Category: Exit

Listen to Grumpy (cont 2)

There’s truth in this phrase.

There is no blob of “government” money, or “policy” that can make something affordable for one without making something else less affordable for another.

So if tenants get immediate relief from a rent freeze, where does that money come from?

Those outside the business may think that this will trigger a direct transfer from a wealthy landowner. Structurally this is an impractical notion. Even for those who have equity, it is just that: wealth tied up in the value of the property. It is not cash that can circulate and pay bills.

But in most all cases, the funds that come in from rent are pegged to go out to another obligation. This might be property taxes which are known to increase every year. This might be to a bank that financed the purchase of the property. And the insurance company which provides property isurance as required. This might be to a utility company. Each of these obligations have recourse for non-payment which ultimately leads to their making first claims on the income.

The funds which subsidize the rent freeze are most likely to come from monies intended for repairs and maintenance of the property. These vary from tasks that are good to do but not urgent, to things that if defrayed cause additional costs, to things that need immediate attention like a leaky pipe or a furnace outage. To give an idea of the number of routine items involved in the care of real estate, consider this post.

Over time, two things tend to occur. First, the new landlords with all their positive energy and desires to get ahead can’t maintain a financial foothold and leave. Other longer term owners prioritizes the most important fixes but let the cosemetic upgrades go. Over time more and more of the longer term components age, yards get overgrown, appliances become run down. The housing stock deteriorates.

The neighborhood at large is depreciated by blight, taking a little chunk of equity from every property owner nearby.

Learn from Grumpy

The Grumpy Economist has another great post, this time about rent control. For those of us in real estate, it’s an irritating topic. The errors in the use of price controls are numerous. Using John Cochrane’s article as a road map might be interesting to illustrate this point. Let’s start with this paragraph.

Sure, “sharply rising rents and utility bills wreak havoc on family budgets,” if the families don’t follow the screaming market signal to move. (Which is not painless, for sure. Incentives never are.) But the money comes from somewhere. Rent controls and energy price caps wreak havoc on landlord end electric utility budgets. The money must come from somewhere.

The claim is that rents are rising sharply. The reader pictures a Scrooge-like figure pounding on the door of a cowering family of four, announcing a ‘sharp’ rent increase (extra dollar symbols for emphasis), while behind this embodiment of the typical landlord stands an eviction notice ready to be served. I’d love to see numbers to this effect. I challenge that the ‘sharp’ rent increases are occurring at lease renewals.

Large corporate landlords might have a set policy of annual increases, but they account for only 3-4% of proprietors. Landlords must juggle the cost-benefit of increasing rent. As 80% own and manage the units, they calculate the costs, time, and uncertainty of a new tenant. This is weighed against a 3% increase on $1,100 or $33/mo in additional income. Needless to say, many landlords will forego a rent increase to keep a good tenant.

These subtleties are lost in real estate analysis, where all the numbers are averaged as if there were one typical renter, one typical landlord, and one typical property. This couldn’t be further from the truth. There are whole economies of renter groups. There are students who will have negative income before they join the workforce; there are singles with high-fluting jobs and no other responsibilities; there are single parents; there are couples with kids in a city just for a bit; there are elderly on fixed income with low mobility; there are recently divorcees looking for a glamorous downtown lifestyle.

Are all these groups to receive the same treatment? The same concern for their monthly budgets?Rent controls are initiated at the city level. Every group of renters would receive the benefit of a market-restrained obligation. Is that the intention?

Landlords are also assumed to be a certain type. The persona has tremendous equity in their property, no debt, and other cash they are stashing like squirrels do with acorns in the fall. And certainly some landlords fit this description. But more likely than not, the landlord has a mortgage and obligations against their time. The new entrants to the field, those trying to get ahead by getting a foothold in real estate, are undoubtedly the ones who need to make the cash flow.

When property taxes, utilities, or the cost of hiring labor rise, a landlord has no way to respond until a lease comes up for renewal. Rent control tightens this squeeze, leaving property owners caught between increasing public demands funded through taxation and their limited ability to recover those costs through rent. The first to be pushed out are often the newcomers—the small, aspiring owners who bring fresh energy and ambition to the market, but lack the cushion to absorb sustained losses.

Lesson number one. Averaging is a mistake. Assuming there is only one type of each actor in this economic trade of money for lodging makes for an impossible conversation.

Decay

It takes a long time for a house to completely depreciate. Many of its structural elements have lives longer than decades. Exterior features in like roofs, siding, windows, and doors may need little maintenance for years.

Yard work left to run free may give the appearance of a property left to nature. But eradicating the growth is of little cost compared with replacing all new heating and cooling systems, water heaters and appliances. Most of these have an average life of 12-15 years. And then, of course, there are the plumbing and lighting fixtures that are often replaced for both cosmetic and functional reasons.

At each phase of putting off a replacement and trying to patch things up and get by, a debt of maintenance is created. If the property were to trade hands, a new owner might be willing to take on a few additional repairs for a concession on price. At some point (and what would that be?) the average buyer turns away. There’s too much to do. There are too many lurking money pits under the subfloor in the bathroom or behind the paneling in the lower level.

This is when the structure’s value falls to zero. The parcel will only command the price of the land it sits on, with an adjustment for the cost of debris removal. But it takes decades to get to this point. The built world is durable, and there are many opportunities for rejuvenation.

Reasons for Regional Thinking

This is from Bloomberg’s news letter a few days ago:

This example comes from South Africa, but the pattern is familiar in city neighborhoods across the United States. A single area becomes highly sought after—often because of a natural amenity like a lake, a hilltop view, or tree-lined streets. As people concentrate their attention and investment there, surrounding neighborhoods are overlooked. That neglect can manifest in subtle forms—like disrepair or increased petty crime—which only reinforces the appeal of the original “best” area.

At first, residents welcome the rising property values. But over time, that early advantage turns into a burden. Friends and family are priced out. Local businesses close as commercial rents climb, replaced by boutique shops that cater to outsiders. What began as a benefit morphs into a form of isolation.

A regional perspective offers a solution. If planners and policymakers ensure that all neighborhoods remain livable and desirable—not just one or two—the pressure on any single area can be eased. Without that balance, scarcity drives runaway prices, and the community as a whole suffers.

Vibe shift is still shifting

There are three actions in the motion that drive social change. There’s the act of staying loyal to one’s team, until one simply can’t anymore. This stage prompts the act of voicing concerns. We can speculate that this is first an in-group activity before going public. And if these two steps don’t bridge the rift, the individual agent can opt to exit.

