spending

What the Boom and Bust of Williston, North Dakota Teaches Us about the Future of Cities

The biggest lesson from Williston’s and the other cities’ experiences is that city governments need to stay simple and flexible. They can’t provide everything to everybody. Cities in general lack the revenue generating mechanisms to provide a social safety net. Taxes and policies that redistribute income at the city-level cause people to leave since it is relatively easy to move to a lower tax jurisdiction.

Moreover, pension payments must be paid in the future and it’s hard to predict how large the future population will be that has to provide these payments. Defined contribution plans alleviate this uncertainty and prevent over-promising since the money is paid as the benefits accrue.

Infrastructure should be built slowly and kept simple – function over form. Finally, local rules and regulations often stifle entrepreneurship and economic growth. Specialization and innovation are the comparative advantages of a city, and those that don’t exploit these advantages will decline. On top of that, the enforcement of complex rules, regulations, and ordinances requires a large government workforce that must be paid and often shrinks too slowly when populations decline, contributing to the aforementioned pension problem.

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