A Few Thoughts

The Ratchet and the Economy

By Charlie Houston

Old fashioned car jacks are ratchets: They allow continued upward movement, but downward movement will be one slow notch at a time. That tool lends its name to an economics concept called, naturally, the ratchet effect: Prices can rise quickly in inflationary times, but fall slowly.

That’s the situation we find ourselves in right now. But don’t panic.

The rate of inflation is slowing but people still feel the high prices. I certainly do. One quick fix is deflation, but that’s worse. Prices fall but so does the overall economy. That’s a recession, and bad.

There are two types of inflation: Cost-push and demand-pull. The former is easy to understand: The cost of ingredients or parts increase, so the final product has to cost more in order to compensate. Whether omelets or automobiles, the concept is the same. 

Demand-pull inflation is a bit harder to understand, but I have confidence in readers’ intelligence. When more money flows into the economy and everything else remains constant, prices rise. A kid’s lemonade stand in a poor neighborhood might get a quarter a cup. Put the same stand somewhere with money to burn—like Loudoun—and that cup of lemonade might cost a dollar. That’s monetary policy.  

Since 2017 more than $12 trillion was added to the economy. I believe that the supply of goods and services did not increase dramatically, so you had boat loads of new money chasing the old market basket of goods and services. Prices had nowhere to go but up. That’s the essence of monetary policy.

Occasionally prices do fall: Egg prices recently. Gas prices. Beef prices a decade or two ago. However, these were anomalies. Egg and beef prices had a temporary imbalance between supply and demand that was soon corrected. For example, cattle producers quickly expanded their herds and the added supply caused prices to fall. We’re extracting more oil, so gas prices have fallen.

Don’t count on serendipity. Help can come from a different direction. Instead of only attacking costs, focus on increasing incomes. That’s happening now. Unfortunately, disgruntled perceptions about high costs will linger. 

The Waterford – Paeonian Springs Interconnected Project

Fret about high prices if you must, but there’s a huge problem and you should be worried. I’ve written about the odious proposed Waterford – Paeonian Springs project before, and have some wonderful bits of very ironic news. 

County Staff told me about a survey it had done in Waterford. “We had 77 responses and 82% support!” Later I dug into County documents and found interesting things. First, while the introduction to the poll noted that connection to the Loudoun Water system would be at a homeowner’s expense, it did not mention the possible costs of $8,000 to $15,000. If those costs had been disclosed, much of the 82% “support” would likely have evaporated. 

Next, I scrutinized the County’s poll results and found this gem: Only 26% of respondents said they would connect to a new utility system. That alone should be enough to kill the project.

Lastly, I dug into the Dewberry Engineers’ Waterford report, commissioned by the County, and found even worse news for the Board. (Snicker, snicker.) Only one respondent reported daily water problems, while one other person said they had monthly difficulties.

The County survey was also skewed—intentionally, I believe. Instead of surveying residents or homes, it surveyed parcels. That gave the Waterford Foundation nine times as many votes as any homeowner. 

Faw-Yuh

That’s verbal shorthand for FOIA—the Freedom of Information Act, which was designed to make government transparent. The County has a link for submitting FOIA requests, so I requested copies of communication between the County and the Waterford Foundation, hoping to find more nuggets.

The response staggered me: I’d have to pay $8,868 to get that material! Egad! It turns out that someone else had FOIA’ed County documents regarding the same project, and was told that their cost would be about the same as they quoted me.

Clearly the County is not eager to give citizens a peek at its records. Is it trying to hide material about the Waterford – Paeonian Springs project, or does it just generally want to keep us in the dark? Neither motive is acceptable.

Populism

I’ve written about this before, bemoaning the fact that County government, indeed most governments, too often side with business promoters. That’s backwards. 

Populism reflects citizens’ collective concern for the common good while businesses pursue private gain. Governments exist to serve the people but while elected officials claim to be “public servants,” all too often they are lackeys for businesses. We often see that with at least one Supervisor and two loud members of the Planning Commission.

I’m doctrinaire about populism, but I have read a middle ground that makes sense. Citizens’ wishes define our goals, and businesses provide much of the means to get there. When the two clash—as they often do here—government must respect citizens’ democratic will while ensuring that doing so will not cause hidden harm.

Business is a tool, not a master. It should not dictate our future. That moral hierarchy is clear but the Board of Supervisors seems blind. On one major topic, they are also deaf.

Density

Loudoun’s citizens want to stop sprawl, meaning less residential growth. That’s populism at work and it has the answer. Simply require more acres per house. Base zoning north of Snickersville Turnpike is one house per twenty acres, but using cluster zoning, homebuilders can construct houses on four-acre lots. That exemplifies sprawl.

Yet the topic of density has been off the table. The Board’s made it clear that they are tired of hearing about density, so conservation groups are holding their fire. Personally, I could care less if the Board’s tired of the topic. Aren’t they our public servants? 

Charlie and Emily Houston live on a restored horse farm, dating to 1760. When its original log cabin was built, density was not an issue.