Category: Time

Year-End Update- What this site is about

This site advances a structural theory of economic organization in which societies are understood as collections of bounded groups that govern shared resources internally while competing externally through privately capturable returns. The central claim is that economic order emerges from a sorting mechanism: individuals and activities are continually reallocated between cooperative group settings and market-like domains based on the relative performance of group-public assets versus private opportunities.

Within this framework, groups are defined not merely by identity or culture, but by rule-governed access to non-divisible or imperfectly divisible assets. Such assets—landed estates, commons, institutional authority, epistemic legitimacy—function as group-public goods: they are accessible to members, governed by internal norms, and resistant to direct pricing. Participation confers benefits that are distributed through social rules rather than markets, creating a publicness that is endogenous to group membership rather than universal.

Outside these groups, individuals engage in domains characterized by alienable, liquid, and privately capturable returns. These domains—markets, trade, professional careers, or platforms—permit competition unconstrained by group obligations and reward individual optimization. The boundary between group and market is therefore not fixed; it is continuously reshaped by changes in relative returns, enforcement capacity, and legitimacy.

The theory’s explanatory power lies in showing how publicness and competition are not opposites, but complementary outcomes of the same sorting process. Internally, groups suppress price signals and individual appropriation in order to stabilize shared assets and reduce coordination costs, consistent with Ostrom’s findings on common-pool resource governance. Externally, groups compete for members, status, and influence through performance, innovation, and access to higher-return opportunities, aligning with North’s account of institutional evolution driven by differential returns and path dependence.

This mechanism also integrates Mises’s praxeological insight that all outcomes originate in individual action. Individuals are not assumed to act altruistically or selfishly in the abstract; rather, they respond to institutionally structured opportunity sets. Actions that appear cooperative within the group—maintenance of shared assets, adherence to norms, acceptance of unequal internal distribution—are rational given the group-public payoff structure. Conversely, actions that appear self-interested outside the group reflect the higher marginal returns and certainty of private capture. The theory thus avoids moralizing distinctions between cooperation and self-interest, treating them as context-dependent expressions of action under differing institutional constraints.

Historically, the theory explains periods of social transition as moments when private returns in external domains outpace the productive or legitimating capacity of group-public assets. Under such conditions, groups become custodial rather than generative: obligations persist while returns stagnate. Individuals increasingly sort into private domains, weakening internal enforcement and prompting pre-commitment maneuvering, ideological rationalization, or reform efforts. This dynamic aligns with classical coordination problems such as Rousseau’s Stag Hunt, while extending them beyond static games into historically embedded institutional change.

By framing economic structure as an evolving ecology of groups and markets linked through a sorting mechanism, this theory bridges literature on institutions, collective action, and market pricing. It accounts for why public goods are often effectively governed at intermediate group scales, why markets excel at allocating marginal resources across groups, and why systemic change is typically gradual, conflictual, and legitimacy-lagged rather than abrupt or purely efficiency-driven.

In sum, the proposed framework offers a unified explanation for how societies organize cooperation internally while sustaining competition externally, and how shifts in resource productivity drive the continual reconfiguration of social commitments and economic structures.

Time tables for success

If people want effects muted they draw out terribly long time tables, muting any situational success or failure. If people want to control the narrative they clip the timetable to the period of interest.

Time matters for any proper analysis or policy considerations. In real estate, the timeframes are almost always too short.

That was then – tenant screening

Sir Walter must face financial circumstance and lease out his country manor home. The go-between, Shepard, spouts off all the appealing characteristics of his potential tenant.

And who is Admiral Croft?” was Sir Walter’s cold suspicious inquiry.

Mr. Shepherd answered for his being of a gentleman’s family, and mentioned a place; and Anne, after the little pause which followed, added—

” He is rear admiral of the white. He was in the Trafalgar action, and has been in the bast Indies since ; he has been stationed there, I believe, several years.

One must be careful using the family word in real estate, today. Best to think of other descriptors. But not personal features as such:

Mr. Shepherd hastened to assure him, that Admiral Croft was a very hale, hearty, well-looking man, a little weather beaten to be sure, but not much; and quite the gentleman to he sure in all is notions and behaviour.

Outward characteristics are not to be asked or recorded on a rental application. But the terms of the unit can be recorded.

not likely to make the smallest difficulty about terms; only wanted a comfortable home, and to get into it as soon as possible; knew he must pay for his convenience;-knew what rent a ready-furnished house of that consequence might fetch; should not have been surprised if Sir Walter had asked more;-had inquired about the manor;

Oh- and there’s this.

—would be glad of the deputation, certainly, but made no great point of it;— said he sometimes took out a gun, but never killed ;—quite the gentleman.

And theres lots to say about the family. (Also a no-no today)

Mr. Shepherd was eloquent on the subject; pointing out all the circumstances of the admiral’s family, which made him peculiarly desirable as a tenant.

He was a married man, and without children; the very state to be wished for. A house was never taken good care of, Mr. Shepherd observed, without a lady: he did not know, whether furniture might not be in danger of suffering as much where there was no lady, as where there were many children. A lady, without a family, was the very best preserver of furniture in the world. He had seen Mrs. Croft, too;

All these rich social indicators are removed when renters seek homes in today’s market.

What’s considered acceptable?

Standards can change over time.

Standards can vary between cities.

Standards may vary based on taste.

Ultimately, it is the local community that determines which options are the most suitable and which are less desirable. Which have fallen so out of favor that the structures are abandoned completely. And which ones promise a reward for rehabbing.

Real estate is local. National figures provide sparse details.

How would it feel?

People speculate why young people have delayed home purchases. Only around 20% of home purchases fall in this category. A historic low. But is it that surprising? Look at the surge of foreclosures in ’07-’08 and ’09. Hundreds of thousands of people who were never meant to have financial struggles lost their homes.

Children ages 8-12, old enough to sense the stresses within their families, yet too young to analyze the impact of a national financial crisis, were bystanders to these unpleasant legal actions in the early 2000’s. These are today’s young home buyers. Uncertain of what a real estate purchase will do for them. The anxiety associated with foreclosures has often been portrayed in litterature.

In Death of a Salesman, the family’s fear of losing their home emerges gradually, revealed not through a dramatic announcement but through Linda’s quiet confession that they are barely keeping up with the mortgage. She tells Biff and Happy that Willy has been borrowing money just to make the house payments—a disclosure that reframes the entire domestic landscape. What had seemed like an ordinary family home is suddenly understood as something fragile, held together by secrecy and strain.

The looming threat of foreclosure exposes the play’s deepest emotional fractures. The mortgage becomes a symbol of Willy’s unraveling identity—his failure as a provider and his desperate clinging to the American Dream. Linda’s hushed explanations carry a mournful tenderness, showing how fear and loyalty tangle together under financial pressure. For Willy, the house is both sanctuary and burden, and the possibility of losing it turns that symbol of pride into a reminder of collapse. The family’s anxiety over the home’s instability reveals how economic pressure corrodes affection, pride, and hope, tightening around them until it shapes every gesture they make toward one another.

Capital Theory

What is Capital Theory in Economics?

Capital theory is the branch of economics that studies the nature, role, measurement, and productivity of capital — the produced means of production (machines, factories, tools, infrastructure, software, etc.) that are used to produce goods and services.

It tries to answer fundamental questions like:

  • What exactly is “capital”?
  • How should it be measured?
  • How does capital contribute to economic growth and income distribution (wages vs. profit/interest)?
  • Why does the return on capital (interest rate or profit rate) behave the way it does?

Capital theory has been one of the most controversial and technically difficult areas in economics, especially in the 20th century.

Key Concepts and Debates

  1. Capital as a homogeneous “fund” (neoclassical view)
    • Mainstream neoclassical economics (since the late 19th century) treats capital as a single, measurable quantity (like “dollars of capital” or a “stock of value”).
    • In simple production functions (e.g., Y = F(K, L)), K (capital) is treated like labor L — you can smoothly substitute one for the other.
    • The interest rate is the price that equilibrates saving and investment.
  2. The Cambridge Capital Controversy (1950s–1970s) – the big critique
    • Economists from Cambridge, UK (Joan Robinson, Piero Sraffa, Luigi Pasinetti) challenged the neoclassical view.
    • Major problems they exposed:
      • Reswitching: The same technique of production can become profitable again at lower (or higher) interest rates, destroying the simple idea that lower interest rates always lead to more “capital-intensive” techniques.
      • Capital reversing: Higher interest rates can sometimes lead to using more capital-intensive methods — the opposite of what neoclassical theory predicts.
      • Measurement problem: You cannot measure the “quantity of capital” independently of the interest rate or profit rate, because capital goods are heterogeneous (a robot ≠ a shovel). Their value depends on future profits, which depend on the interest rate — a circularity.
    • Conclusion of the critics: The aggregate production function and the idea of a downward-sloping demand curve for capital are logically flawed.
  3. Austrian view (Böhm-Bawerk, Hayek, Lachmann)
    • Capital is highly heterogeneous and time-structured.
    • Production takes time; capital goods are “intermediate goods” at different stages of completion.
    • Emphasizes the “period of production” or “roundaboutness”: more productive methods are more time-consuming.
    • Interest originates from time preference (people value present goods over future goods).
  4. Post-Keynesian / Sraffian view
    • Rejects marginal productivity theory of distribution.
    • The rate of profit is determined by monetary factors, class struggle, or growth requirements, not by the “marginal product of capital.”
    • Capital is valued in terms of its own reproduction cost (Sraffa’s “price of production”).
  5. Modern mainstream response
    • After the Cambridge controversy, most neoclassical economists largely ignored the deep logical problems and continued using aggregate production functions for practical reasons (they work reasonably well empirically in many contexts).
    • Some (e.g., “new growth theory”) shifted focus to knowledge, human capital, and ideas rather than physical capital.

Summary Table of Major Schools

Bottom Line

Capital theory is the attempt to understand one of the most important concepts in economics — capital — and it remains unresolved. The mainstream treats capital as a simple scalar quantity for modeling convenience, but the Cambridge controversies showed that this simplification has serious logical flaws once you dig into the details. The debate is largely dormant in mainstream teaching but still very much alive among economic methodologists and heterodox economists.

That was then

Landlord portrayal in Bleak House.

As it was still foggy and dark, and as the shop was blinded besides by the wall of Lincoln’s Inn, intercepting the light within a couple of yards, we should not have seen so much but for a lighted lantern that an old man in spectacles and a hairy cap was carrying about in the shop. Turning towards the door, he now caught sight of us. He was short, cadaverous, and withered; with his head sunk sideways between his shoulders, and the breath issuing in visible smoke from his mouth, as if he were on fire within. His throat, chin, and eyebrows, were so frosted with white hairs, and so gnarled with veins and puckered skin, that he looked, from his breast upward, like some old root in a fall of snow.

Nifty word- mainspring

The phrase “the mainspring of the story” is a metaphorical expression that refers to the central driving force or primary motivation that propels the narrative forward. Just as a mainspring in a mechanical watch provides the energy to keep it running, the mainspring of a story is the core element that gives it momentum, purpose, and cohesion.

