What is the Myth of Development?

Many hold a false belief that all development is good.

The Lawrence Journal World buys into the myth that all development is good. In the editorial of October 28, 2006, it stated, "The company [Wal-Mart] would have hired many employees, would have provided extra income for many families and would have spun off added taxes for the benefit of the entire community."

Examination of the facts shows this to be incorrect.

1. No net gain in employment

While it is true that the company would have hired many employees, there would be no net gain in employment in the community. The total number of jobs in the retail sector is a function of the total spending in the retail sector. Adding new stores does not mean new spending. New stores do not add new people or new income. The new stores only displace workers from one store to another. We saw this when the Wal-Mart on south Iowa expanded; it caused the closure of the Food-4-Less. The gain in jobs at Wal-Mart was canceled by the loss of jobs at Food-4-Less.

2. No net gain in income and possibly a loss

If retail workers will not see any increase in their numbers, will they at least see a gain in their wages? With Wal-Mart, the answer is "No". Kroger will probably close the Dillon's store at 6th and Wakarusa if a Wal-Mart opens at the intersection. The Dillon's workers will lose their wages and benefits. Wal-Mart is notorious for paying low wages and offering few or no benefits to its workers. Thus, there is certainly no gain in wages, and probably, there will be a loss. More workers will be without a health plan, leaving the community vulnerable to greater unpaid usage of the City's hospital facilities.

3. No new sales taxes

Sales taxes from retail sales are paid by the consumer, not the vendor. Adding more stores does not increase the population or its income. It only changes the location where the sales tax is paid. Thus, adding a new Wal-Mart will not provide any increase in sales tax revenues for the community. It will only take it away from other stores and send it through Wal-Mart, with no net gain to the community.

4. Short-term gain in property taxes with a long-term loss

There will be a short-term gain in property taxes. A new Wal-Mart store will pay property taxes. This is an immediate gain to the City. However, because the retail maket in Lawrence is saturated with a surplus of stores, opening a new Wal-Mart will only cause other stores to close. As these stores close, they are still subject to property taxes, even if they are empty. But chronically empty stores create blight that is expensive to fix through redevelopment. This redevelopment generally comes with high public expenditure. A short-term gain with a new store will be lost through the high, long-term cost of blight elsewhere in our community.

It is a myth to believe that all development is good. There is little doubt that growth is good, but excessive growth is cancer. Lawerence, like any growing community, needs to be smart. It needs to distinguish between well planned beneficial growth and growth that does not serve the long-term interests of the community.