak values of $30 trillion in 2007. It is unclear if the bottom has been reached without more government programs.
These excess and vacant buildings are dragging down neighborhoods, local businesses and responsible homeowners, and draining resources from our economy. They need to be heated and cooled, costing energy dollars; they need to be protected, using police and fire resources; they need to be maintained, utilizing workers who could be allocated to other projects; they need to be financed, costing capital that would be freed for other investments.
Since it was financed with DEBT, the real estate bubble almost brought down the financial system. The Treasury, Federal Reserve and FDIC have committed over $11 trillion in capital to backstop real estate and related paper. Yet, there is no program to address the excess developed real estate “on the ground”. The U.S. economy will never fully recover until capital can be withdrawn from U.S. real estate and reinvested in more productivity generating enterprises.
A major urban park program could address the excess real estate assets “on the ground”. Capital would be available to buy underutilized retail space and vacant homes (collectively called “redfields”) providing much needed liquidity in this sector. Homeowners wishing to “cash out” of their housing investment would have new buyers for their assets. Excess commercial real estate could find alternative uses. Construction jobs would be re-ignited as demolition work and landscape architecture would turn into growth parts of the economy. White collar jobs, in addition, would be saved as a result of due-diligence work associated with reinvigorated sales transactions. With more parks for exercise and outdoor play both children and adults would lead healthier lives. It would be a stimulus citizens could see and enjoy.