MPR gives a local politician the platform to express dismay at the local culture of corruption that has seized the state. He’s the first prominent person of that party to do so.

I would also say that there is a significant fraud problem in Minnesota involving nonprofits. And so, especially now, when we have seen hundreds of millions of dollars be stolen through the use of nonprofits — and in some cases for-profits receiving state and federal funds — it’s extra important to have the highest standards of ethics in state government, both with rules and with the conduct of elected officials.

The issue in the article is one of the tamer instances of misconduct in the state. Indeed, it may simply be the appearance of corruption. But this instance of Voice as opposed to a code of silence against any fellow team member is telling. It’s the move that leads to Exit.

Now, either the politician in question will exit, as Dean Phillips was forced to do after calling into question Biden’s abilities. Or the corrupters will be forced to exit as their behavior no longer meets the norms of the party.

Either way, the vibe shift is still shifting.

Exit, Voice, and Loyalty

It was one of those late summer afternoons when people had gathered at a lake home for a shared meal and a view of the lingering summer sun rays over the water. A local farmer often included in these, mostly family get-togethers was there. The harvest was still underway, but the crops had had a plentiful year, and there was a sense of contentment around the final crop. Every year, nature threatened crop failure with late spring plantings, or vicious wind storms, or excessive rain. This year, all had gone well.

The conversation turned to local issues, and the relationships were such that it was easy to ask about the necessity of farm subsidies, especially in plentiful years. He agreed. “But if we let them go, we’ll never get them back.”

Many groups’ strategies involve lying low and being silent when times are good. They don’t remind the governing body of the flow of money. Let the benefit slide while everyone’s focus is on some new issue. Let the political energies and attention be drawn away from the fact that the farmers live large at the moment. That’s how is can be in government programs. Once in place, there’s no mechanism to pull them away once the need is no more.

Until Trump, that is. The president’s actions are described as slash-and-burn, as he closes down departments and pulls programs. He’s put foreign partners on notice that what used to be may no longer be. Critics voice that there will be more harm done than good in the outside-the-normal-way-of-doing-things model is put to the test.

But is there nothing to learn? Is there a method here?

Isn’t the President testing group structure? Every time an old way of doing things is challenged- the various groups engaged in the activity respond through multiple forms of Voice. Aren’t some surprising? Like- who knew about the tariffs Canada imposes on the US or between each province? And isn’t the quiet around the Federal workforce reduction a little deafening?

Some people will not like the new arrangements and will leave. Farmers will encourage their kids to go into other fields of work. Countries will turn to their neighbors for new alliances. It just seems like there is something to learn from each of these instances of exit, voice and loyalty.

What would Hirshman say?

Yes! If we apply Hirschman’s concept of exit more broadly to Trump’s first six weeks in office, we can see multiple ways in which he used exit as a strategy—moving away from established policies, norms, and agreements rather than attempting to reform them from within. Here are some key examples:

  1. Exit from the Norm of Allowing Migrants to Enter (Immigration Restrictions)
    • One of Trump’s most high-profile early actions was his January 27, 2017, executive order (often called the “travel ban” or “Muslim ban”), which restricted entry from seven predominantly Muslim countries (Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen).
    • This was a stark departure (or exit) from the long-standing U.S. approach to welcoming refugees and immigrants, particularly under the Obama administration, which had expanded protections for asylum seekers and refugees.
    • Trump framed this policy as a matter of national security, but critics saw it as an abandonment of traditional U.S. commitments to humanitarian relief and global migration norms.
  2. Exit from Diversity, Equity, and Inclusion (DEI) Policies
    • Even in his first few weeks, Trump began rolling back Obama-era diversity and inclusion initiatives.
    • While most of his full-scale attacks on DEI came later (e.g., the 2020 executive order banning certain diversity training programs), his administration signaled early on that it would exit from the emphasis on diversity programs in government hiring, education, and federal agencies.
    • For example, he nominated officials to the Department of Education and the Department of Justice who were skeptical of affirmative action and federal oversight on civil rights issues.
  3. Exit from Certain USAID (U.S. Foreign Aid) Obligations
    • One of Trump’s first major foreign policy moves was reinstating and expanding the “Mexico City Policy” (also called the “global gag rule”), which blocks U.S. funding to international organizations that provide or promote abortion-related services.
    • While previous Republican presidents had reinstated this rule, Trump expanded it to cover all U.S. global health assistance, meaning billions of dollars in USAID funds were now subject to the restriction.
    • This marked an exit from previous U.S. commitments to funding certain international health and reproductive rights programs.

Conclusion: Exit as a Governing Strategy

Rather than working to modify or improve existing systems from within (which would be the “voice” approach in Hirschman’s framework), Trump often used exit as a political strategy—choosing to pull the U.S. away from norms, policies, and institutions that his administration viewed as ineffective, unfair, or counter to his “America First” ideology.

Historic photo

Dramatic Plunge

Sometimes, crazy northerners crack a hole in the ice and disrobe down to a skinny bikini before plunging into a chilly frozen lake. It’s called a Polar Plunge. It’s supposed to be fun!

But that’s not the type of plunge I’m bringing you in this article by well-known urban geographer Bill Lindeke. New construction in the legacy cities, which had made nice strides from 2017-2021, plummeted down 88%.

Comparing the slowdown to other cities of similar size reveals an undeniable first place in the worst record award to be given out. The cause, you ask? Bill suggests.

The most obvious culprit to me is that both St. Paul and Minneapolis have enacted (or taken steps toward enacting) rent stabilization policies. This was an issue that I argued about back in 2021, writing that the policy proposal appearing on the referendum would amount to St. Paul “redlining itself” when it came to attracting housing investment. The bigger surprise is that Minneapolis seems to also have been affected by concerns about rent stabilization, even though they haven’t actually enacted any actual policy.

I say it doesn’t stop there. The hostile environment against developers, landlords, tradespeople, maintenance and upkeep folks, and anyone who puts effort into the upkeep of real property has taken a toll.

There are other municipalities that welcome people who want to build upon and maintain investment properties. Options provide choices.

Embedded bugs

embedded [əmˈbedəd, emˈbedəd] adjective

  1. (of an object) fixed firmly and deeply in a surrounding mass; implanted: “a gold ring with nine embedded stones”

I’ve never followed the use of this word as a descriptor of how norms and values influence economic activity. So I asked Chat. How is it that Karl Polanyi, who wrote The Great Transformation, talks of actors navigating a dynamic system where the act of their own free will and yet somehow is fixed firmly and deeply, i.e., embedded, in pre-set cultural norms? Here’s Chat’s response.