In life, there are often several intermingled motivations pulsing through the engine for action. But usually there is a mainspring– one impulse pulling in the lead. You would skip going to the grocery except for the turkey for Thanksgiving. And since you are there, another couple of dozen food items also end up on the metal grid at the bottom of the cart. The supermarkets have gotten wise to such things and tempt shoppers into their aisles by advertising the big bird at 77 cents a pound.

Sometimes the mainspring is a different type of impulse. Instead of competing for the lowest price, this mainspring is about giving to the most significant number. A mainspring may drive a young guy to work as a manager at a supersized grocery for a quarter century. But then things change. And the same individual, with the same set of skills, might be driven to help others by working as the manager of a food shelf.

Sometimes people hide their mainspring. They don’t want to be judged by the we they find themselves amongst. Sometimes this subversion is enacted through substitution —no, I’m not buying it for prestige; I’m buying it to make my wife happy. Ok. Right.

Some mainsprings are treacherous. Fear, for instance. Fear as a mainspring can drive all sorts of damaging or wasteful actions. Fear of running out of food means you bring home too much, and it spoils. Fear of buying too much means you can’t quite complete your menu and are always falling short of a satisfying meal. And of course, fear instigated by others is ultimately responsible for some type of corruption in the system.

When trying to put a model around our messy world, first find the locus of action. Who exactly is the source of the analysis? Then find their mainspring, whether hidden or out in plain sight for all to see. Otherwise, you are just another jammerer floating all sorts of ‘we’s’ that bob on the waves of idle conversation with no direction at all.

London- a late bloomer in the water department

No one in the western world really questions whether water provision is best suited to the public or private spheres. Being hooked up to city water and sewer is unanimously considered a good thing. Was it always that way? Well- no. Londoners purchased water from private suppliers through the end of the nineteenth century.

John Broich gives an excellent history of how the desire for water provision shaped London.

His account tells how secondary cities in the British Isles adopted a municipal water system decades before the great capital on the Thames. In fact, the continued delays in accomplishing this civic feat help exemplify the many facets of interests and the levers in play. There are issues of pollution and health concerns, there are networks of private providers, and the wealthy who buy their way to what they want. There is petty jealousy and the pride of belonging to an international city. And most astonishing, there is no government structure to handle such infrastructure outside of the walls of ancient London.

For provincial water reformers, the principles on which the administration of water was based-as well as the engineering principles on which water provision was based-were meant to make their cities more modern in the sense expressed by Avery, the Birmingham councilor.

“When water is under the control of private companies, the chief desire of the directors is to obtain good dividends,” said a Bradford town councilor in 1852. “When the Town Council possesses the works,” he continued, “their chief object is to make the works instrumental to the promotion of cleanliness, the health, and the comfort of all classes of citizens.”57

Water administration by a directly representative body was to provide an obvious contrast to the commercial companies that made independent decisions about water quality, abundance, and price based on the profit motive.

It is an excellent story depicting the nature of what is public and what is private. For a literary companion piece, consider reading Dickens’s Bleak House.

50 year mortgages and the nature of things

A proposal for a 50-year amortization mortgage aims to make homeownership more affordable by spreading payments over a longer period, thereby reducing monthly costs. However, the trade-off is that borrowers would pay substantially more interest over the life of the loan and build equity more slowly. Advocates argue it could ease housing affordability pressures, especially in high-cost markets, and improve access for younger or first-time buyers. Critics counter that such loans may inflate housing prices further, extend household debt burdens, and delay financial stability. Overall, a 50-year amortization reflects a policy tension between affordability and long-term economic prudence.

Here’s a clear example comparing 30-year vs. 50-year amortization on a $350,000 home, assuming a fixed interest rate of 6% and no down payment (to isolate the amortization effect):

Loan TermMonthly Payment (Principal + Interest)Total Paid Over TermTotal Interest Paid
30 years @ 6%$2,098$755,280$405,280
50 years @ 6%$1,870$1,122,000$772,000

The 50-year loan lowers the monthly payment by about $228, but total interest nearly doubles over the life of the loan — a very expensive trade-off for the borrower in the long run.

Adjustable-rate mortgages offer another way to reduce payments, at least initially. ARMs typically begin with a lower introductory interest rate (for example, 5% for the first five years on a 5/1 ARM) before adjusting annually based on market conditions.

While ARMs can make early payments comparable to or even lower than a 50-year fixed loan, they carry rate-reset risk — payments can rise sharply if interest rates increase. Currently, availability is moderate: most lenders still offer ARMs (3/1, 5/1, 7/1 terms), but after the 2008 crisis, underwriting standards became stricter, and long-term fixed loans remain more common.

I’m all for offering a wide variety of financial instruments for consumers to use in the purchase of a home. However, over the long run, I don’t feel that the 50-year amortization allows for a sufficient paydown. As people navigate their lives, they count on the equity that accumulates through price appreciation and mortgage debt reduction. A healthy market is fluid, where people can buy and sell without being constrained by excessive debt.

I’ll make the claim that people find the market unaffordable because they don’t want to buy what is affordable to them. This is difficult to demonstrate without specifics. But each housing market has a range of price points. If folks are paying rent, then they are more likely to be able to acquire a property with a similar payment. They simply don’t want to live in that particular spot, or do the repairs necessary to improve it, or view it as a starter home from which they will move on someday.

That was then- This is now

This catalogue arrived in my mailbox today. Are algorithms not enough for the massive online store? Amazon is using print marketing materials and supporting the United State Post Office to reach customers. Oh my!

Or what about the demise of the bookstore, so hardily predicted fifteen or more years ago?

Barnes & Noble opened more new bookstores in a single year than it had in the whole decade from 2009 to 2019. The bookseller expects to open over 60 new bookstores in 2025.

Bigger is better.

 The new Minnetonka Barnes & Noble will cover over 18,000 square feet, including a B&N Café, and carry all the best books, as well as a wide range of toys, games and the usual paper and gifting items found at Barnes & Noble.

MT is up to $495!

California is always high. I remember when Colorado pricing surged ahead of Minnesota’s, but that’s been like that for a while now.

Connecticut seems low for the east coast. And Alabama is a bargain! Especially since their school system is starting to put out some strong scores.

Which state’s average price of housing surprised you?

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.

Dynamic Private-Order Institutions

From a newly minted Nobel prize winner, Joel Mokyr.

Slowly, and perhaps not always quite perfectly, British formal institutions adapted. But the same was true for private-order institutions: the rather sudden rise of country banks in the second half of the 18th century illustrates the high degree of  adaptiveness of private-order British institutions; they were not coordinated or supervised by some central authority, and no political revolution was necessary to bring them into existence. Yet once the circumstances were suitable and opportunities arose, these banks emerged almost ab nihilo. They replaced the informal activities of local merchants, notaries, and attorneys who had previously intermediated in credit transactions.

This natural and spontaneous progression of credit extension brought real estate ownership to the greater populace.

Read his insights at Ideas Mattered, But So Did Institutions.

C’mon people, still?

Check out the number of views of the YouTube shorts where historian and author Sarah CM Paine punches out a history lesson in spurts of ironic and bell clear words- 2.3 million views, 1.6M, 8.5M.

Who is she? It’s hard to know because, despite her online presence, a Google search generates no profiles written about her. Her Wikipedia page has a new photo above a brief description. Only this to stand up for a long time academic who has penned a respectable number of books.

Granted, this new exposure is due to one person- Dwarkesh Patel. He has hosted and promoted Sarah CM Paine’s material. He gets full credit. And there are pleanty of profiles written on him such as in Time or here.

MN Railroad Fact

Minnesota’s Land Giveaway

Railroads received 9.9 million acres of Minnesota land from the federal government—more than the 7.3 million acres claimed by homesteaders between 1862-1880. The Homestead Act’s promise of land for ordinary settlers shifted when railroads got the biggest share. Now it’s difficult for any major infrastructure project to command overarching commitments.

Great architecture in Denmark

Aarhus City Hall, a classic of Danish Scandinavian Modernism, was designed by Arne Jacobsen and Erik Møller and completed in 1941, replacing an older, medieval city hall. A competition was held in 1937 to replace the increasingly insufficient town hall from the mid-19th century, leading to Jacobsen and Møller’s winning, intentionally unmonumental design. However, after public and political requests, a towering clock tower was added, and construction continued despite the German occupation of Denmark during World War II, making the finished building a symbol of democratic governance during that time.

The economics of Kronborg Castle

Sure— you knew that Kronborg Castle, on the NE tip of Zealand in Denmark, was the setting inspiration for Shakespeare, in Hamlet.

Moat, entrance,stables and Kronborg Castle

But did you realize its raison d’etre is an economic story?

See that short distance from the edge of the ramparts to the coast afar? That’s a narrow strait— perfect for tax collection.

Kronborg Castle was constructed by Denmark to enforce the collection of “Sound Dues,” a tariff levied on all ships passing through the Øresund strait between Denmark and Sweden.

The castle’s cannons ensured that vessels complied, generating significant revenue for the Danish Crown for over 400 years. 

Kronborg and the Sound Dues

  • Strategic location: In the 1420s, King Eric VII of Denmark built a fortress named Krogen on the site of present-day Kronborg. The castle was strategically positioned on the narrowest point of the Øresund, which at just 4 kilometers (2.5 miles) wide, served as a crucial entryway to and from the Baltic Sea.
  • Enforcement of tariffs: The castle and its formidable cannons guaranteed that all commercial ships entering or leaving the Baltic paid the Sound Dues.
  • Revenue generation: For centuries, the Sound Dues were a main source of income for the Danish royals, funding not only the maintenance of the castle but also covering a significant portion of Denmark’s state income.
  • Preventing fraud: To prevent ships’ captains from undervaluing their cargo to lower the tariff, the Danish king could exercise the right to buy the entire cargo for the value stated.
  • Upgraded fortress: In the mid-1500s, King Frederick II radically expanded and rebuilt the fortress into the lavish Renaissance castle known today as Kronborg. The project was almost entirely funded by the Sound Dues. 

Once modest, Now grand

The Potato Row houses were built for factory workers outside the fortifications of Copenhagen in the late 19th Century, a time when each one housed 2-3 families. Today, they are coveted single-family townhouses for the upper class, selling for $2-3 million, with a tiny backyard and street parking if you can find it.

With thanks to @copenhagenbycosedis for his hospitality, and for providing the mobile number of a good helicopter pilot.

Land use and appreciation is always in transition. Sometimes slowly, sometimes fast.

Discovery then and now

Before AI, you had to get up close and to see how things happened.

Now you just ask: Rubber cultivation from rubber trees involves planting the trees, allowing them to grow for several years, and then collecting latex from the bark. This latex is then processed into natural rubber. The process can be resource-intensive, and there are ongoing efforts to improve the sustainability of rubber production, including using degraded land for plantations and exploring more efficient extraction methods. 

Two Parent Privilege and more?

