Let Freedom do its Thing

Today the US celebrates the birth of its constitution and its independence from British rule. It’s a family day filled with picnics and parades. There is a lot of flag waving and fireworks traditionally close the show after nightfall. By far the most patriotic of holidays, it remains a cherished long weekend despite nagging challenges to the varieties of freedom present in American lives.

In the ‘ol days, freedom was simpler. As long as your kin and kith were not ruled by outside forces then you were free. Freedom from domination by force was the primary concern until modern history, and freedom to worship if you lived in the west. Since then the demand for freedom has expanded in all directions: free to love, free to choose, free from oppression, free to marry, free to express, free to join, and free to separate. But it seems that as the quest for greater freedom picked up speed, new forms of restrictions sprouted up like dandelions in early spring.

It’s like everyone is all for freedom, as long as it coincides with their ideas, their thoughts on the way life should be. Business-oriented people cringe at the freedom of a pool boy to work through the summer and coast through the winter. But we are not optimizing productivity! Women who thrive as corporate powerhouses find housewives inconvenient. Parsimonious types can’t fathom that artists wielding away their time and resources on churning out pottery or graffitti or embellishments. And thus the debates about details, a haggling over resources, produce battles for control. Progress trickles past all the damming.

There’s a stumbling into a new power structure and a new paradigm of how networks of people with shared interests engage to produce. The model is bubbling with interconnected trading spaces. But it requires participants to allow others the freedom to navigate their choices. It requires a release of assumed dominance over the choices people make. This appears to require an unnerving amount of trust. The domain is vast.

The figuring out of this new balance within our old system is underway. People are distracted by the details. Instead of looking to the overarching structure they choose to bicker about their small corners. But the desire for maximum freedom never diminishes. And thus becomes a human project which touches us all. Happy Fourth of July!

Van Gogh in Minneapolis

Five of Vincent van Gogh’s olive tree paintings are on loan to the Minneapolis Institute of Art. They make up a small exhibit along with several etchings. The viewing space is intimate with lighting picking up the texture of the paint strokes on canvas. Only a handful of people are present at any one time which encourages an inclination to linger rather than to leave.

Everyone knows van Gogh as the genius with mental illness. The man whose brush techniques and color combinations made his work vibrate with energy. I did not realize he started his artistic endeavors late in life nor that he was so prolific.

Largely on the basis of the works of the last three years of his life, van Gogh is generally considered one of the greatest Dutch painters of all time. His work exerted a powerful influence on the development of much modern painting, in particular on the works of the Fauve painters, Chaim Soutine, and the German Expressionists. Yet of the more than 800 oil paintings and 700 drawings that constitute his life’s work, he sold only one in his lifetime. Always desperately poor, he was sustained by his faith in the urgency of what he had to communicate and by the generosity of Theo, who believed in him implicitly. 

Britannica

Insight into his state of mind can be gleaned from the many letters he wrote to his brother Theo. His brother gave him the freedom to pursue his calling. It’s hard to say how a brother can be so devoted to his sibling. Vincent tried to support himself as an art dealer, a language teacher, a bookseller, and a lay preacher. As he stumbled along, fighting with mental illness, his brother chose to support him unequivocally.

Perhaps Theo did this entirely out of family obligation. We all have duties to our blood ties. It sounds more likely that he had some sense about his brother’s brilliance. Fortunately, he lived in a time when he had the freedom and capacity to provide support. In a short run accounting, van Gogh would have been a liability- taking the long view, as perhaps Theo did, Vincent was a rainmaker.

Freedom trumps utility as the latter isn’t always readily apparent. Each couple or group or society must decide where to place their backing. Those on the outside are inadequate at doing the math or evaluating either short-term or long-term returns.

Joyful Blooms

Perhaps, if you are not a gardener, it is hard to understand the level of satisfaction to be gained when your plants come into full bloom. But it is real. After the tulips and rhododendrons and lilacs steal the early show, there is a flurry of new activity come June.

The fushia peony and the yellow false indigo didn’t always stand shoulder to shoulder. A lot of work is done to get the right plant in the right spot- the degree of sunlight and water are the most significant determinants, but other factors influence the plants’ well-being as well.

And there are critters. They feel you have simply made their meals a little easier. My two tea roses went into their spot about fifteen years ago. For the first few summers, they barely grew making me look ridiculous for having allocated them so much space in my front border garden. Then early one morning I spotted the problem. The bunnies would nibble the fresh shoots down to the stems. Once the bushes are large they lose interest- perhaps because of the thorns.

There are old plants like the yellow iris which came from my grandmother’s garden in Iowa. And new experiments like the Sweet Kate Spiderwort which only shows its periwinkle blooms before noon. The purple balloon flower had to be moved from a shadier spot but is now quite happy in the full afternoon sun next to the catmint. And the Siberian iris blooms only last a short while but sure are elegant on their sharp slender stems.

There is a bit of work involved in maintaining a garden- but the blooms make it more than worth the effort.

Price of Lumber Plummets

Market Insider

The price of lumber is dropping precipitously as the housing market cools off in response to higher mortgage interest rates. During the first peak in 2020 and on through 2021 the cause of the price increases was attributed to supply chain issues and trade with Canada. But the second peak in late 2021 was said to be driven by the producers. Maybe they’ll regret it. I can think of a handful of people who have moved to alternative plans (than building or building projects) as a result of the high prices. Once the wave of properties under construction leaves the pipeline, the builders might find themselves short of work.

In Memory

Memorial Day is a holiday for reflection. Officially it is a time when a nation recognizes the soldiers who died while fighting to preserve a country’s most pressing values: liberty, fraternity, and the pursuit of happiness. This isn’t just done in the nation’s capital but all over the 1.9 billion acres that constitute the continental United States. If anything, there is greater attention paid to the monuments placed in honor of fallen soldiers from small communities than in large metropolitan centers.

The process of remembering brings history to a family’s doorstep. People review why their uncle was drafted, and how the events unfolded. Perhaps the pain of the ultimate sacrifice still aches a bit. The recall of the story and the memory of the tradeoffs is a beneficial exercise. It is hard to see how things balance out if not told within the context of the moment.

Today, many people will feel an impulse to spend a few silent moments at their relative’s gravestones. After all, we are a product of what our grandmothers and grandfathers did with their lives, in both productive and unproductive terms. Our parents’ reaction to their upbringings in turn influences how in time and effort they contributed to our own. Some of this we may find lovely and some of this may be unpleasant. But there is no separating the unrolling of events.

To take a peaceful moment or an hour and reflect upon the circumstances of their situations, to give credit for their accomplishments within the constraints of their lives and be an impartial observer of all they had to work with is fruitful. At different stages of our own lives, we are perhaps even more appreciative of what was done or not done, and how it all played out. It’s difficult if not impossible to evaluate people’s choices as if in their shoes.

It’s more difficult to know where you are going if you don’t know where you came from.

Trading Laundry

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

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

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

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

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

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

Land for sale?

With war being out of fashion and colonialism a relic of a bygone era- how is a country is to acquire more land?

Even on a small scale, purchasing property that is owned by multiple independent parties is a messy business. In the middle of this satellite photo, you will notice fifteen five-acre homesites which were surrounded by open land twenty years ago. Developers in the home building business can spend years negotiating with neighbors to sell in unison.

These homes also happen to be fairly substantial. This just means that their values as stand-alone parcels are strong which pushes the buyout price higher than say a dilapidated tear-down property. Over time, however, if an owner thinks it is inevitable that their home will be torn down, they refrain from improving the property. It feels like a waste of their money. When the exterior starts to look run down, the neighboring properties are also affected. And slowly, the owners succumb to the pressures of an expanding metro, get used to the idea of living elsewhere and sell out to a builder.

This story is a way of suggesting a scenario where land could be sold between countries.

  1. If the land is being used in an obsolete manner, owners over time could be persuaded to convert to a higher use.
  2. If the buyer country had more infrastructure to offer, the owners’ material situation improves with the sale. It has become fashionable to take shots at British colonialism, but no one seems to complain that the occupied countries received British passports and the privileges it bestows.
  3. Plan on the process taking time, as in generational time.
  4. As long as the land is low value and underutilized, there is most like a buyout price (speculative, of course!)

Getting More Properties to Market

As the new listings plunge to pandemic-year levels, an obvious question is how do we get more properties to market. Where are they, and why isn’t the regular turn over in ownership providing opportunities for new buyers to acquire property?

I’d be curious to see a study about the effects of the capital gains tax on people who own less than four properties. Say an individual held onto a condo or townhome after they got married. It was fairly easy to rent, and the years roll by as one gets busy with family and life. Before you know it there is a couple hundred thousand dollars of equity tied up in the rental. Now if the owner were to sell, they would have to recapture depreciation and pay capital gains. And this is substantial.

If this tax is holding back sellers from releasing their property to market which in turn disallows wealth growth by a younger generation- perhaps it is more of a societal detriment than a source of income.

Structural memories

Have you ever viewed the listing of a home that you lived in long ago? The visual impact of the images stirs up the memories nestled in the folds of gray matter. We lived at 510 St. Olaf Ave over fifty years ago. My father had been assigned to Vietnam and my mother, two brothers and I stayed stateside near my grandparents. This property was only forty years old back then, but it was already considered a vintage home- not a cookie-cutter suburban home.

There are video loops from our time here that my mind has kept ready at hand. The winter had been a snowy one and the sidewalk to the street has banked high with the white stuff. My grandpa stopped over one weekend day and tossed me gently into the cool crystals. The snow was as soft as a mattress and my Opa’s joy enfolded me as I sunk in the snow. My brother loved to climb up into the limbs of the massive old pine right outside the back door. One afternoon he took a tumble and mom said she had warned him.

I remember the inside as well. We had cats and they carelessly wandered all over the kitchen counters. My mom’s sisters would come over and bake bread and there were the felines, pressing their paws onto the cotton towels covering the rising dough. I’ve never cared for cats.

My bedroom faced the street. It was the smallest- my brothers always got the largest room as they had to share. My twin bed pushed up to the window which was adorned by a Swiss Dot curtain. The headboard was a nursery rhyme stitched onto a cloth, like a sampler but two feet by three feet. I remember thinking that everything must already have been invented, every famous line said. It was the sixties and there was a sense of accomplishing great things in the air.

It was a different time then. A man’s salary was enough to raise a family of five in a decent house on a tree-lined street. People weren’t shy about wanting to live near extended family to visit on the weekends and see the kids. But I was completely wrong about the finale of future accomplishments. It’s just that a few decades of social destruction put progress on hold. The dismantling and reformulating of the family power structure may just now be finding a balance. And that with that, creators and builders and innovators can count on a social base to support them.

A rebirth in rural MN?

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

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

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

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

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

When responsibility tips

Communal arrangements are mostly nested. The family unit secures the primal position. Then surrounding neighbors (I like to think of this as the size of an elementary school district) create a group, then the city/suburb, county, state and so on. Overlayed in various positions of priority are people’s associations with religious affiliations, work associations, general interest groups and passions.

For instance, at the federal level there is the US Department of Education with a primary function to “establish policy for, administer and coordinate most federal assistance to education, collect data on US schools, and to enforce federal educational laws regarding privacy and civil rights.” Then each state has their Department of Education which gives direction, collects data and funnels money to the School Districts. Despite all these layers of oversight many decisions are left to the most basic unit. The administration of Covid rules, for example, was determined at the building level of a district.

The situation in Ukraine highlights the difficulty in determining when a nested structure requires an outside intervention. In the case of war there is an impulse to violate political delineations, drawn into the foray due to an associational compact of humanitarian compassion. But rupturing the divides between units of responsibility is always controversial. It is not clear when to breach the boundaries of a marriage in the case of suspected domestic assault. It is not clear when to intervene in the administration of a failing school. It is not clear how to restructure a department of human resources which repeatedly fails to administer benefits resulting in human tragedy.

