Though Iowa in general escaped the worst of the housing and commercial property bubble and crash, we had plenty of our own unpleasant occurrences coupled with our own homegrown scoundrels and scandals.

The difference between speculative housing and commercial development and their aftermaths in the Des Moines metro area and, say, Phoenix is merely one of magnitude and scope. Driving around Central Iowa, one encounters half-filled strip developments and site after site populated with a smattering of homes amid dozens of empty lots – the gap-toothed evidence of speculation and bad planning.

That’s what we can see. As an economist, I often measure the expected gains or losses to regional jobs and incomes from increased or decreased industrial activity using models. This gives us a multiplier or “ripple” effect. There is another multiplier in a community when high fliers crash. What we don’t see, nor can we measure, is the misery multiplier that occurs in a bust.

Long before the jig is up, developers and speculators slow or stop payments to their suppliers and contractors, who in turn have difficulty paying down their business accounts. When the developers hit their inevitable dead ends, contagion begins to spread. Bad bank decisions are revealed, partnerships go sour, firms are liquidated, partially finished developments are turned over to receivers, and the developer goes bust.

As lenders, contractors, suppliers, skilled tradesmen, unwitting partners and local businesses get stiffed, the misery multiplier begins to take down other firms, which also multiplies through the economy. It would be interesting to study construction-related bankruptcies in Central Iowa during the past four years and sort out which were due primarily to an overall bad economy and which were due to being left a large ledger of accounts receivable by failed developers. I bet the latter group is large and bitter.

Complicit in this whole process are our city and county governments. Eager for tax base additions, it is safe to say most never met a development they didn’t like. We watched suckered city councils and county boards fall all over themselves to aid and abet housing and commercial developments with publicly funded inducements. Many were left holding the bag on project infrastructure or other unrecovered public costs.

We’ve watched the unmasking of our development mavens as the mere paper tigers they were. In their wakes are ruined businesses, ruined relationships, ruined lives, ruined suppliers, a suspected arson or two and prison time. It’s been quite a saga.

Now the rest of the economy, the part not taking economic development hallucinogens, must clean up the mess, absorb the losses and look forward soberly to the slow slog of recovery.

David Swenson is an associate scientist in the department of economics at Iowa State University.