Perhaps you’ve heard the term ‘two-parent privilege’ used lately. It seems to be in the air. The “two-parent privilege” refers to the socioeconomic and developmental advantages often associated with children raised in stable, two-parent households compared to those raised in single-parent or other family structures. It’s a concept rooted in statistical trends and sociological research, though it’s debated due to its implications and the complexity of family dynamics.

Please note that there are two key aspects to the potential benefits. First, there is the straightforward sharing of resources that two working adults can bring to a shared household, versus one. Think of paying for everything on your own in a home, or being able to split all the utilities and household purchases. Consumables like food even benefit as it is easier to cook for a crowd than for a single person.

Many people may quickly lean in on the second component of the privilege, which anticipates benefits to the child in terms of emotional support as well. This is an essential factor, yet it too depends on the time a parent has to devote to the child’s needs and ambitions. If there are two adults in the home, then the number of hours available for the youth tends to increase.

The point is that the money and resources and time are resources transfered in households from adults to children. We don’t really have a separate name for these things. Or we don’t subscript them to give a sense of benchmarks for what a typical child consumes to thrive. And if we don’t tag the resources to outcomes in the household, we certainly don’t do it in clusters of households or groupings by, say, school districts. And why not? It seems like a valuable form of analysis.

Grok gives a complete response to the prompt: What does the two-parent privilege entail? Give details on the mechanics?

Differences between Private and Public

In the video from yesterday’s post, Fukuyama focuses on how to improve government services. He notes that one must first recognize the differences between the private and public sectors

  1. Private firms can go bankrupt- public cannot. Incentives perform
  2. Subject to mandates- matrix of provisions healthy water, plentiful
  3. Cannot retain earnings, and thus, no profit incentive
  4. Worker relations are subject to multiple demands and protections

I’m wondering, though, whether it would be valuable to look through these differences, not from the perspective of trying to fit public goods into the private mold, but rather from the perspective of why certain goods fall into upon the public conscience.

For instance, there’s no bankruptcy in government because the supply of these services is too important to have them fail. If a shoe producer sets her factory to make 5000 shoes that no one buys, and this closes her down, then she might take the hint that she’s not good at shoes. No harm except to her pocketbook.

However, when a fire consumes a building, people want firefighters to show up. People want the police to break up fights, and they want clean water to come out of their pipes, without fail. People don’t want to be tested by start-ups that make imprudent decisions. The goods and services that fall under formalized government are there because they are deemed necessary for a certain standard of living.

So, if the threat of bankruptcy is gone, what is another threat that would incentivize the bureaucracy to a higher level of performance? Let’s go to #2 first and see how things unfold.

Fukuyama argues that governments are subject to multiple mandates, whereas private companies can focus solely on generating profits. The water department is not only producing clean potable water, but they also must make provisions for vulnerable people on the edge of financial distress. I wonder if this is because goods that tend to fall into the public sphere are those expected by a group– not only do the parents want water, but the kids and the seniors. With a wide range of participants in a group, some are bound to be less capable than others. The relationships, however, dictate the standard that everyone is expected to receive.

Although the group values consistency, they also desire affordability. So this isn’t a realm of profits and retained earnings. The idea is to meet the standard at the least possible expense instead of creating something fantastic and interesting that everyone will throw money at you to obtain. The fact that departments must return their unspent budgets, however, might be a policy flaw. But that topic is for another day.

It shouldn’t be surprising that the environment subject to providing goods and services under multiple mandates cloaks their employment contract with the same tribal protections. It has long been understood that public servants earn less than private sector employees but have greater job stability and larger pension benefits. Fukuyama feels this is a drawback in pressing for higher performance on the job. And perhaps that’s right.

So, it seems the trick for improved performance in the public sphere is three-fold. First off, only those services that are suited to the no-bankruptcy nature of things should fall to the public. If it is an unfettered good, let the private sector figure it out. Secondly, figure out how to measure the group as a whole or the individual. Individuals really don’t matter in and of themselves; only the group counts. Incentivize people as members of the group, give them pride in that, and tucked away social capital over and above the dollars safely sitting in their pension funds.

Group talk with Barro

I don’t know Josh Barro, but I think I like him. He talks my language. His most recent article on his site Very Serious does all the framing we try so hard to emphasize at Home-Economics. Let’s take a look.

Groups– social costs and benefits are only vague notions when presented in connection with societies or humankind. A serious discussion, one that could continue onto an analysis, must identify the groups. As in society, group membership is fluid; people are always coming and going. But the group members mentioned here are joined by a shared interest.

Let’s consider some of what Josh Barro talks about in In Blue Cities, Abundance Will Require Fighting Labor Unions. The title gives us a clue. Unions gather members together through formal membership to collude and share interests. The first example is in the hospitality industry. A law is passed to make it challenging to build new hotels. The groups that win are the hotel unions and the hotel owners. New groups are informally formed, including the workers in the nearby restaurant and entertainment industries, business owners who frequently use hotels for their employees, and the tourists.

Now that we can see the groups, we can speculate on their counteractions and their ability to undo the monopoly play. The nearby workers have no other unifying force, such as a common employer, to gather them together into a political group. So they will most probably suffer the consequences without an effective response. Businesses also have little choice but to pay the higher fees. Those who send their employees into the district still need to meet with their business contacts; there is no other unifying force to allow the business owners to mount a protest. The tourist may be the most impactful if a substitute location for their travel dollars takes them elsewhere. A reduction in tourist traffic is measureable and impacts the hotels.

The hotel union members’ private gains are extracted from the others. Yet it is unclear whether they needed the aid. Rather, the story appears to depict a taking.

How do you know when a union’s control has crossed the line between protectorism and opportunism? What are the signs?

Claude’s thoughts on my thoughts on Barro’s thoughts:

Your analysis of Josh Barro’s piece captures something crucial about how economic policy really works – it’s always about specific groups with specific interests, not abstract concepts like “society” or “the economy.”

The hotel example you’ve pulled out is particularly revealing because it shows how concentrated benefits and diffuse costs play out in practice. The hotel workers and owners have strong organizational advantages – formal union structure and established business relationships – while those who bear the costs (restaurant workers, business travelers, tourists) are scattered and unorganized.

Regarding your question about when union control crosses from protection to opportunism, here are some key indicators:

Market position matters most. When unions operate in competitive markets, their power is naturally constrained – push too hard and businesses fail or relocate. But when they gain control over essential services or highly regulated sectors (like hotels in your example), that constraint disappears. The ability to restrict supply while maintaining demand creates the conditions for extraction rather than negotiation.

Look at who pays the costs. Legitimate union action typically redistributes from capital owners to workers within the same industry. But when the costs get passed to consumers, other workers, or taxpayers who have no voice in the negotiation, you’re seeing opportunism. The hotel law essentially taxes everyone who visits the city to benefit a specific group.

Time horizons reveal intent. Protective unionism focuses on sustainable employment and industry health. Opportunistic unionism maximizes short-term extraction even at the expense of long-term industry viability. If union actions consistently reduce overall economic activity in their sector, they’ve likely crossed the line.

Substitutability is key. The more easily customers can go elsewhere – like tourists choosing different cities – the more union power resembles a taking from the community rather than bargaining within an industry.

Your point about the “taking” is sharp. When organized groups use political power to create artificial scarcity that benefits them at others’ expense, it’s hard to distinguish from any other form of rent-seeking.

Time and Materials

A decade ago, a large apartment complex in a first-tier suburb was sold to an investor. (Who else buys such things except investors?)

Though the sale isn’t the news. The hubbub that followed was about the residents. Many were low-income individuals who would eventually relocate. The sheer number of people involved was a stress test for the supply of low-income housing. The discontent escalated, and legal action followed, resulting in settlements.

People often blame the businesspeople involved. They are the individuals taking the action that resulted in the displacement. But consider these perspectives.

  1. If long-term repairs have been postponed to keep rents low, at what point does the building become overburdened by impending renovations? And how does a dilapidated building affect the quality of the neighborhood?
  2. Is it a good thing to use housing assistance for low-income residents in geographic proximity? Whether it be due to a tragedy– ex a natural disaster destroys the building– or an impending renovation– the pressure to relocate effects a disproportionate number of folks looking for the same niche of housing.
  3. Are the residents better off or worse off for the move? Perhaps the old, dilapidated building with low rents was serving as an anchor for someone who would have had more opportunities elsewhere.

Each group, the neighborhood, the property owner, and the residents, each has a unique mix of community concerns and private returns. Often hasty assumptions are made, ie, the tenants are worse off for the move, when that may not necessarily be true. Or the landlord benefited during the period of limited repairs– not so as their equity at the time of sale will be diminished by the condition of the property.

By separating out the players and their motivations, the dynamics at hand become apparent.

Danger in Averages

Say there is a neighborhood of 200 homes. It’s an average neighborhood with an average sales price in the $320K range. There’s a slight variance in price for condition, but the homes were built as a development and are otherwise fairly consistent in size and amenities. Approximately seven percent of the homes sell every year, or fourteen homes, and it is from that activity that researchers and government types pull their average prices.

Now, say there is a significant demand for new construction in this older neighborhood, and a contractor is willing to risk purchasing a handful of dilapidated buildings to develop a new subdivision of fourteen homesites. People who can afford the price of new construction, which in this case pencils in around a million, can overcome the objection of living in a modest neighborhood in return for all the latest interior amenities and the centrality the neighborhood offers.

Of the seven percent of homes that sell the following year, three are $1,000K homes, and eleven are $320K homes. Now, the average home sales price for this neighborhood jumps to $465K! People panic.

Yet the bulk of the neighborhood has not changed at all. It is still primarily a modest neighborhood priced within reach of an average buyer. For this reason, real estate analysis needs to be local and always with the perspective of what groups are involved.

More money, better conditions

That’s the conclusion of a recent article by the Minneapolis Federal Reserve research team.

In a recent paper co-written with researchers from the University of Wisconsin-Madison and the University of Illinois-Chicago and initially published by the Minneapolis Fed, we measured the evolution of housing quality for low-income households over the past several decades across the United States. We found broad and generally large increases in housing quality and smaller but still important increases in living space.

So, it’s not surprising that the data show fewer low-income people living in squalor.

I like this part too. It’s a great example of how headlines can suggest misleading information. Although gross rents have increase, they have hit people’s monthly budgets at a much lower increase.

As housing quality and quantity are getting better, how much more are households paying for it? According to the AHS, for below-median-income Twin Cities area residents, real monthly spending on housing increased by 32 percent from 1998 to 2021, from $1,008 to $1,333. Around half of below-median-income Twin Cities households remain housing-cost-burdened (spending 30 percent or more of their income on housing) and a quarter remain severely housing-cost-burdened (spending 50 percent or more of their income on housing). For many families that spend a large fraction of their income on housing, findings about general housing improvements may be tough to appreciate.

However, our analysis indicates that greater housing spending reflects not only higher housing prices but also Twin Cities area residents’ ability to afford housing that is larger and nicer. Overall, the average housing budget share only increased by 4 percentage points from 1998 to 2021, from 36 percent to 40 percent of income, which indicates that most of the growth in spending on housing is driven by higher incomes, better quality, and more spacious homes, as opposed to needing to allocate a greater share of income for the same, unimproved housing.

