Five Minute Real Estate

In this five minute video clip, Frederick Melo with the St. Paul Pioneer Press refers to a number of important real estate outcomes. He was invited to the weekly PBS show, Almanac, due to a recent announcement that a portfolio of commercial buildings, including the iconic First National Bank Building, is being listed for sale.

The collection of buildings are owned Madison Equities. Long time real estate developer, Jim Crockarell died in January and his heirs are not interested in being landlords. Building owners can gain emotional attachment to their properties as appears to be the case here. Some of them were half empty and some completely empty. Significant vacancies do not happen on the turn of a dime. Commercial leases are multi-year and companies have an investmest in their locations. So this recent announcement reflects activity which has been brewing for a while.

Well known architectural firm, TKDA, is also moving. They are relocating to Bloomington to keep workers happy. After 100 years, the downtown devotees are succumbing to practical desires for free parking. An added feature is scenic vistas over the Minnesota River. To attract workers back into the built environment, they are seeking out new surroundings in the third largest city in the state.

US Bank is also stepping away from downtown yet still staying in St. Paul. Workers here also say no to the densest part of the city. Melo reports that the building has had ghost leases for years. While technically under contract, the one-employee-per-floor occupancy has been a long-time indicator of what the future held.

What to do with all these vancant buildings is the question of the day. The solution under proposal is converting the office space to living space. But conversions are very expensive and the demand for residential in the capital city is not as strong as next door neighbor in her sister city. It’s a tough place to live.

Grants and tax increment financing are being proposed as public interventions. Is this a good idea? I’m not so sure. The mayor is quiet letting a non-profit alliance offer investment strategies. Their approach is to focus on one street at a time. One street a downtown does not make.

Cathy Wurzer brings in the ringer of a topic just at the end. Crime and personal safety. These are real issues that have been muted in the last four years. People don’t want to have to worry about being carjacked at knife-point when they’ve got a head full of kid’s programming and an armful of work manuals. Proximity to violence is a deal breaker for many people.

I had not heard of the study the Downtown Alliance had done around the DT Greeters pre and post pandemic. Within a district where a tax was collected to support the greeter program, quality of life crimes decreased by 40%. Whereas in the adjacent Lowertown area (where the St. Paul Saints stadium is located) crimes increased by 20%. Jim Crockarell, the real estate developer, opposed the district. This is speculation, but I’m guessing he thought greeting people and being busy maintainers of sidewalk safety was meant to be organic. It was the civic thing to do. Yet here is concrete data that an organized effort to deter crime, a significant motivator, was successful with subsidized labor.

In review, we were told about multiple exits to the city core. Be careful to note this was not a sudden occurance. We heard about emotional attachments beyond the pull of financial prudence. We heard about consumer driven needs for parking and easy access. We heard about the impracticality of retrofitting the built environment (file under why so many old buildings come down). We heard about public subsidies that will fall woefully short of the task. We heard about the big driver, safety, which is often kept on the QT so as not to implicate an area.

That’s a lot in five minutes

Title work from the Book of Ruth

In Chapter 4 a plot of land is identified for aquisition.

3. And he said unto the kinsman, Nấ-o-mi, that is come again out of the country of which, selleth a parcel of land, which was our brother Elim-ẽ-lēch’s:

Then one worries about past liens and encumbrances.

5. Then said Bo-ăz, What day thou buyest the field of the hand of Naomi, thou must buy it also of Ruth the Moabitess, the wife of the dead, to raise up the name of the dead upon his inheritance.

So one asks for witnesses to the transaction.

9 And Bo-ăz said unto the elders, and unto all the people, Ye are witnesses this day, that I have bought all that was E-lim’-e-lech’s, and all that was Chi-li-ăn’s and Mäh-lõn’s, of the hand of Na’-o-mĩ.

Instead of gap coverage, the buyer secures the potential claimant to the land through marriage.

10 Moreover Ruth the Moabitess, the wife of Mäh-lon, have I purchased to be my wife, to raise up the name of the dead upon his inheritance, that the name of the dead be not cut off from among his brethren, and from the gate of his place: ye are witnesses this day.

That’s a wrap on a closing.

The thing is- many countries still rely on insufficiently formal titling of land.

How many people does it take to start a protest movement?

It turns out quite a few. Tablet Magazine has an excellent article on the people behind the recent protests on campus’ across the US: The People Setting America on Fire- An investigation into the witches’ brew of billionaires, Islamists, and leftists behind the campus protests.

Not only does the article list out the actors: “This largely decentralized network of agitators is, in turn, politically and financially supported by a vast web of progressive nonprofits, NGOs, foundations, and dark-money groups ultimately backed by big-money donors aligned with the Democratic Party.”

But also gives shape to the dynamics of the interaction:

These groups, Shideler says, typically operate in a decentralized manner, using successful tactics drawn from decades of anarchist organizing and spread through left-wing activist networks via word-of-mouth, as well as through formal trainings by professionals such as Fithian or the nonprofit “movement incubator” Momentum Strategies. “If you look at Fithian,” he says, “she has consulted with hundreds of groups on how to do these things: how to organize, how to protest, how to make sure your people don’t go to jail, how to help them once they’re in jail.” There is no one decision-maker; rather, decentralized “affinity” groups work together toward a shared goal, coordinating out in the open via social media and Google Docs.

It’s worth a full read.

When do regulations work?

There’s a frequent complaint around government’s performance. Measurements for outcomes on public policies are difficult to evaluate. So how do we know when regulations meant to make things better, work?

One sense of it could be reflected by the populations adherence to the new rule. For instance, when smoking was banned from indoor areas there was a lot of grumbling. Now, a quarter-century later, it is rare to enter a home hanging heavy with the sent a-la-ashtray. The constituents agree. No smoking is great! Don’t even think about lighting up by the public entrances to buildings as perfuming oneself with the sent of Marlboros is not OK.

Some cities place permit requirements on all sorts of home improvements. I doubt there are objections to paying for an city inspector to stop out for the significant improvement projects like roof replacement or furnace upgrades. But the fees can hit smaller appliances like gas ranges or hot water heaters too. In these cases the regulatory charge adds an additional ten to twelve percent to the new appliance. After paying a sales tax and a delivery fee, people find this onerous.

As a result, people bypass the permit process. Pretty soon it becomes a known thing and nobody is following the rule. When the public ignores a regulatory process, I’d say it’s time for a reassessment.

Time- according to Alfred Marshall

Marshall proposed thinking in one of four blocks of time. The first would be a market period, where demand determines price because there is not sufficient time to alter supply. The short run, Marshall’s second period, introduced a new wrinkle: by responding to demand, firms could increase supply, but only by spending more money. So prices might go up, set by the cost of supply, working in tandem with demand.

The third period, the long run, during which firms had time to develop new efficiencies, introduced a further complication. Now rising demand might trigger falling prices as businesses benefited from economies of scale and better organization.

The fourth period, secular time, was Marshall’s nod to history it-self. Secular time was generational time, which might see huge shifts in demographics, knowledge, or political organization, completely refiguring the dynamics of supply and demand. Marshall had found a way to integrate the glacial movements of the ages, the lurches and accelerations of the present, and the universalizing clarity of economic abstraction.

Lifted from Jennifer Burn’s book Milton Friedman: The Last Conservative. She narrates Friedman’s encounter with Alfred Marshall’s book Principles of Economics.

Time is real estate is yet on another schedule.

Paternity Leave

It’s game time for the second in a series against the Denver Nuggets and lead Timberwolves defender Rudy Gobert is taking the night off. For what you say? For the birth of his baby. My. Times have changed.

I guess the team is on-board with his decisions. As they should be.

Gobert and the Timberwolves were well aware that he might have to miss a playoff game for the birth of his child, and the team has been nothing but supportive of his choice to be at his girlfriend’s side for such an important life moment.

“I would do anything I can to be there,” Gobert told the Deseret News in March. “I don’t think there’s any debate to have. Coach Finch and every guy in this locker room, that’s what I love about them, we have a level of human connection and empathy for one another that I think is really good. And I think all the guys will be literally telling me, ‘Don’t play, go.’”

MSN

The team has tons of momentum. Let’s hope this opens up an opportunity for one more player to become a star.

Christ Church, Malacca

Christ Church is the oldest protestant church in Malaysia. It sits on the same square as the administrative buildings set up by the Dutch in the seventeenth century.

The Stadthuys (an old Dutch spelling, meaning city hall) is a historical structure situated in the heart of Malacca City, the administrative capital of the state of Malacca, Malaysia, in a place known as the Red Square.[1] The Stadthuys is known for its red exterior and nearby red clocktower. It was built by the Dutch in 1650 as the office of the Dutch governor and deputy governor. It continued to be used as the Treasury, Post Office, Government Offices, and suites of apartments for the high officials after the takeover by the British.

WIKI

The librarian who liked the beach

Many lessons were learned from the Covid lockdown, including knowing which jobs are conducive to work from afar. Employees who work primarily through an internet connection discovered that they preferred working from home as it gave their lives more flexibility. Some employers are now indifferent to where their employees sit when they earn their paychecks. But not all employers are so flexible.

A few years ago, a brouhaha flitted through the local news as it was discovered that the man in charge of our largest, and nationally recognized, library system was running the show from a downtown condo in LA. Minnesota’s weather is indeed a drawback. Still, the Hennepin County Board is in charge of this position and was not amused by someone in a key position choosing to live by the beach instead of in the land of ten thousand lakes.

There’s a consensus that if you are a public employee of stature then you should be experiencing the public environment here, along with the rest of us. You need to part of the team. You need to be in the know of the subtle and sometimes unsaid nuances of an area’s culture and aspirations. To dial in from afar was deemed unacceptable and a severance package was negotiated.

Where you choose to live tells a lot about your preferences. It’s an acceptance of the combination of features available to residents in the surrounding area. There’s an acknowledgment, by taking on the expense of the move, that there is something to gain through the relocations. Interestingly, the minority population in Minnesota is the only population that has gained ground between 2022-2024. Minnesota Compass, a non-profit research group, recently released these numbers.

People of color in the Twin Cities has increased by 34,000 in two years. It doesn’t seem to indicate the concern about policing and the justice system that some in the political realm are suggesting. Quite the opposite.

Knob and tube and deal breakers

In the early part of the last century, when electrification was new, a house wiring system called knob and tube was installed in many homes. It was a labor intensive process but the materials were less expensive. Where there were workers, knob and tube made sense. Wires ran between the interior walls and the outer shell throughout the house on the whim of the electrician. Without a plan, it is difficult to know which wires connect where. This becomes a drawback at time of a remodel. But the more significant drawbacks are the safety hazards due to overloading the system with electrical demands the system was not designed to carry.

This investor purchased a nine-unit building with k&t.

The fuse box looks funny because it doesn’t have the flip breakers. The cute green topped glass are the circuit breakers.

Insurance companies in our area will no longer cover a home with k&t. At least that’s the latest I’ve heard. They tried twenty years ago or so to make it a rule, yet it did not hold. There was enough demand in the market to over turn removing that option from their insurance offerings.

Lenders, federal mortage insurance rules, property insurance providers all play a role in real estate excahnges. In this way they feature in the price of property. It’s uncommon for a subsidary service to make a property unsaleable, but over the years there have been instances where property types have taken significant hits. Condos in the early 1990s would be another example.

Chapter 5- who does what when

Stubborn Attachments is a smart slim book by Tyler Cowen. He presents a decisive defense of society’s obligation to pursue economic growth. Although he expands his profession’s definition of wealth by bulking it out to include a larger scope of life. Wealth Plus is how he describes it.

In chapter five he wrestles around with some ideas about who should do what when. In order to not only have monetary wealth, it is valuable to sense that when something bad is on nigh, someone is around for a rescue. When the drowning girl needs to be saved, there must be a member willing to jump in the water and pull her out.

It’s not efficient if everybody were to jump in. She’d be saved by the sudden and dramatic reduction of the water level. Meanwhile no other jobs would get the attention they deserve. S0 how is it that the available labor will be in place when a task needs doing? When a crime needs reporting or an old pensioner needs protecting? That’s a great question.

It’s the question that begs the demand for benchmarking.

