Expectations and Applications

How do expectations affect economic decisions? The recent “inclusionary zoning” imbroglio at Toronto City Hall offers an interesting case study.

On October 22, 2021, the City’s Planning and Housing Committee approved the Inclusionary Zoning amendments, which would go up to vote in City Council on November 9th. 

This news was seen as a surprise to many developers, as evidenced by the flurry of activity in the three weeks leading up to the November 9 City Council meeting. Dozens of new Condominium Approvals were being submitted per week; a huge increase, as the trend had been for only a handful of these applications per week. 

The new rules go into effect in September 2022. This date must also have been a surprise to developers, because the day after the vote there was an immediate drop in the number of new Condo Approval applications being submitted per week. 

As part of my work with UrbanToronto.ca, I have access to all the city planning and permitting data as they come in. This lets me chart and quantify this surprise. (If you’re interested in getting a summary of this data sent to your inbox daily, check out the New Development Insider. This report was first published there!)

Before delving into the charts, a bit of background info:

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In Defence of Rodney Bowers

Originally posted on mises.ca on January 29, 2013

On page 4 of last Monday’s Metro Toronto, journalist Jessica Smith detailed the heroic actions of Toronto chef and restaurateur Rodney Bowers, as he joined Vancouver chef and restaurateur Mark Brand’s effort to address poverty in his community.

The Brand-Bowers plan to address this great social ill is simple: They sell tokens for $2.25 at their restaurants, which can be exchanged for a free sandwich. The people who buy these tokens then give them away to those in need. The reason Bowers is bringing this program to Toronto is because of its immense success in Vancouver: according to Brand, he’s redeeming 120 tokens a day.

But no good deed goes unpunished. Apparently, other activists have spoken out against this program as “demeaning” and–horror of all horrors–doing the government’s job.

One such critic is York University’s Ilan Kapoor, who is a professor of critical development studies (which involves critiquing economic development from post-Marxist, feminist, etc. perspectives). He brushes off Bowers and Brand as providing merely “a Band-Aid kind of solution, because it doesn’t address the broader problems of hunger and, larger than that, joblessness and inequality.” He says the problem with private charity is it allows “private individuals–celebrity chefs in this case–to decide (how to feed people in need) and we as the audience who buy these meal tickets should not be making decisions on who we want to give them to based on our whims and fancies.” He offers as his solution “a state-funded, fair system of distribution.”

The problems with Kapoor’s criticisms are two fold. First is his dismissal of Band-Aid solutions seemingly in general. But Band-Aids still serve an important function. Bowers easily dismisses Kapoor here. “Some critics are going to say it’s dehumanizing or degrading; but what’s dehumanizing and degrading is that those people are still hungry.”

Second, Kapoor commits the fallacy of ascribing action to a collective. Put simply, only individuals act. If a group of people were to stand naked before you, you could not, merely by looking, assert that you were looking at the Ontario Legislative Assembly, or the Toronto City Council, or just group of strangers with no connection to each other. We can only ascribe identity to collectives once we understand what the individuals that make up collectives themselves understand about their condition.

So when Kapoor says he is in favour of “a state-funded, fair system of distribution” as opposed to private individuals distributing their money how they please, he is fact favouring a system where arbitrarily chosen individuals (the state) decide how to spend other people’s money. What he is saying is that arbitrarily chosen individuals can somehow avoid the follies and weaknesses of everyone else, and will not succumb to the twin demons of “whim and fancy”.

Recently deceased Nobel Laureate James Buchanan spent his entire career demonstrating that just because you are an arbitrarily chosen manager of other people’s money, does not mean that your heart becomes hardened with indifference. It does not mean you become immune to persuasion. And surely you do not suddenly become a nonemotive, friendless, dispassionate, calculating robotic bureaucrat concerned only with the attainment of the elusive “greater good”.

Politicians are people before entering office, and remain human beings while they are in office. They build relationships and owe debts of gratitude, like the rest of us. They also, like the rest of us, try to help out their friends whenever they can. They make a lot “friends” when they’re in office, too.

The only difference between us and them is that, unlike private people, every bit of help a politician offers a friend through the state is at the expense of every single other member of the community.

And because the state has vastly more resources at its disposal than any private entity, politicians are actually more susceptible to be bribed, co-opted, blackmailed, and tempted & tantalized with promises of great riches and glory in order to game the system to advantage of themselves and their “friends”.

Private charity should be embraced with open arms, precisely for the reasons that Professor Kapoor decries it so. It is precisely because private charities allow individuals to determine for themselves how to help others, that makes private charity more judicious, economical, creative, and just a little bit more human.