The foundational reason not to intervene is that the unit will come out of a challenge stronger for the experience. A neighborhood which comes together to reduce crime through block parties, cooperative interactions with police and the courts will develop methods for working together. Once they realize the rewards of safer streets, the recompense for their work will further encourage the efforts.

But at some point, the outer group has to call it, and step in. Unfortunately, this often does not happen. The cost/benefit logic says that if the subgroup school is performing at such a low level over a generation or more, then the outer group is taking a hit. The need to interfere is justified in order to maintain a pre-determined threshold.

In Minnesota there is a political debate at the moment regarding the timing of the National Guard’s intervention during the riots following George Floyd’s death in 2020. The mayor of Minneapolis claims he requested help early on. The Governor claims he wasn’t given authority to intervene in the city. This last argument seems to fall flat when three miles of a city in his state is set alight. At some point it is clear that the greater group is obliged to step in.

I believe there is a relative calculus for these tipping points. We just have to find them in the numbers.

Market Failure- Or tapping to a different tempo?

If you are too young to remember when Julia Roberts came into her own as an actress, rewatch Erin Brockovich. No one can flash a smile as well as Roberts. And the zesty character of an everyday single mom taking on corporate America in a David and Goliath story is a perfect match for Julia.

But this real-life tale is a redemption tale for markets. Wait- you don’t have to go googling the plot to confirm the intent of the story was to exemplify market failure of the classic kind. The firm (in this case the Pacific Gas & Electric Company- but there were many) in an effort to maximize profits, refused to look into claims of contaminants seeping into the neighboring soil and water. In order to keep track of things, let’s name the marketplace with the anchoring of the firm. Let’s call this traditional collection of goods, customers and firm, M1. PG&E is striving to provide goods and services to their consumers at the best prices. It’s a win for everyone in M1!

But not so fast. Erin Brockovich steps in as an activist and donates hundreds of hours of her (unpaid) labor to help determine that the residents near the plant are suffering from externalities of M1. This is where most people stop and claim that capitalism doesn’t work because M1 has not taken into consideration the surrounding community. Truth be told, they just haven’t finished watching the movie. Because it is soon readily apparent that M1 is contained in M2. And it is in M2 that Brockovich and her law firm and the community residents are going to form a common interest and push back on M1.

Here’s a good spot to encourage the reader to look back through the menu to categories explained at Home-Economic. The activity in a social sphere is governed by groups sharing a common interest, and the efforts or sacrifices they are willing to contribute towards that goal and the ongoing and updated norms which guide their behavior. The young paralegal revved up the M2 by going to the group (audience) and educating them to the claims at hand. This spurs on further efforts to make M2 more efficient by rectifying the public health concerns being externalized by M1.

As many law firms know, if claims of this nature are successfully demonstrated, the courts will order a balancing of accounts through a financial settlement. This not only pays those harmed for the externalities, it also makes it clear to other firms that being negligent will end badly. In this case it took $335 million in 2006 to bring M2 back into balance.

Note too that this process also occurs for positive externalities. For instance, a company produces widgets in M1 at a certain cost to consumers. Then there is a technology improvement in a broader market, call it M2. Once the firm has access to the public good of knowledge of a new process/technology, then product prices drop and consumers in M1 internalize the benefit through lower prices.

The question isn’t whether the market is failing. The question is what market are we in and where is the inefficiency.

Vigilance for identifying and cleaning up pollutants has a long history.

Bonus to those who move

Cities around the US are paying people to relocate to their town. Marketplace recently ran a success story out of Bemidji Minnesota. They featured two families who took the city up on the offer of $2500 to cover the move. It seems that is enough money to risk the relocation expenses. Bemidji is getting pretty far north, not to the Canadian border but definitely that direction.

I pulled the demographics just to give you an idea of the landscape and was presently surprised by two things. First- the median age is a lot lower than I would have guessed. (For a generation or more these towns were aging) And furthermore, births are exceeding deaths by almost two to one. This is quite a switch.

Bemidji has a total of 11,917 people and of those residents there are 5,547 males and 6,370 females. The median age of the male population is 25.3 and the female population is 30.8. There are approximately 585 births each year and around 304 deaths.

https://www.movingideas.org/bemidji-mn/

These two families cited the work/life balance, a change of the pace of things, as the reason for moving to a smaller community from Topeka and Phoenix. Of course, the costs across the board are lower, but the lifestyle change is another way of saying they recapture more of their time. They can use their free hours to raise more children, get involved in civic projects, or simply have more fun pursuing hobbies which enrich their lives.

Since many writers and ambitious folks chose to live in the big coastal towns there is often this assumed bias that everyone wants to live in NYC or San Fransisco or LA too, they simply can’t. The reality is that a $2500 bonus will get people to choose a much different way of life.

Veblen, Context, and Claire

Context isn’t something you can see, which makes it hard to put a finger on. To add a layer of opacity, often people have reasons to hide their situations from some while signaling in full regalia to others. One of the first to pick up on the flare some wish to exhibit was Thorstein Veblen, a farmstock Norwegian, an affiliate of one of our finer Minnesota schools Carleton College. It’s not surprising that a-salt-of-the-earth type of guy would be at odds with (what he considered) the wasteful expenditures of the wealthy in The Theory of the Leisure Class. He’s probably best known for coining the phrase conspicuous consumption.

But the purchase of a $20K Rolex watch is as much a ticket to a click as a gang sign. The price tag is only a means of filtering out those of lower economic standing. Within the economic platter of folks who drive Maserati’s or buy jewels at Tiffany’s, the price settles in amongst other choices. Possession of such things delineates the group. Many people judge this, as did Veblen, in a disdainful manner. Though it isn’t all that different or more harmful than other social parameters, set and enforced by others.

Last fall there was fallout when the Art Institute of Chicago let all their docents- long time educated volunteers- go. The group of one hundred or so later-age privileged women were judged to be a closed access group. I have a feeling they weren’t selective. It’s more logical that this collection of unpaid workers with passion for artistic endeavors and creators, is thrilled to shed their knowledge on anyone who will listen. By dismissing these women, the museum lost more than the price of a Rolex, all for fear that their presence would be taken out of context.

There’s the context of expenditure, and the context of appearances and also the context of work. Consider, for example, the dog show folks. Amongst my acquaintances there is a couple who posts more photos about their show puppies than most do of their kids. They live for their dogs. We all had to chip in to buy the local K-9’s bullet proof vests. If you doubt the amount of (unpaid) time people will invest to be part of a superior level of dog obedience, check out the National Dog Show. In 2020 Claire, a Scottish Deerhound, brought home a blue ribbon.

Keeping track of the deal

Solving for climate change solutions is a tough go as the time spans over hundreds of years and the inputs offer imprecise measures. Luckily issues around real estate are typically on shorter horizons and tangible resources. Consider the story of the novice developer from Texas, Nathaniel Barret, in the tweet at the end of the post.

By the time you’ve read through the entire description of his experience as a developer you’ll get a feel for the grit and grime of the process. He has even provided visual aids through extensive photos. You can also sense the apprehension he must have felt when he had to go back to friends and family mid-project and ask for a sizeable amount of additional funding. Keep in mind that at this stage the building is ripped apart and there is no going back. It’s like saying, gee thanks for the $50K, if I don’t find another $150K, I won’t be able to repay you.

Note #1- developers are all in on their own money as well as money provided by their network.

Then consider the time over which this transpires. It isn’t a couple of months, or a year, but several years of no income, free labor and no certain outcome. Several years of owing people, who hold you in high esteem, to sit tight until the whole thing comes together. The post has his adventure starting in 2016. It may not have taken five years to wrap it all up, but it took that long to write about it.

Note #2- there is a backlog of expenses in investment return and in personal favors and in unpaid sweat equity.

Some people may come away from this story wondering how anyone would want to pursue such a project. Some people will never understand the satisfaction in turning a derelict building back into a going concern. Some people do not have the impulse to go toe to toe with a failing neighborhood and throw one’s ambitions at it full force. But fortunately, some investors do. These people are long term thinking, maybe twenty-year scope people.

Luckily a fully renovated property should be good to go for twenty years without major expenses. This allows for the return from the upfront investment of resources and sweat equity to be recouped over a dozen to fifteen years. And there is still the uncertainty as to whether the direction of the neighborhood will turn and inflate, rather than erode the equity in the property.

Now let’s leave behind this story from Texas specifically, and more generally entertain a speculative scenario. Say about five years following a rental property renovation, there is an influx of new residents to the neighborhood. They have relocated from another state. These folks have no memory of the seedy buildings from the past. However, they do bring their recollections of what things were like from whence they came, about relationships with landlords and laws in their previous hometown.

The area attracts an influx of residents due to these restorations. That combined with an overall uptick in the economy causes rents to rise. Tenants who sign one-year leases see increases in their monthly obligations. They cry foul and become politically active due to what they see as greedy landlords. Their short-term framing is not in sync with the longer-term investor framing, hence the perception of corruption. Since tenants make up over fifty percent of the city’s population there is success through four-year term city council people to restrict landlords from earning what was originally projected.

If we are trying to model a neighborhood, a city, or a rural community, where real estate structures are built to last over many decades, then it seems the disjointedness of short-term politics versus long-term investments is counterproductive. Maybe even destructive.



Originally tweeted by Nathaniel Barrett (@ncoxbarrett) on January 27, 2022.

The 2016 story of my very first real estate project: How I bought a scruffy old strip center, almost died of stress, and started Barrett Urban Development.

After reading too many articles about problems with our urban development patterns (thanks @StrongTowns) and walking on our broken down sidewalks too many times, I thought there was no better person to address this than yours truly.

After reading RE books and looking at projects that would have surely failed (thanks @montewanderson & @IncDevAlliance for saving me), I found a pair of adjacent commercial buildings totaling just under 8,000 square feet both for sale. They were in…sub-optimal condition.

I raised money from family members and put a fair amount in myself and found a great GC and architect to work with. The scope: replace/repair everything except the wastewater lines, the foundation and maybe 60% of the structure.

During our walk-through, the GC ballparked it at $250,000 to white-box it. I was way too green to know of a better way to estimate costs or recognize the many red flags during due diligence.

Thanks to a pair of motivated sellers, the ACBM, and an REC during the ESA (don’t do auto-repair in the back yard), we negotiated pretty hard and got what I thought was a good deal: something like $400K for the pair of them.

The plan was divide the 2 buildings into 5 spaces since we figured we’d get higher rent that way. The building is awfully deep, but work with what you got.

The problems started almost immediately. Remember those wastewater lines I wanted to keep? Just past the bend we couldn’t get the camera past, the clay pipes had collapsed.

The plumbing bid to replace comes in: $80,000. I’m already 20% over my construction budget and we’re just getting started. This is not good but there’s no way to go but forward.

Since we’re replacing the plumbing anyway now, we move the bathrooms to the back of the building to shorten the run and reduce the number of bathrooms in the larger suites by 1 (foolishly I plumbed the wastewater lines for them anyway in case I wanted to add bathrooms later???)

Meanwhile, new problems come up: During due diligence, my GC commented that a lintel was sagging. Being naive, I didn’t probe further. Turns out you could put your arm through several of the beams over the openings. Now I need $20,000 of masonry work, steel, and welding.

At this point, I know I need another $150,000-200,000 to finish the project, money I don’t have. I have jaw pain as I start grinding my teeth at night while I sleep which isn’t much, because of the anxiety. A nightguard and sleeping pills solves the symptoms but not the problem

I look for money but I don’t know how: I apply for city grants, liquidate my stock holdings, and borrow against my 401k. I still don’t have enough and I find myself weeping outside City Hall after failing to get a grant as I wonder what I’m gotten into.

I finally have to tell my investors (should have told waaaay sooner). Most of them are circumspect but one is very upset and is making noises about taking over the project. I eat crow and fall on my sword.

I finally have a revelation: I can borrow money from places other than banks. Turns out if you pay a high enough interest rate, people are happy to lend you money*!

I raise another $150K and the project is on track: the walls are flying back up, the trusses going into place, the windows being installed.

