A free economics lesson for London Councillor Jesse Helmer

Lee Friday – June 23, 2017

When people drive their cars downtown to work, or to shop, or to dine, do they need a place to park their cars? If I stood on a street corner and put this question to one hundred passersby, how would they respond? If I conducted such a survey, I would wear a disguise, because I am pretty sure each response would be some version of this: “Listen, you idiot, of course they need a place to park their cars. Why are you bothering me with such a stupid question?”

Is it possible that one hundred passersby – people selected at random – are smarter than some of their ‘representatives’ on City Council? There is insufficient parking in downtown London, yet some City Councillors want to reduce the number of parking spaces.

As per the London Free Press (here and here): “The most important reason London has 700,000 sq. ft. of vacant office space in the downtown is because we do not have enough convenient parking,” said Shmuel Farhi, a top core property owner. “Every spot lost means one less potential new downtown worker.” This simple economic fact seems lost on Councillor Jesse Helmer, who said (emphasis added):

“I understand why people want parking downtown . . . I have been consistent with not voting for temporary parking . . .”

So, Helmer is saying he does not want to allow entrepreneurs to provide the parking which he knows people want. And Helmer is supposedly a representative of the people?

Do not concern yourself with Helmer’s choice of words, “temporary parking” versus permanent parking, because some councillors seem opposed to either form of parking. The LFP reported that in 2014, Sifton Properties applied for a rezoning to establish a parking lot for permanent use and council refused, instead approving a new temporary use for three years.

The temporary Sifton permit is due to expire this year. Therefore, on Monday, June 19th,

The city’s planning and environment committee . . . approved a temporary lot at 221 Queens Ave. for three years, after a plea from Sifton Properties that businesses leasing space in nearby buildings would be hurt without it.

“This site is essential. It provides staff parking and demand does not let up,” a Sifton vice-president told the committee.

“We need more than that and it is critical to be competitive.”

Approval from the planning and environment committee came by a narrow 3 to 2 margin, including Helmer’s opposing vote. This is confusing. Why do some councillors want to forcibly prevent the market from maintaining the current number of parking spaces, which are clearly in demand? More from Councillor Helmer:

“We have a policy that says we will discontinue temporary surface parking, but all that have come forward have gone through,” he said.

“If we keep renewing surface parking, we will keep having surface parking. It’s a bad principle to have a policy and do something else.”

I say it is bad to have a policy that makes no sense. Helmer appears determined to follow a policy, for the sake of following a policy. But the policy is ill-advised. It is economically counterproductive to reduce the number of parking spaces, and to forbid more parking spaces. Business expansion requires parking expansion. To elaborate on this point would be an insult to the reader – simple economics a ten-year-old can understand.

Sifton’s temporary parking lot permit was narrowly approved,

but at that committee meeting politicians pledged to stop allowing temporary lots, saying they are an eyesore and limit development downtown.

An eyesore? Well, that’s in the eye of the beholder. They are not an eyesore to those who use them. And how exactly do these parking lots limit development downtown? I assume these politicians are expressing their opinion that this land should be used for more economically productive development, not parking lots. If that is their claim, it is an economically ignorant claim. But it is an easy claim to make for politicians who have no skin in the game. Councillors Park and Turner have made similar suggestions in the past, and I have responded to their comments here and here.

Furthermore, as far as “downtown development” is concerned, these politicians seem confused about cause and effect. As Farhi pointed out, we have a lot of vacant office space because we don’t have enough parking.

What is the best way to decide how much parking is required downtown? And what kind of parking – outdoor ‘open-air one level’, parking podiums, underground parking? The answer – let the market decide, not politicians. Entrepreneurs are incentivized to quickly and efficiently respond to market demand. Quickly, because they seek profits. But ‘efficiently’, because mistakes may produce losses. These are foreign concepts to politicians who have no skin in the game.

Entrepreneurs should not have to apply for parking lot ‘permits’ from the government – they can receive ‘permission’ directly from consumers. If the government stops interfering in the marketplace, more parking lots will be built, and parking fees will decline. If too many parking lots are built, owners of empty lots will face losses. Losses are the method by which consumers effectively deny permission to parking lot owners to continue their business – and the land is conserved for a future entrepreneur who believes he/she can more effectively utilize it to satisfy the preferences of consumers. The market is self-regulating. Consumers gain the most when the market is not disrupted by government edict.

City Council says it wants the downtown to grow, yet it creates rules which prevent growth. Absent the ‘permit’ requirement and other government regulatory impediments (zoning etc.), the market would provide sufficient parking spaces to prompt businesses to start leasing all that vacant office space. And more people working downtown means what? More spin-off businesses created – restaurants, stores etc. Simple economics.

 

2 thoughts on “A free economics lesson for London Councillor Jesse Helmer

  1. Very interesting article, I don’t live locally ( from Pasadena CA) but similar issues have come up in my town. The two main issues I see are that local govement is trying to solve a problem it has no business nor expertise to solve, second there is a real problem that cars have taken over our towns. Many cities in north America have become a vast spread of asphalt and parking lots. For most people I believe its an aesthetics problem not a global warming issue, they dont like living in a sea of cars, others dont care, they just want to find a parking spot. Politicians tend to want to do “something” even if it is ham handed. So the my call to action is get creative, government is probably not going to help and neither are people who just want to find parking.

    like the blog, and the writing, saw it on DGN SA

    • Would we still have a “vast spread of asphalt and parking lots” if the government was not interfering with individuals’ property rights? In other words, would our cities look the same if individuals had the freedom to develop their own property as they see fit, free from governmental conditions, but not free to violate the rights of other property owners?

      I don’t know what our cities would look like, but I suspect they would look much different, and function far more efficiently. We can safely predict this result because when decisions remain in the hands of those who are most directly affected by the decisions, rational planning tends to prevail. In contrast, government planning is always arbitrary, tends to benefit politically connected special interest groups, and, as you pointed out, is often ham handed, which is economically counterproductive. This reduces overall prosperity and wellbeing.

      Here is an example of economic waste due to government planning. In London, during the past few years, many miles of bicycle lanes have been added to many roads. Some cyclists use these lanes, but I often do not see even one cyclist when I am driving. Cars outnumber cyclists by at least a thousand to one. Construction of bike lanes was a wasteful use of scarce resources.

      Perhaps, in a genuine free market, we would still have lots of cars and asphalt parking lots. That would simply reflect the preferences of consumers. But you can be sure those asphalt roads would be better planned, better constructed, better maintained, and traffic flows would be greatly improved.

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