Pop star or rule or pop stars rule

They’re called influencers when they hit soccial media venues peddling cosementic products and outfits. Pop mega-star Billie Eilish isn’t hawking commodities. She’s pushing for people to make a sacrifice for the environement. Instead of enjoying a new outfit, settle for a used one. Instead of going solo in a vehicle to her concert, pair up and carpool.

“Hit Me Hard and Soft,” Eilish’s third album, is due out May 17. For the tour, she is focusing on sustainability and is continuing her longtime relationship with environmental nonprofit Reverb, to which she’ll donate a portion of proceeds from ticket sales. She’s also encouraging fans to carpool or take public transportation to her concerts and to wear thrifted or borrowed clothing rather than purchasing new. Fans are also invited to bring an empty reusable water bottle as there will be free refill stations at the venue.

St Paul Pioneer Press

Reminding people to do their part toward a common goal is one way to advance its objective. Another is to pass a law. No plastic straws, for instance, was meant to help the environement.

What I wonder about is which of these to strategies has a bigger impact, and to what degree? Spitballing it I would guess that someone of Eilish’s stature teases out more action, probably a lot more action. It wouldn’t be that hard to measure the ridership of the audience memebers.

I wonder why there aren’t more efforts to nail down the results of some of these strategies. If a mega-star can generate more significant results than a law. Skip the bannings that no one pays attention to and hire the influencers to change the world.

Work is Voluntary.

Is volunteer the right word for unpaid labor? Afterall, in free societies jobs are done voluntarily as well. Carees are pursued on a voluntary basis. That’s the whole idea. You get to choose. ‘The difference between work that is done as service work, in the efforts to improve or maintain a common goal, and work done for private enterprise, is that in one instance you are paid through reciprocity down the road, and in the other you are paid in unfettered cash.

How you choose to spend your waking hours in labor or leisure, caring for your loved ones or idly reading a book, working for a paycheck or going to an NBA playoff game, are all done voluntarily.

The difference is not whether you choose to work, but whether you choose to work for compensation. In fact, you can blend the. You can work for a check and in conjuction with your passions. And do it entirely voluntarily!

Austin Tx and the Missing Middle

Kyla Scanlon- economist

I love this clip by Kyla about the housing market in Austin. Build more housing and prices moderate. Too true.

There’s another factor at play here. Austin is a new town which has experienced a lot of growth. And along with the growth, prosperity. So for folks in the area to be pro-expansion and in turn pro-housing growth is an easy turn.

In more established cities, there are networks of additional interests all meshing on top of the landscape. There were reasons why residents fought for and built out their cities following those rules. For new growing metros, the Austin plan would be easy to adopt. For more those with longer histories, it’s not the same game. Here it will take other strategies to urge continued housing growth.

Future Farmers of America- Minnesota Edition

Years had passed without me giving the FFA a second thought. If someone had asked, I would’ve bet money on their demise years ago, during the era when everyone talked about the death of small-town rural America. If it hadn’t been for stopping at a rest stop on Sunday, the organization would still be out of my sight.

As it turns out the two bus loads of kids who were shoulder to shoulder in line for the sandwiches were headed to the FFA Minnesota State Convention at the UMN. Three days of events starting at a very early 7:30am. The dairy evaluations were at 7:45am.

This organization is not lacking for members eventhough it seems to be lacking media coverage.

Minnesota’s 95th State FFA Convention was held April 21-23 at 3M Arena at Mariucci and at the Minnesota State Fairgrounds.

Speakers, awards, competitions, workshops and sessions were some of the highlights for more than 6,000 FFA members from Minnesota attending the convention, celebrating the convention theme “Achieve – What It Takes.”

Here are some stats:

4,200 FFA members 7th-12th grade are pre-registered for the state convention.
15,000 FFA members in the state.
40,000 Minnesota students are enrolled in Agriculture, Food and Natural Resources (AFNR) classes.
218 FFA Chapters in Minnesota middle and high schools.
338 Agriculture, Food and Natural Resources teachers/FFA advisors in the state

This is from from a Grand Rapids outlet, WDO

Youth interest in rural communities is good news for the environment.

What are the proper densities for city dwellings? Asks Jane Jacobs

The answer to this is something like the answer Lincoln gave to the question, “How long should a man’s legs be?” Long enough to reach the ground, Lincoln said. Just so, proper city dwelling densities are a matter of performance. They cannot be based on abstractions about the quantities of land that ideally should be allotted for so-and-so many people (living in some docile, imaginary society).

Densities are too low, or too high, when they frustrate city diversity instead of abetting it. This flaw in performance is why they are too low or too high. We ought to look at densities in much the same way as we look at calories and vitamins. Right amounts are right amounts because of how they perform. And what is right differs in specific instances.

The Death and Life of Great American Cities, Jane Jacobs

When the land is worth more

We were driving by an intersection nearby and my husband said, “I can’t see why they’re tearing down the Prudential building. It’s in such good shape.” True. The building that was the corporate headquarters for Prudential in Minnesota was only forty years old and still looked like an attractive structure. But the destruction has begun.

Although the building is still viable, it sits on 43.75 acres of land within the Hwy 494 loop around the Twin Cities. Perhaps a large corporation would still invest in a private campus of this size, but the likelyhood of a current buyer, with the money, and (perhaps most importantly) the compatibility with the structure, is improbable. Technology changes alone make a forty-year old commercial building sorely lacking.

But it’s really about the land.

In 1980, much of the surrounding land was undeveloped. There were scatterings of buildings and a few housing developments, but this was truly the outskirts of the metro area. Bass Lake Townhomes, for instances were built in 1990. The commercial strip mall across Bass Lake Road to the north was built in 2001.

Once the present use of the Prudential site changed, and the company no longer had value in it, then value became what an outside party could do with the parcel. And this is what is proposed.

There are plans for two large apartment buildings. There is a retail and a grocery. There is space for restaurants and other commercial. The pressure to release this resource from a one-site parcel to a multi-use asset is tremendous. Thus the value of the large, seemingly viable, structure diminishes to nothing.

What’s interesting to note is that Prudential did nothing to make this happen. It occured because of neighbors.

Ruby slippers and a Value question

How do you put a number on historical value? A Minnesota bill is about to put a price on the ruby slippers worn by MN native Judy Garland in the Wizard of Oz. The slippers, stolen twenty years ago, were recently returned to their owner following the completion of the trial last year. The FBI were tipped off to the where abouts and recovered the sparkly heels in a sting.

Now the owner plans to have them auctioned off after sending them on tour. Their estimated auction value is put at $3.5 million.

The state of MN is going to put in a bid but it’s a bit shy of the estimate.

How are cultural values calculated? A one-off item is difficult to determine. But other similar items come and go from the market. Properties, for instance, have been designated as historical landmarks.

Game Theory or Discovery?

The higher interest rates have cooled the residential real estate market a bit, which is nice because for a run of three years or so, every home that was in decent condition was selling in multiple offers. It was common for a buyer to bid on four, five, seven homes before they were the winners.

Recently at a sales meeting the manager pulled the topic out of his list of things to talk about at a meeting because some properties are still attracting several offers. The strategies the office came up with filled the large sheet of paper on the easel at the front of the room. There’s more than one way to write and present an offer to a seller.

This made me think of game theory as the purpose of the meeting conversation was to theorectically compare strategies amongst the active participants in the market. Like in game theory, agents develop a sense of their buyers valuation of the home. There are many angles to this, but given the process of considering other options, perhaps loosing out on other bidding situations, the agent shares the strategies discussed amongst the agents in the meeting, and advises the buyer accordingly.

While reading Isreal Kirzner work, I thought his concept of discovery best described the process buyers go through in the market to arrive at their home purchase. After repeated investigations into the various housing options, perhaps with breaks in between to go home and reassess the purpose of the move, buyers discover their best option and only then are motivated to pursue an offer to the seller.

I can see now that the game theory part is the setup for strategy, competition and cooperation with the seller once the property has been identified. The discovery part has to do solely with the buyers insights into which property has that added benefit that boosts the property ahead of others in accomodating their needs. It is more useful to them and their particular circumstances.

It’s funny beause often a buyer is attracted to a property for the some or all of the same reasons the seller has enjoyed it during their tenure. And that affinitiy for the same likes and dislikes encourages the parties toward cooperation.

Urban Parks

Massive suburban mall parking lots must be one of the more unattractive features in a built environment. That’s why I like this little park so much. The city of Minnetonka installed a well landscaped gathering spot in one corner of Ridgedale Mall’s lot.

A woman walking her dog mentioned that on Tuesdays in the summer months the farmer’s market sets up in the open space.

When stakes are high-

Westminister Church has a wonderful town hall forum that hosts interesting visitors in a its beautiful nave. Today’s guest was Keyu Jin whose book, The New China Playbook, Beyond Socialism and Capitalism, was recently published. I was not familiar with this professor from the London School of Economics but the title of the talk drew me in.

After the half hour talk, Prof Jin took questions from the audience. Tane Danger, the host, looks through the cards in order to group similar topics together.

One audience member asks about the nuts and bolts of the k-12 education system in China. She responded that the party originally was responsible for education and it was free to all. But the one child policy in conjunction with fierce competition to vie for the best spots in the work force, led couples to hire tutors. A high score on placement exams guarantee economic and social advancement. Thus, in response to demand, a large industry of private education providers was spawned. This led families of limited means to expend, according to Jin, as much as a quarter of their income on supplemental instruction.

Prof Jin saw this as a negative outcome to capitalism. People’s hopes and fears for their children’s success were being exploited by a private entrepreneurial spirit.

Which brings us back to a favorite topic here at Home Economics. The theory is that certain endeavors are better suited to cooperate efforts of resource providers, while others respond favorably to incentives. In the first instance, the common goal is achieved through public governance and provisions, whether informally within a group or formally via a state structure. Public education has positive impacts from all angles in a society which is undoubtedly why it was established and is still maintained as a public good in the US.

Prof Jin provides a counterfactual. When the state fails to prioritize education, private entrepreneurs jump in and fill the gap. In her example, their success in combination with the high stakes creates an inefficiency.

What women do

From behind him Madame emerged, small and wrinkled and fierce. She considered that she had created this man out of whole cloth, had thought him up, and she was sure that she could do a better job if she had it to do again. Only once or twice in her life had she ever understood all of him, but the part of him which she knew, she knew intricately and well. No little appetite or pain, no carelessness or meanness in him escaped her; no thought or dream or longing in him ever reached her. And yet several times in her life she had seen the stars.

She stepped around the Mayor and she took his hand and pulled his finger out of his outraged ear and pushed his hand to his side, the way she would take a baby’s thumb away from his mouth.

Growing Capital- Ukraine Edition

Sue Christianson watched in shock and heartbreak as Russia invaded Ukraine in 2022, and she wondered what she could do to help.

Christianson, of St. Paul, was looking for a way to donate money online when she came across a Forbes article that mentioned ENGin, a nonprofit organization that pairs Ukrainians with English-speaking volunteers for free online conversation practice.

This is how she ended up helping a Ukrainian — now living in Minnesota — practice his English via Zoom or Google meet.

Mary Divine shares more about the need for volunteers.

When people have time, and they see a need, they willingly give of their time and expertise. It’s the work we do keeping a social objective in mind.

Read about it here, as Mary Divine explains in the Pioneer Press. Perhaps you can spare some time as well?

Jane Jacobs

The first author of neighborhoods points out the need for self-governance.

Let us assume (as is often the case) that city neighbors have nothing more fundamental in common with each other than that they share a fragment of geography. Even so, if they fail at managing that fragment decently, the fragment will fail. There exists no inconceivably energetic and all-wise “They” to take over and substitute for localized self-management. Neighborhoods in cities need not supply for their people an artificial town or village life, and to aim at this is both silly and destructive. But neighborhoods in cities do need to supply some means for civilized self-government. This is the problem.

Chp 6, The uses of city neighborhoods

The best conversation

The Uber/Lyft conversation in the Twin City area provides material to illustrate the dual nature of transactions. Let’s revisit the players. The drivers provide a service to riders for a fee. They also use a platform which takes a cut of the fare in exchange for technology services and national branding.

Drivers left the taxi structure back ten years ago or so. And it does not sound like they want to go back to the taxi arrangement and work for a boss, but are encouraging other ride share companies to enter the market. They are disgruntled with private pecuniary measures, yet satisfied with the soical benefits and flexibility of the job.

