Wanted: A Larger Perspective on Public Policy Issues
|By Patrick M. Barkey
May 29, 2006
Thereís nothing wrong with self-interest in politics. We elect representatives to look out for our interests, after all. So when legislation and policies affect things that matter to us Ė especially if itís a matter of financial interest -- many of us squawk, scream, or otherwise throw a fit. And we hope to get noticed.
But in policy debates in Indiana in recent years, weíve been getting lazy. Itís easy enough to defend your interests, of course, but itís much harder to convince those less affected that your position is best for everyone. So many of us have stopped even bothering to try.
The tumultuous debate over Daylight Saving Time is a case in point. For some, the question boiled down to what was convenient for us, personally. I like to golf, so Iím in favor of it. I like to jog in the mornings, so Iím against it. The larger impact on the economy as a whole, as investment, consumption, and migration decisions change and adjust to the circumstances presented by different policy options, never even came up on the radar screen.
It was with this thought in mind that I came upon two business stories this week in central Indiana that perked my interest. The first one was about home affordability. The National Association of Home Builders finds that Indianapolis remained, for the third consecutive quarter, the most affordable market for residential real estate in the first three months of 2006. The NAHB says that Indianapolis median home prices actually declined by 5.8 percent from the last quarter of 2005.
Of course, affordability and appreciation are two sides of the same coin. New home buyers are delighted with central Indianaís real estate market, and companies and organizations that recruit workers to the area tout housing affordability as a plus for prospective new residents.
For sellers, itís another matter. Compared to almost any other major city, real estate in Indianapolis is an underperforming asset, as it is in many other Indiana communities. The single largest item in most Americanís portfolio is their house Ė and current trends mean that we will retire poorer for having lived in Indiana rather than in a less affordable state.
Thatís why a second, seemingly unrelated, central Indiana business story caught my eye. Noblesvilleís City Council unanimously rejected the idea of building an expanded regional airport in eastern Hamilton County. The airport would have doubled the size of the current land-locked airport in Fishers, and accommodated small commercial jets and other business-friendly services. Among the reasons given was a concern over the impact of noisy air traffic on local property values.
Of course, the decision reflects the NIMBY-ism that plagues site decisions on everything from landfills to cell towers Ė from those who want all of the benefits and none of the unpleasantness of the infrastructure that lets us enjoy the lifestyle we take for granted. But it also reflects Ė in my opinion, at least Ė a denial of the whole process that brings about higher home prices in the first place.
That, to put it quite simply, is all about demand. Demand for land is driven by the access that land gives to the things that businesses and homeowners care about. And on the business side, transportation access is key, and airport access in particular is crucial, for the high-paying high-tech and headquarters operations all communities covet. Indeed, a recent study on site location for computer software companies found that the single most important factor explaining those decisions was proximity to an airport.
Job growth brings increased demand for land, and that, in turn, brings higher prices. Since price appreciation in central Indiana isnít exactly setting the world on fire, perhaps we ought to take a look at that.
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