It’s finally looking like a building again and I can start to think about actually leasing the place! One of my mentors comes by to check out the project and says I “Decided to skip the master’s degree and go straight for a PhD and now i’m studying 24/7 to get a C-“

I catch a break and a local publication does a favorable story on my project and I pick up several tenant commitments.

https://lakewood.advocatemag.com/rebuilding-not-replacing-old-east-dallas-nathaniel-barrett/

In not too long, the building is finally done. I get some really good long-term leases in place and the rents come in higher than expected, which is good because I owed a lot of people a lot of money.

I don’t recommend the above method for starting in real estate. I mostly succeeded due to luck and the good fortune of a large network of supportive people in my life. I can’t believe I actually made it through.

Originally tweeted by Nathaniel Barrett (@ncoxbarrett) on January 27, 2022.

Borderlands

There is a space where the private market slides up next to the public goods market. This is where decisions over which products and services are best produced under an esprit de competition and which are best served through cooperative efforts are flushed out like pheasant from the wayside ditch. A Minnesota writer, Aaron Brown, wrote about this landscape in a piece entitled The troubled border between consumption and conservation. The issue on his mind is the ongoing tension between the desire for jobs from mining and the environmental impact they create.

How countries have handled these two spheres in their political choices is not what is being discussed here. This is more local than sweeping observations on governance directions towards socialism or communism or capitalist democracies. (Even though, it might be observed with a bit of irony that China has shown the agility of a communist state to profit from capitalist models. And whereas NIMY and YIMBY forces tie US cities into knots, China is using more private enterprise to build its cities.) Brown leads your focus past levels of national governance, past levels of state governance, past overlays of activism, and bring you right down into his back yard.

Bears fall limp on trampolines. Moose tangle in hammocks. Tourists lose themselves in the woods, their dying cellphones lighting a doomed path even deeper into the wilderness.

Then the helicopters come, looking for the source of the signal. They scare up the birds as their blades sweep across the marsh reeds. The metal dragons return to their dens. So it goes along the borderland.

There is a need to micro-manage your attention because this is a saga has been in the air almost as long as All My Children. And at all levels, political players will attempt to obscure the choices, to pull your support to their side. The weapon du jour is a miscasting of identity. If you value communal interest, then you must be a communist. If you voice support of one political party, then friends may find reason to exclude from their next dinner party. The activist entreats you to wear their hats, wave their banners. At all levels teams are built to harness political voice

This last round was at the national level, as two days ago the Interior Department revoked a lease for a mining project. The 2019 renewal of the lease during the previous administration was considered improper. There was no new evidence of environmental harm.

Twin Metals, in its own statement, excoriated the Biden administration and called the decision “a political action intended to stop the Twin Metals project without conducting the environmental review prescribed in law.” 

https://www.courthousenews.com/interior-department-revokes-minnesota-mine-leases/

The campaign to save the boundary water’s chair declared this a “win.” One might as well be following the sports section.

That’s why Brown needs to capture your attention, pull you away from power plays and home runs, and back to the arts. He paints the issues out in more romantic depth than the Hudson River School of American artists. He wants you to consider choices over a variety of time frames. The spaces where public and private choices intermingle have cascading impacts and generational persistence. I wish more writers lingered here longer.

The borderlands are where interesting questions are answered. Aaron Brown lays some groundwork on how to navigate the space between two competing spheres of human interest.

Economic man was lonely

Welfare economics ran into market failures because of economic man. The view that all transactions are performed by an individual actor looking only after his own interest is relevant for the pursuit of private goods, but not public. If the problem isn’t structured from the point of view of a group, then it all falls apart due to freeriding. If the economic analysis isn’t contained within a sphere of voluntary reciprocity, then the desire for each and every to fulfill only their needs tells a story of everyone taking and no-one giving.

But we don’t live as the caveman did defending a little hilltop. We live in families, tribes, cities and countries. We participate in work life and school life and sports life and associational life. When our diplomatic family would show up at a new post halfway around the world, we’d be met at the airport and driven to our housing by a couple from the embassy. Co-workers would be sure we knew where to shop, how to get the kids in school, and other pressing local customs. I was recently reminiscing with a military guy who nodded knowingly when I relayed how, for years, I had missed the strong ties of service personnel when I got out into the work force.

And because these are lifestyles, the assumption of the group and its obligations can be taken for granted. The compacts of who takes care of whom at different stages of life, over decades, makes for messy accounting. But that doesn’t mean it can’t be tracked. It just means we have yet to do so. It’s taken forty years, since a little rebellion in the 70’s, to name a labor wedge. And now there’s credit for sweat labor. And then there are the Wikipedia contributors, and many more cooperative types making cool stuff.

The independent actor, however, is so ingrained in the US psyche that the conceptualization of a group as a consumer and supplier slips easily out of the analysis. To further muck up the landscape, an institution thought to be public, acts as an economic man with regard to anyone outside the group. Take the teachers’ unions actions regarding COVID as an example. The focus is on the public health and well-being of the teachers, and the teachers alone. The initiatives of their efforts do not include the public health of the school children nor their families. There is no consideration of other public objectives or benefits to keeping children in the classroom. The services the unions are negotiating are only public to dues paying members.

Economic man is a lonely notion. Have no fear, he lives in groups! But his behavior traits are accurate and, as it turns out, groups can be selfish too. To keep it all straight, one must declare an anchoring point of view in any analysis.

Women in Government, now and back then

Friday evening I went to a seminar entitled Women in Government hosted at the high school by two student groups. It was really well done! In addition to video presentations by Senator Tina Smith and Lieutenant Governor Flanagin, four accomplished women made up a panel on a stage edged by an American flag: a federal judge, a county prosecutor, a state senator and a media personality.

Turn the clock back to when I was just graduating from high school, or even into the first years of college, the only woman in US politics who stands out in my mind is Geraldine Ferraro. She was the US representative from New York and was Walter Mondale’s vice-presidential running mate in 1984. Highly visible, outwardly successful women were few and far between. And those who did venture onto the big stage were pestered and heckled mercilessly. Fortunately, there has been a steady infill of female politicians since that time.

First off what struck me about each of the professionals in the auditorium is how they talked freely about their children, and from the sounds of it each had more than one. They spoke with ease about family life. One expressed thankfulness for the balance and objectivity the birth of her children had given her. Another told how her professional life had intermingled with a stay-at-home mom life, a follow your husband abroad life, and then back to a professional life.

This is a significant change from when I was one of the girls in the audience. Family life was not talked about and diverting one’s ambitions to support a spouse would not have been admired. Back then the statistics bantered about were that women with graduate degrees were doomed to spinsterhood. It seems we’ve progressed past necessitating a choice between job or family, and past a jealousy of a partner’s career.

When asked to offer advice to their younger selves, here are a few of their responses:

  • Be open to people who are trying to help you.
  • Gossip is not about you, inevitably it’s about the one trying to spread it.
  • Relax and don’t stress about everything.
  • Be open to your path changing course, as it most probably will.

There were quite a few adults in the audience as well. And I think everyone took away something useful from the experience.

Grateful for family

Sounds trite, doesn’t it? Of course you are grateful for your family. No more of a surprise than you love your kids, as fiercely as I love these two beach bums:

The term family is often reserved for those with whom we share a household. The people who do the housework for the daily routine of food and lodging. But as we sat around our Thanksgiving meal this evening it was clear that the genesis of our lovely circumstances originated beyond the four sitting at the table.

Being thankful for good health, for example, cannot only be a tribute to our personal efforts. One must reach back and be thankful for all the good genes that have been passed down through the generations. And the habits of selfcare that were taught with quaint proverbs, like an apple a day keeps the doctor away, didn’t just pop into the family routine one day. But saying isn’t doing. Those who came before also showed us they were willing to pay more for fresh fruits and vegetables; they were willing to dedicate resources to better health.

The multigenerational passthrough of profitable habits doesn’t stop there. When parents establish the custom of aiding with advanced education, the gift is meant to tumble on down to the next generation and then onto the one after that. The payment of tuition is done with long views over a whole life, not short returns.

But when these habits of investing across and over people, of participating in a system of beliefs and not of immediate returns, then we are no longer talking about family as a gathering of four people. When choices have been thought through and tradeoffs considered; when families have evaluated outcomes and set norms; when all this circulates through decades worth of relations, then we are talking about something else. We are talking about family as an institution, as an economic force.

That is the sense of family we were grateful for this evening.

How fear ties knots of inaction

On the one hand people worry that improving disadvantage neighborhoods will cause the evils of gentrification:

Now planners are trying to figure out how best to weave through north Minneapolis on the way to the northwest suburbs. But many people along the route fear real estate speculation and increased investment will render their neighborhoods less affordable. Hennepin County hired the University of Minnesota to study potential gentrification impacts and recommend anti-displacement strategies along the route—a first in Minnesota transit history.

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On the other hand there’s dismay that property values do not increase in disadvantaged neighborhoods. Here’s a headline and intro paragraph to an article in todays New York Times:

How the Real Estate Boom Left Black Neighborhoods Behind

While homeownership has been an engine of prosperity for white Americans, home values in places like Orange Mound in southeast Memphis have languished. What would it take to catch up?

Wouldn’t it be ironic if the same forces against gentrification were perpetuating poverty in neighborhoods they thought they were protecting?

Rewriting the present in anticipation of the future

There’s been a lot of brouhaha in recent years about how history is told and what words may or may not be used. I was just listening to John McWhorter, a linguist at Columbia (if you don’t know him look him up) on a Twitter Live interview expressing discontent with the transposition of an individual ‘being the victim’ of an event in lieu of ‘being a survivor’ of an event. The framing, he said, settles a lingering tragedy around a fellow.

In addition to voicing the negative rather than the positive, there have been demands to take the lives and accounts from many generations ago, and rework the fruits of their labor into a present-day-acceptable version. David Livingston was Scottish adventurer from the first half of the nineteenth century. He spent his life exploring Africa and reporting back on what he had found. He was awarded the gold medal from the Royal Geographical Society in London and kept an association with the group for the rest of his life.

On Twitter today (yes it was only 37 degrees here) I saw this post celebrating the rewording of Livingston’s work. It extinguishes any credit to a man who spent a life exploring, documenting and passing along details on a large swath of a continent.

In fact the Livingston accounts couldn’t have been written in any other way. There were no maps of the area in and around Lake Victoria, by British, Arab or African geographers. So it would have been odd to write an account in an off hand, I’m just a tourist seeing things that everyone else has seen, type of way.

How exactly are historic figures from our past supposed to have predicted the future dynamics of civilizations and write their work to the correctness demanded in generations to come? Or is it up to us to take their work in the context of their time?

Compatibility, a review

I recently switched to an iphone after years of android use. It has been fun to compare their functionality. The ease of the transition is a tribute to Apple’s focus on the user experience. There is one feature, however, that I miss. It is Google Lens. My last phone was Google Pixel and the Google Lens icon is at the lower right hand side of the screen when you open a jpg. For instance, as I sort through some old travel photos from my youth, I often want to know where a shot was taken. Check Google Lens- Presto! It matches the image to ones on Google Maps.

Fath Ali Shah

I tried all sorts of methods to store and open this image from Iran on my new phone but gave up, and went back to my Google Pixel. Tapping on the picture on my old device summoned up web results which identified the location in seconds. The 4000 BC etching is located under a fortified wall at Rey Castle, near Teheran. Subsequent postings by the collective of google map supporters offered views of the image and surrounding landscape from multiple angles.

More than likely I’ll discover how to use Google Lens on my new device. But the fact that so many features are user friendly and this one is not made me reflect on how we are at the mercy of structures easily within our reach. And how we don’t make time (partly because we may not appreciate the benefits) of structures which we have yet to discover.

During the lockdown my family and I started a daily walk routine as it is good exercise and it was one of the few activities open to us. We used aps to monitor distances and times, and struck out looking for new scenic trails. I’m not sure how many times we shook our heads in disbelief that we had only now discovered so many pleasing miles in our figurative back yard.