Riders are pleased with the services at today’s pricing. Present public transit options like the bus or metro mobility are actually cheaper but do not replace the service. The groups that would be most damaged by the loss of the ride share structure, since there is no substitute, are disabled folks and those who use it to go bar hopping. The social detriment to the first group would be internalized by loss of freedom and a reduction in trips to their medical appointments. Social detriment would be externalized through outcomes from drunken driving.

Another group of riders would have an impact on local businesses and conventions. The travelers who arrive from elsewhere in the US are familiar with Uber and Lyfts through their national presence. Their apps are already downloaded on their phones and they know the drill. The travel community is worried about how removing this transit option will be externalized onto their business.

Other ride share providers have always been able to enter the market. Drivers have always been able to seek out other work at traditional taxi oulets and other types of driver opportunities like school bus driving. (There are regular job postings for this in our districy choice.) Now that Uber/Lyft’s departure may be eminent, five other platforsm are said to be interested in the market. Yet there are regulatory costs.

Uber and Lyft’s threat to leave the Minneapolis area has sparked a lot of interest from outside players. But the cost of operating a ride share business is not for the faint of heart. It costs $37,000 for a license in Minneapolis, plus another $10,000 wheel chair accessibility fee. St. Paul’s license fee is $41,000. MSP Airport requires a $10,000 security deposit and a $500 license fee.

Separately, it costs about $150,000 to secure a commercial auto insurance policy for a rideshare company.

MSN.com

The issue around the driver’s fare split is presented, politically, as the wealthy corporate boss taking advantage of a punch clock worker. This isn’t the turn-of-the-century, nor are we talking about a factory. And since the platforms have yet to make a profit, that visual is difficult to sustain. But this broohaha may be the trick to get other companies to enter the market and have a go. Should they offer drivers a better cut, then the labor flow will move over to the ride share platform.

The key in all this is freedom. If drivers have the freedom to work as taxi drivers, or bus drivers, or drivers for ride share platforms, then they will gravitate to the best situation for their private interests, leaving the failing apps to die off. If riders find services that better suit their needs, then their business will filter over to new options.

Picking numbers and setting up a dam in the system inadvertently sets off financial as well as social repercussions without clearing them through the numerous social structures involved.

The dual nature of action

What’s interesting about this post by psychologist Kaidi Wu is, that in debunking the myth that American are solely independent and eastern cultures are solely communal, she exposes the reality that people in general act with both types of action in mind.

So the trick to organizing our actions really revolves around acknowledging which endeavors generate the best results through competition, and which ones sort more readily to a communal response.

Some of these are easy to spot. The sales of a tangible widget is best left to competition. Once the market is saturated and the object is no longer of use, resources will stop flowing in that direction. Services which save people from harm, like firefighters, are best provided by a community.

But Kaidi Wu is absolutely correct that the historically popular criticism that Americans are solely interested in the self is simply in err.

Paris pictures just because

Unrational Revolution

It started over 30 years ago. Steven Landsburg wrote the popular book The Armchair Economist in 1993. Through popular stories of economoc quandries and paradoxes, he challenges the long held premise of the rational agent.

Quite the opposite: Our working assumption is that whatever people do, they have excellent reasons for doing.

If we as economists can’t see their reasons, then it is we who have a new riddle to solve.

Since then the discipline has been flooded with sub-categories. There is behavioral economics, feminist economics, health economics, environment economics and so on. Perhaps there’s a thread that ties them together.

Business Opportunity!

Kenya needs title companies.

Lisa Bernstein explains Private Ordering

Example of private ordering described by Anthony Downs.

The purpose of shifting services to the neighborhood level is not just to improve quality but also to encourage self-development of local residents and enhancement of their personal values. Neighborhood self-development usually occurs most effectively through spontaneous, unplanned local efforts often led by charismatic individuals. In city after city the most effective such efforts have emerged from the dramatic leadership of one or a few unique individuals who took it upon themselves to “do something” about local conditions and galvanized others into : action. Inevitably, their efforts reflect their own unique combinations of talents and are therefore difficult to replicate elsewhere.

Neighborhoods and Urban Development

Coalitions can’t forget about constituents

A coalition of diverse groups, it was reported, were all coming together for a housing bill. That was sixty days ago.

(KNSI) — The Central Minnesota Builders Association is throwing its support behind a piece of legislation aimed at addressing the lack of housing and the high cost of new construction.

A coalition of housing advocates and bipartisan lawmakers joined together at the State Capitol to call for an increase in access and affordability in housing through the Minnesotans for More Homes initiative.

The bill (HF 4009/SF 3964) legalizes missing middle housing and new starter homes across Minnesota.

KNSI Radio

From the builders association to affordable housing advocates, an unlikely melange of interested parties were looking for ways to reduce housing costs. How better to lower expenses then to reduce barriers to building by rolling back the rules. This bill brought authority over what can be built where to statewide control.

Once the implications of un-zoning the neighborhood hit local communities, residents weren’t impressed. Here are some of the changes proposed.

  • Sets a base level for density allowed on any residential lot by right (or without needing to go through a discretionary review processes) regardless of size at 2 units statewide and 4 units in cities of the first class. If certain conditions are met, 8 units are allowed in second-, third-, and fourth-class cities and 10 units may be allowed per lot in cities of the first class.
  • Forces administrative approvals of projects that meet the standards in the bill language and prohibits public input in the approval process.
  • Limits minimum lot size requirements to no greater than 2,500 square feet for first class cities and 4,000 square feet for all other cities except for Greater Minnesota cities with populations of less than 5,000.
  • Requires all cities to accept Accessory Dwelling Units on all residential lots regardless of size and allows property owners to subdivide their lots by right.
  • Prohibits off-street parking from being required close to major transit stops and limits off-street parking minimum requirements to 1 spot per unit in other areas.
  • Allows multifamily buildings to be built up to 150 feet tall on any lot in a commercial zoning district.
  • Broadly prohibits design standards for residential development and eliminates minimum square footage and floor area ratio requirements.
League of Minnesota Cities

The cities organized and alerted their constituents who must have followed thorugh with calls to their state representatives as the bills is no longer progressing through the chambers. I doubt constitutents will agree to handing over local property rights to the state. This seems like a heavy handed, top down approach.

So how does one encourage increased density? Why- the market of course!

MN is #1- Helium Edition

A recently discovered helium reservoir in Minnesota boasts “mind-bogglingly” high concentrations of the gas that are even greater than initially thought, potentially paving the way for commercial extraction.

Resource exploration company Pulsar Helium, Inc. announced the discovery of helium stores in late February, after a drill just outside of Babbitt, in northern Minnesota, located gas deposits at depths of 2,200 feet (670 meters). Initial measurements showed helium concentrations of 12.4% — which “is just a dream,” Thomas Abraham-James, the president and CEO of Pulsar Helium, told CBS News at the time. But new laboratory readings have surpassed those results.

Live Science

The find is special.

Normally, helium is obtained as a byproduct of natural gas production, as it accumulates underground in pockets of methane and other hydrocarbons. Minnesota is one of just a handful of locations globally where helium is known to exist without hydrocarbons — the others being in Greenland and southern and eastern Africa. These sites all feature a crust of granite rock rich in uranium and thorium, as well as a rift system that fractures the rock to expose the helium produced through radioactive decay. A dose of volcanism then releases helium atoms from the rock.

Northern Minnesota has a love/hate relationship with the extraction of natural resources from the ground. The article doesn’t address how mining methods affect, if at all, the environment.

Voices validated?

Albert O. Hirshman is known for a treatise on the connection between loyalty, voice, and exit. What he describes is an ebb and flow in people’s actions. Whether people interact in the public sphere and use their voice to signal a challenge, or whether people remain loyal to a brand while they nudge for changes using voice in the private sphere, both possible scenarios indicate that, before leaving a relationship, most people will try to talk through change.   

In a free and open society, all voices should be heard. No questions there. But some folks are more able to broadcast their voice than others. So, it seems it would be useful to have some sense of evaluating the various impacts of the topics at hand.

The possible negative outcomes of giving the societal floor, for monopolizing the social audience ready and in attendance to react with resources to causes, are as follows.

  1. Opportunity Costs. If the airwaves are only giving voice to one group in harm’s way, then others are receiving aid.
  2. When a subgroup is given the mike again and again, even though they represent maybe ten percent of the population, then their imagined importance seems directly proportional to the edges they tend to skate on the issues. So again, there is a misallocation of resources.
  3. When a voice of fear is loudly promoted, then a whole generation may act in an overly protective manner.

Wouldn’t it be useful to track three items when a topic gets brought to the elevated status of statewide attention? Wouldn’t it be helpful to see the numbers of all who are harmed, or affected in some way? Does this group command more, or less the same number of resources as many others who also have legitimate claims? Are the public officials in charge of bringing forward certain voices proportional to their representative groups? Or are they heard due to their proximity to core functions? Are the restrictions placed on people in sync with the risk of missing out?

It seems that a better matrix of analysis could be done before some voices are raised above others.

A woman with dagger words

Happened into the thrift store today…

The 1960s failed, I believe, partly because of unclear thinking about institutions, which it portrayed in dark, conspiratorial, Kafkaesque terms. The positive role of institutions in economically complex societies was neglected. The vast capitalist distribution network is so efficient in America that it is invisible to our affluent, middle-class humanists. Capitalism’s contribution to the emergence of modern individualism, and therefore feminism, has been blindly suppressed. This snide ahistoricism is the norm these days in women’s studies programs and chi-chi, Foucault-afflicted literature de-partments. Leftists have damaged their own cause, with whose basic principles I as a 1960s libertarian generally agree, by their indifference to fact, their carelessness and sloth, their unforgivable lack of professionalism as scholars. The Sixties world-view, which integrated both nature and culture, has degenerated into clamorous, competitive special-interest groups.

Times Literary Supplement, London, May 22, 1992

Yikes! Paglia knows how to slice and dice her impressions. And I completely agree with her analysis.

Any one else remember Woodsy?

Pollution was a problem in the US in the 1970’s. Passengers would throw paper wrapping out of speeding car windows, litter blew around the curbs of city streets, and a pile of various types of debris would accumulate around waste bins that were a bit too full.

A successful public service campaign was initiated with Woodsey as the star. The tunes were catchy and were broadcast across TV. It wasn’t long and the new norm of disposing of garbage properly took hold.

Three duties

Adam Smith closes out Book Four, Of Systems of Political Economy, of Wealth of Nations by telling us the duties of the sovereign.

According to the system of natural liberty, the sovereign (Commonwealth) has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expence to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.

Wealth of Nations, Adam Smith

We no longer have sovereigns, but we can see those duties in our local governance. And thus we can expect citizens to evaluate each of them in turn.

Winter Driving

One of the most stressful transistions for those who move to MN from out of state is adjusting to winter driving. And there is good reason for that. When the typical rumble of friction between your car’s tires and the pavement goes smooth, you know your sliding. If you panic and yank your steering wheel in an effort to regain control of the 4000 pound beast, you’re likely to spin. A smooth turn of the wheels in the direction of the slide, and then a sensing of rubber feeling the road once again, is the signal that the tires will grip and drive you out and on your way.

It’s not an easy move. If you’re new to the white outs, it’s best to stay home.

Happening now!

Update on the morning commute:

The window tax

And why it is regressive.

The window-tax, as it stands at present (January, 1775), over and above the duty of three shillings upon every house in England, and of one shilling upon every house in Scotland, lays a duty upon every window, which, in England, augments gradually from two-pence, the lowest rate, upon houses with not more than seven windows; to two shillings, the highest rate, upon houses with twenty-five windows and upwards.

The principal objection to all such taxes is their inequality, an inequality of the worst kind, as they must frequently fall much heavier upon the poor than upon the rich. A house of ten pounds rent in a country town may sometimes have more windows than a house of five hundred pounds rent in London; and though the inhabitant of the former is likely to be a much poorer man than that of the latter, yet so far as his contribution is regulated by the window-tax, he must contribute more to the support of the state.

The Wealth of Nations, Adam Smith
Taxes saved by bricking up windows.

NAR settles- Are Realtors thrown under the bus?

Nope.

There have been several interesting if not colorful headlines in the news
since NAR settled a lawsuit last Friday. The issue under dispute is whether the
posting of the payout commission to the selling broker (the agent who
represents the buyer) is a key point of collusion amongst Realtors to set fees.  For historical reasons, the commission is based on a contract with sellers at the
time of listing, so there is a need to advertise that amount reliably. Hence,
it’s posted on an industry-supervised service.

