I’m returning from a lecture at Ave Maria University in Florida, my first exposure to this extraordinary entrepreneurial venture. The University is just the beginning. This is an entire, full-service town, privately conceived and built.
The idea was hatch in 2002 by Tom Monaghan, founder of Domino’s Pizza. The notion was to create a new town with a university and Catholic Church at the very center, but surrounded by real life as expressed in the commercial sector, something like the model you find in innumerable European cities that combine religious attachment with progressive hustle bustle that you find only within a free-enterprise framework.
Of course in the European model, you have organic development of the structure, plus many centuries for development. For a new town outside of Naples, Florida, the attempt to recreate this sense of community centered on faith required something unknown to European cities: a private form of central planning with development compressed into a few years.
The vision might have foundered on this flaw alone (vibrant towns resist planning but instead depend on spontaneous order) but Monaghan had experience in the world of free enterprise and correctly saw that in opening this town, he was not acting as a central planner so much as an entrepreneur or real estate developer. It was a risk he was ready to bear. That meant marketing and the creation of a friendly environment for business to thrive.
It was and is a brilliant plan. The idea was to create a huge community with a university and high school and grade school with gorgeous residential areas. Families would move there. Their kids would go to school. Students would would attend the university. Businesses would be drawn by an abundance of labor, both earnest and low priced, and also the close proximity of a customer base. Business owners and parents would move to the community to live amidst a thriving religious culture in which the Church was the town center. It would all work provided the engine of private enterprise was there to combine all these efforts into a beautiful and orderly town. This is a grand and inspiring vision.
And yet, the contemporary story of Ave Maria, Florida, is told in the sign you see driving in: “Established 2007.” I do not know the details of what has happened to home prices but I do know that the wonderful vision was unveiled at the height of the real estate and economic boom. I don’t know what happened to the price of homes but it can’t be good from the point of view of owners.
I do know that something like 1/4 or fewer of the homes that people expected to sell have in fact sold. The bust of 2008 created a disaster of immobility nationwide, thus hobbling the possibilities of growth for many entrepreneurial. People can’t move anywhere, must less to Florida. People are stuck because houses sell for far less than they once did, saddling people with catastrophic financial losses and eliminating even the option of looking at a place like Ave Maria as a possible relocation spot.
Had this entire venture been put in place 10 years earlier, Ave Maria, Florida, would today be a beacon to the world of what private enterprise can do, not just for worldly things but also for communities of faith. It might have shown how every sector of society is capable of opening a private town with a cultural atmosphere supportive of a particular interest. Whether it is Orthodox Judaism, Baptist snake handlers, or a nudist colony, a free society permits and encourages this kind of privately supported community formation. A thousand flowers can bloom.
In so many ways, Ave Maria, Florida, is an inspiration. The setback is a consequence of macroeconomic trends, a victim of the central bank and Greenspan and the business cycle these create. I like to think that Ave can stick it out until the bust ends. The dream of the founders can in fact be a reality – the only problem is that the wickedness of the boom-bust cycle (yes, there is reason to fear it) has delayed it. The bust has tested this vision just as it has tested everything and everybody.
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Dude! What are you smoking and where can I get some? The only way some junk food selling shyster could put this white elephant together is because of the inappropriately cheap debt caused by fiat money and fractional reserve lending. McMansion estates all over the Anglosphere, stupid towers in Dubai, empty cities in China – caused by fake money, not ‘cut down in their prime’ because the inevitable bubble burst. Seriously, can you sell me a baggie?
“In so many ways, Ave Maria, Florida, is an inspiration.”_Jeffrey Tucker
It also could be seen as a case of malinvestment.
Beware of temporary cheap money for long term investment !
I see: Mr Tucker is being provocative – like always. The deflationary process of taking resources away from some business to reallocate in another, in a sound monetary system, would also be thus the objective limit of market efficiency to be perceived.
In the current system, all one knows is that the credit inflation allows resources to be allocated to investments without prior selection process (the subjective credit rating seems not better or not worse than any Governmental decision). This makes a strange arbitrary mutation out of our society… with some good and some bad, but no human being left to judge it.
That’s all well and good, but here’s the thing: if America was a market-oriented society with sound money instead of inflationary business cycles, communities like Ave Maria would not stick out as being anything special. To steal from Tucker’s purple plume: a thousand Ave Marias would bloom.
Well, to say that something is a malinvestment is not a moral judgment. It is a macroeconomic one – the resources to support the investment are not there. But there is no way to know this in advance. The market signals are distorted. I can easily see how this town would be viable in normal market conditions, but not in a bust.
When we live in a succession of boom and bust, what then is ‘normal market conditions’ ?
Testing its artificiality: Describe the tax structure of Ave Maria, Florida.
http://www.newoxfordreview.org/article.jsp?did=0904-messaros
“But institutional chaos was soon dwarfed by troubles which were much more severe. In late June of this year, the federal Department of Education (DOE) announced sanctions against Ave Maria at both its Florida and Michigan sites. In a letter sent to the College, the DOE announced it was putting Ave Maria on “heightened cash monitoring” for its poor management of financial aid awards to students. The letter said that the College would have to pay back $100,000 to $300,000 of grants and loans because AMC Michigan could not prove that a substantial number of awards from 2000 to 2003 were made to “eligible students.”"
Tom Monaghan, nor his entities deserve any sympathy (yes the poor folks who followed him down there do). When libertarians on this site think of the Monaghan enterprise, particularly with what he did to the University and Law School, I want them to visualize the Koch’s.