On a recent trip to Calgary I discovered the ease and reliability of public transit. It was forced on me by the difficulty to secure a rental car in the era of Covid. This reminded me of when I took my kids on the Great Northern Railroad from Minneapolis to Glacier National Park. The line runs from Chicago out to Seattle skirting the northern most border of the US States. It appealed to me as it gave me a break from road tripping with young children and I thought it would make an impression on them. Many of the other passengers from places like Minot, Culbertson and Wolf Point used the rail frequently. It was their preferred form of transportation.

The dominance of some IT structures has made me wonder about other patterns in my life which have steered my activities. Where else have decisions kept me from advantageous experiences? What other take-it-for-granted services are people not using optimally which would make their lives better? And how can we reveal those little connectors to better engage a just-next-door infrastructure we have yet to discover?

Stories about visiting soldiers

I pick up used books in all sorts of places. When I drop off a load of goods at the Goodwill (I have no patience for hosting garage sales, all that storing and sorting and ticketing), I always pop into the retail part of the store to see what books have found their way to the shelves. There’s inevitably an eclectic mix. That’s where I might have picked up A Bell for Adano, by John Hersey. I had never heard of it. The cover said it had won a Pulitzer Prize and a few page flips showed it was set in Italy. The odds were in my favor.

It started slow. About seventy pages in I’m questioning who this guy is–he studied at Yale and Cambridge, then taught for several decades at Yale. He was born in China. Interesting enough to keep plowing through the story of an American major put in administrative charge of a small Italian town in the early years following the allied victory in Europe. The writing is clear but unimpressive.

Then some economics filters in. He starts with endearing stories about wine and hair cuts.

He traced the black market in wine to the house of Carmelina, wife of the lazy Fatta. The very first person who bought wine from Carmelina, on the very first night of the invasion, was Corporal Chuck Schultz. Carmelina’s story to the Major was that the Corporal had just handed her a dollar and walked away. Schultz’s story was that the Italian lady had haggled and shouted and threatened to call the police. In any case, Schultz paid a dollar. The regular price for that grade of wine before the invasion had been twenty lire, or twenty cents.

Four soldiers sauntered into a barber shop one morning, and made motions with their fingers around their skulls that indicated they wanted haircuts. None of them could speak Italian, so they based their payment on what they had last paid for haircuts in the States.
Each plunked down a fifty cent piece and said: “Keep the change, Joe.” The regular price for haircuts had been three lire, or three cents, shaves had cost two lire. Here in one morning’s work, the barber had made two hundred lire. He retired to a life of leisure, and refused to cut any hair for three weeks, till his money gave out.

Then the vignettes turn more somber. There are two economic platters, that of the American soldiers and that of the local Italians. The clash of the two is upsetting a balance of exchanges. The most basic needs of the villagers are put at risk.

The welfare of the town was really threatened by the black market in food. Peasants, instead of bringing their grapes and melons and fresh vegetables into the town market, would go to the various bivouac areas and hang around the edges until they could catch a straggler. Then, in the heat of the day, they would tempt the Americans with cool-looking fruits, and would sell them for anywhere from ten to twenty times the proper prices. It got so bad that city people would buy what little fruit did reach the town market, and would take it out into the country to sell it to the foolhardy Americans.

To stop, or at least to curb, the black market, Major Joppolo did three things: he put the town out of bounds to American soldiers, who from then on could enter only on business; he had the Carabinieri stop all food-stuffs from leaving the town; and he fined anyone caught selling over-price or under-measure three thousand lire– a lifetime’s savings for a poor Italian peasant.

Major Joppolo is struggling with how to manage the economic forces which drive fungible exchanges for commodities, such as the desire to sell to the highest bidder. When two very different economies intersect with one another, how does one straighten out the obligation to community versus pull of premium pricing? How indeed do other social commitments, such as those to far away marriages, all pan out when distance and time and groups live temporarily in close proximity to one another?

I will read on to find out. I’m starting to like this guy Hersey.

Maggie O’Farrell’s Hamnet

Taking full advantage of the long weekend here in the US, I read my softback copy of Maggie O’Farrell’s new book lakeside. It’s easy to find praise for this fictional story of Shakespeare’s domestic life in Stratford-upon-Avon, so I won’t dwell on the wonderful prose and endlessly interesting historical references.

Since this is a blog about home economics, I can’t help but key into the detailed transactions which are laid out in the book. Specifically the family relationships and obligations which landed Shakespeare in London. For without the The Globe to provide the stage, and the city to provide the audience, it is hard to say how the bard’s career would have evolved.

As a lad of eighteen, Will marries a woman eight years his senior. She has a dowry and a faithful brother to support her wishes. He comes from an established merchant family that has some financial struggles. They are both odd ducks-

Will’s mother Mary is required to make room for her daughter-in-law, to take her into her household and help with the care of the grandchildren. And it is Mary who objects the loudest at the plan for Will to set up an extension of the family glove business in London.

…At which Mary could say three things: Agnes is no girl. She is a woman who enticed a much younger boy, our boy, into marriage for the worst possible reason. And: You forgive her too much, and only because of that dowry of hers. Don’t think I don’t see this. And: I am also from the country, brought up on a farm, but do I run about the place in the night and bring wild animals into the house? No, I do not. Some of us, she will sniff to her husband, know how to conduct ourselves.

“It would help matters,” her son is saying, airily, insistently, “help all of us, to expand Father’s business like this. It’s an inspired idea of his. God knows things in this town have become difficult enough for him. If I were to take the trade to London, I am certain I might be able to “

Before even realizing that her patience has slipped out from under her, like ice from under her feet, she is up, she is standing, she is gripping her son by the arm, she is shaking it, she is saying to him, “This whole scheme is nothing but foolishness. I have no idea what put this notion into your father’s head. When have you ever shown the slightest interest in his business? When have you proved yourself worthy of this kind of responsibility? London, indeed!

The plan had been instigated by Agnes’ faithful brother. There is some outstanding obligation between the families which allows him to influence the father, to allow for Will’s departure. It is the extraction of a chit which he plays on behalf of his sister.

What if William Shakespeare, thought to be the greatest dramatist in the English language, had not made it to London? What if his life had been denied matrimony and fatherhood? What if one of the players in the economic distribution of inheritance and obligations to marriage and family had set an imbalance in the transactions?

What Maggie O’Farrell accomplishes is a flushing out of the possible infrastructures which may have contributed to a brilliant man reaching a pinnacle of performance.

A supply chain for progress

Why do men like metal and women like fabric? I’m not sure. So when I had children I tried be a gender neutral toy provider. Despite my efforts, my son liked anything with wheels and my daughter clung to her blankies and dolls.

In the last few years I’ve had two experiences where access to a machine was a game changer. Advice from a trusted advisor to purchase a Lenovo Yoga opened up a whole new level of work and writing. The mobility of internet ala hotspot made any park bench my office. It changed the timing of how I interacted with clients. I became more efficient as there was less remembering and follow up.

The impact was multifold and multilayered.

Why hadn’t I done it sooner– or why don’t women in general do more machinery? When I was young I remember an incident when we were stuck in some foreign outback. The details are foggy, but there was the necessity to clear the road of scree. I had gloves and was digging in when a male adult asked for them. He could do it better! He wanted my tool and assumed he’d secure them. (He didn’t.)

Perhaps it is a silly story. But weren’t women’s sports disregarded for years as boring? Aren’t the beginners at anything shrugged offed as irrelevant and uninteresting?

Machines also need maintenance. There maybe tricks to getting it started, like the lawn mower in the spring with old gas in its tank. If you have a friend to call, the fix can be easy; a couple pushes to the primer. If you don’t, you may give up on the machine and decide it’s easier use the old push blade mower that spins and slices a choppy lawn.

Two buddies who enjoy each other’s company can trade off helping each other with their projects while learning new tricks. A solo attempt can lead to discouragement, and abandonment of the machine that seems too much trouble. The ongoing supply chain of support and knowledge, success and overcoming setbacks is what facilitates progress.

A roto tiller is a great help in the garden. One can create a bed all along a wooded edge by spending an hour watching a gas powered blade turn the dark brown clumps into finely grained soil. But one needs a truck to fetch the instrument from the hardware store, and perhaps some muscle to load and unload it.

The point is, that it is about more than just the machine. It is a process. To an inexperienced farmer a tractor is of limited use. As soon as it requires maintenance, parts or a good kick to the tires, it becomes a burden instead of a boon. There isn’t a product result that will solve a systems problem.

Finding a way to quantify the meaning of different pieces of the supply chain is a way to see the gaps, discover better matches between groups with capacity and groups with potential.

There’s no ‘i’ in housework

Aussie household are in turmoil after their census included this simple request.

“In the last week did the person spend time doing unpaid domestic work for their household?” the ABS asked.

Perth Now

I mean seriously, is there a better dog whistle to get couples yapping at each other over the perennial debate about who does what around the house?

“Include all housework, food/drink preparation and clean-up, laundry, gardening, home maintenance and repairs, household shopping and finance management.

The ABS asked Australians to estimate the amount of hours they’d spent on such unpaid work, offering five options ranging from none to more than 30 hours.

Social media was alight with debates on who gets credit for what in the ongoing partnership of domesticity. But I question if sorting by individual is more useful to a national government than sorting by household.

Call me nostalgic but I remember when people used to comment: “The Johnsons, they do so much for the community.” There was a time when couples were considered as a unit. And when you think about such things as unpaid work, a longer time frame, one that would allow each person to perform different duties at different times, makes more sense.

I know of several men, now in the twilight years of life, who were completely preoccupied with work-for-money jobs in their younger years, but are now fulltime caregivers to their spouses. There was a time when they would have been disdained for doing nothing within the household. Now they devote a majority of their time to enabling their household to stay together.

From the government’s point of view I would think this is the interesting unit of analysis: the household. How much time in unpaid labor is required to nourish a household? to educate, to retain good health, to keep in secure mental balance? These household averages could be quite useful.

Instead the census question seems to be provoking some fudging of the numbers.

Since last night, there have been countless reports of family rows over who spends the most time on chores — from who does the bulk of the cooking to whether putting your own dishes away can be used to bump up your “unpaid employment” tally.

But maybe more importantly it reinforces the ‘i’ in an arrangement that is about the ‘we.’

Which real estate technology companies will survive?

The following infographic compares total venture funding in Real Estate Technology to the number of companies in each category.  Which Real Estate Technology categories do you think have the most traction and potential for growth? At Venture Scanner, we are currently tracking over 642 Real Estate Technology companies in 9 categories across 46 countries, with a total of $9.5 Billion in funding. To see the full list of 642 Real Estate Technology companies, contact us using the form on http://www.venturescanner.com.

Venture Scanner

Since Zillow and Trulia became part of the real estate experience over a decade ago there has been an onslaught of technology companies attempting to disrupt the business.

Yet realtors and clients are, for the most part, going through the same processes in a move as they did in generations past. Was technology more about how information is delivered than about a new means of moving (in the purchase and sale of real estate)? Is technology providing a means of communicating and marketing instead of fundamentally changing the real estate transaction?

Maybe more on point is which of these technology companies will survive by providing a superior service and which will go to the wayside.

The 70’s weren’t all bad

I was showing houses to a couple in the 90’s and the area they were fond of was full of split entry and bi-level homes. Abruptly Mr. Buyer spits out, “Nothing good came out of the 70’s. Not homes, nor music.” Partly he was referring to the floor plans, but the construction materials also had changed quite a bit from the plaster walls and hard wood floors of the 50’s and 60’s. Early sheetrock was not too pretty and plywood in far from hardwood.

Split entry homes have since cycled back into fashion. Pottery Barn helped out with their glossy representations of living spaces with heavy brown beams. These were standard fare in the vaulted living room ceilings of the 70’s. The dark trim thundered back into demand to edge out the new walnut stained floors. Golden oak was put to the door after a long run in the 80’s and 90’s.