You raise a compelling point about the term “embedded” potentially being seen as static or limiting. However, in Karl Polanyi’s usage, the term “embedded” does not imply a rigid or unchanging system. Rather, it signifies that economic activity is integrally tied to social, cultural, and political frameworks. Within this embedded system, change and enhancement by participants are entirely consistent with the concept.

Why “Embedded” Is Appropriate in Polanyi’s Framework:

  1. Embeddedness Is About Integration, Not Inflexibility:
    • Polanyi uses “embedded” to describe how economies are integrated into social and cultural systems, rather than existing as separate, autonomous spheres (as in the market economy).
    • Embeddedness highlights that norms, values, and institutions guide economic behavior, but it does not preclude change or evolution. It acknowledges that human agency and interaction shape these systems over time.
  2. Dynamic Nature of Embedded Systems:
    • An embedded system evolves as participants interact with and reinterpret the norms and institutions that structure their actions. These systems are adaptive and responsive to changing circumstances, such as shifts in resources, relationships, or external pressures.
    • For example, reciprocity in a small community might evolve to accommodate new technologies or trade relationships, but it remains embedded because it is still governed by the community’s social values.
  3. The Contrast with Disembedded Economies:
    • Polanyi contrasts embedded economies with disembedded ones, where economic activity becomes “autonomous,” governed solely by market principles. In disembedded systems, human relationships are subordinated to market imperatives, creating a more rigid and dehumanized structure.
    • Embeddedness, by contrast, ensures that economic systems remain rooted in human relationships, which are inherently flexible and participatory.
  4. Room for Agency and Innovation:
    • Embeddedness does not eliminate agency or pre-set participants to fixed standards. Instead, it provides a context within which people act, negotiate, and innovate. Participants are active agents in shaping the system, but their actions are always informed by their embedded relationships and cultural understandings.

A Possible Refinement: “Interwoven” or “Integrated”?

For clarity, terms like “interwoven” or “integrated” might better capture the dynamic, evolving nature of the systems Polanyi describes. These terms emphasize the mutual influence between individuals and institutions, as well as the ongoing negotiation and adaptation of norms.

Conclusion:

The term “embedded” in Polanyi’s framework is appropriate because it emphasizes the interdependence of economic, social, and cultural systems. However, it is crucial to understand that embedded systems are not static. They are enhanced and reshaped by participants, reflecting a dynamic and evolving process rather than a pre-set, unchanging standard. If the term “embedded” feels too rigid, alternatives like “interwoven” or “integrated” can convey the same idea with more emphasis on fluidity.

I still say embedded is misleading. Economic activity doesn’t sit in a nest of norms and rules. It participates in making norms and rules along the way. In the process, economic agents are continuously confronted with the choice of Exit, Voice, and Loyalty.

How about you? Does economic activity sit atop a mangle of social requirements calling out orders? Or are social needs slid in side-by-side with personal gains?

Another Labor Theory- Autonomous decision makers

Who are the actors in this model of labor for pay and volunteerism? Who are the laborers? They are individuals who act of their own free will. They are autonomous decision-makers; the labor in this theory is performed free from force.

Familiarity with labor for money makes the concept easy to accept. However, volunteerism is a newer type of work and deserves a little more attention. Volunteerism functions in conjunction with an individual’s shared interests. People are born to kin and kith; throughout their lives, they regroup with many other shared alliances. These affiliations result in obligations through reciprocity, attention to loyalties and possibly the necessity to exit.

The model requires an acceptance that an individual may pamper the ego and still consider others who fall within their life bubbles.

Suppose one were to write a symbolic notation of labor; one might start by defining L as the number of labor hours the individual allots to paid work and V as the number of hours allocated to volunteerism. If you had a couple where one worked 40 hours a week at a career and devoted 10 hours a week to help in the home, it would be shown as L subscript 40 V subscript 10. Let’s say the other partner worked 20 hours a week at a part-time job and filled in 30 hours to their home life; this would be shown as L subscript 20 and V subscript 30. Or- let’s say that both partners worked 40 and did domestic chores for 10; this could be written as 2(L subscript 40 + V subscript 10)

Clashing Commitments

I’m really enjoying Ayaan Hirsi Ali’s memoir Infidel. In part because I also spent the early 70s in the Horn of Africa and remember the turmoil she describes. I can visualize her and her siblings playing within the compound of the home. Stories of soldiers showing up at homes to question people or haul them off to jail were part of the news the house workers would share when they reported for duty in the morning. It was an unsettling time.

Her parents’ story is daring. After many years being held as a political prisoner, her father was aided in a successful prison break. He fled to Ethiopia. Her mother then went to work at securing false passports for herself and her three children. When asked where she wanted to reunite the family, she chose Saudi Arabia.

My mother didn’t want to move to Ethiopia, because Ethiopians were Christians: unbelievers. Saudi Arabia was God’s country, the homeland of the Prophet Muhammad. A truly Muslim country, it was resonant with Allah, the most suitable place to bring up children. My mother had learned Arabic in Aden; more important, she also imbibed a vision that Islam was purer, deeper, closer to God in the countries of the Arabian peninsula. Saudi Arabian law came straight from the Quran: it was the law of Allah. Inevitably, the life of our family, reunited in Saudi Arabia, would be predictable, certain, and good.

Although their life in Somalia wasn’t sophisticated, they had many freedoms. And thus the move to Mecca and then Riyadh was oppressive.

But as soon as we left the mosque, Saudi Arabia meant intense heat and filth and cruelty. People had their heads cut off in public squares. Adults spoke of it. It was a normal, routine thing: after the Friday noon prayer you could go home for lunch, or you could go and watch the executions. Hands were cut off. Men were flogged. Women were stoned. In the late 1970s, Saudi Arabia was booming, but though the price of oil was tugging the country’s economy into the modern world, its society seemed fixed in the Middle Ages.

Women were not to leave the home without male companionship. Yet she did. There was shopping to do and kids had to be taken to school. Thus she was heckled by neighbors and degraded. Yet she still persisted with the choice to give up liberties in order to feel she was leading the good life.

I think there were times when she was happy: cooking in the evenings, her family around her. But how many of those evenings did she have? Sometimes, at night, I would hear my parents talking, my mother listing all the ways my father had failed her, her voice tense with rage. Abeh would tell her, “Asha, I am working to give us a future in our own country.” Or he would say, “These things wouldn’t happen if we were living in a normal country.” Abeh never liked Saudi Arabia and always wanted us to move to Ethiopia with him. But my mother wouldn’t do it: Ethiopians were unbelievers.