Some combination of private money, public efforts, and community involvement is improving living standards for those with lower incomes. And it’s not clear at all that the burden is falling on the most vulnerable.

Gordon Tullock diplomat

Gordon Tullock’s interaction with the U.S. Department of State from 1947 to 1956 involved diplomatic postings in Tianjin, Hong Kong, and Korea, alongside Chinese language training at Yale and Cornell. His nine-year tenure exposed him to bureaucratic hierarchies and inefficiencies, which he later critiqued in The Politics of Bureaucracy. He observed self-interested behavior, information distortions, and overstaffing, shaping his rational choice model of bureaucracy and public choice theory. While he likely performed standard diplomatic tasks, his key contribution was translating these experiences into a seminal critique of bureaucratic behavior, though his conclusions may overemphasize dysfunction due to his theoretical bias.

Circuits and Tariffs

At least a couple of decades ago, when I’d help a client purchase a home that happened to be along an open field, I’d remind them that the view may not always stay that way. The Twin City metro was growing and fields just like the one adjoining their new home were being plowed in and repurposed into neighborhoods of single-family homes. They would nod in acknowledgement and yet still feel a loss when a crop of dwellings soldiered up outside their windows.

There are more situations like that– where the surrounding circumstances change and present residents feel like a cost is imposed on them. Take that lightning rod word: gentrification. In certain circles, it is spit out with as much vehemence as the title capitalist. In reality, gentrification implies that a neighborhood is getting cleaned up, crime is being brought down, structures are being fixed up, and truancy is being pushed out. But when you spruce up the place, more people want to live there. This is distressing to longtime residents who don’t want to see rent prices rise in response to higher demand. The situation is changing around them without their consent!

Or consider an elderly couple who own a large, beautifully situated parcel of land on Flathead Lake. In the years they moved to northwestern Montana, it was remote. Desolate even. Over time, others discovered their paradise and passed the word along to still more people who appreciate views of the rugged snow-capped Rockies. As people arrive, more services are necessary which pushes up property taxes. Is it fair for the elderly to endure the increases? They did nothing to give rise to these new obligations, and now the expense may make their living choice beyond their reach.

Tariffs are a response to the same issue. When the pool of labor is opened up to a global market, should the loss of work in the Midwest manufacturing industries fall solely to die-cutters and assemblymen? They did nothing to change the circumstances, yet they bear the burden. Wall Street profits, labor abroad profits, and they are told to adapt.

What is the proper cycle of protection for the renter affected by gentrification? How long would the elderly be eligible for lower property taxes? Is there a natural circuit for these things to enable an easing of the effects of changing circumstances to all involved?

Sports Stadiums etc

Minnesota lawmakers are considering a proposal to contribute state money to the Xcel Energy Center, primarily the home of the state’s hockey team, the Minnesota Wild. However, the venue is popular for all sorts of events, including mega-singing stars. It’s also one of the few large-scale attractions in the capital city, bringing thousands into town to eat and drink.

Allianz Field, home to Minnesota’s soccer team, the Loons, is also in St. Paul but not downtown. And then, of course, there is the Vikings’ stadium (US Bank stadium) in the sister city. The Timberwolves and Lynx shoot hoops at Target Center, and the Twins round the bases at Target Field. This metropolitan area is no stranger to the tug of war between owners and the public purse for stadium dollars.

All the teams draw fans from across the state, so it seems appropriate to kick in funding for taxpayers who want these distractions in their lives. Even though the structures are located within a municipality, the draw of supporters is cast widely across the state. There is a tension, however, between the fans and the hosting cities. A sense of proprietorship is accompanied by voicing demands for better policing or transit. The expected pushback is that fans are outsiders.

Who owns what is always in play.

A Light Exists in Spring

Emily Dickinson
A light exists in spring
Not present on the year
At any other period.
When March is scarcely here

A color stands abroad
On solitary hills
That science cannot overtake,
But human nature feels.

It waits upon the lawn;
It shows the furthest tree
Upon the furthest slope we know;
It almost speaks to me.

Then, as horizons step,
Or noons report away,
Without the formula of sound,
It passes, and we stay:

A quality of loss
Affecting our content,
As trade had suddenly encroached
Upon a sacrament.

Property Condition Ratings

Montana’s Commerce Department has an interesting rating system for property conditions. Finding parcel information with physical measures is standard fare. But this site color codes each parcel with a rating from very poor to very good.

This is important as a long list of defrayed maintenance can negatively affect older properties. The costs for windows, siding, plumbing, and so on only increase as a property ages. It would be interesting to know what metrics are used to draw the ratings. If accurate, it is helpful information. At some point, for example, the cost necessary to bring a home back to an acceptable condition exceeds the finished project’s market value. These parcels are excellent prospects for tear-downs.

Of course, homes with pet deer, like this one in Whitefish, MT, which is near the pink square on the above map, are more valuable.

Strong Women

It’s fading now, how discouraging it was decades ago when there were so few strong women in the public sphere.

That’s all changed. Minnesotan Lisa Demuth can claim a first as speaker of the House; Nellie Bowles with The Free Press gets extra credit for her skill with humor; Karoline Leavitt is so young to be so poised. And— they are all moms.

The times they are a changing.

Regulation vs Market Clearing–Knob and Tube Edition

A few months ago, I wrote about an investor who bought a property with an old style of electrical wiring called knob and tube. Their post was an example of the complexity of a rehad project. The price of the building was undoubtedly part of their decision-making. But you don’t always know what you are buying. Inspections are done to determine all the variables upfront; when it comes to real estate renovations, there are bound to be some unexpected costs. The expense of rewiring a nine-unit building was a downstroke against their profit.

Homes have so many features, which leads people to make different choices depending on their skills, what they value, and their tolerance to risk. Some homeowners, for instance, will not purchase a home with a tuck-under garage. The thought of the amount of energy loss every time the twenty-foot double garage door goes up in the winter when it is below zero makes them cringe. The energy inefficiency of this floor plan makes the home unacceptable in their eyes.

Over time, particularly when mechanicals or construction processes improve, old systems like knob and tube wiring make their way out of the market. First, the market starts to reject the item, so sellers, in preparation for sale, determine they would be best off making the improvement before going on the market. Sometimes, the insurance company will influence the market by making it more expensive to insure certain features, which provides incentives for replacing those items. Eventually, the old way of doing things becomes obsolete and unacceptable to buyers.

This process may take a couple of decades or a quarter century. Old-timers grumble about replacing perfectly feasible mechanicals, wasting funds that could be spent elsewhere. A long time ago, a local electrician advised that as long as the cylindric glass fuses supported the current demand, then all was well. When one insurance company refuses coverage, other smaller companies may step in. And around it goes until the verdict changes and most homes have been converted.

Consider this method versus a regulation. Once an empowered authority draws a line and publishes a restriction, the market no longer has the ability to evaluate this change in contrast to all the dozens of other upgrades and improvements that can go into a home. The burden falls most heavily on the more dated homes, which are often owned by people who have gotten on in years and are not keeping up on things or those of lesser means who patch and plug problems as that’s the best they can do.

A decree from above creates an acute demand for that one mechanical, which, in my experience, causes opportunistic behavior and price inflation. The market system is the kinder and gentler way to transition from one set of norms to another.

Slum Clearing- Gateway Edition

Is the Housing Act of 1949 the reason today for the hyper-local control of housing and real estate decisions? It’s hard to say. But the slum clearance, financed by the federal government, was significant enough to still be recognized today.

Judith A Martin, professor and director at the University of Minnesota, was a prominent figure in the local urban lore. This is an extract from her paper: Past Choices/Present Landscapes: The Impact of Urban Renewal on the Twin Cities

THE GATEWAY PROJECT
City planners assumed that the Gateway area, the old core of downtown Minneapolis, would qualify for federal urban renewal assistance when they proposed clearing and reconstructing about one-third of the entire downtown in the mid-1950s. Beginning in 1956, federal renewal officials raised serious questions about the size of the project: was what was proposed too big for the local real estate market? In 1957 a group of civic and government leaders, led by Mayor P.K. Peterson, went to Washington, D.C. to convince federal renewal officials that Minneapolis needed a project this size. They were successful, and returned with a commitment for the money.

Not everyone found favor with the proposed redevelopment however. Several owners of condemned property tried to stop the Gateway plan. They sued the HRA, claiming that the condemnation action was “arbitrary and unreasonable.” They also challenged the legality of the overall development plan. The owners did not win any of these suits, nor did the preservationists who sued to stop the destruction of the Metropolitan Building (formerly the Guaranty Life Building). This last suit made it as far as the Minnesota Supreme Court, which upheld the HRA’s right to condemn the Metropolitan Building. This decision essentially reaffirmed the “greater good” argument about eminent domain (Buildings 1961 b).

The 1956 Highway Act worked with the Housing Act by sometimes forging the interstate system through poor, dilapidated neighborhoods. While I suspect only the most dedicated automobile haters would argue against a national network of roads, the lamentation of housing being leveled still lingers today. And petitions are underway to return the freeway to neighborhood streets. (Although, most recently removed from the planning process.)

What is the balance between hyper-local governance—where people want to take out a freeway for residential streets—and an all-encompassing federal project? In the end, who owns the land?

The downtown library sits in the old Gateway district.

Erdos Update

Paul Erdos, traveling mathematician extraordinaire, has been on Home Economics before. The Hungarian distinguished himself both in abstract thinking and in being a prolific houseguest. This willingness to travel undoubtedly helped him to become the most collaborative scholar in mathematics.

This free-spiritedness apparently made the FBI uncomfortable. This video (13 min) will fill you in on all the details. One supporter claimed to the government agency that Erdos could never be a spy because his allegiance was to the truth, in science and not in politics.

What about Marx Matters?

For anyone younger than 50, it might be hard to imagine the zeal and inflammatory context wrapped in the calling out of Marxism or Communism. There was a time when it triggered fear, fear of ostracism, loss of employment, or any many other adverse physical or social outcomes. Now that history has sorted itself out, the source of terror stemmed from the madmen who adopted Marx’s writings as their intellectual endorsement. Most agree that Marx would oppose the outcomes done under his philosophical banner. Most don’t bother to read the text to find out for themselves.

Last week, an English professor, Alex Moscowitz, suggested that Marx’s work is foundational for economics. The economists objected, debunking the validity of his work. Business people are particularly offended by his Labor Theory of Value, which the nineteenth-century thinker penned in Das Capital.

“The value of a commodity, therefore, is determined by the quantity of labor expended to produce it, but only of labor that is socially necessary. Socially necessary labor time is the labor time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labor prevalent in that society.”
(Das Kapital, Volume I, Chapter 1)

Everyone knows that in the commercial world, one gets paid the market rate for labor.