I had heard the criticism of the splits before, but that my buyer would trash a decade of music all in one blow. I mean, this was the decade I received an electronic clock radio with flaps that clicked over every minute. It could wake me up for school with a song! Seasons in the Sun crooned non-stop that summer out of that little machine.

We were living abroad when someone brought Elton John records out to us. Who couldn’t like Bennie And The Jets, Rocket Man, Don’t go Breaking My Heart? I think the Boston album with a space ship on the cover was in that care package as well. What was it’s title? It’s More Than A Feeling. I don’t think I heard the Eagles until later that decade, but Hotel California is still a favorite.

By the end of the 70’s ABBA and the BEEGEES had created a whole new sound. Olivia Newton John and John Travolta brought the romantic musical to a new generation. I was in french boarding school at the time and everyone wanted a translation to You’re The One That I Want. I did what I could with the first verse:

I got chills. They’re multiplyin’. And I’m losin’ control. ‘Cause the power you’re supplyin’, it’s electrifyin’!

The words got a little easier after that.

Housing Bubble?– maybe not

The cost of a home to a consumer is greatly influenced by the cost of mortgages. As the chart below shows, the monthly payment hasn’t really changed that much on the median priced home between 2006 and today.

The data also shows a how housing prices are catching up to a long term trend rather than accelerating into a bubble.

Both graphs provided by Minneapolis Area Association of Realtors

Timing a move

People move households a variety of times throughout their lives for a variety of reasons. Depending on your data source, Americans move every 7-9 years, with more frequent moves in young adulthood and more sedentary behavior in later life.

This makes sense. As folks move through different stages of life, both from an income stand point and a lifestyle standpoint, they want a different combinations of neighborhood amenities. These are not questions of ‘good’ things versus ‘bad’ things. These are simply mixtures of choices.

When you are young you may want to live near entertainment and restaurants. Once there are kids in the household, going out to shows and restaurants quickly takes a back seat to prioritizing daycare, schools, and after school activities. Stability of residence can be important at this stage as rearing children benefits from consistency.

If the norm is to move, to seek out new living arrangements that better suit new objectives, than wouldn’t incentives that lock people into a location be holding them back? Financial incentives such as rent control do exactly that. It discourages mobility.

And I’m not saying people who need help shouldn’t still receive help. I’m saying that paying people to live in the same set of living circumstance through all stages of their lives goes against the norm. Which leads one to believe it is a drawback in the long run, for a perceive protection in the short run.

Fun facts about DQ

Dairy Queen – Golden Valley, MN

This DQ is not far away, in a neighboring suburb. It is one of the few left which is solely a walk-up ice cream shop. Built in 1964 it remains plopped in the middle of a 100 ft by 134 ft asphalt covered lot, surrounded by customer parking. In normal years there are tables and chairs within the white lined rectangle in front of the building where hot sweaty kids sit with their parents and enjoy their treats.

DQ was a mainstay of summer back when we would come back to the Midwest between tours abroad. And continues to be the first choice for where to take the team after a big game. Although headquartered in the Minneapolis area, there are 4455 franchise locations in the US and 6800 worldwide. That’s a lot of real estate devoted to ice cream.

This building is a classic. I hope it never is torn down.

Tweets about Work

Mike Bird is always providing great information. This time it’s a paper written by Nicholas Crafts, Professor of Economics and Economic History at the University of Warwick.


Quite neat – not just measured relative to 1931 life expectancy either, but to what demographers might reasonably have expected C21st life expectancy to be. So we have the same sort of balance of work/life that a 15hr week would have achieved, it's just very unevenly distributed

Originally tweeted by Mike Bird (@Birdyword) on May 14, 2021.


Craft does something cool. He adjusts the framing of what Keynes was after by taking into consideration how the understanding of the components has changed over time. When Keynes made his prediction about work hours, they were compensation in exchange for labor. There was no consideration for the work we do to maintain or improve our health, for example, which prolongs life expectancies.

By taking a new view on labor and stretching it out over a lifetime, Craft shows how Keynes wasn’t far off in his prediction. There is also an acknowledgement of work outside of paid work. (Although calling it non-market will result in the same confusion as use of irrational for choices made outside the traditional economy.)

Establishing something called ‘non-market’ work means that we can talk about what that is, and how it works. If it is done outside the paid-for work, shouldn’t we know where it lives? In a different sphere perhaps. It is not leisure, but if cash does not change hands where is the value in it? What are the tradeoffs individual make within their own choice matrix to perform such work and how can it be cashed out?

Maybe there are more lessons to learn from the NFT’s whose value only exists within their crypto space.

In two generations

Kids of Norwegian immigrants circa 1920(s?)

The history lesson yesterday had me digging through my grandmother’s photo collection. Ethel with her straight blond hair is pointed out at the top with a pencil mark. She is clustered here with her classmates. I’m not seeing a lot of wealth or power, but rather a collection of homemade dresses and hand me down overalls.

Happy Birthday Minnesota

Minnesota became a state on May 11th, 1858, making today her 163rd birthday. Perhaps it is hard to believe, but the Scandinavian countries weren’t wealthy back then so a great many Swedes and Finns and Norwegians boarded boats in ports off their fjords and ventured to the land of ten thousand lakes which reminded them of their motherland. A bunch of Germans headed this way as well. And then there were the French Canadian trappers pulling furs out of the back country.

In more recent times the leading immigrant group harkened from the Horn of Africa, but now the top country of origin is Mexico. The state has received a nice cluster of Hmong, Indian and then in smaller numbers Chinese, Russian, and Liberian immigrants. The increasingly multicultural population matches up to the international reach of many Minnesota based companies. Best know abroad are probably 3M, Cargill, and General Mills, which are three of the 16 fortune 500 companies based here. Medtronic is a local creation, only moving its headquarters abroad recently for tax reasons.

Minnesota is a high tax state. A strong communitarian spirit emerged out of its agricultural origins and persists to various degrees throughout the population. The state offers generous social services, safety nets and (even prior to Obama Care) universal health coverage. The University of Minnesota is a leading research institution, founded in 1851. In addition to a network of branches, the U funds our nationally recognized arboretum (truly something to visit if you ever make it out this way).

It’s a popular place for small liberal arts colleges. Best known by east coasters is probably Carleton College, established in 1866 in the bucolic town of Northfield, about an hour south of the metro area. Its notable graduate, Thorstein Veblen, coined the phrase Conspicuous Consumption– so you see the realization that consumers pay extra for things like social status is not new around here.

We have had our share of super stars like Judy Garland, Prince and Bob Dylan, Vince Vaughn, Winona Rider and Jessica Lang, to name just a few. Life isn’t really that much different than portrayed in the film Fargo, written by Ethan Coen. The Coen brothers, as they are known, went through St. Louis Park schools around the same time as Senator Al Franken and writer/commentor Thomas Friedman. Can you imagine how they must have tormented their middle school teachers in the late ’60’s–yikes!

I could go on about how we elected a former All Star Wrestler for governor in order to tune out the same-old same-old banter from the established parties. I could try to explain Scandinavian humility which keeps brashness in check but morphs into passive aggressive behavior. I could warn you that you will be inundated with casseroles if you experience a family tragedy, and that no one will take the last piece of a cake at an office potluck.

But mostly, on this 163 anniversary of Minnesota, I wanted to share more about our state than the view of the Minnesota State Seal during the now infamous trial of a former police officer.

Mothers, do they Work?

Seems like a silly question, right? Especially on Mother’s Day (one day late as yesterday was an event filled day). We celebrate mom’s and all they do. Whatever that is, love, nurturing, caring, there is an unsaid insistance at not distilling it down to a currency calculation.

Nor should it be. Kind of. As long as it is understood as a public good, one that fulfills the mission of a seventeen year investment in a child– work done to form a member of society who is both able to achieve their inner purposes while contributing in ways to those around them. It is nature’s ultimate public good transacted between the giver of life and her offspring.

But for the sake of practicality, for ease of conversation, wouldn’t it be nice to be able to quantify some of the efforts towards these ends? Researchers such as James S Coleman tied mother’s education level to child’s performance, but as far as I know he did not draw a present value of those future earnings back to the mother and say, voila, her life’s work was worth $xxx.

Perhaps the aversion to equating mother’s work to dollars is that cash is fungible and moms are not. You can hire babysitter to look after a child, but that just buys you care enough to keep the child out of harm’s way. It doesn’t buy all the extra on-demand services, or the supplementary nurturing, or the tradeoff evaluations between off-spring and what would be best for them at that particular point in time.

Even the courts agree that only under dire circumstances should a child be removed from their mother. After forays into such social interventions, it quickly became clear that even if they are of meager means and abilities, moms are still the most likely to serve their child’s interests. You see, because the labor of motherhood is not replaceable with paid work, it is non-fungible.

And similarly, just as the mother is poorly substituted in the paid marketplace, the care and education passed from parent to child is also non-fungible. A child cannot package it up like their Nike shoes or favorite baseball cards an sell them to classmates. The value of the transaction clings tightly to those in the relationship.

These are not straight out gifts in most cases. There is a payment, whether said or unsaid. Mostly the implication is that what a parent does for a child, the child is expected to pay it forward to the next generation. The reciprocity isn’t back to the individual who did the work. Time does not allow for that. The reciprocity is to another in the group who will in due course have a need.

But what about the group: Mothers? Are they an aggregate of individual mothers each making the best decision for their individual child, or are they grouped as mothers, celebrated on Mothers’ Day, altogether going through such metering out a list of jobs? Well, that depends

At the primary level every player is an individual. But there are instances, compelled by a common pursuit, say a Little League Team, that mothers may start behaving as a group. They become known as The Baseball Moms. Although each mom is still keeping their individual commitments to their children, the interest in winning the League championship, persuades them, as a group, to cooperate for all things baseball.

These might be making sure all the kids get to practices, organizing their eligibility paperwork, bringing snacks and water, mending and cleaning uniforms, tag-teaming on sibling care. It doesn’t matter which one of the individual moms do exactly which chores. It only matters how much they do sum total. And in that way their individuality vanishes.

Even though the mom are still making choices and acting individually, the only measure that matters is how the group of moms keep their pitchers, basemen, shortstops, catchers and outfielders in the game. Their work is spontaneous and just-in-time, as well as divided into jobs. To add each individual’s hours or contributions matters little–it’s the sum total or their capacity that matters.

Mom’s are independent contractors who forge alliances with groups in the schools, extra-circular activities and places of worship to advance many missions. Far from a socialistic model of a group performing based on equal allocations of obligation, the individual choice making is done through granular comparisons on where it is best to spend one’s time and energies.

It makes no sense to hand out 1099’s for this type of non-fungible work. Value is accumulated and retained. In the public sphere, choices are made as individuals, but the work is evaluated based on the outcome of the group. So in order to make any sense of measures, it is vital to know how to sort.

An instance vs a life-time

The world of Twitter and Instagram promotes the power of a snapshot. It’s a small-package delivered to pack a punch. Not only is it how a lot of information is disseminated to audiences in the millions (in small frame, limited view, no historical placement setting) but has also become the most popular vehicle of public debate, or hollering.

Recently there has been lot of admonishing of our north star state with data claiming Minnesota has the largest achievement gap between majority and minority populations. Let’s consider how this datagram could mean something good instead of assuming it means something bad.

If Minnesota abruptly welcomed a large group of immigrants with no English language skills to the state, the state would be celebrated as humanitarian and good. But of course, for a number of years (how many? ten? a generation?) Minnesota’s numbers for minority education performance would be affected, as not knowing a language is a serious impediment to learning. That makes Minnesota a bad place for minorities.

Minnesota also achieves very high performance amongst children with long time residency, which makes Minnesota is a good place to live. But of course this exacerbates the difference between scores with those who have come more recently, less well equipped, which once again makes Minnesota a bad place for disparities.

It is like the comic strip with an angel and devil on each shoulder whispering their arguments in each ear. Each little creature gesticulating wildly while the face between them looks comically confused.