Emotional response to the Nat’l Anthem

Basketball player Brittney Griner spent ten months in a Russian penal colony for being caught at the Sheremetyevo airport with e-cigarettes with cannabis oil in her luggage. The experience may be the reason for her emotional response to the playing of the national anthem while on the podium at the Olympics.

It’s easy to take for granted what is so familiar to us. Coming into contact with dire regimes across the world most often causes people to appreciate the standard of living in the US, despite the problems here. When it doesn’t, be wary.

I hope all goes well in the primaries tomorrow.

A form seen in highlights

Albert Hirshman describes an economic motion in his book Exit, Voice and Loyalty (1970). Parties can withdraw if they do not care for a product or arrangement. They may attempt to impact the process by exercising their voice. Over time, loyalties develop, which influence the superstructure of relationships.

It seems Hirshman would agree with his contemporary, Milton Friedman, about the benefits of school vouchers. Should a family be displeased with a pedantic school district, they could collect a coupon for their tax dollar input and cash it in at another more vibrant district. Since schools are tied to geographies, consumers always have the choice to relocate their homes to attend elsewhere. Vouchers make the process more fungible.

Hirschman outlined the logic of the exit option and how noted how increased competition could improve government performance. But competition didn’t solve all problems, and the exit option had several important drawbacks. The freedom to exit was often used by the most ambitious, educated, or well-to-do users of a particular service, and once they exited, those remaining were even poorer, less educated, and less demanding. Moreover, Hirschman pointed out, the possibility of exit weakened the effectiveness of voice, that is, the ability to directly change the management’s behavior through feedback, discussion, and criticism. 

As Frank Fukuyama explains in his American Interest piece, Hirshman didn’t believe vouchers were the answer to improving a school system. Unlike other commodities, the departure of the stronger students from the classroom has a negative impact on the remaining students. This observation gives a new form to education. Casting the product in this light projects a little amber glow onto all members of the school community. The mission is to educate everyone. If not an educator or a student, the role may be to voice praise or criticism.

A school does not produce widgets on an assembly line, but a group process produces educated students. Changing the composition of the pool of players can have both positive and negative effects on the outcomes. And there are roles for an audience as well.

Freddie Mac calculates Boomers’ Exit

As of 2022 there were 69 million Boomers, accounting for 21% of the U.S. population, and 38% of total homeowner households. Boomers are overrepresented in the homeowner demographic because homeownership rates tend to increase as households age, gradually starting to decline as households age beyond age 75 (Exhibit 4).

As of 2022, Boomers were between 58-76 years of age. By 2035, these Boomers will be between the ages of 71 and 89. We estimate the retention rates of these age cohorts as they age over the period from 2000-202211 (Exhibit 5).

Applying these retention rates to the Boomer households as of 2022, we estimate the number of Boomer households each year through 2035. We find a gradual decline in the number of Boomer households over time from around 32 million in 2022 to 23 million by 2035 as the oldest Boomers reach ages close to 90. Per this estimate, there will be 9.2 million fewer Boomer homeowner households by 2035 (Exhibit 6).

That’s more than 9 million homes available for the Gen Z’s who are entering into their home buying years.

Read the entire report from Freddie Mac February Outlook.

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

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.

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.

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.

Objections to spontaneous public spaces

The owners of Cup Foods along with other business owners in George Floyd Square are suing the city of Minneapolis and Mayor Jacob Frey over alleged lost business.

Bring me the news

I think this is an interesting match-up: social justice vs. neighborhood grocer. If it goes to a jury will they simpathize with a city’s effort to designate space to an internationally recognized event, or the corner store who served a disadvantaged neighborhood deligently?

They seek over $1.5 million in damages, claiming the city and the mayor were negligent in violating the city’s nuisance ordinance and charter.

The damages don’t even seem that high. But let’s look at the claims.

The claims revolve around two issues: the blockades halted business traffic and secondly the complete lack of police presence encouraged excessive crime. I can’t imagine anyone coming up with a strong rebuttal.

Perhaps the courts will be successful where the city was not in making it politically feasible to dismantle what has become hallowed ground for those who place social justice activities in the forefront of their lives.

Pro-corporate pillage is anti-mobility & anti-unfortunate

We’ve seen this movie before. Make a monster and pursue with the fervor of Joan of Arc. The problem is, they are slaying the wrong dragon.

Mystery messages

I’m very grateful to a cousin who has sufficient interest in ancestry and sufficient patience with ancestry.com to have archived a trunk full of family documents into digital format. There’s a youthful picture of my great grandfather in overalls, rolled up at the knee, holding a teather to a gigantic draft horse. There’s a long wooden table of picnickers dressed in cotton up to their necks. And the new development feel to a photo of children playing on the grass between turn-of-the-century homes reminds one that what is old was once new.

And the smattering of postcards have a touch of mystery to them. First off, all one needs is a name and a town for accurate delivery. Even now the population of Lodi, WI, is only about 3,000. Back at the beginning of the last century, when this postcard arrived from Brookings SD, it was a third of that. A manageable number for the postmaster or mistress to keep track.

On the front side of the card we see workers out in the fields. Many worker were needed in the Dakotas in the summer months. Aunt Lettie wanted to know if great grandma recognized one of the crew.

Let’s take a closer look at that crew (and machinery!) It doesn’t seem reasonable to expect any of them to be recognizable. For as carefully the USPS kept track of its mail recipients, one can see that disappearing into the American West was certainly an attainable goal.

Chicago Public Schools- Tiebout edition

When you start to sense that the people in charge expect something of you that they don’t expect of themselves, then be on the alert. Poor intentions are often a sign that type of fraud is at hand.

Does locking up the gangsters work?

The Feds have been busy cracking down on crime in the Twin Cities. Three gangs in particular have been targeted by the attorney general first with an arrest of 45 members of the Highs, the Lows, and the Bloods in May. A few weeks ago, another fourteen members were charged under the RICO, a law originally intended to curb Mafia activity.

The short term results are good.

“There have been 127 fewer families who’ve had a loved one affected by gun violence this year compared to last,” O’Hara said. “Despite having the lowest number of sworn members in the MPD in decades, the level of gun violence in Minneapolis this summer is dropping to near pre-pandemic levels.”