For the law school in particular, I want you to think:
Koch = Monaghan
Ed Crane = Bernard Dobranski
Rothbard = Steven Safranek – Charlie Rice
Libertarians know the names on the left, as for the names on the right, it doesn’t matter much, other than the story is pretty much the same. Founder comes up with incredible idea, pitches it to multimillionaire, multimillionaire complies, then minion of mutlimillionaire kicks out the founder for ideological-religious purity, multimillionaire moves enterprise cross country and sells out the ideological-religious message. For those who care, Stephen Safranek came up with the idea of have a Catholic law school committed to the faith (he’s also quite libertarian, see his LRC article on marriage: http://www.lewrockwell.com/orig7/safranek1.html). Safranek and the great Charlie Rice was given the Rothbard treatment by Monaghan and his neocon minions (see former Ave Law board members: Kate O’Bierne and Robert George), booted out as a tenured professor, and then moved the lawschool down to Florida.
As for “But there is no way to know this in advance.” I say hogwash, every Austrian who looked at the real estate project new ex ante that it was doomed to failure as a stupid and greedy speculation by Monaghan to sell a planned community amidst a real estate boom. He cloaked his greed in caritas, and got burned for it.
“He hath filled the hungry with good things : and the rich he hath sent empty away.” – Ave Maria
http://www.newoxfordreview.org/dossier.jsp?did=dossier-ave-maria-college
http://avewatch.com/
Casey, I’m sorry but that sounds like a lot of baloney growing out of a frenzied imagination, including your supposition that investment is motivated by “greed” and that if all entrepreneurs studied Austrian economics, they would never make a mistake.
I don’t think that investment is per se motivated by greed, but that the particular investment made by Monaghan was.
Greedy investors: entrepreneurs we don’t like. Far-sighted genius investors: entrepreneurs we like.If I’m wrong, perhaps you can share your mind-reading techniques with the rest of us?
Are the town and university worth visiting?
I would say so. I was intrigued on many levels. I fear for the long-term viability, however, unless there is a big economic turnaround.
What is its tax structure? If it is a full-service town, privately conceived and built it must have some structure. What makes it like a model classical liberialism village?
I have no idea but the taxes of any town – I don’t even know if there are taxes or what the relationship is with the county – are relatively minor compared with state and fed taxes.
Hahahahaha, I was quite intrigued by this, so I googled it. I was not surprised to see that the news headline was “Queen Mary Pub Now Open!” Having attended Catholic schools for 13 years, I knew no gathering of Catholics would be complete without plenty of beer!
Their apartment buildings and everything look amazing though, especially the ones with long balconies.
AMU looks like they’re serious about academics. Their Econ department is small (like the rest of the university) but includes a graduate of MIT and of Notre Dame.
It is a great pub!
Jeff: If Ave Maria U will leave the place, maybe Mises Institute can move in, a second site perhaps for LvMI?
Jeffrey this post confuses me to no end. I am all for anybody creating any community they want but I get the feeling you are not being objective.
I don’t know why you would say this. I know about as much as I learned this weekend and no more.
Personally I am no expert and I haven’t a clue about this little community near Naples. But what confuses me is how this community could be different than the others that have sprung up and not been able to take off? The islands in Dubai, a town near Vegas, and condos in Florida were, I was told here at this very website, what happens during a inflationary boom and bust cycle. Then this post comes up and this domino’s guy is some kind of entrepreneurial genius that got side swiped by the fed? What did he do differently than the other community builders around the world other than make it catholic? How great of an entrepreneur can he be if he can’t sense a boom and bust cycle? I don’t mean to imply anything, but I can hardly see someone from the Mises institute coming back from a (pick a non catholic religious community) like this with such glowing review. I am just calling it as I see…not saying that I am seeing it correctly. Jeffrey is still awesome!
Ah! I see what you mean. Well, I guess in my case, I don’t really see it as a easy case of folly based on a get-rich-quick scheme. The guy was really taking a speculation on an noble idea – not one of for the mass market but one for a niche market rooted in his own convictions. Maybe I’m completely wrong here but it strikes me as not all that implausible an idea, one rooted in real entrepreneurship, one that might have worked well under normal conditions. This was not a casino in Vegas or a skyscraper in Dubai.
But maybe you are right that this is a bias talking here. I can’t rule it out. In any case, I’m just giving my impressions from a weekend visit. Separating the real from the unreal is very difficult in an economy that swings from illusion to reactionary in short order.
Jeffery I am glad you were able to clarify a little more. Oh and one point to help the argument that the Ave Maria can be plausible venture over the long term is that while it may not be as successful as some would have liked at this point it is still open. The other things I had in mind are not able to brag even about that!
But Your point on whats real and unreal brings up another question…
How do you objectively measure success? I know there are going to be many buildings destroyed and many homes sit empty in the wastelands of the bust, but some entrepreneurial will come buy and pick up some of theses assets and put them too good use. So is it a question of just a broke banking system, distorted prices, or bad business ideas because in the log run some of these assets will be put to use in their original intent and be successful….but in the long run we are all dead. No need to answer I am just expanding on your last point of market distortion, sort of think out loud. End the FED!
Detroiter here. From the home of Tom’s Dominos Pizza. We’re familiar here with Monaghan and his religious convictions. This is a man who built a pizza empire and gave it all up for his faith. I know that many here base their liberterianism on religion, but in my mind this man thew it all away for a pipe dream. I don’t remember, and don’t have the time or the inclination to look up the details, but in a fit of moral guilt he sold his business and dedicated his fortune to the catholic church. If I’m not mistaken, in addition to giving mucho bucks to the catholic church, and the project noted here, and who knows what else, he opened/funded some sort of catholic mission in Central or South America, too. Serious mental imbalances in my estimation.
What a waste!
P.S. Never liked Dominos pizza much anyway. Lots of bread, skimpy on the toppings.
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