Raj Chetty is an economist at Harvard who studies, among other things, equality of opportunity over time and place. After all, what we want is a culmination of activity to produce a result. One time snapshots capture a measure at a particular time. A piece of information. They are woefully barren of any wisdom.

His research shows that the Minneapolis area is in the lead among large cities in cultivating the greatest income growth for children of poor families, by age 26.

Brookings

The issue of time and setting must be made part of any half intelligent conversation about these issues. The public goods a city provide can’t possibly be evaluated in moment-in-time snapshots. And people who to try to navigate this path are more likely activists out to promote one point of view, not for a public benefit, but for their private initiatives.

Information, Knowledge, Wisdom

When Zillow and various other tech companies decided to upend the real estate industry more than a decade ago, their tool of choice was information. With all their money and data skills, tech companies were able to thread together rigorous findings on every homesite. They took the mortgage data and the house features data and the tax data and the school data and wove it into a twinkling tapestry of particulars.

The public was mesmerized for years by the shiny fabric. It glistened and glowed and gave them more information than they could imagine. Like the ‘pre-foreclosure’ status, which delicately made public which one of the neighbors was behind on their payments. A little flag went up on the map to grab a scrollers attention. Many consumers interpreted this to mean that the house was for sale, and went up to the owners to inquire.

The wealth of information posted in one electronic capture was impressive. But it was only information. It was neither knowledge nor wisdom. Let me see if I can describe the differences with an analogy.

The weather is harsh in Minnesota with temperature swings from twenty below to over one hundred degrees Fahrenheit. For this reason most single family homes are built on a full basement, so the footings are below the frost line. In addition to the temperature fluctuations we have quite a bit of water. Have you heard of the land of ten thousand lakes? That’s us!

You’re most probably familiar with basements. It’s where the utility room is located, housing the furnace, hot water heater and water softener. There is probably an electrical panel on one of the walls where the service is controlled by breaker switches. And if it is an older home, the washer and dryer are most likely in a laundry room along side a utility sink where the wash water drains.

Now all this information about what’s in a Minnesota basement might be evolving past some of you. The vague sense of the utilities being in that area is known, but identifying each of the mechanicals is becoming as shadowy as the utility room before you find the string cord and give it a yank to turn on the bare bulb light. You definitely can’t tell the difference from a security panel and the electrical, or where the main water shut-off is located. You have information but you don’t have knowledge.

Say there is a bunch of water on the floor. This is a problem. If left, it could cause mold and unpleasant odors. If there is chronic seepage into the big hole that is a basement, then there can be damage to the foundation walls. The seasonal pushing of water on the concrete blocks creates movement. You have information on what is in the basement. You may even have knowledge. But it takes the wisdom of knowing how the whole structure works.

The water pipes could be culprit, or the water heater may be leaking from its bottom. The drain under the 1950’s concrete laundry sink may have cracked beyond retightening. Or maybe the wall right behind the sink is experiencing seepage because the exterior gutter is plugged and overflowing with spring rains. This last one can get nasty over time. A seemingly innocent horizontal line will darken between the cinder blocks. Then widen. And if a decade goes by, you’ll notice a definite bowing of the wall.

You can only acquire wisdom over time. Information is flat. Wisdom has dimension. Zillow will never be wise.

Affordable housing is not a product line

Some politicians don’t buy the idea that an additional supply of housing units, at any price point, will lead to more units of affordable housing. They do not accept that increasing the number of units overall, or greater supply, reduces costs.

What they see are swanky high end homes being built and swanky high income people moving in and absolutely nothing happening to the other end of society. So who’s to blame them?

In order to assist in smoothing out some of these misconceptions, it’s necessary to beg people to accept that housing is not an ordinary commodity, like clothing. Everyone needs housing and clothing, but that’s where the similarities ends.

Poli-types and activists talk about affordable housing as if it were one line of housing, like an evening gown is one line of a designer’s seasonal collection. If you only make evening gowns there’s nothing for the average Joleen to wear. We must sew up some practical shirtdresses! It’s that simple: Build affordable housing.

There are two conceptual problems with treating housing like clothing (just pick the right line for goodness sakes!) Housing is a good that is used and reused as opposed to being disposable. And secondly, in part due to this, over time (time is important) depending on how much maintenance it receives (maintenance is important) a home’s usefulness and hence value fluctuates.

When left unattended for too long, the structure depreciates and the land it sits on becomes disproportionately valuable.

Whereas a community doesn’t want too much time to pass with too little maintenance (which creates slums), this is often the scenario playing out for NOAH (naturally occurring affordable housing). A long time landlord may get to the point of not being energized by upgrades and flashy renovations. He or she may be riding out the property’s usefulness as long as the tenants are amicable.

But time never stops. And mechanicals get old. So these situations are only sustainable for so long. When left unattended for too long, the structure depreciates and the land it sits on becomes disproportionately valuable. Down comes the structure to make way for a swanky new one.

Since new is expensive, expensive people move-in. But as long as the new construction is adding units to the pool of housing, and not just being filled with newcomers, then homes are freed up for folks to stair step up through more choices.

Equality at odds with Progress?

There’s a new paper, Lessons from Denmark about Inequality and Social Mobility, by James J Heckman and Rasmus Landerso. Here’s the abstract:

Many American policy analysts point to Denmark as a model welfare state with low levels of
income inequality and high levels of income mobility across generations. It has in place many
social policies now advocated for adoption in the U.S. Despite generous Danish social policies,
family influence on important child outcomes in Denmark is about as strong as it is in the United
States. More advantaged families are better able to access, utilize, and influence universally
available programs. Purposive sorting by levels of family advantage create neighborhood effects.
Powerful forces not easily mitigated by Danish-style welfare state programs operate in both
countries

What I find interesting is the framing of their analysis around neighborhoods. They find that even though teachers in Denmark are paid the same salaries, there are still different outcomes for children which appear to be a result of families sorting themselves by neighborhood.

One good example of this phenomenon is the quality of schoolteachers by clusters of parental
characteristics. In Denmark, teacher salaries by neighborhood are mandated to be equal. That is
a force for uniform quality of schools across neighborhoods. However, uniform quality is not the
actual outcome in Denmark.

The sorting continues down through to the teachers.

There is a strong positive association between the characteristics of parents, on the one hand, and the characteristics of teachers on the other, despite equality in wages.

Even with an equalization of monetary compensation to the educators, the more established families gain the preferred access to education. And thus equal opportunity to education is not being realized.

But is this one of those everything-should-be-equal that makes sense or is counter productive? Are the measures and classifications and groupings done in a way that divvies up into a state of balance?

I don’t think it is a controversial notion that those on the lower rung of academic performance are more likely to be motivated by seeing themselves in their teachers and mentors. And until those teachers and mentors are brought along into this higher level of academic delivery, the system that looks for those mentors will have unbalanced delivery systems. By choice. And this may very well be the best delivery for that moment in time.

Here is a scenario where fine tuning and focusing in on what is thought to be an issue of equality maybe sabotaging the path for greatest progress. By drilling down to the tier of the individual, one dismisses the group. To bring along the child can only be done by bringing along their larger group, including their parents and teachers.

Vintage Stonehenge and the passing of time

Stonehenge summer of 1976

In honor of the alignment of the rising sun on the spring solstice between the ancient stones of Stonehenge, here is picture from my visit in the mid 1970’s. I do remember the now UNESCO World Heritage site as being well attended. And from the lack of grass around the ancient stones, it seems that everyone was allowed full access to the area.

Aesthetics and Solar Roofs

Elon Musk has stated that 2021 will be a key year for the Solar Roof, with the CEO noting that its potential would be evident this year. Considering the company’s ongoing rollout of the integrated PV system and the development of better Solar Roof designs, it may only be a matter of time before more customers of Tesla’s flagship residential solar product would have more design options available. 

https://www.teslarati.com/tesla-solar-roof-colored-textured-tiles-patent/

Aesthetics is one stumbling block in consumers’ embrace of solar energy. A look that blends into the standard architectural asphalt shingles, or clay roof tiles, would be more consumer friendly than panels.

NorthStar MLS

Attractive shingles will undoubtedly command greater appeal than shiny 24 x 24 inch panels set into a large framework.

Tesla’s Solarglass Roof tiles are already among the most aesthetically-pleasing PV systems in the market. A Solar Roof installation involves the setup of both PV and non-PV roof tiles, and according to Tesla, this could present some issues. Since some tiles do not have solar cells in them, there will be some angles or times when it is possible to distinguish which tiles have solar cells and which do not. 

credit: Patentscope

Tesla also produces a lithium home battery, called a powerwall, which can store energy from the panels to be used after dark, during peak pricing hours.

The Tesla Powerwall pairs well with solar panel systems, especially if your utility has reduced or removed net metering, introduced time-of-use rates, or instituted demand charges. Installing a storage solution like the Tesla Powerwall with a solar energy system allows you to maintain a sustained power supply during the day or night, as long as you store enough power from your panels when the sun is shining.

https://news.energysage.com/tesla-powerwall-battery-complete-review/

With cost for the battery alone running around $8-9K, installation of an entire solar system is upwards of $20K. For comparison, a forest air furnace runs around $4-5K. That said, people pay extra for all sorts of social reasons. They use their son-in-law for their mortgage despite higher fees, they buy Girl Scout Cookies (OK, they are delicious too) and bid triple the value of a vacation package at a charity auction. There is an additional expense in buying organic vegetables and sometimes loyalty to one’s barber requires a drive across town. There are many circumstances where one pays above the going rate so that a portion of the price supports a social objective. Still- the premium has its limits. And solar power isn’t quite affordable enough to reach the mainstream concerned, yet.

In the end it is all about the payback and reliability, especially in a harsh climate. Natural gas is very affordable, but its infrastructure is not available throughout the state. Homes that rely on electric baseboard heat will most likely be the first to tackle the significant upfront investment and convert to solar.

In Dubious Battle- Steinbeck (1936)

After the first of the year, I wrapped up the novels I was reading and made a promiss to myself to be a little more selective. To only read high caliber writing. That’s how I came upon In Dubious Battle. I wasn’t aware of the buildup to an apple pickers’ strike until I was bending back the binding so the pages eased open in my hands. And strikes are turning out to be very good scenarios for expressions of the social economic side of the economy.

Take what Mac says here to Dr. Burton, who has been brought in to be on hand to mend any of the strikers who get caught up in a tussle. Mac’s trying to figure out why Burton keeps showing up when he doesn’t get paid, nor does he seem interested in the cause. In other words Mac can’t figure out the ambitions for what he refers to as ‘work’ when it falls neither in the private or public sphere.

“Yes, you. You’re not a Party man, but you work with all the time; you never get anything for it. I don’t know whether you believe in what we’re doing or not, you never say, you just work. I’ve been out with you be fore, and I’m not sure you believe in the cause at all.”

Dr. Burton laughed softly. “It would be hard to say. I could tell you some of the things I think; you might not like them. I’m pretty sure you wouldn’t like them.”

“Well, let’s hear them, anyway.”

“Well, you say I don’t believe in the cause. That’s like not believing in the moon. There ‘ve been communes be fore, and there will be again. But you people have an idea that if you can establish the thing, the job’ll be done. Nothing stops, Mac. If you were able to put an idea into effect tomorrow, it would start changing right away. Establish a commune, and the same gradual flux will continue.”

“Then you don’t think the cause is good?”

Burton sighed. “You see? We’re going to pile up on that old rock again. That’s why I don’t like to talk very often. Listen to me, Mac. My senses aren’t above reproach, but they’re all I have. I want to see the whole picture as nearly as I can. I don’t want to put on the blinders of ‘good’ and ‘bad,’ and limit my vision. If I used the term ‘good’ on a thing I’d lose my license to inspect it, because there might be bad in it. Don’t you see? I want to be able to look at the whole thing.”

Burton turns out to be a bit of a philosopher. He’s there putting in the work so he can understand the why of it all. He and I agree the flux will continue. That the whole pricing mechanism is always in motion, and for that reason time must be understood. He also is indifferent to the ‘good’ of it. He isn’t going to shuffle through the risks versus the rewards, he is there trying to understand the beams that turn the wheel and the flow of the water that pushes on the buckets.