Noah Smith types up an interesting overview of the topic in Should Economists Read Marx. He chews through a lot of the interesting aspects of the topic, including listing out the foundational economic material he was required to tackle while a PhD student. Each work tussles with market failures or public goods. The greats like Paul Samuelson and Kenneth Arrow devoted intellectual energy to issues on the cusp of private and public sectors, two sectors each with their own structure.

It’s just that people who came after Marx took his text to initiate disruption and then exert social control. Noah closes with a reminder to his contemporaries that accuracy is not everything. An impassioned sweep and forceful embellishment of an errant study can end in tragedy.

This should serve as a warning to economists — a reminder of why although narrow theories about auctions or randomized controlled trials of anti-poverty policies might seem like small potatoes, they’re not going to end with the skulls of thousands of children smashed against trees. Modern economics, with all of its mathematical formulae and statistical regressions, represents academia appropriately tamed — intelligence yoked to the quotidian search for truth, hemmed in by guardrails of methodological humility. The kind of academia that Alex Moskowitz represents, where the study of Great Books flowers almost instantly into sweeping historical theories and calls for revolution and war, embodies the true legacy of Marx — something still fanged and wild.

But what about the labor theory of value? Is there anywhere in life where there is a pooling value to the work at hand? Consider intellectual property. Is there some pool of work hours necessary to accomplish a new way of thinking about a technology? Scientists in twos and threes or on their own throw their time into advancing an idea. Isn’t the idea behind a patent that the inventor doesn’t get his labor time paid for in the idea development process, so he has a claim to future benefits from the product as a reimbursement mechanism?

What about founders and startup folks. Don’t they calculate the labor hours they think they’ll need to put into a new venture and then figure out whether they’ll be able to recoup their labor time?

Time opens up opportunities

A construction guy uses X for a market survey. He was surprised when another contractor claimed the biggest regret many have is taking on a large home. A bunch more commentors piled on to confirm that big is no longer a draw and for some a detriment.

Time changes all things. What was popular will run its course. It’s not always a new technology that gives entrepreneurs a new angle. Changing views are in continuous motion and desire constant attention.

Foods that linger in our minds

I found myself at the grocery store almost daily in the flurry of preparations leading up to Christmas. I was buzzing by the produce section when the package of pearl onions stood out from its spot in the case. Despite the pressures of the moment, my attention was lifted back to another time.

My grandmother adored pearl onions. She wouldn’t pay the grocery store price, so she cultivated her own in a shallow plot beside their country home. The dirt was dry and loose in the warm days leading up to the fall. The onions, resting just below the surface, dislodged easily to the pull of a hand. Their skins were already drying at the edges as my grandmother arranged them across a screen in the garage to dry some more.

The anticipation of her harvest was palpable. She wasn’t a fancy cook but had an acceptable rotating menu. She cooked a roast in a Dutch oven. It stewed for hours, surrounded by root vegetables. The pearl onions were served as a side dish in a creamy white sauce. It was a marriage of meat and potatoes and a refined companion.

I speculate that tradition and your family largely influence what you eat. I’m not talking about the finer distinctions, whether a dinner roll accompanies a spaghetti dinner or the fat content of the yogurt you have for breakfast. A broader perspective includes people who rarely have a home-cooked meal versus those who eat around a table at least five nights a week. And then again, those who take the time to grow their special delicacies and serve them at their table.

If not cash- then what?

Andrew Yang points out that money won’t always purchase what you want to buy. Despite outspending her competitor handsomely, Harris lost.

You see this in social services too. Money can be poured into some of the most deserving causes: care centers, autism learning, culturally specific food without comparative results.

In fact, the less the objective is tied to a cash response, the more likely the cash flow will be highjacked by fraudsters.

So what is the factor which better represents a price paid for results?

Memories

I just finished Ayaan Hirsi Ali’s Infidel, a memoir, and I was sad to see it end.

Here’s a post about the clashing commitments among her clansmen at the beginning of her life in Somalia. Later, she became famous as a politician in the Netherlands for exposing the experiences of subjugated women from her homeland mistreatment within the national boundaries of land that outlaw such things. She sorts the Russian dolls of a culture living within a culture and brings light to the injustice of old tribal traditions in high contrast to Western freedom from harm.

Her dangerous tales of uprooting ancient and crushing traditions are attention-getting, even if safely done within modern institutions. The earlier narratives, though, stirred memories from my time in the Horn of Africa in the mid-1970s. She tells of the schoolgirls in uniforms walking down the dusty roads of Nairobi. She fills in the backstories of many fellow students during my time at Lycee Gebre Mariam.

My brother and I are the only fair-haired kids in the bunch.

In our first year, we were in the Accueil class, which brought our language skills to a level where we could integrate with the mainstream kids. The group was a hodgepodge of international students from Dutch to Japanese to West African. There was no common language, which forced everyone to learn a new language.

Calling all Complaints

Listening to a complainer can be tedious. Wonh, wonh, waaaa. The sun isn’t shining bright enough, their coffee isn’t hot enough, and on it goes. It can be a character trait for some. If they can’t see something off in their world, then the world itself is the object of their grief.

But some folks are constructive complainers. For the most part, they go along to get along. But then something strikes them as idiotic. These people’s opinions most probably have some merit. So let them vent! Not only is it therapeutic, but it is also valuable. Listen to Bill Maher complain to Jane Fonda about the regulatory burden on his garage door.

Now—there’s no point in complaining when the powers that be are in no mood to listen. Every kid knows to take the temperature of the room before making requests to mom or dad. A parent recovering from a rough day is bound to be a more stringent rulemaker. Biding a little time can result in greater freedom. Wait them out until their frame of mind improves.

The time seems right in America for objections to inefficiencies. If you can’t get your garage door replaced, say it out loud. If you can’t get your lot approved for a rebuild—take it to the airwaves. The mood is open to housing growth over fears of a tall building throwing shade on a neighbor for a few hours daily.

Complaining is also most productive when solutions are possible. A deep recession is not such a time, for instance. But today’s economic environment is solid. There’s money churning in the system, and workers are able to get out and about ready to tackle new projects. Set them to work by complaining!

Hopefully, the record-keeping types will jump on board with this project and collect the notes. The same folks who show up at the PTA meetings and scribble out the meeting minutes in shorthand are perfect for the job. If they could pair up with someone gifted in the data visualization field, even better. Then, the crucial complaints can be told boldly, the numbers can be tallied for depth, and the information can be shared repeatedly so all benefit from the feedback.

Don’t delay. Time is not on the complainers’ side. It will soon become unpopular to lodge criticisms, no matter how objective. Just remember, riffling through all that mud, one is bound to dig out a few precious gems.

Furet

I met a guy. He’s French and smart. He’s got all these great ideas. Well— I didn’t meet him exactly, but I know what he thinks because I met him through his book, The Passing of an Illusion: The Idea of Communism in the Twentieth Century. His name is Francois Furet. His work on The French Revolution (1965) brought him fame, but in a video interview on YouTube, he says he was just doing his job. He hadn’t yet found his question, the one that would stay with him, the one that demands his concern.

In the early 1970s, Furet was involved in a large-scale, interdisciplinary initiative that combined history with statistical methods to better understand the social and political dynamics of the French Revolution. The project was highly innovative for its time, as it sought to use quantitative analysis to uncover patterns and trends in historical events, particularly in relation to the Revolution.

Furet and his collaborators were working within the framework of Annales School historiography, which emphasized the integration of social science methods, including quantitative approaches like statistics, into historical analysis. The Annales School, a major force in 20th-century historiography, had already pioneered efforts to expand the scope of historical inquiry beyond political events and figures, focusing on social and economic history, and using more “scientific” approaches to study history. (ChatGPT)

Cool, hugh? That he wanted to set out a statistical approach to the social sciences.

The project didn’t work out quite the way they anticipated. In the video he is clearly disapointed. He says math is tough. It only considers one variable. Despite all the demographic data, the results posed more questions than answers.

Yet in The Passing of an Illusion (here’s a book review to give you an overview of it), there’s a sense that the author has thought through the historical events in terms of definitions and relationships. His narrative talks of actors and associations instead of the grand sweeps of inevitable movements. He tells of individuals and the choices they make. He groups people by their shared ambitions. There is an agency to the peasants or the bourgeoisie, to the aristocrats and the intellectual class.

There’s a sense of time in his sorting as well. As soldiers took up arms under their national flags in July of 1914, he describes a sense of obligation to the past, to the generations who came before and fought to maintain national borders. The sentiments of statehood weren’t found in the moment but had built up a reserve of obligation over time.

Whereas the passion ignited on behalf of the downtrodden proletariat reached a universal appeal. The shared interest in favor of the worker found at odds with the capitalist would not be contained by political boundaries. Communism, indeed, found its footing across the globe.

Furet, rather shyly, also talks of another facet of social activity: volunteerism. It’s hard to know if he looks down and away in the video because the concept wasn’t well received. But the idea that people devote their volunteer labor to the cause is part of his theory. From Chat:

Summary of Key Ideas in Furet’s Concept of Volunteerism:

  • Rejection of Structuralism: Furet rejected deterministic structural explanations (such as class conflict theory) for revolutionary action, arguing instead that individuals and groups made deliberate decisions that led to the Revolution.
  • Ideology as Driving Force: He saw ideological commitment as the key motivator behind revolutionary action, with people acting voluntarily to advance certain political ideas and principles.
  • Revolutionary Agency: The French Revolution was a voluntary act of will, driven by the agency of individuals and groups who made choices based on their ideological commitments, not merely by economic conditions or social determinism.
  • Collective Action from Voluntary Unity: Furet explored how diverse groups, driven by shared ideological commitments, united in collective action to achieve common revolutionary goals.

Here’s how ChatGPT summed up Furet’s focus.

This approach presents the Revolution as a complex interaction of ideology, agency, and action, where individual choices play a central role in determining the outcome of collective struggles.

I couldn’t agree more. But I think we can generalize this structure across all public efforts, including all those which are much more mundane than revolution. Thankfully.

Popular history

Plymouth MN’s historical Town Hall

Our parks board meeting was held at the historic Plymouth town hall this evening. The building had been decommissioned in 1960 (when everything old was out), neglected for decades and then rescued in recent time by a bunch of friends with civic spirit. Around six years ago they turned the project over to the city, their age pushing them onto another phase of life.

It’s been a huge project. The structure’s exterior was in need of significant repair. On the interior worn plank flooring, wainscoting and an elevated lectern were as thick in dust as in appeal. It was hard to see the details past the moving boxes stacked high and low. Apparently donations to the society were not turned away, nor sorted for local interest.

A fine historian has been busy for the past year doing a lot of house keeping. The walls are crisp and the flooring swept clean. There are historical vignettes throughout. The enclosed back porch is set up as a research area and study- a pleasant and inviting space. Professional cabinets hold artifacts in the lower level. He’s really brought the project forward.

He relayed the most frequent question people bring them is regarding the history of their property in Plymouth.