Some people appear to believe that the agreement to not post the payout on
the multiple listing service, so that all professionals in the industry may see
what it is openly and transparently, is the same as eliminating half of the
work the profession currently carries and half of the commission. If we say it
isn’t so, and they agree not to publish it where it has always been published,
then poof! it’s gone.

Here are some things to keep in mind. The profession of bringing parties to
the table in a real estate transaction has existed in its present form for more
than one hundred years. It has always been an open process that accommodates
parties who wish to represent themselves. There is a very low bar to entry into
the profession as there is a small educational commitment and a few thousand
dollars in fees. There have always been people of all stripes coming into the
profession and trying new models of doing business. There have been menu
systems, where clients just pay for pieces of the work to be done. There have
been low-fee models. There has been full access to list a home on MLS and post
your fee for the selling broker. The real estate business is an open, low-entry
profession in which an entrepreneur can jump in and offer any type of
combination of features for any type of pricing structure to the public.

And people have. Over and over again.

The tech companies were sure they had hit a gold mine and built out a
network of information services nationwide. The clients loved it and told all
their realtor friends in and around 2010 that they were soon to go the way of
travel agents. While we sat in their homes holding them open to the public on a
Sunday afternoon, they nodded away at their future vision. While we spent
entire Saturday afternoons running them through half a dozen homes, they told
us they were going to order up their home over the internet and do all the
paperwork electronically.

But a dozen years later more people use Realtors than at any other time in
the last twenty years.

What’s interesting is a lot of people who don’t believe that there is a
market (that impersonal churning of groups of buyers and sellers who
voluntarily make choices) for real estate services, are pro-market. It’s hard
to understand how these critics believe in all other markets but not in paying
a fee for representation in one of the largest purchases the average individual
makes.

There is no collusion. There is no monopoly. There are no barriers to entry.
The market has continually supported the real estate profession all on its own,
despite persistent attempts to challenge it. For that reason, I have no reason
to believe that this will stop simply because a payout needs to be posted in a
new spot.

Then and Now

When this building was originally built in 1910 was used to house working folks. Not the poor.

The building was designed for middle class worker housing when demand for such housing was increasing around the beginning of the 20th century. It was billed as an “apartment hotel“,… The individual units did not have their own separate kitchens; instead, residents ate from a common restaurant in the building.

Wiki

It was beautifully renovated in the 1990s and is now home to 70 previously homeless people. There are onsite services, classes and workshops.

Single occupancy rooming houses were a perfectly acceptable form of housing for many years. But not any more. Norms and standards are bound to change. It’s just that when people cry fowl on affordability, they also need to acknowledge that today’s standards are apart of the the higher expense.

Do those who claim ‘shoulds’ about wages get it right?

Let’s investigate the claim that every job should be paid a ‘livable’ wage by
spending some time with a mom in the neighborhood. First off, livable is very
subjective. What some people claim as a bare minimum to get by in, say, NY is a
fortune to others in Ames, Iowa. Furthermore, as soon as a generation goes by, livability
inevitably has upped itself on the notches of life’s expectations. But for this
examination, let’s assume that to qualify as livable the wage must be more than all
lower paid work.

Now to say every job ‘should’ command a livable wage is the same (well
almost the same) as saying that every job that does not offer a livable wage
should be eliminated. And the intent of wanting every job to pay at least a livable
wage (although I can read what’s in the hearts of those who say should) is to
make society better.

A mom of three kids starts her day by dropping them off at school, after
feeding them a breakfast of milk over cereal. After the middle schooler catches
the bus, she delivers the first one to a before-school program where a college
student greets them. He is picking up a few hours of work (not a working wage)
to help with tuition and later he will be sitting in classrooms getting his
in-school experience. The second child is walked over to the library where a
nice grandmotherly woman sits at a low table surrounded by six mini chairs
waiting to start extra reading help. She is part of a literacy program paid for
through grants. (She does not receive a working wage).

Then the mom runs over to Target. Thanksgiving is around the corner and
there’s lots of food to buy. At the checkout, she is pleased to see her
neighbor. Her kids are a bit older, so our mom always appreciates picking up
tips from a mom who has just forged down the road of rearing her children.
Target gets busy over the holidays and hires additional workers (not a livable
wage) so that busy parents can be in and out quickly with all their supplies.
Many workers like the extra spending money around the holidays and the store
gives a discount to employees.

Once the mom gets the groceries put away and straightens out the scattered
items throughout the house, she pops over to the Y to get some ‘me’ time. After
committing to a workout routine, which keeps her sanity, she’s gotten to know
some of the instructors. Her favorite is a graduate of West Point and, a mom
herself, is using the work (not a living wage) to keep in shape and provide an
outlet to adult relationships.

Before you know it the first round of school classes are starting to let
out. Her middle school child is involved in the Scouts, and they are having a
special activity with a city recreational leader, a senior adult (not a living
wage) who will show them some features of the local park. She drops him off
before running back to the elementary school to pick up her two youngest. Once
at home, a sixteen-year-old who lives next door stops in. She is going to look
after the kindergartener (not a living wage) while our mom takes her other
child to basketball. The coach (not a living wage) is great, and mom played in
college so she stays on to help.

Our mom encounters six workers in less than eight hours who voluntarily and
willingly participate in employment that is not considered a livable wage. They
are not coerced. They are not full of regret. They play an essential role in
elevating the quality of life for families.

If someone had time on their hands, they could calculate the market rate of
each of these services and come up with the pecuniary difference. Yet this
still would not be a true reflection of the total value as the interaction
between these folks serves as a clearing house of beneficial information
throughout the networks they support. The mom receives no income for her work
to raise her children and would be at a great disadvantage to lose these
support services.

Now think of a CEO, or an accountant, or a doctor, or a stockbroker, or a veterinarian.
Do they depend on lower-wage labor to do their jobs? It seems like the people
who they depend on like the managers and nurses and financial services admins
and vet techs are all paid a living wage.

So, by eliminating the jobs paid at below a living wage the groups that get hurt are
those who also do not earn above the living wage.

Private subsidizes eventually expire

Yesterday’s post revolved around Adam Pratt’s framing of the groups with a stake in Uber & Lyft’s departure from Minnesota, in his article Getting to the Big Picture on Rideshare. Today’s post tries to sort through which groups will have a thumbs up or thumbs down on their value outcome.

Pratt describes how the two tech companies were able to enter into a market and survive for a decade without making a profit.

Like some tech companies of the era, Uber was funded with billions in venture capital to allow it a path to viability. And like other tech stars of the era, that glide path lasted over a decade and allowed Uber to price its service below cost and pay drivers more than it could profitably afford.

The profit motive is important. If a private company is a going concern, then it needs to make a profit under the existing constraints. So many of the tech companies blasted through traditional ways of doing business and shut them down. Or disrupted them, as the then-popular phrase went. But in effect, only some of the new platforms delivered enterprises that ended up being profitable. And for Lift and Uber to make a go of things, part of the restraints is the objectional driver wages.

There has always been a subsidized transportation system available to the public. And this journalist, H Jiahong Pan, did a fantastic thread outlining all the options. He points out that many of them are less expensive than the ride shares. These buses don’t have routes is one of his articles about micro-transport but read his thread for all the details.

In effect, Uber & Lyft became a subsidized ride system for more than a decade. The consumers preferred it as it was timely and came to your doorstep. If you are blind, for instance, this can be world-changing. It wasn’t because it was cheaper. Others who benefit from the private subsidy (gift from private VC) are all those others who could have paid for a taxi, or driven their vehicle, but preferred a ride if they were going to throw back a few.

All riders will lose convenience with the departure. But those on the low-income scale will be most inconvenienced. Those on the mid-to-high income scale will replace the service with other for-hire drivers. Those who drink and drive could suffer, and cause suffering.

If anything, new information about the market should give public transit clear directions on what customers value. After all, even though a profit motive is not entirely in play, ridership is still a measure of the performance of the various public transit options. In many cities tracking of public transit is available online so riders can make their connections.

The drivers who need a full-time driver positions can transfer to public transit driving and earn quite a bit more money as well as benefits. The thing is, if they had wanted those jobs, they would have already made the switch. Most probably they don’t want to be committed to a boss and a schedule and they benefit in some way from the flexibility of being self-employed. All those who were doing it part-time just lost their part-time gig. Many side jobs are lower paid without benefits. It seems like this group, which is quite large, will lose out financially.

The politicians can tally a score in the win column. They went to bat on an issue and won. But to say they can account for a positive value in the people-over-profits net sheet is very much in question.

Lyft & Uber Uproar

It looks like Lyft and Uber are leaving Minnesota- the tech company sent out a notice to all their customers to that effect. This was brought on by the biggest city’s city council who voted to set price controls for wages within their municipal boundaries. But the political backlash to this political control-grab is snapping quick and hard as it seems there are many other groups who value the service and price of Lyft and Uber.

Thankfully a journalist has written the whole kerfuffle all out from the view point of groups. (Perhaps he’s an institutionalist.) Here’s Adam Platt’s essay Getting to the Big Picture on Rideshare in Twin Cities Business magazine of which he is the executive editor.

The big picture refers to group 1, Minnesotans. He’s looking to break down not one issue, the issue that was the bee in the bonnet of the activists, that drivers (who fall mainly into group 2, first generation immigrants) fight to challenge the oppression of low wage labor imposed by a corporation. The political entity who has the elected power to carry out the move was chosen by group 3, the residents of the largest city.

But it turns out that even parts of group 3 find themselves together with other Lift and Uber riders, Group 4,in that they are poor, handicapped and disadvanted themselves. They use the service regularly as public transit does not accomodate their needs for a variety of reasons. And a group of other politically elected officials across the metro in particular, group 5, are putting pressure on the only person in the state who can intervene, the Governor, to put an end to this Marxist, but not really, tale of oppressed labor.

The irony of it all is that group 2 (the drivers) are independent contractors not wage earners beholden to a no-face factory-boss. They work when they want. They break when they want. They set their own plan. So what Adam Platt also elucidates is that the whole political play goes contrary to established structures of paid labor versus self-employment. It’s really a very interesting twist on villanous characterizations with the whole red march theme.

In all seriousness, this article is worth the read. Adam Platt lays out the details both with a historical perspective and with an accounting of all the groups in play. Analysis of these issues are never a dichotomy. And only with a sense of where things originated, and in what direction are they heading, can a proper analysis be done for a stab at the best outcome for the most people.

Holding our Attention

I was looking for a book. I knew it was on one of the bookcases skattered throughout the house. An older style bookcover, in deep red with a difficult to read title, was upside down so I pulled it toward me with the intention to right it to its proper placement. It slipped, tipping open as it reached the floor, and out slid a business card, my grandfather’s. The published date on the copy of The Essays of Francis Bacon was 1908- so I suspect this was a college book for him.

Now that my attention was diverted from my search, I took a moment to inspect the volume. I only grabbed a handful of books from his library when his children were clearing out his things once they had sold their parents’ home. My grandfather marked pages with little scraps of paper, ripped from pages of a used pad. Opening to one, it read.

The edge of the page was frayed as if had been held tight between the thumb and crooked index finger of the right hand. It’s as if the words had sprung into the readers thoughts and grabbed hold. That delightful igniting of the brain caused him to clutch the paper.

That’s why we read, isn’t it? Those private moments when the words bewitch us with their beauty or their truth. When we sit in our big comfy arm chairs and wonder how someone could say it so concisely, how someone could have read our thoughts which were not yet properly formed and put the fragments into words on paper. It doesn’t happen often. But when it does we stare at the page, clutch it, and enjoy the moment.

Municipalities s/b Mixers

Municipalities serve all types of functions. There are the boring ones which no one talks about but that are all too relevent to people’s daily lives, like keeping the water turned on, the water mains flushed out and the roads in good repair. And then there are the controversial duties which everyone has an opinion about, like which polished developers should be able to build what, where. with what exceptions to the zoning codes.

And somewhere in between are the functions which are both useful and sometimes delightful. They happen right in the parks. Take a look at this photo and see the variety of services it is providing on a beautiful spring day.

