Competitive Advantages - Building
August 23, 2018 (pseudopolis)
a.k.a why will this work?
Traditional cities are organic entities with varied and conflicting priorities. In contrast, Pseudopolis is a single-purpose, purpose-built solution meant to provide urban space with the greatest efficiency.
Also, in traditional cities the value of improving the city is split and contested between many different groups - all the various landowners, the local government, and so on. In contrast, in Pseudopolis all the value is funneled through the sole landowner, Pseudopolis Corp. That means that many investments would pay off in Pseudopolis which would not in a traditional city.
This will all come into play for the two main tasks, building and recruiting. First off, let’s look at two examples of how Pseudopolis will be able to build more effectively than traditional cities.
Example - Building a new subway line
Consider building a new subway line. In general, it will have a large upfront cost, diffuse and hard-to-predict benefits for many people, and some negative externalities, like increased noise for the nearest houses. A traditional city faces some significant issues here that are avoided by Pseudopolis.
A traditional city is only able to capture a fraction of the added value to use to fund the project, by eventually collecting increased property taxes. If the value recaptured by property taxes represents (for example) twenty percent of the total value added, that means that the city can only afford to fund projects that give a five-for-one return, and even those just barely. The rest of the value dissipates to existing landowners.
In contrast, in Pseudopolis, Pseudopolis Corp is the existing landowners, and can directly capture up to the full added value directly by charging rent. That means that Pseudopolis will always have more options for improving infrastructure, and they will be more cost-efficient.
In a traditional city not only are the benefits of infrastructural improvements diffuse and hard to capture, but the negative externalities are concentrated and incite intense opposition. The owner of the house that will be bulldozed to make way for the new subway line, or even of the house that will merely be subject to round-the-clock noise, suffers large and uncompensated damage. In general, these negative effects, for the affected parties, heavily outweigh their share of the diffuse benefits. This leads to a huge degree of “not in my backyard” opposition to any substantial project, and for good reason.
In Pseudopolis, again, Pseudopolis Corp is the landowners. Rather than random members of the community suffering ruinous losses which they will rightfully and strenuously object to, the city corporation itself bears the full costs. Since the city corporation also stands to reap the benefits, it will be willing to bear those costs when it makes sense.
Example - Building an apartment complex
Consider another case, building an apartment complex. It has a different calculus than a public infrastructure project like a subway, but likewise poses problems for traditional cities. In particular, the benefits of building a new apartment complex accrue almost entirely to the property owner. The city as a public entity bears the costs of increased strain on public utilities, and other landowners suffer from lower property values (due to competition). The best situation for any particular landowner is for them to be allowed to build freely, while all others are restricted from doing so.
Again, in Pseudopolis there is no conflict of interest between the landowner building the new apartment complex and the other landowners - because they are both Pseudopolis Corp. As long as the benefit from leasing out a building full of new apartments offsets the price-lowering effect of increased supply, it will be built.