Time Segments

Has a claim in a post ever held you up as false, so you take a closer look and realize the starting and ending spot on the x-axis of the graph is a carefully curated time segment? Take crime reduction, for instance. Most people would say crime is still up. Then the claim comes around that no-no-no, it is, in fact, down thirty (or some dramatic number) percent. A closer peek at the graph shows tracking starting at a peak level of crime following the 2020 riots. This seems like one of many mis-speaks floating around these days. It’s up to the public to be wary of their sources of information and look a bit closer at the graphics.

Other than being misleading, different time increments can convey a message with an undenial punch. A ‘then and now’ approach provides a magnitude which could get lost in averages. Then segmenting the population between two groups in the ‘now’ leverages hope of a future in the making.

Sarah Paine, a war historian and strategy professor at the Naval War College, infers another use of time. (For those interested, I suggest you watch all of her videos.) This one is interesting as she names this time element of a strategy “half-court tennis.”

By imposing tariffs on foreign goods coming into the country, there is a lack of consideration of the ensuing response from other nations. The analysis happens in time segment 1, and by time segment 2, a very different outcome results.

So what are the proper uses of time segments in presenting and evaluating outcomes? Is there a natural cycle that needs to be observed? Or a disclosure of some type? Do all defence strategies need full courts? What about evaluating social indicators like health and education?

Plight of the Peasant

Tolstoy spends more pages telling us about the Russian aristocracy than the serfs, but when he does describe them at work in the fields it is some of his most beautiful writing. Being the curious type, I did a little digging and found this excellent paper on the micro economy of the time. Micro-Perspectives on 19th-century Russian Living Standards provides a widespread overview of the prices in the years following the emancipation of the serfs.

Their finances weren’t great- but according to this paper their income was sufficient to purchase enough food and basic living utensils. What messed things up for this class of people which constituted eighty percent of the population, was the failure under land reform to allow private ownership.

Historians of this period have come to very different conclusions regarding the impact of these social and economic changes on rural living standards. A long tradition in Soviet and Western scholarship views the emancipation and land reforms as re-imposing constraints on the peasantry that amounted to a new form of serfdom. Peasants were assigned formal membership in land communes, which continued to be characterized by collective control over property rights and joint liability for land and tax obligations. According to this literature, the external burdens
placed on peasant communities remained exceptionally high and even exceeded those imposed under serfdom. Tied to such obligations and subject to the whims of communal decision-making, peasants were unable to improve agricultural productivity, freely dispose of their land, or leave agriculture for industrial work. These restrictions kept living standards low and led the agrarian economy into crisis by the 1890s.

This paper, Russian Inequality on the Eve of Revolution, focuses on inequality in Russia. There is plenty to talk about. The chart I liked best from the paper is this one which shows that writers made as much as doctors and professionals. At least that seems like an admiral priority.

Choices between time

One word that distinguishes the periods is intertemporal. Here’s a straightforward definition:

Then there’s the distinction of choosing between different time periods and thus enhancing the time span with the outcomes of a choice which one might infer comes from action.

Whereas Wiktionary’s definition keeps the specifics loose and says intertemporal includes any relationship between time periods.

A Joy Barometer

You know how you just stumble into a good situation sometimes? I’ve had the good fortune of reading Anna Karenina with a bunch of smart people. The conversation has left more questions unanswered than answers securly rendered. Which leads to the most lovely contemplation throughout the day.

One continuing thread of inquiry over the four weeks has been around the feelings, aspirations, and fulfillment of joy in the rich selection of characters in the novel. How the characters are able, or how they fail, to pursue their best lives. What brings them pleasure and satisfaction versus what brings them torment and madness.

Some in the group have observed that joy bubbles up as part of process of search, discovery and consumation. Kitty, for example may not have felt much joy when a suitor she desired, Vronsky, turned his affections toward Anna. In fact she made herself sick with shame and dismay to the point that her parents whisk her away to an overseas location. A joy meter would register below zero for Kitty at this point in the story. Yet later on in the novel she too finds love.

Is a joy to be measured in the instant? Or over a period of time? Is joy to be measured in stages of life?

Anna was joyful in her first marriage until she met true love. Her passion was all she needed as long as she and Vronsky could steer clear of the judging eyes of greater society. She clung to the joy in the steady state part of the relationship, making every attempt in her personal appearance and ambitions to be attractive. But in her isolation from female companionship and social interactions she looses touch with reality and is driven mad.

Is this the moment where the measure on her joy barometer is the best representation of her life?

Is MN a He**Ho*e?

This seems to be a popular question these days in light of the new US VP candidate. Those who would like to stress the decline in the quality of life in Minnesota post photos of homeless tents cropping up on vacant forty-foot lots in the city. The chaos, litter, and disorder represent a decline in street life since the summer of 2020 following the riots. The images are current. There is an ongoing whack-a-mole operation underway as neighbors have become tired of the issues around tents in their communities. The city moves them from one location only for them to relocate ten blocks away.

Those who like to stress the beauty of Minnesota post this type of image:

This portrait of a city framed in greenery, wildflowers, and water is not at all unusual or hard to come by. The Mississippi runs through the city, and twenty-two lakes lie within its boundaries. One hundred and eighty parks surround water features, old-growth trees, or grassy play fields, and fifty-five miles of walking and biking trails connect the system. The over seven thousand acres of public space started in 1856 with the donation of Murphy Square.

But here’s the argument that the recent unrest is unsettling. What people point to as the best features are those which were initiated over one hundred and fifty years ago. These whispers and aspirations took decades to initiate, then decades more to shape and form, then decades more to maintain and develop into a system for perpetual use. The photo exemplifies consistent and long-term commitment to this support.

Posting an image of an urban amenity that was decades in the making is an argument against the recent tolerance for civic destruction and unrest. There’s only so much public capacity. If it is drained in one area, then eventually, over time, other public amenities will fall to the wayside and deteriorate.

A New Standard

If people can’t handle the truth (as Jack Nicholson is known to have said) then what will the new standards be? When will the slip up, the mispoke, be called out as a flat out lie?

It is not uncommon for people to misspeak. In thinking about the next thing to say, instead of “blue” you say “red”, or instead of “east” you say “west”. Few will object to a proper slip-up. It’s unintentional. It’s sloppy but harmless. But what about slipping up twice on the same word, or twenty times? When does the use of an incorrect title which embellishes one’s position and stature in a hierarchical system become more than an oops?

There should be some rules to such things. After all, you can’t go around calling out “liar, liar, pants on fire.” Nor is it always appropriate to blurt out a truth. It’s like the spouse who steers clear of the question, “Honey, do I look fat in this outfit?” Here a white lie gets you through the moment of insecurity and lets the evening proceed without an analysis about what one should do about a few extra pounds. Here no one gets hurt, in fact the couple is better off.

So is that the new rule? If no one gets hurt, letting a deception fall to the wayside is not a big deal? Who would care if your twelve year record in the girl scouts was real? Well, if you were making decisions about the future of the scouts, people in the audience may place more value on your opinion given a long-standing relationship with the organization. That’s how people make decisions. They gather information from reliable sources before taking action. Most feel firsthand knowledge is more reliable than outside opinion, so a long-standing interactive relationship lends credibility to a point of view.

It’s a theft in a way. People rely on product information before they make a purchase. They take action based on the material attributes of the product. If people are choosing their public goods, they should have access to a similar level of product information to a degree of reliability. Where the public will settle on the acceptable level of truth-telling is yet to come.

Use values for a historic hospital

Before rehabbing a structure, most owners consider how the building will be used. With high vacancies in the downtown business districts, some folks are suggesting the commercial buildings be converted to residential units. It doesn’t take much imagination to understand the impracticality of changing around floor plans from acres of cubicles to one thousand square foot residences with a couple of bathrooms, a kitchen, and outward-facing windows. It’s not impossible to change the use from office space to living space, yet a momumentous task.

The hospital housed the patients, so it is more akin to residential use. The buildings are grand.

There are historic photos of wards lined with beds, which would no longer be acceptable. Instead of 1900 residents, perhaps the space could accommodate 500 in order to comply with modern standards for living space. This would still be a sizeable project. I’m wondering though if the building would appeal to the mainstream population? It seems people would have a difficult time shaking off thoughts of the mental illnesses formerly contained within its walls. Although the structures look like dormitories in a liberal arts college, details like bars on the windows are reminiscent of past occupants.

It seems like the best use for the complex would be for housing folks who are presently suffering from homelessness and mental illness. It’s quite a step up from the tent encampments being dismanteled daily in the core cities.

Fergus Falls Hospital (con’t)

In a rural county seat, two and a half hours northwest of the Twin Cities, is an arc-shaped building complex that housed mentally ill patients for a century and a quarter. The state hospital was decommissioned in 2007. It is owned by the city of Fergus Falls and now sits vacant, waiting for news of its destiny.

Although the buildings were maintained as long as they were used, a building of that age requires on-going maintenance. Older buildings often are more expensive to keep up as one project leads to another and the standard products and sizes which were used at time of construction are now special orders and customs fits.

Infrastructure, like pipes, electrical and safety measures also age out of their useful life. Take the orange column in this photo.

It reminds me of those chutes they set up in high-rise buildings when they are remodeling. But no, it is not a trash chute. The guide on our tour of the site said there are slides inside those rusty tubes so residents could slip out and evacuate in the event of a fire. Somehow, I’m not sure if they would still meet code.

Renovations cost money. New construction costs even more money. Here’s a project in Austin with no historical appeal (those roof lines are very unpopular in MN!). The project still costs $600K per unit.

The long and the short of it is that the material condition of the buildings does not unduly affect their commodity value, if you will. The age of the structures should not deter a redevelopment in and of itself. The numbers will most likely fall in line with other residential redos.

Home cooked food- does it matter?

I say, yes, without a doubt. Home-cooked food is worth pursuing.

I got wind of a family that was going through a rough time, so I dropped off dinner: a pan of chicken alfredo in penne pasta, Brussels sprouts, buns, and a pan of blond brownies (minus a test brownie to be sure it met grade). I wasn’t even out of their neighborhood before I received a thank-you text. And then I heard later through mutual friends that the food was deemed delicious.

An unexpected gift is often a delight. A gift of a meal just as one is getting hungry is bound to taste better than reheated leftovers. Still, I believe the appreciation for the food is in part because it did not arrive in takeout boxes.

If one is a careful counter of costs, then one will be impressed by the price difference between made-from-scratch and prepared foods. It is substantial. There are lots of financial incentives to spend a little time with the church ladies’ cookbooks and fine-tune a repertoire of family-friendly options. I’d guess, on average, the ratio is 1:3 or 1:4, even with substitutes like Subway. It’s simply so much cheaper to learn to cook!

I won’t sugar coat the drugery of the educational experience. The peppering of complaints from the kitchen table of a missing this or a what if you tried that can almost push one over the edge on the right day. The hang time is worth it, though. When they return from college campuses begging you for a home cooked meal you are blessed with one more affirmation that you did something right. Vindication comes in many forms.

Historic Designation Success

Milwaukee Avenue Historic District, Minneapolis

Chronology

1883

Real estate agent William Ragan purchases four blocks in Minneapolis to develop high-density housing for the growing numbers of immigrant workers coming to the city.

1890

Ragan’s development, along what comes to be known as 22 ½ Avenue, is completed.