There a youth in a tree instead of staring at a screen. A woman is on a bench, seated next to a man whose leg is in a cast is stretched out and leaning up against his crutch. There’s a cluster of three under the shade of the blooming Magnolia trees. There’s a two-some cutting across the open plaza. A bit further down a photographer is setting up a light diffuser. And in the foreground a lady in pink inspects her phone for any udates.

There are people at play, people in convalesence, people in a group and people passing through. There are people at work and people in communication. A park is a place where people doing all sorts of things mingle. It’s all capture here on a quick snap shot, on a sunny day, in Spring.

City Services

Cities provide core services like streets, police and fire. They often have a parks and recreation function as well. A goal here is to bring residents together across picnic tables or tennis courts. It’s to maintain a level of physical activity or leisure activities. This is also a spot where the volunteer community can step in with a lending hand. In this city their efforts are accounted for on the department’s budget pie chart.

Although, the number is really only half the total value. For what ever the value of the services provided by the volunteers, these folks also receive the benefit of commarderie and a sense of purpose through their action.

Amartya Sen says to look for justice beyond income

Despite the crucial role of incomes in the advantages enjoyed by different persons, the relationship between income (and other resources), on the one hand, and individual achievements and free-doms, on the other, is neither constant nor in any sense automatic and irresistible. Different types of contingencies lead to systematic variations in the “conversion” of incomes into the distinct “functionings” we can achieve, and that affects the lifestyles we can enjoy.

Development as Freedom, Chapter 4

Lifestyle contingencies need to feature their own conversion rates.

Furthermore, the need to discuss the valuation of diverse capabilities in terms of public priorities is, I have argued, an asset, forcing us to make clear what the value judgments are in a field where value judgments cannot be and should not be avoided. Indeed, public participation in these valuational debates— in explicit or implicit forms— is a crucial part of the exercise of democracy and responsible social choice. In matters of public judgment, there is no real escape from the evaluative need for public discussion.

Only a clearing across societal resources can a responsible choice be made.

Produce, two girls and a firefighter

I overheard an exchange between a mom, her two girls and a West Metro firefighter today while shopping for produce. It started all fuzzy and in the background, as I scanned the vegitables trying to recall what we’d be having for dinner. The request was quiet but the man with the large lettering across his dark navy jersey said his partner would be right back.

“One for my cousin too,” said a young voice. “We want to be fire fighters.” He replied with encouragement and said it was the best job you could have. That they would be great at it.

As I saw another uniform approach I pivoted to have a look at the voices. An athletic man was handing over stickers and hats for the girls in the shopping cart. The mom looked on. There were two communities here that have had some rough patches. It was so nice to see them getting on.

How many homes in a Neighborhood?

As we say here at Home Economic, context is important. Recently I heard the figure of twenty homes as a sweeping number with respect to an impact on a neighborhood. In order to evaluate an impact, it is necessary to know how many homes total constitute a typical neighborhood.

A standard city block with a sidewalk out front and an alley to the back generally has twleve to fourteen homes per city block. So if you were to think that your neighborhood was your block and two to the north, two to the east, two to the south and then two to the east- you would have about 230 homes in total. In this case twenty home is about ten percent. If all these homes were in poor repair, for instance, this could be noticeable and have a negative affect on the outward appeal or from the street view.

Neighborhoods are quite a bit bigger than a cluster of two blocks to eith side. Here’s a neighborhood map of Minneapolis, for example.

The USPS offers a useful tool for direct marketers which calculates the number of residential mail stops on mail carrier route (it’s called Every Door Direct Mail). We can use it here to help estimate the number of households by neighborhood. The first map is for the Armatage neighborhood. The number of homes comes in at 2620. Since the routes overlap into Fulton, let’s use a number of 2400. In this case twenty homes in the Armatage neighborhood makes up 0.83% of the total.

The Fowell neighborhood on the other side of town is know for having a larger share of corporate owned rental housing. Here, our USPS tool tells us that the neighborhood contains 2182 properties. Again rounding down is appropriate as the one route that runs on the west side of the cemetary is in the Victory neighborhood. Let’s use 2000 homes, in which case twenty porperties is 1% of the total.

It’s hard to see where one percent of a total number can have an effect on quality of life issues.

When a raw number gets tossed into a conversation as if it were a grenade ready to explode, always ask for context.

Airplanes and pirate ships

As it becomes more and more accepted that government is not the sole purveyor of public goods, but just another actor in the economy with private interests, how do we then determine: What is a public good?

Here at Home Economic, we find that people associate with groups of individuals who share a similar interest. We’ve laid out a landscape of action based on whether a participant works towards their own interests or towards the interests of a group project. When work is done for the in-group, then it is a public good for all its members. When an individual takes action in an exchange with an outgroup, then it is private only to the individual. For instance, an inventor may, on one level contribute toward the project air travel, while still retaining a portion of the new technology in the form of a grant or a patent.

The private side is more visible as it is often compensated in fungible currency. Thus the flow of money can be traced and counted. But how do we see the public side?

In How Innovation Works, Matt Ridley tells the tale of the first attempts at air travel. People in several countries were working on this idea and it is safe to say that the information which transpired from these activities fall in the basket of a public good. The American government supported an individual, Samuel Langely, with grants of $50,000 (quite a sum in 1903). Although he internalized these funds privately, Langley was unable to come up with the goods for a successful technology. It was the Wrights brothers, with their zeal and voluntary efforts, who launched the Kitty Hawk on that successful day.

They tried to privatize their invention through the patenting system so they would reap a pecuniary reward, but to no avail. The information necessary was already out in the public sphere with no way to reign it back in.

In The Invisible Hook, Peter Leeson tells us about Pirates. He tells how pirates commandeer a vessel and then set out on the seas to pillage and steal. He calls the boat a “sea going stock company” as the boat crew operated it very must like a firm. I would say, however, that the boat was a public good to the pirates who shared the common interest of pillage and plunder. Here’s why. None of the pirates could sell their share of the boat. The ownership of the pirate endeavor was non-fungible.

A public good maybe identified if the the only way to access it is through membership to a group. You can’t sell a favor you are owed from one friend to another. You relinquish all rights and benefits to the good if you leave the group. When you exit.

Can the ‘firsts’ be behind us?

The praddle following Super Tuesday outcomes is still filtering through the various media sites. I just caught a headline celebrating another ‘first’ for this sexual identitiy group or that one. Isn’t it time to but this exclamatory statement of achievement behind us and admit that the barriers have been broken? It really isn’t that novel. Diversity in politics has become a political angle not a hindrance.

I do remember the old days. When Geraldine Ferraro ran for president in 1984 it was heartbreakingly awkward. A whole bunch of people put themselves out there in the last forty years and were public flogged before we’ve reached this point. But not that we are here. Now that every configuration of social group has taken position in every political party-

Can we take a moment to celebrate and then put the issue to rest?

MN a place for music

Minnesotan Libby Larsen was inducted into the American Academy of Arts and Letters. The 73 year old was interviewed at her home in Minneapolis near Lake of the Isles.

She sees it as “an honor for Minnesota as well.” Though Larsen’s work often takes her out of state, “by choice I’ve made my life here, and I’m deeply grateful and proud of the crazy culture that supports ideas — like no other place in the country.”

Star Tribune via MSN

“People here really love to make music,” she said, “which is true everywhere, except that it seems to be more here with a smaller population.”

At one point in her busy career, packed with commissions, performances and recordings of works for orchestra, opera and band, she thought, “Where else could I make music? Just make music — instead of spending a year or two trying to get in the door to make music?”

The answer kept her here.

Star Tribune via MSN

If you have more listening time, try this piece, Mass for the Earth, from 1992.

Choosing Bids

You might have gotten a recommendation to always get three bids when inviting contractors over to do work on your property. This is wise for a couple of reasons.

First off, it’s common to see a spread in the proposal amounts. I’d say on average I’ve seen a twenty percent spread on quotes for roofs, garage doors, tile remodels and so on. Of course, everyone is consious of the cost of things and twenty percent is quite a bit. But you’ll notice other differences between the bids.

The second issue concerns the type of work to be done. The proposal above is quite detailed. There are measures and a sketch to demontrate spacial relationships. It has a floor drain option, and a service door pad option, and an apron. The posts from the overhang are noted and there is a suggestion to bring the patio floor out past them for a higher quality finish. In contrast, it competes with a proposal that was received by text and just gave to figures for the floor and the patio. And that figure exceeds this one with all the extras by ten percent. There were other bids somewhere in between these two.

This isn’t a difficult project, so why would various contractors want to diverge so seriously from the standard pricing? Most trades people work for themselves. They get to choose their pricing, and some feel they are worth more money. Others feel that they don’t want the work unless they get the premium amount. And they probably don’t get the work as many consumers like to check around. But that one consumer, who is in a squeeze, with a deadline to meet, might be happy as punch to pay a little extra and get the high priced guy to come at a moments notice. There’s room in the market for this.

For as many personalities there are subs. The contractors who are detailed will be appreciated by detail oriented people. The ones that keep it simple and quick will find their niche too. Some people find details irritating. Part of what the consumer wants is a good price, but they also want to connect socially with standards and timing.

Home Economics Throwback

From The Library of Congress.

The image is estimated to have been taken between 1908-1919 in the New York City. A home economics class is taking place in the kitchen of a housekeeping flat.

Also from The Library of Congress.

It was the consensus of opinion of these women that the proposed plan covered the material or mechanical side of home life. On the other hand they considered it important that the less tangibic side should be emphasized. The most fundamental problems the thinking home women today involve decisions of what to do. Many agencies are telling her how to do the various household tasks, but it is equally important to give her motives for doing them and to attach to the various duties such clear-cut standards of value in relation to all the aspects and contributions of home life that she will be helped in knowing what to do and what may be left undone. Such careful weighing of values is needed by the housewife in organizing her working time, in apportioning the material resourees of the family, and in all the choices she constantly makes that bear on the material and social well-being of her family.

Report of the Chief of the Bureau of Home Economics- June 30th, 1924

Homelessness and squatter cities

The homeless have been in the local news quite a bit lately. Tent cities keep appearing and then are dismanteled only to reappear again a few blocks away on another city owned lot. The lots are filled with uncomfortable large concrete blocks, the support groups for the homesless show up with more tents, more supplies and on it goes.

The seperation of fortunes from those who, for whatever reasons in their lives, choose to live out of doors in the cold winter climate, and those who live off the average wage in MN is dramatic. It’s hard to understand or compare the circumstances on how it all comes to be. For that reason it maybe beneficial to look elsewhere in the world for strategies to a more stable existence for these folks.

There are area of the world where whole sections of slums are in the process of ameliorating into better situations for the residents (What Squatter Cities Can Teach Us). What were the aspirations that helped drive this change? How did supporting services come into play? Who were the early adopters?

WHen there is too big of a spread from those who need institutional support and those able to provide it, the cultural difference might be getting in the way of success.

When 1st world problems sound trite-maybe redirect to 3rd world?

With the politicians back to work in their respective capitol buildings, news of their work starts to trickle out onto the media sites. Some topics seem so tired, others seem combative and unnecessary. If politicians feel a calling to go to bat, why don’t they put their energies to places in the world that need the very basics? Over a quarter of the world’s population still does not have piped water into their home. And more than forty percent live in places with no sanitation.

Key facts from World Health Organization

  • In 2022, 73% of the global population (6 billion people) used a safely managed drinking-water service – that is, one located on premises, available when needed, and free from contamination.
  • In 2022, 57% of the global population (4.6 billion people) used a safely managed sanitation service.
  • Over 1.5 billion people still do not have basic sanitation services, such as private toilets or latrines.
  • Of these, 419 million still defecate in the open, for example in street gutters, behind bushes or into open bodies of water.
  • In 2020, 44% of the household wastewater generated globally was discharged without safe treatment (1).

It’s not a lie but…

People frequently make statements that, while technically true, lack the necessary surrounding context. Without this context, the claims can be, at the very least, misrepresented and, at worst, deceptive. Claiming context, however, maybe the responsibility of the the audience.

Consider an example.

During my highschool years, my family took advantage of me by giving me the responsibility of caring for a toddler and an enfant. I couldn’t broaden my experiences by participating in extracircullar activities or sports in highschool. I couldn’t earn my own money working at a fastfood restaurant. My family pocketed thousand of daycare dollars while I suffered a loss.