At the news conference, O’Hara stood beside a chart that showed a big spike in the number of shooting victims in the city in mid 2020 — 111 of them that June alone. There were smaller spikes in 2021 and last year.

By June of this year, the number of reported gunshot wound victims in the city had fallen to 35. Homicides are also down, and carjackings fell by half compared to this time in 2022.

But will it last? Will residents be able to get back to watching their kids play ball without having to duck from stray bullets from gangsta’s in cars? Many wish they had the answer, and I certainly can’t say I know. But here is where I’d look for information: in groups.

The attorney general said that since 2020 local criminal activity coalesced and became more organized. From this one could infer that replacements for the 45-60 indicted criminals are in the wings, ready to take over their new positions in each respective gang. Law enforcement does their job, builds a case, and locks up the ne’r-do-wells only to open up new spots for fledging criminals in the pipeline.

Perhaps if there is stress in the organization there is an opportunity to detect the strength of the hold the delinquents have on associated groups. For instance, are they still able to recruit the youth? Or can this group be bought out of the interaction with other types of youth programming? What about the neighbors in general- are they doing as they are told to do or being subversive? Another group to watch are the informants. Are they staying loyal to their criminal friends or providing more information than usual?

In loose terms one might be looking for variables that represent how these groups are open to exiting the relationship, willing to voice their objections, or, a measure of the degree of loyalty they have to the gangsters.

People doubt Exit- they shouldn’t

The Mayo Clinic, the state’s largest private employer, put its foot down on Friday over legislative overreach at the MN state capital.

In an email to DFL legislative leaders and Walz’s office on Wednesday, a Mayo Clinic executive said the non-profit is reconsidering its plans for new facilities and infrastructure that are “four times the size of the investment in U.S. Bank Stadium” — a $1.1 billion project. And their decision is “time sensitive” and will be made in a matter of days.

“Because these bills continue to proceed without meaningful and necessary changes to avert their harms to Minnesotans, we cannot proceed with seeking approval to make this investment in Minnesota. We will need to direct this enormous investment to other states,” Kate Johansen, vice chair of external engagement, wrote in an email obtained by the Reformer.

Minnesota Reformer

Throughout the spring legislative leaders have been warned that continuing to push a progressive agenda, where the expense from social arrangements is sloughed off business, will cause people and entities to exit the state. This letter provides a tangible example.

Mayo is a powerhouse in MN and thus it is unlikely that this flare-up will go unresolved. But what about all the little businesses and people who decide they’ve had enough and pack their bags? It would be handy to pin down some indicators for people’s movement. Ones that are representative but not alarmist.

Do store closures matter?

There have been some notable retail store closures this year in the metro. On May 15th the Target on Lake St in Uptown is shutting its doors. This is one of their smaller stores and the housing nearby is quite affluent. I’d peg this loss more as an inconvenience than a hardship.

A few weeks ago the large Wal-Mart in Brooklyn Center closed. The corporation cited safety concerns for their workers but undoubtedly the rampant theft which has festered in this commercial node for quite some time was also a factor. Let’s assume that this last point has been aggravated by the failure to prosecute youth shoplifting. The recent philosophy here seems to look the other way on small crimes to stop the school-to-prison pipeline.

Pushing the costs of theft off onto corporations is simply a social tax. To save some wayward youth from entering the system, retail stores like Walmart take a little hit.

The problem with this occurs when the business removes itself from the mix. By choosing to exit the market, now it is the customers of the store who suffer a loss. According to the US Census, the per capita income in Brooklyn Center is just under $26K. Some were interviewed when the store announced its closure. Wal-Mart’s lower prices will be a greater loss to them in relative terms. So the calculation changes. The expense of higher crime is privatized across neighbors who don’t have a lot to start with.

The poor get poorer.

Shifting social costs through mandates onto business is precarious. Not because the costs are not real. Not because the businesses don’t have funds. The reason is that the nature of creating and maintaining value in social circles is different than in business. You don’t run your family like a business. Businesses are not the most efficient mechanisms for fulfilling social demands.

(Just for fun let’s think in terms of publicness and privateness. If the flow of benefit is Pub-to-Priv use this term, or Priv-to-Pub for the other way around. Changes in the judicial process give a Pub-to-Priv flow to youthful delinquents. Businesses internalized the public cost as a private expense. Then, at a certain point, exits do to the high costs.

Now the Pub-to-Priv transfer can be described as the loss of public safety transfer at a private cost by all the shoppers who now pay a surcharge at more expensive stores. To solve this, we would need to have some idea of the long-term benefits to the wayward youths. Lifelong criminals are an expense. Does this strategy work and is the benefit of keeping the youth out of a life of crime greater than more expensive groceries?)

Undoing monopolies

About 500 nurses at the Mayo Clinic’s hospital in Mankato, Minnesota, will no longer be represented by the Minnesota Nurses Association after voting 213-181 to decertify their labor union, according to a release.

Healthcaredive.com

Monopolies are helpful when there is an imbalance of power or when large infrastructure needs to be pushed through to completion. Ideally, a period of control is released after a time so that the actors can go back to making the best individual decisions to accomplish a blend of their private and public goals. After a 70-year stint, nurses at the Mayo Clinic will return to negotiating for themselves.

The decertification process was supervised by an outside agency.

The effort to dissolve the union was driven by the National Right to Work Legal Defense Foundation, a “highly powered, well-funded outside national organization bent on undermining worker power and collective bargaining rights,” the MNA said in the release.

That Right to Work group says its goal is to provide “free legal aid to employees whose human or civil rights have been violated by compulsory unionism abuses,” according to its website.

Voice

We’ve been in an age of novel voices. You can tweet your opinion; you can mass message through email; you can tik toc your way into an endless loop of your voice. But other than the medium through which constituents communicate, what kinds of voices are there?

There are the ‘call it from the rooftop’ voices. In times of dire need, like during a pandemic, it seems necessary to advertise the benefits from vaccines, for instance, by broadcasting loudly across all channels.

Then there are times when a quiet voice is desired. If the point is to encourage a timid participant to step forward and share their stake in the issue at hand, perhaps starting the conversation in a quiet voice will bring them along.

And what about the aggressive voice? Is there a place for it in the mechanisms of our social life? It seems so. Although an extended visit is usually counterproductive.

Albert Hirshman described a dynamic to the entrance and exit of people in and out of groups of their choosing in Exit, Voice, and Loyalty. But a lot more could be said about the methods and manners in which this all occurs.