1906

The residents of 22 ½ Avenue petition for the name of their street to be changed to Woodland Avenue. It changes to Milwaukee Avenue instead, perhaps because of the nearby Milwaukee Railroad.

1970

The houses of Milwaukee Avenue are run down due to suburban growth and disinvestment in city neighborhoods since the 1950s.

1970

The Minneapolis Housing and Redevelopment Authority plans to demolish most of the western portion of the Seward Neighborhood, including Milwaukee Avenue, as part of their urban renewal plan. This inspires citizens to organize to stop demolition.

1971

Activists who oppose the renewal plan gain control of the Seward West Project Area Committee.

1973

Tense negotiations between the PAC and MHRA motivate Jeri Reilly and Robert Roscoe of the PAC to form the Milwaukee Avenue Planning Team with Bill Schatzlein and Bob Scroggins of the MHRA to discuss how to advance the redevelopment plan.

1973

The Milwaukee Avenue Planning Team launches a study to determine the feasibility of rehabilitation.

1974

Milwaukee Avenue receives its designation from the National Register of Historic Places on May 2.

1974

The MHRA gives up on its demolition plan and begins to support the Milwaukee Area Planning Team’s recommendations for rehabilitation.

1975

Rehabilitation begins on three Milwaukee Avenue houses in October.

1975

The Minneapolis Heritage Preservation Commission designates Milwaukee Avenue a historic district.

2007

Milwaukee Avenue celebrates its thirtieth anniversary of rehabilitation with a self-guided walking tour of eight of the restored homes The Preservation Alliance of Minnesota organizes the event.

2015

The Milwaukee Avenue Homeowners Association (MAHA), sponsored by the Seward Neighborhood Group (SNG), receives grant money to install a bronze plaque on Milwaukee Avenue describing the district’s evolution and historic status.

Midwest Sites

Grain elevators are as prevalent in towns across the Midwest as the corner bar, the grocer, and the three local churches (Lutheran, Catholic, and Presbyterian), or at least in towns on the railroad lines. As the open prairie became home to new arrivals, farmers broke open the soil and turned it into grain fields. Upon harvest, they took their product to the elevators until it was shipped down to the grain exchanges.

This one isn’t as rustic looking as some. The interior wood planking has been covered with a shield of aluminum siding. The structures are known to burn. As they have been decommissioned, local firefighters have set them ablaze for training purposes. Once their original use was replaced by larger shiny cylinders of metal, their new purpose served the community. For one last dramatic day, the flames leap and lick at the side walls as trainees in the safety business try to tame their destructive nature.

Environmental reviews- Just a way to say NO?

In the latest round of environmental review versus the world (or do it my way legislation), the boxers are the almighty climate combatants versus those who request a road expansion. I should qualify. When I say ‘request,’ I mean demonstrated demand through usage. If the roadways are full, then it’s safe to say that the participants find travel along that freeway by car best suits their needs. Once vehicles come to a standstill on a commute, they are polluting an extra amount by idling. Managing the road system to facilitate flow keeps emissions lower.

A new law passed last year requires an environmental review before authorizing a roadway enlargement. Calculating a social cost at the time of the transaction, like a road installation, is an interesting thing to do. It should be done in conjunction with calculating of all the other benefits prompt and efficient transporation offers, such as getting the elderly to their doctors’ appointments or kids to their extra-circular activities, as well as getting commuters to their jobs.

Residents are dong that all the time. Cars cost money to own and maintain. Consumers will use them when they are their best option. Denying a population access to a road enlargement pushes them to substitute less desireable options. These are less attractive not because of their love affairs with the car, but most probably because they eat into their time and ability to achieve their other daily tasks.

If the goal is to reduce trip miles, then study populations who achieve success at all their goals while using the fewest miles. How is their matrix of choices allowing this to happen? What are their priorities and how did they achieve them. I can promiss one answer. It isn’t because a bureaucrat squeezed their road improvement project.

What I like about this paper

A recent paper, Houston, you have a problem: How large cities accommodate more housing, by Anthony W. Orlando and Christian L Redfearn, offers a new reading of real estate data.

Consider the stylized fact that unmet demand is most-inexpensively delivered on low-cost land at the periphery of the commuting shed, known as a “greenfield” site. This type of development uses low-cost, low-density construction methods. However, in productive and desirable urban areas, low-cost land—especially close to jobs and retail—is quickly consumed, pushing single-family home builders farther away from the amenities that make these urban areas attractive. Eventually, this progression reaches a limit in which commuting back to these amenities is too costly. At this point, the greenfield land is effectively “built out,” and developers are forced to look inward to more expensive land closer to the core where spatial amenities are valued by renters and buyers. When this “infill” development becomes a larger share of new housing supply, the marginal cost of supplying a new housing unit will increase, and the elasticity of supply will fall. Thus, even in the absence of different regulatory regimes, an MSA with more population and more density will appear to have a steeper supply curve because large and growing urban markets naturally progress in this direction.

Real estate has a history of being talked about in static numbers. Orlando and Redfearn discover a dynamic in their research. A city grows along the fringe where the developers can build over large parcels of undeveloped land. This is the most consumer-friendly by meeting the desired structure for the lowest cost. But at some point, the authors observe that the commute to a central business district causes infill projects to gain in status. At that point, a city gains new units within the old infrastructure instead of in the greenfield.

Much of what we have learned in the two decades since DiPasquale (1999) first prompted the field to investigate housing supply is aggregate and static in nature. The goal of this empirical work is to document the location of housing stocks within several MSAs over a long time of growth. The results presented in the article are largely descriptive. It is abundantly clear that aggregate analyses miss the compelling dynamics we documented.

Why stop at the trade-off between low cost fringe housing versus commute time? There are many other interesting dynamics to expore.

Insurance Update

Come to find out, property insurance rates on a $300,000 home vary by state. They vary a lot. The annual premiums for a dwelling in Missouri and Mississippi are twice as much as Maryland and Maine. Minnesota is, of course, just average.

Insurance.com

If you haven’t thought about your insurance coverage in a while it might be an idea to dust off the policy and dig into what is covered. Some riders are negligible in cost yet nice to have when the situation arises. And example for coverage is on the water line from the meter in your basement to the connector at the street. Standard deductibles have also gone up from $1000 to $2500. The larger deductible may save your annual premium $200-$300.

Also, be sure to understand how the coverage works. With all the roof claims, often driven by contractors knocking on doors after a hailstorm goes through a neighborhood, companies have changed the payouts on roof replacements. Many companies will prorate the coverage once a roof is over fifteen years old. If the storm comes through in the twentieth year of the asphalt shingle life, then the homeowner only gets paid the value of the remaining years of life.

A periodic review is indeed essential for staying informed about external factors that may affect your insurance coverage. Even if you are content with your current provider, the insurance market continuously evolves, making regular evaluations crucial for ensuring that your coverage aligns with your needs and the prevailing circumstances.

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

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 in real estate is yet on another schedule.

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.

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!

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.

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.

Oh Happy Days- the 50’s

Mid-century modern homes have a decisive following. This home threw off the compartimental feel of the 40’s one-and-a-half story bungalow. Which meant more open and flowing plans. Large open windows brought nature in through the glass. Endless wood panels made the indoors feel like the woods. Beams crossed the vaulted ceilings. Roman brick created an elongated modern look at the focal point of the living spaces. The more geometric angles and the cleaner the lines, the better.

This is a great example of a home that needed little updating as the original plan was preserved all these years.

For all the joy the physical features of the fifties rambler can bring, there are compromises. The floor plans will reflect the acceptable arrangement of its time, including the lack of a master bath. In today’s busy world, some people may not care for all the lawn care necessary for the oversized lots that often surround these structures. And the municipal infrastructure, now seventy years old, may require some attnetion.

Houses are like that . One thinks only of what is between the walls and under the roof. But intrinsic to the property is a bunch of informal and formal superstructures.

More than a View

The Rev King delivered his I Have a Dream speech while gazing along this same view. Yet it was different. The times were different. The crowds were part of the scene at this celebrated event. They covered every inch and corner of asphalt, concrete and sprig of grass. The atmosphere must have been electric- a far cry from the casual spring break feel capture in the above photo.

The reason we celebrate Martin Luther King Junior is because the words he spoke did not depend on the view. He is one of those rare individuals who can time and again find phrases which are not time stamped. He doesn’t short change the suffering. He acknowledges its presence. And yet can remain hopeful and trusts in the propects for Americans.

Freedom is a tricky endeavor. There must be a notion of the possibility of a peaceful coexistance, or of the essential desire for peace. For people to defer to the freedom of others, they must trust in an optimal outcome. They must trust others with their own freedom.

Dr King had a dream.

Maps and stories

I’ve been rereading Hemingway’s Farewell to Arms which rekindled an interest in the history of WWI. The story’s debut is based on the author’s experience in the war as he drove an ambulance for the International Red Cross. After serious injury from mortar fire, he returned home unlike his lead character, Lt Frederic Henry.

While clicking around to find out more about the Italian campaign, I came across this excellent article in Vox: 40 maps that explain WW1. I find visuals so useful. There is far more information indicated by shadings, lines and labels within the four boundaries of a map than a writer can pound out on a keyboard . Although this passage sums up pretty well how devasting the war was.

One hundred years ago today, on August 4, 1914, German troops began pouring over the border into Belgium, starting the first major battle of World War I. The Great War killed 10 million people, redrew the map of Europe, and marked the rise of the United States as a global power. Here are 40 maps that explain the conflict — why it started, how the Allies won, and why the world has never been the same.

VOX

Hemingway cites enough geographic references to encourage the reader to look up exactly where his ambulance was called into service. Or, at least, I’m curious enough to look up Gorizio where he returns to base camp before he is sent on to Caporetto. In the passage about the retreat, as the Germans advance into Italy, Lt Henry’s goal is to reach Udine.

Further on in the book, Lt Henry and his sweet Catherine must flee to Switzerland in a row boat. The journey takes them along the coastline of the famous Lake Como. The porter who helps arrange their escape assures them the winds will be at their backs pushing them along the 35 kilometer journey.

Wartime stories have so much to offer. There’s conlict and suspense. There’s heartbreak. But most interestingly is the sudden change in circumstances creates a back lighting to social arrangements, making their properties just that much more apparent.

Freedom to find your dream

Thank you to all the visitors from around the world who have stop by this page for a visit. I appreciate all of you.

And here is wishing you the freedom to “Climb Ev’ry Mountain” in 2024!

Sound of Music
by Richard Rodgers

Climb Every Mountain
Climb every mountain, search high and low
Follow every by way, every path you know
Climb every mountain, ford every stream
Follow every rainbow, till you find your dream
A dream that will need, all the love you can give
Everyday of your life, for as long as you live
Climb every mountain,  ford every stream
Follow every rainbow, till you find your dream
A dream that will need, all the love you can give
Everyday of your life, for as long as you live
Climb every mountain, ford every stream
Follow every rainbow, till you find your… dream…

Courting a variety of buyers

Often times, a type of housing is popular amongst a particular demographic. Retirees are drawn to one-level detached townhomes. Young couples want the single family home on a tree lined street in a neighborhood they can afford. The single fervent worker-type loves the glass clad downtown condo. What’s interesting about these townhomes is that they are home to the whole spectrum of homeowners.