Now put context around the scenario to see if, as a member of a family, this claim is true.

  • Consider a farm family in the 1940s. People are still recovering from the great depression when thousands of farms were lost in bank repossesions. All the adults are preoccupied with the crops and livestock and feeding everyone in the household. Teenage boys sometimes leave school after eigth grade to work fulltime besides their fathers. Female family member from the old country may make the journey to help in domestic chores as an opportunity to make a new life in the US.
  • Consider a family in the 1970s. The women’s movement has championed women’s work outside the home. The parents have the financial capacity to put all their children through college. The also have the connections to mentor the kids about career choices and chanel their aspirations to people within their preferred industry. The children secure well paying jobs early in life.
  • Consider a famliy with a teenage foster child and three very young birth-children. The foster child is treated well in the household but at age eighteen is told to make it in the world by their own gumpshin.

I think most would say that the duties of the individual in the form of babysitting was matched by the duties given to her by the family in the first two scenarios. In the last scenario perhaps not so much. The point is that when a claim of retribution is made against a group, it is not possible to give an assessment until 1. the group is named 2. the context of the activity is described 3. a weighting of the benefits of being a member of the group is determined. Even then, it is often necessary to have a sense of a baseline of what social arrangements were typically acceptable for similar sets of people.

From here forward demand to know context. There is no way to assess a story without it.

Best thread of the day

This thread descibes the feel of the structure and tempo of the entire market. Throw away the old concepts of private industry and intervening governments. All parties from bureaucrates to solar panel installers to lobiests to oil rig workers to politicians to immigration officers participate in trades that look after their own interests as well as the interests of the groups to which they align. The economy represents outcomes based on the actions influenced by the will of the individual in conjunction to the will of their people. Benefits are internalized and become private benefits. Costs are externalized and show up as public deficits. No one is free from self-interest. Everyone can benefit as part of a group.

Read the whole thread.

In memory of fallen heros

A beautiful service was held today in Eden Prairie for three public servants. Grace Church hit its capacity limit of 7600 people and Prince of Peace in Burnsville also hosted a viewing session. The two police officers and a paramedic were shot in the early hours of Sunday February 18th while trying to seperate seven children from a madman. Three men went to work and did not return home to their families.

I found this eulogy particularly poignant.

No matter how hard a day most people have at work, few of us face this risk.

Images from today. The story from the Associated Press.

The power of Zone control

A new bill is being introduced in St. Paul concerning zoning. An eclectic mix of backers from builders to affordable housing advocacy groups, from the National Association of Realtors to progressive politicians, are in support eliminating exclusive zoning of single family homes across the state of Minnesota. Here’s are some of the highlights of the bill as provided by Edina Realty’s president Sheri Schmid- who did a nice job of presenting all sides of the issue at today’s company wide sales meeting.

The first bullet point is interesting. The public is denied the right to speak to their city council. It seems to me that there is an effort to take the NIMBY’s out of the conversation. Yet aren’t many, many city council meetings filled with advocacy groups doing their best to talk the loudest? Are they to be muted as well? This might be a public service.

I am an advocate for missing middle housing. In a 50s built neighborhood, it is common to see nice looking duplexes mixed in with single family homes. They blend in well and come at all levels of housing from a modest one bedroom to significant four bedroom units. They are also the main means of aquiring investment property for those entry entrepreneurs who would like to give rental property a try. I just wonder if these multifamily buildings sync with people today. The buyers in the 50s were still feeling the effects of the depression and thought of a little rental income on the side as comforting. Also families would buy a two unit property for siblings to live side by side, for instance. You just don’t hear those same demands anymore.

Let’s leave the next few points about building heights and parking for another time. Here are the points given that necessitate a shift of control from the very local level of the municipality to the state level.

The first bullet point in valid. There are too many regulations in the building process. But regulating by zoning is only one of the areas in question. Even after this is removed, said building would need to meet a whole host of other building regulations and set backs and still fit on the lot. Furthermore, these plans need to go through a planning approval process. It seems like whenever a change goes into effect on complicated process it takes the bureaucracies years to smooth out their systems.

Last I heard, considering the second bullet point, the production of new housing was on track to meet the Governor’s Task Force recommendation of 300,000 additional dwellings by 2030.

Do we need more affordable housing? Sure- the most disadvantaged in society will always, simply on a comparison scale, need to be accomodated to catch-up to the average. Minnesota has a poverty rate of just under 10 percent and folks in that income bracket have real and pressing needs. But what are the best housing opportunities for these families, and more importantly where are they?

Building more housing brings down the overall cost of housing. But helping people in need of housing as well as all the other components to a good life is a multidemential problem. I don’t think we’ve tackled all of the aspects involved. But I do think cities are at a much better vantage point to connect people to housing than the state.

Family life and Crime

Maybe because violent crime gets people’s attention, or maybe because we all like to look at problems from one dimension, I’ve noticed that analysis about people in prison has very little if anything to say about the family life of a criminal. Sure many of these guys and gals are thugs. Most don’t return home to streets shaded by old growth oaks and lined by tidy homes. But some do. And some have relationships outside of crime; and all have parents, possibly brothers and sisters and children.

The most galvanizing activity in the life of a criminal maybe their husstle. The monetary and materialist attraction to crime certainly has a strong allure. Undoubtedly for some that is all they have in life along with their network of work associates. But for most people family matters. It is a lifelong bond that can’t be shaken easily. And even if there is no connection to parents, these (mostly) men have women in their lives and children in their lives. It would be pretty cynical to think they elude the attraction of family that most of us hold dear.

In order to understand the dynamics of a certain population it is necessary to account for all the interests that draw their attention, especially the ones they are willing to act on. After personal security from harm and some form of sustenance for food, and housing, it must be family. Sometimes this is refered to as community. But that’s down the list from family. Sometimes the criminal try to tell each other they are family. But I don’t buy the omission of lovers and wives from this calculus.

At least for some, and certainly not for all, persuasion by family relations has got to play into the lifestyle choices of those who have found their way to prison. Support from these connections is the most likely way to prevent recidivism. Pulling this subgroup out of the main prison population could very well worth the effort.

NYPD Blue- Series Review

After dabbling in a few more recent series and being disapointed, I decided to go way back to 1993 and try a classic. NYPD Blue was broadcast before TEVO or streaming so I’m sure I’ve only seen a handful of the episodes. It’s interesting to see how standards have changed in the last thirty years. Some issues are spot on the same.

The writing is much sharper and less predictable than most series. The characters have more depth. But then, that’s why it had a 12 season run.

Timely Knowledge – Textbook Edition

I’m really enjoying this textbook on price theory by Deirdre Mccloskey. The explanations are lively and interesting. The book is available on-line at no cost.

As mentionned in yesterday’s post, knowledge of bargaining techiniques for a good being transacted in the marketplace is valuable to market participants. McCloskey provides this example.

But economists have not discovered very much about what constitutes exceptionally subtle bargaining. There are profound reasons why this is so. Suppose that some bargaining technique were known to be useful when employed by the Soviets-such as threatening to abandon bargaining altogether in a week if the Germans do not accede by then to the terms demanded. The Germans would come to understand this. The Germans would use it themselves. Its usefulness to the Soviets, therefore, would vanish. In general, any knowledge that the analyst of the situation acquires can be expected to be acquired by the participants. They will alter their strategies in view of the knowledge, making the knowledge obsolete. The Soviet bargainers make a “last” offer. The German bargainers know that the offer is insincere (that there are quotation marks around “last”‘) and ignore it, making their own “last” offer. But the Soviets know that the Germans know that the Soviets “last'” offer is insincere and prepare a “real” last offer. But the Germans know that the Soviets know that the Germans know that the Soviets’ “last” offer is to be replaced by their “real” last offer, itself insincere. And so forth.

Chapter 5 – Trade, page 95

Timely Knowledge

In the real estate world, transactions can take several months to come together. There is a shopping period, which is, at minimum, a few months even if a client has thought through the main parameters of their search like price points and physical attributes of the home. Then there is the waiting time for a seller with a home with just the right combination of features to put it on the market. If the first bid process is successful, the next delay is from time of signing the contract and doing a house inspection to closing. This is typically six weeks give or take.

It is not until a property closes, with a seller signing over a warranty deed and a buyer handing over a bag of cash, does the information about the transaction get revealed to the market at large. So the lague time from shopping for a home to having access the sales prices of similar properties is often half a year.

Agents that work with a large broker have the advantage of gather in meetings such as the one in the photo. Here people discuss in general terms the feel of the market. It’s useful to sense who has the upper hand in what sub-markets through antidotal evidence. Although specifics are never given out the tempo and general pace of activity is helpful.

A simple model of why

The state legislative bodies just went back to work for the season. One item they are working on involves land use regulation. The libertarian in you mught thing, ugh more rules. Maybe that’s too quick a judgement. Maybe there’s more liberty than restraint in this case.

If an issue has risen to the attention of state politicians, than it’s possible it impacts all Minnesotans. Let’s call it the greater group or G-group. From Peter Callaghan’s tweet it sounds like the rules envolve restaints at the city level. Let’s call these groups C-groups. And then let’s keep households in the story and they’ll be H-groups.

So the line of reasoning goes, that due to land use restrictions at the local level, insufficient housing is being built. Since real estate is sold in an ever adjusting market, low supply rises prices for all participants. One might even argue that low supply is gumming up the market as single, older folks are sitting in large 3-4 bedroom homes as they have no where to go. So the opportunities for new buyers and move-up buyers to navigate to a new port-of-call is slowed. While those that would prefer to give up their large home, as they are no longer using but a quarter of it, are not finding appropriate options. Hence many participants in the H-group are not feeling very free.

The C-group is responsible for, over long periods of time, formalized language on the books to prevent hither dither building. This was all done to preserve the liberty of the H-group, at those points in time. The H-group had a certain idea of what their neighborhood was meant to be. It wasn’t meant to abutt a bowling alley, or a five story apartment building. The H-group wanted to drive down tree-lined streets past other single family homes just like theirs. They wanted consistency. They wanted tranquility. And with all the other options just a bit further out, their desires did not interfere with others in the G-groups

A few generations go by, and the metro area triples in population. The spacial relations evolve to something different. Those who were newlyweds hoping for a family now are elderly with low maintenance needs. The formal regulations set out be the C-group, which made perfect sense at the time, is putting a dam in a dynamic system. Instead of transforming itself under new demands, new needs are blocked at every turn.

And so the greater group is making a rule to take out the rule that is holding back the market. Call it a liberty rule instead of a regulation. For it is through transformation of the land to new uses that allows the C-group to arrive back at a balance of the greatest freedom for the best price.

Burnsville, Mn- Trending

Burnsville is a suburb of the Mpls/St Paul metro just over the Minnesota River from Hennepin County. In the early morning hours, two police officers and one first responder were shot and killed while negotiating with a homeowner who held his family of seven children captive in the property. This is the heartbreaking reality which may befall these civil servants.

Let’s honor their profession. Everyday.

Cooperation, Altruism and Moral Judgement

People often conflate cooperation with doing good or what is right. The thought goes that is everyone just gets along and cooperates, than it’s a win for everyone. And getting along is exactly what those nice churchy people do when they reach out into the community with a helping hand to those in need. Out of a sense of duty to our fellow person, an altruist will act to augment the welfare of others.

And this is true. But there are other examples of cooperation that have not a thing to do with do-gooders in their Sunday best.

We’ve been reading David Skarbek’s book The Puzzle of Prison Order. It’s a thoughtful book of comparative analysis. By looking at various prisons, both their physical structures and their management structures, the author elucidates the emergence of a variety of levels of self-governence throughout the convict community. In South America, prisoners maybe responsible for virtually all necessities behind their wardens’ wall. While in Norway the prisoner to guard ratio is virtually one-on-one creating little need for the captive take on any duties.

From the case studies it is clear that where few services are provided, prisoners organize to allocate housing, maintain safety standards, and supplement the meager amount of food provided to them.

In San Pedro prison, governance emerges in the political realm (in the form of housing associations), in the commercial realm (markets and exchange with the outside world), and in civil society (as with the parents association).

