Ev Ehrlich's Everyday Economics

The World Cup, the Crash, and the Nature of Urban Life

As I warned in my last post, Nancy and I went to see Carl in Valencia and Madrid for ten days at the end of July, and if the definition of meaningful is that which changes you, the most meaningful part of the trip was The World Cup.

I am not a soccer guy.  Let’s be brutal, OK? – it’s not a good sport for Americans, least of which, me.  It’s clock-heavy, has no offense, it rewards players for whining, and it eats up ballfields that our kids could be using doing throwing drills and learning fundamentals.  And I say this knowing that friends such as Andrew Keszler and Nora Mann who have done right by soccer and vice versa, let alone my high regard for Bob Foose and the way he’s been the steward of players and fans’ interests.    

But watching futbol in Spain is like hearing organ music in a chapel, or seeing The Dead at the Fillmore.  Because futbol belongs in countries such as Spain, where sports haven’t been stripped out of the public sphere of life.

Part of it, of course, is that the World Cup is about national teams.  We don’t have nationals teams here because a) we don’t give a shit what foreigners do so why have a national team? – for Chrissake, it’s the World Series, b) we’re roughly the size of all of Europe already, and c) our professional sports were built on the then-prevailing model of vaudeville that gave rise to baseball  – play as often and as in many place as possible -- which set a pattern for football, basketball and the one with guys on skates. 

It’s hard to talk about the public sphere of life in America, because of the astonishing affluence markets have created here.  This puts the burden of proof, both rightly and wrongly, on those who would argue for communal consumption through the public sector. 

But everything can’t be privatized.  The economy – even the market economy – is a way to act out social norms and preferences.  Nothing wrong with that – lots is right about that – so long as we know what it costs to do so and we go into it with our eyes open.  We put aside wilderness and subsidize the expansion of broadband Internet because we think there’s a good reason to do so and have made the costs transparent.  Those are our preferences.

It always strikes me that laissez-faire guys don’t get that they do see a role for communality in their vision – they think we all ought to have the same values about the right of property.

Back to futbol.  Sitting in bars and restaurants to watch Spain advance in the Mundial  is regarded as an aspect of the role of the “public sphere” of life in Spanish – and continental European -- “culture,” which is [part of the communal understanding about how you live there.  But that “culture” both  reflects and is mirrored in economic policies.

And that’s what takes us back to the Crash.  It started – let’s not always see the same hands – because our policy was to encourage housing and homeownership, and also not to second-guess banks and other financial institutions, whether lending for housing or trading and speculating for their own accounts no matter how aggressive their risk-taking, because greed is good.

Let’s put the latter aside for a moment.  The crash of the housing side of the problem was the end of a policy crescendo that has been underway in America throughout the postwar period.  By using federal institutions to develop and standardize the mortgage market, creating a class of banks with not much else to do but lend to housing (the savings and loans), building ring roads around cities that encouraged suburban development and, unsurprisingly, dispersed “ring cities,” and  making mortgage interest tax deductable, we’ve made home ownership a leading objective of economic policy. 

Other nations do that, too.  For all the talk of home ownership being a distinct feature of American life, there are many countries with higher rates of home ownership than ours – some data are here and here.   In fact, the countries with the highest home ownership rates – Greece, Italy, Ireland, and Spain – are those in the deepest financial Dutch right now, as they relied even more than did we on ever-expanding housing prices to promote lending which fueled speculation and so on.

But the difference is that these countries didn’t encourage the gutting of their urban centers as part of the promotion of home ownership.  In fact, it’s quite the opposite.  By taxing motor fuels, maintaining urban public services, regulating land use, and more generally seeing the long-term benefits of viable urban areas, Europe and much of the rest of the developed world has allowed home ownership to co-exist with viable urban centers instead of the risk of hollowed-out inner cities. 

As a result, the primary difference between ourselves and these other nations is not the rate of home ownership, but the way in which it has occurred.  Our homes are bigger and built in suburbs.  More people in Europe own an apartment or an otherwise smaller residence.  They rely on public services and become a political force for maintaining them and for urban policy in general.  And their homes are smaller.   The average newly built home in America has abut 2,300 square feet (214 square meters) of floor space.  Spain and Ireland, in contrast, may have higher home ownership, but the average new home is a little over (Spain) or a little under (Ireland) 1,000 square feet. 

And the difference shows up in the way of life.  Street cafes and bars and the other aspects of viable urban life aren’t just quaint aspects of “culture.”  They’re an important aspect of a way of life that relies less on living in a larger, fortress-like home and more on using a more communal “public sphere”  to supplement what their abodes offer.

So Americans watch the Superbowl with their friends in rec room parties, while Spaniards watch the Mundial with their friends in street settings that allow them more comfort and space than many of their homes.  Or, as Carl said in his own blog:  Super Bowl parties consist of 15 people watching a 60-inch screen, World Cup celebrations host 60 people watching a 15-inch TV.  There’s a little literary license there, but not much.

I’m not touting this way of life as being distinctly superior to ours, mind you.  It has its costs.  For one, a greater reliance on public services means a larger public sector.  Carl told me that some Spaniards say the civic employees of Spain do “less work than Tarzan’s tailor.”  There’s a far greater level and tolerance of inefficiency (and sloth) that comes with the territory.  And while my instinctive left wing twitched sympathetically for the striking subway workers in Madrid during our visit, I was still surprised by the incredibly low level of grumbling on the street about the resulting inconvenience.  Would Ihave been as tolerant?

But respect for the public sphere is a good value to recall as The Crisis acts itself out.  We’re facing reductions of municipal services as state and local governments make draconian cuts.  The debate over whether some kind of revenue sharing should support these local governments and the services they provide is being played out as whether another round of stimulus is merited.  But we would do well to remember the value of what’s lost and what we prefer when the hollowing out of public services spreads.