Trading Laundry

Perhaps thirty years ago, I was a loan officer at a large local bank. In those days we sat behind oversized mahogany desks in the open lobby of branch buildings located all over the metro. Clients would wander in, pull up the guest chair, and have a chat about whatever type of financing they had in mind. If they were organized, they would have brought in all their tax forms and bank statements, and we would apply pen to paper and go through an application together.

I was working at a site located on an old-fashioned main street in a town that had been swallowed up by urban growth. A late middle-aged woman with an unassuming presentation sat down across from my desk with all her papers ruffling out of a manila folder. She owned the dry cleaner a few storefronts down the street. New environmental regulations were going into place addressing issues around the chemicals used in the cleaning process. She had some colorful words regarding the changes, stating that they were simply meant to put small business owners out of business.

When I did the write up for her loan (we manually underwrote loans as algorithms were still fifteen years off) I was taken aback by her barebones income. I rarely saw advertising for the brick fronted building that housed her operation. It turns out she had inherited the business from her parents and was simply hanging on, doing what had always been done before. I remember wondering at age twenty something how it could be worth being a small business owner if you weren’t in it for the money.

As it turns out, social situations are a large part of business.

I have no way of judging whether this woman enjoyed running her parents dry cleaning business. If so, then how she spent her workday was a good match despite the low income. If not, what could have been done to loosen the emotional ties which fettered her to a life of dealing with chemical solvents? Selling a small business is a little tricky as it is hard to know what they are worth. Better information and connections with other people in the business might have led to a trade. Perhaps she never investigated other business ventures or careers.

The point is, that whether it is to attain a higher level of satisfaction from one’s own life, or whether the motivation is to put a business to a higher and better use, facilitating and coordinating transactions is part of the equation.

A rebirth in rural MN?

Empty houses are depressing. I know everyone has been concentrating on the shortage of housing, but it wasn’t so long ago that vacancies were blight problems. There’s rural abandonment and urban board-ups- but they both cause neighboring properties to suffer.

For decades younger people left small-town communities as soon as they could, looking for adventure and employment in major metropolitan areas. Quaint brick main streets became ghost-like and there was a lot of gnashing of teeth that only the elderly would remain on all the Oak, Elm, and Division streets of small-town America. This trend has changed. Although the statistics show that young adults (between 25 and 29 years of age) relocated to urban centers, the trend is reversed for 30-to 34-year-olds.

The migration of couples back to rural areas in their young family years must include the availability of adequate housing at more affordable prices. At some point, people started to realize that small towns were stitched together by sidewalks tunneled by the foliage of old-growth trees. And that they could afford the beautiful craftsman with an arched front door and amazing built-ins.

With the expansion of working from home arrangements, I’m sure the trend back to rural communities will continue. Even though the schools are often not as high test as metro schools, and the availability of specialty stores and restaurants is lacking, families live an easier life further away from the hustle of urban commotion.

Trends are always in flux. I imagine that keeping track of housing stock and whether it is in use would feature in policy conversations. In the days of Anthony Downs, the concern was around the age of housing. This seems secondary to its occupancy.

The home seller’s POV

In order for all those home prices to end up on a list at the county recorder’s office, both buyers and sellers must agree on the exchange. The idea of revealed preferences tells us how the buyers are viewing, evaluating and reacting to, not only the physical characteristics and conditions of a home, but also what type of neighborhood infrastructure is in place to educate the kids, and to collect the trash, and to obtain potable water and so on. When price is equated against relevant quality indicators, a number will indicate what type of weight buyers put on each of these factors.

Now let’s think about the sellers. Sellers of course would like to secure the highest financial bid on their home. But this isn’t the only consideration. Since there is a four-to-six-week lag time between signing a purchase agreement and closing on the property, parties to the transaction consider the buyers’ level of earnestness, as it is a great disappointment should buyer’s remorse creep onto the scene. Sellers also take into account the financial viability of the buyers to be sure the lender will show up at the closing table with a suitcase full of cash.

A seller is no longer thinking about the public goods in their neighborhood because they are soon to exit the networks which rely on and participate in the production of those goods. But when they accept the money for the sale of their property, they are receiving payment for any participation they may have done over their residency. If they petitioned the city council for traffic-quieting-turn-abouts for safer streets or set up a tennis association to get people out exercising or led the kids out on a Trick-Can-Treat to gather up canned goods for the food shelf, it is at time of sale when they receive payment for their labor.

From my point of view, the equity in their home which accumulated during their ownership due to all these types of activities and investments is social capital.

Thinking of our foreign service families in Afghanistan

If you’ve been away from the news lately, there is a tragedy unfolding in Afghanistan. Below is a summary of the events leading up to the situation in Kabul.

It was a preferred posting for U.S. diplomats until 1979 when Amb. Adolph Dubs was kidnapped then killed by pro-Soviet police. The Peace Corps & USAID were sent home, and the U.S. mission greatly diminished to just dozens of people.

https://smallwarsjournal.com/jrnl/art/the-day-embassy-kabul-forever-changed

(2/11)

Ten months later, when the Soviets invaded Afghanistan, the embassy was reduced to being a “listening and reporting post.” On Jan 31, 1989, with the Soviets gone and civil war imminent, it was evacuated on newly-sworn-in SecState Baker’s order.

https://www.washingtonpost.com/archive/politics/1989/01/27/us-embassy-in-kabul-to-be-evacuated-closed/b6b168c0-0931-4058-9d37-93ca39bd5e6d/?no_nav=true

(3/11)

That day, Marine Sec Guard James Blake left in the chancery a note with a U.S. flag. It read: “Take care of it. For those of us here, it means a lot; for those of you yet to enter Kabul, it could mean a lot to you. We Kabul marines endured, as I'm sure you will.''

(4/11)

For 12 years, 60 Afghan colleagues took turns watching and taking care of the embassy grounds. They tended to the gardens and ensured the chancery was left alone. They were frequently jailed and rocketed. (More in this @amywaldman @nytimes story)

https://www.nytimes.com/2001/12/18/world/a-nation-challenged-kabul-unsealing-time-capsule-at-the-american-embassy.html?referringSource=articleShare

(5/11)

In Oct 2001, the Taliban tried to break into the chancery, firing into the front doors' bullet-proof glass, but they never got inside. After the Taliban fell, Marines entered the chancery again and found a place frozen in time — and the flag and note from Blake.