Whereas in Bolivia the time invested by the inmates is extensive, in a small Californian prison for the gay and trans population only one position was necessary to be the intermediary between the prison population and the guards. A House Mouse takes on the duties of go between with the prison staff. Skarbek’s examination of the various spontaneous arrangement throws light on the various levels of investments demanded of the convicts. Depending on the need for governance, individuals rise to the occasion and donate their labor hours to the endeavor (one might say the socially necessary amount of labor hours, but that’s for another post).

But wait. It’s easy to forget that these are criminals who have been removed from civil society. Their emerging cooperation is forced upon them as a result of immoral behavior against their countrymen and women. They are not do-gooders. They are not altruists- at least not to the outside. Altruism delivered through self-organization is to noone’s benefit but them and theirs. And the moral behavior is dictated by their own set of rules.

Cooperation is a descriptor for a type of societal action. It’s the act of foregoing a bit of freedom to be apart of a group. Cooperation is a technique to attain an aim for an ingroup while withholding it from an outgroup. Cooperation has no moral compass. Resulting outcomes can either be good or bad depending on which wall surrounds you.

It is not equivalent to altruism. Altruism is a gift for which no duty or repayment is required.

Crazy, Stupid, Love – Movie Review

After devoting time to some movie duds, it was a delight to watch a comedy with a clever plot line. The film does a good job of contrasting the frivolity of distant social relationships versus the itimacy of the family. And in doing so says something about the value of the work necessary for such things.

The cast is impressive as well. But most of all I appreciated the laugh out loud moments.

A routine reminder

Rent control is counter productive. From the Federal Reserve Bank of St. Louis:

Weighing Trade-offs

Economists generally have found that, while rent-control policies do restrict rents at more affordable rates, they can also lead to a reduction of rental stock and maintenance, thereby exacerbating affordable housing shortages. At the same time, the tenants of controlled units can benefit from lower costs and greater neighborhood stability—as long as they don’t move.4

For policymakers considering rent control, economics can help them anticipate possible effects and may even inform policy design for those who decide to pursue such policies. Given the trade-offs, policymakers must balance maintaining affordability for those with rental housing, while possibly shrinking the stock of affordable housing for others, especially when such housing is already in short supply.

What Are the Long-run Trade-offs of Rent-Control Policies?

Targeting a pecuniary benefit to a low-income group seems like an easy solution. The shift of funds from the property owners to a social value, however, promotes undesireable long-term social shortfalls. These include the convesion of rental property to owner occupied housing as the incentives cause landlords to exit the market. Or a deterioration in the quality of rental housing as, again over a longer time frame, long term maintenance becomes more difficult to fund.

They put Us far apart-

by Emily Dickinson

They put Us far apart—

As separate as Sea

And Her unsown Peninsula—

We signified "These see"—



They took away our Eyes—

They thwarted Us with Guns—

"I see Thee" each responded straight

Through Telegraphic Signs—



With Dungeons—They devised—

But through their thickest skill—

And their opaquest Adamant—

Our Souls saw—just as well—



They summoned Us to die—

With sweet alacrity

We stood upon our stapled feet—

Condemned—but just—to see—



Permission to recant—

Permission to forget—

We turned our backs upon the Sun

For perjury of that—



Not Either—noticed Death—

Of Paradise—aware—

Each other's Face—was all the Disc

Each other's setting—saw—

Anthony Downs and Neighborhood Utilities

In Chapter 3 of An Economic Theory of Democracy, the Anthony Downs suggests government services delivered to neighborhoods be measured by their utility.

All citizens are constantly receiving streams of benefits from government activities. Their streets are policed, water purified, roads repaired, shores defended, garbage removed, weather forecast, etc. These benefits are exactly like the benefits they receive from private economic activity and are identified as government-caused only by their source. Of course, there are enormous qualitative differences between the benefits received, say, from national defense and from eating mince pie for dessert. But no matter how diverse, all benefits must be reduced to some common denominator for purposes of allocating scarce resources. This is equally true of benefits within the private sector. The common denominator used in this process we call utility.

What he goes onto say is interesting as well. The reliability of government services in policing your streets, delivery your mail or making sure that potable water is shows up in your pipes should be thought of as a flow of utility income.

Using this broad concept of utility, we can speak of a utility income from government activity. This income includes benefits which the recipient does not realize he is receiving. It also includes benefits he knows he is receiving but the exact source of which he does not know. For example, many citizens are probably not aware that the water they drink is inspected by a government agency. If inspection were discontinued, they might not realize their utility incomes had fallen until they received polluted water. Even then, not all of them would know that a cessation of government activity had caused this drop in income.

He goes on to spell out a whole bunch of utility functions. But I am still back thinking about this flow of income to neighbors. Where is a the asset value that backs this benefit?

The art of faith

During all the centuries of her life the church has made great use of art, but she has learned nothing from the artists. There was never an artist who did not know that he could not paint his picture or compose his music by thinking out the laws of beauty. If the church had seen the way to her truth as clearly as they did the way to theirs, there would have been no trouble and no defeat. Science never had any quarrel with artistic truth, and the artists never concerned themselves with what the scientists said was true. The painters and the poets and the musicians know that there is an order of reality in which intellectual assurance plays no part and the reason is unimportant.

And further along in Witness to the Truth:

Definitions and analyses and all such contrivances of the classifying mind were never of any importance to the poets. Aesthetic dogmas might come and go. They never touched poetry. If a man of saintly life disagreed with the churchmen’s rules, he suffered, in the so-called Ages of Faith, very painfully indeed. Not so in art. Aristotle’s Poetics was long the critics bible, but when Shakespeare was lined up against its rules and came out badly, it was not Shakespeare that suffered, but the rules.

Edith Hamilton

The best of the best and, well, the worst

Lots of publications put out their version of the ‘best’ cities. The best cities to raise a family. The best cities for bicycles or parks and trails. What’s a little humorous is the lack of consensus when it comes to the best cities for renters. Forbes’ picks has little interplay those of USA Today.

USA Today did something different, though. Here’s the results for their worst cities to be a renter list.

Downs called it Dual Rationality

As Chat GPT explains:

In Chapter 2 of “An Economic Theory of Democracy,” Anthony Downs introduces the concept of dual rationality, which he suggests characterizes individuals’ decision-making processes, particularly in economic and political contexts. This dualism reflects the idea that individuals often consider not only their narrow self-interests but also broader social concerns when making choices.

Here’s a breakdown of the dual rationality concept as outlined by Downs:

  1. Narrow Self-Interest: Downs acknowledges that individuals typically act to maximize their own utility or self-interest. This aspect of decision-making is rooted in traditional economic theory, which assumes that individuals are rational actors who seek to maximize their personal well-being. In economic choices, individuals often weigh the costs and benefits to themselves personally.
  2. Social or Broader Concerns: However, Downs also recognizes that individuals may take into account broader social or altruistic considerations when making decisions. This broader concern may include considerations for the welfare of others, societal values, or long-term societal well-being. In the context of political decision-making, voters may consider not only how policies directly affect themselves but also how they impact society as a whole or specific groups within society.

Downs argues that individuals exhibit this dual rationality in both economic and political spheres. While they may prioritize their narrow self-interest in many situations, they also incorporate social considerations into their decision-making process. This dualism reflects the complexity of human motivations and the interplay between individual and societal concerns.

By acknowledging this dual rationality, Downs provides a more nuanced understanding of decision-making processes in both economics and politics. He highlights the importance of considering not only individual self-interest but also broader societal implications when analyzing human behavior in various contexts.

Too many bureaucrats with not enough to do?

From Socrates to the Gospel of John

I can recommend this slim volume by Edith Hamilton for anyone interested in the Bible yet not interested enough to pull out the King James version they received in Sunday school and start at “ In the beginning, God created the heavens and the earth.”

Hamilton is masterful at providing a considerable amount of fodder in a condensed format without losing you, the reader. All those famous events that you’ve seen references over the years show up in an ordered format. You get to know the apostles instead if simply reading their version of Christ’s story.

Also, new to me yet the second time I’ve read about it lately, is the demonstration that the roots of Christian thought find their way back to Socrates. As in this section.

He believed with an unshakeable conviction that goodness and truth were the fundamental realities and that every human being had the capacity to attain to them. All men had within them a guide, a spark of the true light which could lead them to the full light of truth. This was Socrates’ basic belief, in the words of the Gospel of John, “The true Light which lighteth every man that cometh into the world.” His own mission he believed was to open blind eyes, to make men realize the darkness of their ignorance and evil and so to arouse in them a longing for the light; to induce them to seek until they caught a glimpse of the eternal truth and goodness “with-out variableness or shadow of tuming” which underlay life’s confusions and futilities.

Edith Hamilton was a late bloomer. She took up writing as a second career and her first book was publish when she was a spry woman of 62.

Hype or valid concern?

A few days ago Time magazine posted an article entitled Millions of Americans Spend Half Their Paycheck on Rent. Here Are Median Rental Prices by State. The research used in the analysis was generated by the Joint Center for Housing Studies at Harvard. And the intent is (seemingly) to draw readers to an alarming conclusion- that there is a large underclass in America who can’t afford a place to live.

But let’s pull apart the numbers in this claim that half of rental households and who that puts in dire straights.

In Minnesota three quarters of the population own a their home. That leaves one quarter of the population living in rentals. So half of those who rent are approximately twelve percent of the population.

In Minnesota just under ten percent of the population is known to live in poverty. Let’s use an even number of ten so that we cover the homeless as well. I don’t think it is surprising that this population pays a disproportionate amount of the income in housing expenses. And it should also be noted that support for people in poverty is not categorized as income, but arrives in different categories such as child tax credits, SNAP, and renter credits.

That leaves two percent of the population unaccounted for in this observation by the Joint Center for Housing Studies at Harvard. Could there be an explanation for the remaining few who pay a large share of their montly income to rent? College and grad students come to mind. For a brief time individuals work summer jobs, take out loans and yet still must pay for housing. Many of these folks are back stopped financially by family. The policies however for student loans and financial aid give advantage to individuals with lower income. And thus kids come off their parent’s returns and file individually.

In additional to students, the elderly could fall in this category. Say someone was living out their last years in a care facility with high rental fees for comprehansive services. Maybe they are even spending down a large retirement portfolio- because that what they saved it for in the first place. Their ratio of montly expense toward rent versus income will still be high. That was planned, not unexpected.

Here are some reasonable explanations for the breakdown in how housing expenses filter through the population. None of it is worthy of a hair-on-fire headline. And diverting attention to one market can do damage elsewhere. As people who need assistance are ignored.

Some goods buoyed by groups

When Obamacare was in the works I remember crossing words with someone who proclaimed, indignantly- Everyone should have the right to healthcare! I suggested that everyone in the US did have access to care. They simply had to show up to the emergency room of a public hospital, and the code of conduct would require the medical staff to provide care.

It’s nice to hear that confirmed by an expert, Amy Finkelstein, in this interview. What she says is that there are certain products and services a society will offer based on a social contract of civility. For starters, fellow human being will not be allowed to die in the street. Action will be taken to provide the frail, the vulnerable, or the simply irresponsible, with care.

What I said back fourteen years ago, and what she says now, is that it was never whether people would get care, it was how it would be paid for. People with insurance rely on the coverage to payout. People without insurance, according to her calculations paid around twenty percent of the tab. The rest was picked up by the hospitals or the public purse.

No matter the overarching accounting system that ends up allocating resources to health expenditures, this obervation once again confirms that some products are supported by social contracts. And thus they have more efficient outcomes when the group (society, neighborhood,…) devotes some concern to the cause. If you help with kids sports, you are contributing to a reduction in child obeisity. When you taxi an elderly neighbor to their routine doctors appointments, you are preventing them from requiring more expensive treatments later.

Insurance companies understand groups from an underwriting standpoint. And that’s one way to think about it. But what I’m referring to is the time and energy people devote to the habits and actions of folks they touch on a day to day bases. This energy, if you will, squarely supports (or detracts) from public goods such as health, or safety, or family cohesiveness, or local governance. This energy is the energy behind institutions.

The push and pull of public and private

It’s been a while since I’ve written a ‘what is public and what is private’ post. The premise is that goods and services fall into varying degrees of uses but what is important to note is the dynamics for their supply and demand differs.

Consider the shift from funding for higher education. Several generations ago parents were the main financiers of their childrens college education. Some kids could put themselves through school with scholarships and work programs, but those kids were particularly driven. In an effort to open higher education up to those who did not have the support of a family, the governement got into the student loan business.