In the following few pages Dr. Burton talks about group-men. “I watch these group-men, for they seem to me to be a new individual, not at all like a single man. A man in a group isn’t himself at all: he’s a cell in an organism that isn’t like him any more than the cells in your body are like you. I want to watch the group, and see what it’s like.”

I’m looking forward to reading what else Burton observes.

Radon Be Gone

The EPA has designated January as National Radon Awareness Month. “Test. Fix. Save a life.” is their tag line.

Those of us in the business of helping folks buy and sell homes, have been hearing about the health concerns emanating from radon seeping into homes for the past twenty years. In the first part of the 2000’s, health department officials encouraged buyers to test for radon at time of purchase. Radon was listed alongside a variety of other environmental concerns on the state of Minnesota mandatory seller’s disclosure.

Consumer response to radon did not match the government’s concern, and in 2014 the MN Radon Awareness Act went into effect. The variation in apprehension is best represented by the amount of space now dedicated to the topic in the seller’s disclosure. Lines 279-309 (2020 version) of the body of the disclosure speaks to radon alone–more lines than wells, septics, or any other topic. And two pages of information regarding the detection and harm of radon gas were tacked onto the end. Out of a twelve page disclosure virtually three pages, or one quarter of the document, is now devoted to radon (as opposed to foundations, or water penetration, or roofs).

The new disclosure established an industry standard which dictates the seller is obligated to mitigate a home which tests above the 4 cPi/L established by the EPA. It’s unclear if buyers request the install due to fear for their health, or because they don’t want to be the sucker-who-got-stuck-with-the-bill at a later date, when they go to sell.

Over the course of implementing tests and installations there have been some inconsistencies which have resulted in the need for a final arbitrator. For instance, a few years ago an inspector turned off the air exchange system that a seller had installed in his 1920’s home to enhance the heating and cooling functions. The EPA guidelines state that HVAC systems should be running as normal during the test. However, since this air exchanger was located in the attic (not in the basement) the inspector felt it was an extraneous appliance and turned it off.

The reading came in slightly over the benchmark of 4 cPi/L. As it had already been a contentious negotiation the seller refused any additional compensation. The buyer choose to use $1200 (compensation negotiated for a cracked clay chimney flu) on a radon mitigation system that would not be necessary had the exchanger been left running. They chose between fire safety and radon safety.

By early 2019 licensing of inspectors who perform radon testing was implemented to handle the inevitable variations in the use of the testing apparatus, including decisions regarding air exchangers. Since the MN Radon Awareness Act went into effect, a whole industry of inspectors (tests range from $180-$240) and mitigation installers (system installation ranging from $1000-$1800) as well as a bureaucracy to monitor and deal with complaints, has been established.

Background

The story the Minnesota Health Department has been stressing is that cancer is the leading cause of death in the state. But the leader is all cancers. Mortality rates for cancer vary within demographic groups, but generally, lung cancer makes up around 25% of cancer fatalities. Radon is called out as the second leading cause of lung cancer after cigarette smoking. What they don’t say is that radon is lumped in with second hand smoke and accounts for just 12% of the cases of lung cancer.

MN Leading Causes of Death, 2017DeathsRate***State Rank*U.S. Rate**
1. Cancer9,896146.836th152.5
2. Heart Disease8,230119.150th165.0
3. Accidents2,78844.638th49.4
4.  Alzheimer’s disease2,47434.923rd31.0
5. Chronic Lower Respiratory Disease2,46436.339th40.9
6. Stroke2,25032.640th37.6
7. Diabetes1,31219.336th (tie)21.5
8. Suicide78313.838th14.0
9. Flu/Pneumonia6979.948th14.3
10. Parkinson’s Disease67510.23rd8.4
Taken from the CDC’s website

Feel free to chime in if I’m doing my math wrong, but a quarter of all cancer cases is around 2500 (lung). Then twelve percent of that number is 2500 x .12 = 300. In other words, death due to radon isn’t even on this top ten chart. It accounts 38% of the souls that commit suicide.

From the keys on my calculator, I have death from radon registering in at no more than 5 per 100,000. Below this grouping of accidental deaths which make up 6% of all deaths (from MN Department of Health):

  • Falls (2.7%): 21.1 per 100,000 population
  • Accidental poisoning: (1.6%) 12.8 per 100,000 population
  • Motor vehicle (1.0%): 8.1 per 100,000 population

The average Minnesotan is four times more likely to die from a fall, twice as likely to be accidentally poisoned and slightly more likely to die in a car crash. The claim that more than 40% of homes in Minnesota are contaminating people’s lungs with radon gas and killing them is not jiving with consumers’ personal experiences.

Nationwide Agenda from the EPA

One has to assume that the MN Health Department is following a directive for radon procedures from the EPA’s national agenda. However the EPA offers not one article newer than 2003 on its website to validate research tying lung cancer to levels of radon in homes.

A paper from Korea, which looks at the topic using measures of radon in homes, was published in March of 2016 and is the most recent academic paper I could find. It too references almost exclusively research papers written prior to 2000. Ji Young Yoon et all (Department of Humanities and Social Medicine, Ajou University School of Medicine, Suwon, Korea) wrote “Indoor radon exposure and lung cancer: a review of ecological studies” which was published in The Annals of Occupation and Environmental Medicine. There had been no studies to date in their country. They found:

For Korea, we observed tremendous differences in indoor radon concentrations according to region and year of study, even within the same region. In correlation analysis, lung cancer incidence was not found to be higher in areas with high indoor radon concentrations in Korea.

Scanning the bio’s of the faculty at the College of Design at the UMN, not one cites an interest or expertise in radon. There seems to be a lack of interest in funding or pursuing this topic.

How can we be following guidance that doesn’t appear to have been updated or even reviewed in the last ten years?

That was then this is now

Furthermore there has been a dramatic decrease in lung cancer’s claim on lives.

The death rate from cancer in the US declined by 29% from 1991 to 2017, including a 2.2% drop from 2016 to 2017, the largest single-year drop ever recorded, according to annual statistics reporting from the American Cancer Society. The decline in deaths from lung cancer drove the record drop. Deaths fell from about 3% per year from 2008 – 2013 to 5% from 2013 – 2017 in men and from 2% to almost 4% in women. However, lung cancer is still the leading cause of cancer death.

American Cancer Society

The American Cancer Society estimates deaths from all lung cancer in MN in 2021 will come in at 1950. Twelve percent of this is 234.

Time has changed the circumstances but there has been no release, or at least, re-evaluation, of the protocol. It’s like everyone moved-on and no one told the bureaucrats. So they keep RADON at the top of their checklist of ‘to-do’s. Meanwhile a whole industry of inspectors, installers and licensing and compliance people are settling into a new market.

It’s that mindset that if, ‘We can save one life!’ Then it is all justified. Yet–if 2020 has taught any lessons it is, that even in lives, there are trade-offs.

Costs

In 2019 closed home sales in the 16 county greater metro area (Minneapolis Area Association of Realtors) came to just shy of 60,000 transactions. Take out new construction (10%) and townhomes (25%), and take out a few for opting out of radon testing assuming 36,000 test were performed. A radon test performed by a now licensed inspector averages $200. The (conservative) amount spent on radon testing in 2019 totals $7,200,000.

The MN Department of Health estimates that 40% of homes in MN will test over the benchmark set by the EPA as hazardous to one’s health, or 4 pCi/L. That would lead us to expect that 40% of the homes tested high and negotiated the installation of a radon mitigation system into their purchase. At an approximate average cost of $1200, that comes to a total expenditure for the state of MN to (36000 sales x .4 x $1200) $17,280,000.

Based on these numbers, Minnesotans spent nearly $24,480,000 on mitigating radon in 2019. The tag line from the ‘EPA Test. Fix. Save a life’ promotes an image of each install resulting in fewer deaths to cancer. But is that true?

The amount of money our metro community spent on radon is a flash in the pan compared to a state budget or even a (metro) county budget. But $24,480,000 for community associational groups, who are on the ground interfacing with those struggling with mental health and substance abuse, it is a pot of gold. And that’s where the money should be going. When a 70+ year old passes, it folds into the course of life. The impact of a father OD’ing, leaving young children behind, or the death if a youth, high on the latest street drug, will galvanize community effects that reverberate, even to the point of burning down a mile stretch of buildings.

Wouldn’t our communities be better off by spending that $24,480,000 on mental health to deter suicide? Wouldn’t this, for instance, help with community policing? I say yes.

Motivations and Spheres

The difficulty, of course, is that we can’t transfer the $24 mil from the radon pocket to the mental health pocket. Government used their ability to pressure a commercial endeavor to set up the radon industry. In fact, with the death rate for lung cancer dropping, it almost feels like the health officials are spurred onto be more aggressive. “We’re doing so well making widgets, lets make more!”

Unfortunately this is a business mindset, for work in the private sphere, one that seeks to expand and grow. The public good mindset is quite the opposite. Since the work in the public sphere is often performed to prevent something from happening–as in this case, to prevent lung cancer. Once that is accomplished, activities should cease, and resources reallocated to other demands of the public that now climb up to a higher priority.

In the meantime, the industry standard for radon testing, at time of a house purchase, has created paying jobs for inspectors and bureaucrats. Quite naturally, their motivation will be to support this new structure from a private point of view. It is not part of their employment to evaluate whether this the best use of societal funds. The inspectors and installers and continuing ed teachers and state licensures and public health workers will support the process because it pays the bills that support their families.

What happened to the feedback loop? Where in the system should there be a check to see if programs are on the right track? Feedback has been stifled because to criticize the noble cause of saving life has not tolerated.

What I am and what I’m not saying

I am not saying I have the expertise to validate or deny the tie of radon in homes to lung cancer.

I am pointing out that public health officials have struggled to get this issue to take traction in the public mind. I am saying that no research in the last fifteen years has validated our present path to safety (and one study has countered it). I am saying that an industry, in the private sphere, has sprung from these government actions, draining over $24,480,000/year from community funds for this issue. I am saying death rates from lung cancer have plummeted in the last ten years. I am saying there is no feedback loop to public officials to demand a review. I am saying it is no longer good enough to make one agenda and then push it through for a decade without any consideration that time alters all things.

For a generation there has been the activist approach in government. Select a cause; implement it nationwide; get the talking points out to all the communication outlets so it is heard in stereo; then never relent. I am saying that this is no longer good enough.

Back to tenements for the poor?

While the government will need to employ short-term measures to avoid a wave of displaced households, one major step toward resolving the underlying problems in the housing market would be repealing an obscure 22-year-old addition to the Housing Act of 1937, the Faircloth Amendment. Passed in an era when the reputation of housing projects was at a low, the amendment prohibits any net increase in public-housing units.

Opinion | Alexandria Ocasio-Cortez Knows How to Fix Housing – The New York Times (nytimes.com)

Ugh. When politicians are too young to remember the mistakes of the past.

WWF, Neocolonial?

The World Wildlife Fund is the largest conservation organization in the world. Born of the passions of the 60’s, it established a foothold in Kenya when the organization purchased 37,000 acres adjacent to Lake Nakuru in 1973.

Eco-tourism is a big player in Kenya’s GDP, coming in at close to 10%. Despite this economic success, decades of outside influence on the care and preservation of wildlife has some expressing tension around land use.

The conservancy, portrayed in this BBC clip, celebrates the initiatives of local ownership.

Nashulai Maasai Conservancy , is the first ever community led and managed Conservancy which has been created to on the borders of the Maasai Mara National Reserve . The conservancy has been established for wildlife conservation but the local community would also live within the area and share it with both wildlife and livestock . It is a mixed model Conservancy the first of its kind in Mara

The point to be made here is that what was an agreeable arrangement 47 years ago, two generations or so, may no longer have the same feel to it. At that time perhaps there was insufficient home-grown ability to manage the parks, and as the shared objective of wildlife preservation still appealed to all, it was advantageous to have outsiders come in and put everything in place.

