Published May 1, 2007 | May 2007 issue
To the Editor:
I enjoyed reading the articles about rural sprawl in the March issue of the fedgazette. However, I feel that you missed a great opportunity to call attention to a number of ill-conceived government policies that actually encourage rural sprawl, distort market outcomes and, in the end, have few, if any, redeeming social benefits.
Take, for example, the mortgage interest deduction on vacation homes. I don't know what the numbers amount to in the aggregate, but I suspect that there are many people building big houses out in the sticks who would not do so if the federal government were not providing them with a generous tax break. Many such houses are not occupied for much of the year, either because the owners live far away in other big houses or because the sought-after rental demand for the vacation properties does not materialize. Surely, at a time when the federal budget is out of control, it makes no sense whatsoever to subsidize the construction of such houses and have them sit empty. In recent years, of course, the tax incentive has been compounded by an unusually long period of extraordinarily cheap and readily available credit that has fostered extensive speculation not only in residential real estate but also in vacation communities.
Then there are the policies to extend public services way out beyond the bounds of concentrated populations. To a degree, all of us probably have a soft spot for such policies. We think of rural families in the 1930s or 1940s who had to make do without electricity or running water. But should we be so quick to extend those same public services to the far-away vacation house whose owner wants to keep the outdoor hot tub running through cold winter days on the off-chance that a renter might show up some weekend? That is what happens in one resort community that I am familiar with in West Virginia. Or, to take my line of argument one step further, should we, as a society, be topping mountains in another (poor) part of the Appalachians to get at the coal that can help to generate the electricity to keep the hot tubs going? Where is the justice in this? Or, in the calculus of the economist, where are the social benefits?
I have noticed that when questions of regulation or planning arise, you are quick in your articles to point to the benefits of the market. And you are right to do so. Every sentient being is aware now of the power of market incentives in shaping economic and societal outcomes. But it seems unfair of you to hold up the free-market placard so selectively. In so doing, you risk being perceived as favoring, at least implicitly, a policy mix of subsidies for the wealthy, market outcomes for the rest and the environment take the hindmost, even though I am quite sure that is not the perception that you intend.