Pretty soon norms shifted. No longer did parents see it as their responsibility to pay school. Kids became comfortable with taking out loans. And institutions of higher education saw a means of obtaining extra dollars for their operating expenses. And that is how we got to the point of kids graduating with large amounts of debt and schools having far more administrators on the payroll than professors.

Just to review. It used to be that kids had access to the public good education through their tribe. No kin, no school. Then government said- no here’s a way to make education public for all kids who wish to go. The outcome to this, however, was to have kids retain a private debt once they were done. Some kids under the old system may have come out debt free or with far less debt.

What maybe wasn’t considered at the time was this government intervertion not only created a demand among students but also demand from Universities and Colleges via the students. This is because the later group, although a non-profit and seemingly public in nature, is respondong like a private entity to incentives. We have expenses, here’s a source of revenue that we must pursue.

But did it work as intended? Did more kids that would not have gone to college end up getting a degree? It’s funny that no-one declares victory here. Was the public objective achieved?

Shifting Standards

Is this claim about Minneapolis renters correct? Is paying 30% of monthly income toward housing a distressed situation?

Lenders often extend the debt-to-income ratios to 30% for all types of loans.

This claim is false. It is the result of shifting standards for political posturing.

Commons says Marx missed Institutional Forces

These are the grand national and social forces which have come into existence since the time of the Communist Manifesto, and have nullified what otherwise might have been accurate predictions of that Manifesto. For Karl Marx had based his calculations upon the purely mechanical, economic evolution of machinery, of tools, of markets, of supply and demand. He had not weighed these spiritual and psychological forces which have revolutionized the modern world. He had not seen beneath the economic forces. He had not seen the power of patriotism by virtue of which the divers classes of these different nations would finally unite. He had not seen the movement of trade unionism through which laborers learned to organize, learned self-control, learned to negotiate with em-ployers, learned that they need not fall back into the pauper condition that Marx predicted, but that by negotiation, by arbitration, they might make an agreement with the capitalists, that they might come to terms with the capitalists and divide the product between them.

The spirit of trade unionism, instead of being that of class struggle, is the spirit of partnership. The trade union movement looks upon itself, not as the irreconcilable opponent of capitalism, but as & member of the family. Being a member of the family it is entitled to have a row with the head of the family, and to live apart for a time, but it has not yet taken out a divorce. Trade unionists do not presume, as Karl Marx did, that the members of the family can do without the head of the family. Trade unionism is based upon that principle of partnership which we see in & different way in the home. Consequently here we have a spiritual movement which has not attacked family, religion, and property, as Karl Marx had done, but has organized itself to get a larger share of profits by negotiation, by agreement, by strikes.

Industrial Goodwill, John R Commons 1919

Why didn’t the Austrians appreciate John R Commons?

Empty rental- is that rational?

On a trip to Manhattan a few years ago, my son and I noticed boarded-up store fronts along the best sidewalk shopping in the city. From the layers of flyers pasted on the brick wall and the thickness of dust perched on the window ledge, it was apparent that this state of disuse was a longterm thing. It didn’t make sense. What would make an owner prefer to leave a space empty instead of collecting rent from a desireable tenant looking for a desireable location?

If you were to think of this interms of a model, one might say, what are the negative implications of renting a storefront that zero out the benefit of incoming revenue from a tenant? What circumstances cause a property owner to be more interested in sitting on a vacant portion of a building rather than maximizing profit?

I say a portion of the building because the street level space of a NYC building is most always a small percentage of the entire building.

When an investor is looking to acquire new property there’s a lot of calculating to evaluate its prospects. The price of the building is mostly determined by how much cashflow the structure can generate. The lender (as in most cases there is financing involved) is also interested in the return their borrower will receive. This determines their comfort level in receiving payment on the debt.

With this in mind, a seller will often take action, prior to going on the market, to make the property attractive not only to the buyer but to all other parties involved in the transaction. For instance, an inspector will most probably make some rounds and look for mechanical flaws. The easy fixes are best done up front. Often there is a target renter in mind for the property and enhancement will be made to their structural preferences.

When a property goes for sale, there are lots of incentives to shine the place up and present it in its best light. Any salesperson will tell you this is how to generate the best offer.

Now fast forward twenty years, or thirty years, and the young investor with ambitions to build a portfolio has done exactly that. He or she is wealthy. There is a nice amount of equity in the property and the stress to recover every dollar in rent in order to pay the bank, the insurance company, the regulatory agencies and do repairs has eased. If the property is in a strong location, it is garnering a nice return year-in-year out. Often, it is better than other investments can offer.

Now, let’s consider the rental transaction for the storefront. It’s been a couple of decades since the property has had a full upgrade. Perhaps the paint is looking a little faded. Perhaps the interior tile work has more chips in the tile than some deem acceptable. A new younger set of folks want just that much more than what was available before. So for a bit more money in rent the owner is dealing with a lot more in either managing expectations or renovations. Renovations almost always means interacting with a regulatory entity as well. Once on the property, other issues may be brought to light.

There are two factors that go into the cost-benefit calculation of securing the lease. The rent received. And another important factor which we will call the engagement factor. When the owner takes on a new tenant they are agreeing to engage with their expectations, their payment and request idiosyncrasies. It’s not just the dollars. In the same way an insurance claim is not just about getting reimbursed for the repair work. You have to deal with the insurance rep, meet three contractors to get bids, and supervise the work. There’s an engagement factor. The street level activity also has an engagement factor. If the public has become more truant, than property damage or security issues create a cost on the owner’s time.

It gets to the point that the hastle of interacting with others starts to draw down the marginal benefit of the extra rent. Throw in a potential tax implication and that little benefit could shrink to almost nothing. An empty unit creates a tax write-off. A rented unit throws off income that is now taxed at higher rates, as many deductions have run their course.

The store fronts could be collecting dust because the engagement factors are simply too expensive.

Starting Points

It is difficut to jump right into a conversation around real estate topics. Have you ever noticed when opinion makers writeup their latest takes on what should happen with rent control or land taxes or zoning how incredibly broad a field they lay out before their readers? This is as helpful as coming up with a policy for diabetes on a worldwide scale. Someone who must cope with this disease has wide ranging opportunities for care, access to drugs and simply inside knowledge of norms and practives depending on where they live. One insight can’t possibly have a global impact.

In order to talk real estate one must select a starting point. For years, following the great recession, the analysis focused on why homeowners lost their homes. Other people are obsessed with real estate developers in the same way Swifties demure on whether she will make it to the next Kansas City Chiefs game. Still others love to banter about city councils and figure out how many votes it will take to tweak zoning from single family to multi-family. And what is to be done about parking?

This is TMI. Way too much.

I find the most fruitful place to start is at the time of transaction. When I was a loan officer decades ago we called it ‘the deal.’ Our manager, a plump Napoleon-type who loved to give you a hard time late on a Friday afternoon so you would think about him throughout the weekend, said the term was off the table. Too tacky (unlike him). From then on, as we sat behind oversized wooden desks that would make Matlock proud, we were to call every loan we closed a transaction.

So at home-economic we will always come back to the deal that was made when two people shook hands and exchanged a good or service for something of value.

Say you wanted to set up an analysis of tenant/landlord relationships. The starting point would be the lease. The written agreement that is signed between the parties prior to occupancy outlines the terms of the agreement including the monthly obligation and the landlord’s responsibilities. Simple right? Nada- there is much more nuance. And the configurance of renters and landlords (because there are many varieties of these actors) can cause all sorts of imblances that are not fully flushed out in the contract. But the parties to the deal and the agreement they reach is where to start.

More noodling on models to come.

Ask the Kardashians

With fertility rates falling across the wealthier countries, people are asking what can be done to encourage a new generation to have more children. Some think financial incentives are the way to go. Others like the idea of protecting a women’s career path while she takes extended maternity leave. Some focus on subsidizing daycare.

I say- make a mom cool again.

Scroll through the top sitcoms over the last thirty years and name one maternal figure that is not only relevant to the story line but revered in some way. I’ll start. In the 90’s the maternal roles were Rozanne Barr in Roseanne and Peggy Bundy in Married with Children. Both ladies are terribly funny. Does that mean to be a mom is to be funny? Full House did away with the mom role altogether- so I suppose there’s that.

In the 2000’s TV only one show cast starring mothers. Modern Family has us entertain by Claire Dunphy who plays a supportive and nurturing mother. Even Sophia Vergase is nurtuing with a voluptuous swagger. The rest of the shows, Friends, Scrubs, The Office, Will and Grace, Reno 911, My Name is Earl, have nothing to offer in motherly caring of her kin and community.

Hollywood seems averse to letting it slip that some mothers are over joyed with their role in life. Perhaps June Cleaver symbolized a compromise that women who wished to work could never promote. So when make believe won’t make motherhood glamorous, who can?

Well- reality TV of course!

The Kardashians put their children front and center. The matriarch, Kris Jenner, raised six children from two marriages. So far she has twelve grandchildren. And her two youngest girls are only in their mid-twenties. The Kardshians don’t hide their kids. They show them off. They make it look fun.

Perhaps the Kris, Kourtney, Kim, Khloe, Kylie, and Kendall are making a contribution to elevating the status of motherhood. Are you?

Milei makes waves

Javier Milei is the recently elected president of Argentina. He is a vocal libertarian and critic of socialism. He gave a speech this week at the World Economic Forum (WEF) in Davos Switzerland where all those with lots of money, or political power, or both, go to mull over global issues.

Here are some reactions on Twitter.

This view of the State vs. the Market seems a little old fashion. Does anyone really believe that one entity, the bureaucracy paid for through taxation, provides all public goods to all citizens? Often the media acknowledges the role of non-profits, like the Red Cross, stepping in with services in countries under siege. The western countries are set apart in their degrees of social democracy, implying that the decision to draw lines between state provision of benefits and the private sector vary depending on the will and the customes of the people. The concept of a dichotomy between two centers of power, the State and Big Business, is so twentieth century.

Here’s an example of two people hearing the same speech and yet not registering the same intake of information. Rodrik says Milei denounces neoclassical economics as another brand of collectivism, empowering the state through the doctrine of market failure.

Here’s the section of Milei’s speech this Havard professor is referring to:

The problem with Neoclassicals is that the model they fell in love with does not map reality, so they put down their mistakes to supposed market failures rather than reviewing the premises of the model.

Under the pretext of a supposed market failure, regulations are introduced. These regulations create distortions in the price system, prevent economic calculus, and therefore also prevent saving, investment and growth. 

This problem lies mainly in the fact that not even supposed libertarian economists understand what the market is because if they did understand, it would quickly be seen that it’s impossible for there to be market failures.

President Javier Milei’s WEF speech at Davos 2024

I don’t hear Milei saying neoclassical economics is a brand of collectivism. The neoclassical model, although powerful and useful, does not always represent of the entire economic picture under analysis. Instead of addressing why that could be and re-evaluating the premises of the model, hands have been thrown in the air and the following conclusion reached: “It’s not the model! It’s a failure in the marketplace itself. Players in the market are not rational when it comes to certain things. Hence, there is no market for these items.”

Who is called to shepard the irrational? The steadfast hands of the politicians who in turn hand off their mandates to the bureaucrats. This is the opportunity for collectivism, in the under utilization of the model. Even with the best intentions, a pencil pusher is not a player in the transaction. And this artificial involvement with the pricing system causes the mess. Barriers are erected. Transparency turns opaque and then solid. Consumers are dubious of outcomes and become cynical of efforts.

What President Milei is suggesting is that the underlying components and conceptual structure of markets has not been fully flushed out. Part of the driving force behind decisions are either taken for granted, ignored or simply not significant in a particular transaction. Once people digest how men and women search for meaning, how they are compelled to act on desires for freedom, a better life, and in support for the health and well being of the ones they love- then there will be an understanding. An interpretation of a market failure is the result of the failure to properly identify the players to the transaction, their objectives and how all this plays out.

And then there’s this guy. I’m using his post mainly because he has the best clip of the speech. Yet what he says is interesting as it is so man-of-the-street in its political orientation. If you object to a government intervention then you support fat cat Wall Street types. Sadly, excessive regulation mainly hits small business and the least skilled. They don’t have the capital required to navigate the new rules and regulations. And so, it becomes easier for them to work for others, loosing their freedoms, security and access to property.