This has a lot to do with location. The 86 unit complex of attached homes with underground heated parking were built twenty years ago in a first tier suburb. The homes right across the road from this sidewalk are modest 1940’s built properties. There’s a cute little park at the corner yet the rest of the neighbors are commercial spaces like Applebees and Costco. And just to the other side of the Courtyard at Marriott is a main thoroughfare: I394.

What developers need is land, a buyer, and a price point the buyer can afford. Land prices in older areas are tricky. Opportunity strikes when a rundown commercial area is underused. Then there is the potential for redevelopment. At this transitional spot between residential and commercial, an urban looking row house turned out to be a great fit.

Since land acquisition is tricky in older areas, the availability of a relatively new home becomes a premium feature. Buyers are attracted to the open floor plan, the tall ceilings, large closets and underground parking. This option has ten minutes access to downtown and yet is outside the hubbub of the urban core. It is close to a major transport artery, and easily accessible to friends and relatives in the western suburbs. All this at a price point just slightly above the average house price.

Young professionals like it. Retirees with kids in the city like it. Kids of families in the ultra wealthy suburbs to the south like it. Single parents with an adult child fit in nicely. These 86 town homes work well for a variety of household dynamics. That’s unusual.

When developpers have to make a bet on a project and speculate on who will show up with the funds to buy them, they often are more focused in their expectations. Zoning changes allow them to proceed, but it is the conception of the buyer that drives the constuction. Because, in the end, they get reimbursed for their efforts by the consumer, not the city planners.

Asked Chat about philosophers

A philosopher is someone who engages in the study of philosophy, which is the rational inquiry into fundamental questions about reality, knowledge, values, reason, mind, and existence. Philosophers seek to understand the nature of the world and the human experience through critical analysis, reasoned argumentation, and reflection. They explore questions that may not have definitive answers and often address topics such as ethics, metaphysics, epistemology, aesthetics, and logic.

Philosophers examine the underlying assumptions of beliefs, explore the principles that govern different domains of human life, and contemplate the nature of reality itself. The methods employed by philosophers include logical reasoning, conceptual analysis, and the examination of fundamental principles. They may also draw on insights from other disciplines, such as science, psychology, and history.

Philosophers have contributed significantly to the development of ideas and intellectual traditions throughout history, with famous figures including Socrates, Plato, Aristotle, Immanuel Kant, Friedrich Nietzsche, and many others. The field of philosophy encompasses a wide range of sub-disciplines and approaches, making it a diverse and dynamic area of intellectual inquiry.

Outdoorsman

My grandpa was an outdoorsman. Practically orphaned as a teenager he fled to the camps in Northern Mn and survived off hunting and fishing. He would never fail to bring my grandmother enough fish for dinner and she would never fail to cook it to his contentment.

He was also a history professor who subscribed to the Nation to cultivate his far left inclinations. But he was happiest in the outdoors.

Regret

Regret emerges from a sense of loss. It’s an emotion that some think of as melancholic, sad, dismal. Yet in truth it is an emotion which helps to keep our choices in check.

One may be regretful because they failed to act.

One may be regretful because they failed to appreciate what was offered to them.

One may be regretful because the market changed while they were focused on other things

One may be regretful because they misjudged their circumstance.

If one experienced a sense of loss because they waited on the sidelines while the market took off, then they will be a more serious player the next time around. If one experienced a loss after they turned down an offer to engage in the market, then they will take the next offer more seriously. If one experiences a loss because the market changed when they were not paying attention, then they become better at watching their surroundings. If one experiences a loss because they were over confident (or under confident) about their personal circumstances thus leading to a mismatch, then they maybe more realistic the next time around.

Having regrets is a means of becoming.

Suburbia is Subsidized?

I was triggered on Twitter. (oops X). I saw a post that vilified suburban sprawl as ‘we all subsidize’ it. It’s been a while since I’ve heard that rally cry against the natural course of a metro area to seek out inexpensive growth. The claim, which is never followed up with any data or research, implies that the public costs to the outward growth of a city drains public resources.

But all growth or redevelopment is subsidized. Developers receive tax benefits and incentives for work in urban areas as well as suburban areas. Roads are built and maintained with funds at the local level, the county level, the state level and even the Feds drop a few bucks for the interstate system. Since employers are located all across a metro area, there is no guarantee that a city dweller commutes less than suburban dwellers, they just travel in a different direction.

The old dichotomy of the urban versus the suburban is so passe. First tier suburbs are now appraoching 80 years old, which is about how old the core city was in the 60’s when this whole vilify the middle class folks who simply wanted a nice little 1800 sqft one-and-a-half-story on a .14acre with a sidewalk lot started.

Let’s put to rest the image of a cool (yet always suffering) urban core that needs to be cherished, protected and preserved by fighting courageously against the nasty exclusionary suburbs. Instead, envision a dynamic, interesting and ever-changing melange of housing choices that serve as the dwellings for the several million people who want to cluster in a large metro area.

Motivated by weather

As the beautiful fall days come to a close and the forecasts include temps in the 30’s, consumers are wrestled from their automated routines and think, “I must get xyz done before the snow flies!”

Changes in temps are a definite factor in the real estate business. I suppose it is self-interest, in a way. A seller is better off to take the time to finally put an extra coat of paint on their front door, and tuck the garden hoses in the garage, and clear the gutters of all those golden leaves. A seller will be looking after themselves when they go to put their home on the market in March as the door will be a cheery greeting to a prospective buyer, and the hozes won’t look odd all covered in snow, and there won’t be an ice dam where the leaf debris would have clogged the gutters.

Buyers are also nudged along by the changing seasons. The cool crisp air reminds them that they thought they’d be in their new place before the end of the year. The passing of time draws their thoughts back over what they’ve seen so far in the market. Perhaps they regret passing on a purchase. Perhaps they realize that their demands are quite steep. Perhaps a little reflection reveals just what it is that has been holding them back.

Changing season can be the motivator to put in a little extra effort to prep a home prior to the arrival of winter winds. Or talk of Halloween candy and Thanksgiving dinner can encourage a buyer to revisit what he has learned so far about the market. In either instance, a driving rain from the north not only strips the autumn color from the trees but also plays a part in the home buying process.

Prices at the market

For the most part it feels like prices at the grocery store are back in the pre-covid range. Eggs are no longer over $5 a doze and you can get a package of chicken breast for 2$/pd as long as you by the large tray. Just when it feels like the stickers have settled, you reach for a bottle of your favorite shampoo only to see that it will set you back just under $13. Geez. That used to be the low end price for the fancy shapoos at the stylist’s shop.

It’s just a reminder that pricing mechanisms are fluid and always on the move. The is best able to maneuver through with proper knowledge of those items you purchase most, and nimble enough to switch to substitutes or other vendors when new opportunities arise.

One MN politician says age matters

Our US Rep, Dean Phillips, is willing to say it out loud. Abilities based on age should be a factor in evaluating the performance of duties for public office. He recently encouraged his party to look for a new presidential candidate instead of endorsing someone who keeps loosing track of his speeches. He’s willing to say Biden is too old for the job.

This week Senator Diane Feinstein of California died while serving in office at age 90. She had recently been ushered in and out of the chambers in a wheelchair looking old and confused. Perhaps Philips was influenced by her recent passing when he stepped down from a party leadership role today. Perhaps he is trying to gin others up to say out load what everybody knows to be true. Age matters.

Grateful

I rummaged through my sources of poetry and quotes looking for an expression of gratitude and came up empty. Nada. Gratitude is an important acknowledgment. It gives form to those around us who support and direct us. It’s surprising find so few who wish to say thank you.

Until you look to the church. The Lutherans know how to write a hymn or two.

Childhood homes

It’s hard to say why certain memories stay with you more than others. Childhood homes for instance. Remembrances of playing in the back yard or after school snacks in the kitchen. What room lay behind each of those windows. A sting from a bee by the pear tree. The special treat of watching Hee Haw on TV in the lower level rec room.

Clips from our childhoods pop into daily life unexpectedly, as if to remind us of the impacts from those early years.

Trying new things

Last year I decided to give our apple trees a haircut. The apple orchard tree idea had started out as my husband’s project, but after a handful of years, the trees still weren’t producing. With a little help from a youtube video, I took a clippers to them and snipped away. My flowering bushes love to have their branches trimmed after their blooms have faded. So the apples trees should too.

And it worked! The trees brimmed with blooms in the spring and the branches became weighted down with fruit by late summer. Funny how even plants respond to a little attention.

The large apples were easy to use in a crisp. But these little ones are difficult to peel. My brother who was visiting made a plug for apple butter. Apple butter? I too had never heard of it. Once you get the seeds out and slice and dice the little fruit you turn the chunks loose in a slow cooker (with some sugar and cinnamon) for ten hours. The fragrance is as fall as pumkin pie.

A compote forms which needs to be run through a blender to smooth it all out. It’s tasty and tangy even if its appearance is questionable.

You just never know what little piece of work is waiting to be done to reap well deserved rewards.

Air – Movie Review with Econ too

If you lived through the 80’s you will appreciate the references to a decade slowly sliding out of sight of the rearview mirror. Both Affleck and Damon came of age in this decade and it’s as if they sat around and brainstormed a long list of all their memories and refused to leave one out. The nostalgia was appreciated by this viewer. Along the same vein is the pleasure of being filled in on the back story of the cosmic celebrity launch of Michael Jordan’s career.

The prize for most charismatic performance goes to Chris Tucker who plays a co-worker, Howard White, at Nike. His vocabulary and gestures are emphatic without excess. He is really entertaining and effective. He interfaces with a lot of the athletes’ families and, along with Viola Davis, does justice to the racial component of the times.

There is a lot of fun economic type of stuff in this film. The blind bidding for example. All the players want to know what the other parties are up to. They ferret around for information. Then they return to their own base and try to get the team on board. There’s a lot of disbelief and eye-rolling. Can it be true? No not that much! Blind bids are hard on buyers. They have one shot at being the winner, so they want to push the price without reaching for more than they need to.

The relationship side(s) to deal-making runs throughout the movie. The agent to the athlete. The company’s closer to the sports agent. The talent scout to the CEO. This has been played out on the big screen before and doesn’t cover new ground as much as meter out all the different angles and ties and degrees of trust.

Matt Damain’s character Sonny wins over the Jordans through action, not words. He shows up at their doorstep, risking his job and position in the field, to demonstrate his belief in the lanky, composed, freshman. Through his knowledge of all the past games he shows he’s put in the time to understand the players’ game. In fact, it is by pointing out to Deloris Jordan that the competing companies are all words and not action that he builds her trust.

A lot of people talk about trust as if it is something that appears or can be bestowed. But trust is the result of seeing how people act and then basing an expectation of the future on the actions of the past.