(6/11)

That flag was raised at the Dec. 18, 2001 embassy re-opening. I was sworn in at the same flagpole two years later. Some of my colleagues had also served in the 70s & 80s, eager to return to Afghanistan, to do all possible for a new U.S. diplomatic and development mission

(7/11)

We worked grueling hours, driven by a deep belief that our work was essential, buoyed by so many gains, even though the bullet-ridden chancery front doors reminded us of the Taliban threat. The embassy grew dramatically in capacity and size the next decade.

(8/11)

In 2003, we were roughly 100 ppl. By 2010, with the civilian surge, it swelled to roughly 1,500. Thousands of Americans have served at this embassy. Many colleagues served repeated tours the last 15 years, by choice. Thousands of Afghans have worked side by side with us.

(9/11)

I can't imagine the stress at the embassy today. I can't imagine the terror our Afghan friends, colleagues who believed in us, watched over us & our sacred embassy space must feel. That flag has meant everything to us. Please keep thinking of them, thank them, don't forget them

#EvacuateNow

A clarification. The U.S. must get our Afghan colleagues and allies out. The mission the last 20 yrs would’ve been nothing without them. #EvacuateNow = everyone: the U.S. officials, yes — but also scores of Afghans who supported the U.S. mission needing SIVs

And Afghans needing other emergency visas because of their commitment to advancing democracy & civil society through journalism, NGOs, human rights, more. Them & their families. Grateful to former colleagues trying to make this happen #AfghanLivesMatter
#SaveAfghans #HelpAfghans

Originally tweeted by Katherine Brown (@_KatherineBrown) on August 15, 2021.

Paul Erdos~ couch surfing problem solver

Paul Erdos was of my grandmother’s generation, born in the same year, 1913, yet half a world away in Budapest, Austria-Hungary. His genius revealed itself early on. “By the time he was 20, he had found a proof for Chebyshev’s theorem.[14] In 1934, at the age of 21, he was awarded a doctorate in mathematics.”

Erdős published around 1,500 mathematical papers during his lifetime, a figure that remains unsurpassed.[6] He firmly believed mathematics to be a social activity, living an itinerant lifestyle with the sole purpose of writing mathematical papers with other mathematicians. Erdős’s prolific output with co-authors prompted the creation of the Erdős number, the number of steps in the shortest path between a mathematician and Erdős in terms of co-authorships.

https://en.wikipedia.org/wiki/Paul_Erd%C5%91s

Paul Erdos committed his life almost exclusively to the mathematics community. For his own reasons he chose not to have a family of his own. Although allowed to travel at will to his country of birth, he chose not to settle there, (until his death as he buried next to his parents “in grave 17A-6-29 at Kozma Street Cemetery in Budapest.”)

… Paul Erdős, became perhaps the most notorious mathematician of the 20th century. Erdős spent nearly his entire life crashing on other mathematicians’ couches and subsisting on the small sums he received for giving talks at universities around the world. He also had a fondness for devising math problems and offering bounties to anyone who could solve them.

https://www.quantamagazine.org/cash-for-math-the-erdos-prizes-live-on-20170605/

So dedicated to his pursuit of mathematics, he used cash prizes to lure others into joining him in its unraveling. By providing a private incentive he wished to enrich the public he enjoyed so much. His prizes still survive today.

Erdős continued that tradition. Over the course of his lifetime he offered rewards for hundreds of problems that he himself dreamed up. Amounts ranged from $25 into the thousands, depending on how challenging he thought the problem was. Today Graham controls a small fund left by Erdős, who died in 1996, for the purpose of making good on those bounties.

In 1974 Erdős paid off his first major sum: $1,000 to the Hungarian mathematician Endre Szemerédi for a problem Erdős had posed some years earlier. Szemerédi tackled the problem because “he said he could certainly use the money,” said Graham. Decades later Szemerédi would win the Abel Prize, commonly regarded as the Nobel of mathematics, for work that stemmed primarily from his solution to this Erdős problem.

https://www.quantamagazine.org/cash-for-math-the-erdos-prizes-live-on-20170605/

For most people, their primary or first degree community is their immediate family; those housed under the same roof. This mathematician cared not for real estate. His community thrived on the images of abstract notions brought down to earth in formulaic representation, sketched out on paper.

The Wire– a review

If you prefer drama to comedy I can recommend the HBO series The Wire. The first of five seasons came out in 2002 when the TV in our house was featuring Barney and Dora the Explorer. A crime drama portraying the grisly conflict between law enforcement and the (mostly drug) criminals wasn’t in the cards.

The story lines hold their own with intrigue and surprise, along with character development. Every season probes a new scheme, a new crew of gangsters, while bringing along the established cast and story threads from past seasons. From Wikipedia:

Set and produced in Baltimore, Maryland, The Wire introduces a different institution of the city and its relationship to law enforcement in each season, while retaining characters and advancing storylines from previous seasons. The five subjects are, in chronological order: the illegal drug trade, the seaport system, the city government and bureaucracy, education and schools, and the print news medium. Simon chose to set the show in Baltimore because of his familiarity with the city.[4]

What holds up so well is the consistency of the norms, whether they are those which the criminals obey or the ones the mainstream players abide. Each side has heroes and crooks, has chivalry and villainy. Each side has bad luck and good fortune. Each side has weakness and substance abuse. A few try to pass from one side to the next.

The Wire is lauded for its literary themes, its uncommonly accurate exploration of society and politics, and its realistic portrayal of urban life. Although during its original run, the series received only average ratings and never won any major television awards, it is now widely regarded as one of the greatest television shows of all time.

The Wire – Wikipedia

You will also realize how far technology has come in the last twenty years. The primary tool used to capture the drug dealers is “by getting up on their phone,” or getting court authority to tap phones. When the first season opens these are pay phones on the corners of the gritty streets of Baltimore.

As long as you can tolerate a little violence, it’s well worth a watch.

Choose your work location

Yesterday was the day for work-from-home articles, as Bloomberg also posted this excellent article by Sarah Holder, The True Costs of Working From Home. It’s full of great information and statistics. This, for example:

Between 2013 and 2017, households with at least one adult who worked from home spent more money on housing, on average, than ones that all worked outside of the house, the study found: Remote renters spent between 6.5 % and 7.4% more of their income a month, and homeowners who worked remotely had mortgage and property taxes that were 8.4% to 9.8% greater than non-remote households.

I didn’t appreciate that, pre-pandemic, remote workers were already spending almost ten percent more on housing. That’s quite a bit. On the other hand I’m surprised the percentage of people working from home in times of Covid isn’t higher.

The study is a snapshot of the pre-coronavirus world, when only about 3% of U.S. employees did their jobs from home. By February 2020, that number had swelled by some estimates to 8%. And by May, that share had exploded, with about 35% of U.S. workers who once commuted going remote. 

Still– that is about a third of the workforce. And it appears that staying in the neighborhood is popular amongst employees.

According to a Pew Research Center survey, more than half of workers who can do their jobs remotely say they will want to continue doing so after the pandemic ends. A December survey from Upwork predicted that 27% of workers in the U.S. would still be largely remote by the end of 2021.

The freedom of WFH allows people to move to new communities if they so choose. Perhaps drawn by less expensive housing, or a host of other possible benefits. A U-Haul study shows that coastal people tend to move to other states near the coasts. This article offers another view.

But sticking closer to home may be the favored path for many, especially if companies ask for some face-time each month. A San Francisco Chronicle analysis of USPS moving data showed that the majority of San Franciscans who left the city during the pandemic moved not to Florida or Texas, but to another Northern California county; a Zumper report that analyzed national rent shifts found a similar story, with “cheaper, neighboring cities” appearing to be the 2020 destinations. 

I think it’s too soon to tell how household priorities will all shake out. There are options out there that people have yet to consider. If moving half way across the country is possible, why not another continent? Croatia is just one country trying to leverage the remote work concept by offering a Digital Nomad Visa.

There are many costs and benefits to living in various communities, and the reshuffling of tradeoffs will be different for each household. Businesses also may find the transition to remote work a cost savings at first, but then an expense as it is more difficult to recruit and train a corporate culture from afar. Though as a general rule, more choices for both employers and employees are a good thing.

Coming together

Politically outstate Minnesotans and Twin Cities urbanites maybe diverging, but demographically there are converging trends. Here’s #4 from MN Compass:

One theory offered to explain the tight housing market is that Covid has made it more precarious for this age group to complete a move; boomers who may have relocated to a new stage-of-life housing have stayed put. If true, then there should be a wave of availability coming up here in a few years in Roseville, Edina, Golden Valley and Mendota Heights.

Real estate in times of Covid

All things considered, it has been an incredibly strong market for residential real estate sales in 2020. The spring started strong but was shut down along with everything else in March when the virus leapt the oceans and appeared in great numbers on the US coasts. Home sales were considered an essential service, but the apprehension of allowing strangers into sellers’ homes for showings slowed down the process.

This data from Northstar MLS shows the dip in April and then the take off of activity starting in June.

Issues that seemed to be on buyers minds when they came through open houses were 1. room for home offices 2. new flexibility in distance to job location 3. downsizing out of larger homes to avoid maintenance concerns. This broad range of interests led to almost all types of properties being snatched up, often in competitive bidding. Which has led to a sharp decline in properties available for sale.

In almost all markets, except the downtown Minneapolis condo market which is up 21.3%.

I think there is little dispute that Covid has dampened the amenities which a downtown offers. The lack of night life and restaurants, the lack of need to be blocks from work or near light rail for a quick trip to the airport. By displacing the relative value that residents place on these features versus a whole host of other variables that go into a home purchase decision (including square footage, proximity to family and so on), more owners are exiting the downtown community than joining it.

Nailing down the market prices on each of these amenities one-by-one would take data that is not readily available. Data sets for the performance of public sector goods would have to be statistically spun out to reveal levels of significance. An analysis of prices of these and other amenities which overlap through a variety locations would provide an opportunity for index setting. Due to the extraordinary living conditions in 2020, there is an opportunity to obtain counter factual data for many core neighborhood utilities. It is a unique opportunity.

No Voice? Exit

From the Pioneer Press:

Two longtime state senators from Minnesota’s Iron Range broke with Democratic-Farmer-Labor ranks on Wednesday to form an independent caucus in the narrowly divided chamber.

Sens. Tom Bakk, of Cook, and David Tomassoni, of Chisholm, said in a statement they would venture out on their own after finding both political parties to be too polarizing. The lawmakers had frequently broken with DFL party lines to vote what they felt best represented their districts.

Is it so simple?

Nathaniel Rachman writes in Persuasion about how the simpleton manifestos originated in the 60’s and 70’s.

In their 1970 classic The Politics of Unreason, the sociologists Seymour Lipset and Earl Raab coined a word for this black-and-white thinking: “simplism.” They defined it as “the unambiguous ascription of single causes and remedies for multifactored phenomena.” 

He notes that these one line policy responses were clung to by the political extremes. Whereas now it is fashionable to reduce all policy to a slogan. In the same way that it is now fashionable to be an activist.

If I retell the last four years as a simple story, it would go something like this. America’s Heartland felt sold out and left behind so they hired Trump to shake things up to make fun of the sharply educated, networked and shined-up coastal internationalists. They demanded that the nation refocuse on the nation itself. As a counter-response the 60’s political types went into a high-gear-radical-simpleton response, unleashing their swarm of buzzing bees on all the social media electronic waves.

For months following the election an acquaintance on Facebook spewed like a fire breathing dragon, reposting every negative commentary topped off with an acidic remark. But her sphere was at odds recently when a well funded Melton-Meaux challenged incumbent Ilhan Omar in the primaries and lost. Suddenly her tone changed to high school counselor sorting out a cat fight in the hallway. This was as refreshing as a spritz of Evian water poolside at a Four Seasons Hotel (we can only dream about such things these days) and gave me hope that we’ve reached an exhaustion point on activism.

Have we finally stripped down the old ways so we can rebuild? Because there is evidence all around us that things are not so simple, that the system is complex. It relies on a vast network of interlinked groups freely interacting to produce value. For instance, the simple response to the virus is to lock everyone down, to deny them access to all the networks they rely on in the social structure of their lives. So high school kids are out carjacking cars and dying in high speed police chases, and suicides are on the rise, and who even knows what amount of domestic battery is going unreported.

As Nathan goes onto say in his piece:

Perhaps the greatest danger is that simplism feasts on its failures. Its ineffective policies will not solve America’s problems, so calls for radical action will intensify. In this mood of crisis, norms are obstacles rather than boundaries. Politics becomes two unshakeable poles, which paralyzes Congress and halts the passage of policy fixes. As long as simplism reigns, America’s problems will worsen—and so the process will repeat itself.

Understanding a more complex system, no relying on a more complex system is our path to a free society. The problem is that the old guard is not letting go. The very natural tendency to hold onto the prestige and power they’ve gained over the last fifty years, by fighting off opponents, has us stuck in a Ground Hog’s Day movie. Their implicit power makes it necessary for them to gracefully exit stage right. In the meantime we wait.