What was appealing and profitable in a social, ecological and financial sense, a half a century ago, is showing some wear. Now that the outsiders are no longer needed, they are pirates. They are taking instead of giving. Time has changed the circumstances.

Primer Podcast for Affordable Housing

Lots of great topics covered in this Econ Talk podcast with Katherine Levine Einstein. Russ Roberts and the assistant professor of Political Science at Boston University tackle the obstacles developers face in building higher density homes, as well as affordable housing units.

Katherine explains that the title of her new book, Neighborhood Defenders, comes from the notion that people who show up at city council meetings feel they are speaking on behalf of their neighborhood; they view themselves as representatives of that public.

So, first on the motivation side, the term NIMBY implies sort of a selfish motivation. It implies, Not In My Backyard, a very individually motivated view. And, in our research, we actually find that the folks who show up to oppose the construction of new housing often view themselves as representing their community’s interests and are motivated by protecting their neighborhood, their surroundings. Right? So, their motivations are not so individualistic.

The conversation flushes out the reality that people who have time to devote to the work of public affairs do not necessarily reflect the width and breath of the constituency. In fact there are noticeable groups missing from these planning and approval meetings. As Russ says:

So, talk about that tension between the idea behind saying ‘a public hearing.’ Wouldn’t you want a public–I mean: Let the public be heard. And yet it’s not really the public.

Groups are further delineated in the failure of the California legislature to approve SB 50 which would have streamlined the approval process for developers. It seems that the environmental folks found common ground with NIMBY’s.

So, one set of interests, which doesn’t surprise anyone, would be opposed to something like this is communities like Beverly Hills. Like, very privileged places with lots of white homeowners who are strongly opposed to the construction of new housing. So, those folks were like, ‘No, we do not want to have fourplexes all over the place here.’ So, they were a natural oppositional constituency.

But, other groups also came out in opposition. So, Sierra Club and a few other environmental groups were strongly opposed because they thought this would lead to the degredation of sort of existing green spaces.

And, that I think, and this is the oppositional group that was to me most interesting, is sort of left-leaning tenants’ rights organizations and some of the socialists organizations in California that are quite powerful, especially in Los Angeles and San Francisco.

Those groups worried that this up-zoning would actually lead to gentrification. If we think about areas in Los Angeles that are near transit stops, that many of those are less -privileged areas with larger Latin X or black populations. And, that those were places that might face development pressures, and, you know, the construction of new luxury housing, should zoning codes be relaxed.

And, so those really diverse constituencies all came together. Both times they killed SB-27 and they essentially killed SB-50 as well.

As they pull apart the thorny issues around community support for affordable housing, they not only talk groups, interests and work, but also how the public’s impact on timeframes have economic consequences.

Usually it would take like three to six months, I assume, to build a grocery store–I don’t know, maybe. But, for some reason it takes forever. And, of course the answer is, ‘They didn’t get the permit yet. They’re working on it.’ But, talk about–these things, some of them are ten years. And, after the 10 years, they get a building of four units down to three. But these are often 90 units of affordable housing were planned and they end up with, like, 40, ten years later.

In addition to these public sphere definitions and mechanics, they talk externalities and corruption. Well worth a listen!

Gifts and Gratitude

Credit due to an unknown source

There are a lot of exhausted moms out there on Christmas day. What accounts for the value they find in gift giving? To bring joy and a little material well being to your kids is within the realm of comprehension. But what about all those other gifts?

Business people see something in the cards with lots of scrolls that go out to clients, thanking them this time of year. Showing gratitude is over and above any monetary payment, even if there is a business angle to the effort to nurture their contacts.

Figuring out who makes the list is an accounting of sorts. Your very best customers may get a holiday wreath along with the message of good cheer. Teachers may receive gift cards to Caribou Coffee, whereas uncles and aunts step up to Pendleton socks and scented candles, but your secret santa pick warrants an outright custom purchase.

A gift is, by definition, something that is given with no expectation of return. Yet thankfulness is often a notion in the gift giving tradition. It’s a recognition that there is somebody out there thinking about you. Being thankful affords you a moment of recognition for all those loose and untimed interactions that structure a more pleasant life, including perhaps the $15-and-under gift put before you.

Instead of rolling your eyes when you pull back the tissue paper hiding the token of appreciation in the little gift bag, consider what type of gratitude is wrapped up in it. The gesture asks you to take the time to think and remember when that cousin picked you up after hours from the bars, or Aunt Bee was at home on that below zero day when you were locked out of your home, or how the mailman put your package in a shelter spot on the front porch.

Appreciation allows you to gauge different levels of merit. A fine tuning of need, something that seems to be sorely lacking in some of our large institutions. Gratitude is an important player in the ballgame of human interactions, right up there with empathy or greed. It is one to cultivate.

For Christians today is a day of thankfulness for the birth of Christ, the Savior. The lessons of gratitude and thankfulness are carried out through gift giving. All the others who are simply setting up a tree with presents all around are still listing out their sets of priorities. In this way they benefit from this lesson, believer or non-believer. That’s something to be thankful for.

To all of you–Merry Christmas and good night!

Book Club

One of the benefits of raising a child is that you get to follow them through their interests and endeavors. My college sophomore was required to tackle two novels for his class on colonialism: The Poor Man’s Son and God’s Bits of Wood. Feraoun is the product of French Algeria and Ousame is from Senegal, part of Afrique Occidental Francaise (AOF) until 1958. Both tell stories of the struggles of their countrymen and women during the era of New Imperialism.

Unlike the conversation of today, both authors describe many more groups than the simple division of colonial power and the colonized, of oppressor and oppressed, or of those who take what is not theirs and those who are left without. How exactly the goods, services and resources are shared and divided between all the players is a preoccupation for both men.

Details such as, 180 francs– the amount of Feraoun’s scholarship to Ecole Primere Superieure, and 100 francs–the amount he turns around and sends back to his family in Kabylia. Then there is 25 francs and a container of barley–the amount that shows his family’s extreme financial distress. And 600 francs–the amount the headmaster hands over to allow him to continue his education.

Both authors detail workplace struggles. Feraoun’s father leaves for a time to be a laborer in Paris. When a workplace accident lands him in the hospital he is able, after two attempts, to secure a settlement of $3000 francs along with a quarterly stipend. Ousame describes the 1947 railroad worker strike with specifics on pensions and wage scales and family benefits.

There is a counting amongst the women as well in the home life of the railroad workers. There is the rice that the local grocer is forbidden to sell them, and a fight with the french soldiers over a leg of mutton. Feraoun finds his financial obligations to his northern Algerian family growing as his sisters’ husbands leave them for greener pastures. He counts thirteen dependents on his teacher’s salary.

There are many groupings in these stories; there are the workers, and the women, and the missionary, and the soldiers, and the french educators, and the French who show up to help with the strike, and the elders who feel disregarded–all pulling in many different directions for people’s time, talent, and assets.

It’s as if these authors are trying to sort through two spheres of economic activity, particularly set in contrast by private affairs and public affairs, by looking after the individual and being obliged to the family, as well as by outsiders and insiders. And the good and the bad make an appearance in every cluster.

Without a doubt, the richness of these detailed accounts of choices is far more interesting than the conversations of today.

Gentrification-a swear

Not by dictionary.com’s definition: [ˌjentrəfəˈkāSH(ə)n] NOUN the process of renovating and improving a house or district so that it conforms to middle-class taste.

That doesn’t sound too controversial. People go in and clean up an area, make it more livable. There must be more to it to explain how the word gets heated up and shot out like a bullet. This popped up on the CDC site under Health Effects of Gentrification:

Definition:

Gentrification is often defined as the transformation of neighborhoods from low value to high value. This change has the potential to cause displacement of long-time residents and businesses. Displacement happens when long-time or original neighborhood residents move from a gentrified area because of higher rents, mortgages, and property taxes.

Gentrification is a housing, economic, and health issue that affects a community’s history and culture and reduces social capital. It often shifts a neighborhood’s characteristics (e.g., racial/ethnic composition and household income) by adding new stores and resources in previously run-down neighborhoods.

I’m truly not sure how the Center for Disease Control underwrote a housing topic. Gentrification= Disease? (to be fair, they do start the page with this disclosure: “This website is archived for historical purposes and is no longer being maintained or updated.”) However this definition does a great job of setting up the issues which incite a passionate response. And setting up the issues is all this first post will do for this complex scenario.

Straight off, in the first line, is the accurate observation that the process of replacing roofs, tightening wobblily rails and putting in new windows increases property values in a neighborhood. This should not be controversial–ideally owners at all levels of housing can keep up on maintenance (and if you own a home you know that this is a dependable demand). The controversy arises when the change in the value of property, and hence rents, makes it unaffordable to the current residents.

Be sure to understand that this is about value, and who ends up with it. The motivation to build equity drives, in part, the purchase and renovations of a home. A home to do with as you choose and to make your own. Property owners increase their net worth when more buyers want to move in. So gentrification is a good thing, not bad for those whose names are on the deeds.

The passionate objection to gentrification lies in the garbled mess of the second paragraph. Let’s try to pull it apart–but first understand the scenario. An investor, or a homeowner, has to receive some compensating factors to dive in and do the work to repair a home which is begging for all the big ticket items: new heating systems, siding, windows, roof. And that’s before you even get to all the interior stuff like new kitchens, bath, maybe even rewiring the old knob and tube wiring which is known to cause house fires. The compensation is a higher valued home.

To turn a whole neighborhood, where the majority of houses find themselves in a similar state of deferred maintenance, would take a while. We’re not just talking one spring sales season following a year of living with contractors coming and going. Elevating a neighborhood to a new standard is pushing a decade’s worth of work.

Gentrification is described with a sense of immediate turnover, which simply isn’t how it happens.

What is upsetting to people is that a sweeping renovation to an area produces a negative externality for the folks who were benefiting from the low cost of substandard housing. Furthermore, if these renters leave the area, they may leave behind favors accumulated through other social groups with geographic anchors. They take a loss for the chits left on the table for non-fungible work.

At the core of much of the renter’s rights activism you will find this concept of value and who gets it. There is a sense that despite contributing to their neighborhoods of their time and activity, renters fail to earn value. Only property owners do. So the policy is to divert equity from property owners to renters through initiatives like TOPA.

We can do better. But first we have to understand how to calculate value.

Time and Transactions

This picture may remind you of the children’s book by Virginia Lee Burton, The Little House. A home starts out on a country road and is gradually engulfed by the big city, before it is moved back out to a quiet hill in the country. Over time the land use around the home had changed, so the story puts the house back where it belongs.

Some folks decided Burton’s book was a critique of urban sprawl, despite her objections. She countered that the book, which won a Caldecott Medal in 1943, was designed to illustrate the passage of time. Over time things change. It doesn’t have to be good or bad that change happens at difference tempos. It simply is.

Here’s the satellite view of the 50’s built shoe repair shop, encircled by apartments built in early 2000’s.

Over time the land use around this shoe repair shop had changed as well. The whole city block was ready for something new, but not the shoe repairman. His transaction time table did not match with the everyone else’s. He must have been a hold out as the builder/developer I’m sure would have preferred to bulldoze the whole section and not have to build around the storefront.

The inside of the shop shows all the signs of a long time resident: layers of leather chaps tacked to the walls, boots stacked up on shelving, a bit of dust everywhere. Here’s a small business owner approaching the tail end of his career. Selling his shop would have been retiring, and he clearly he wasn’t ready to retire. The rest of the block might have been working on a commerce time frame, but the cobbler was working on a career time frame.

The parties must have worked out a compromise as the shop still sits on what looks to someday be parking. Someday– when the time is right.

Arthur Rimbaud-French Poet

I jumped on Wikipedia to look up information on Arthur Rimbaud after reading a reference to Rimbaudian savagery. I’m somewhat of a Francophile and know a lot of things French and was a little surprised the name didn’t ring a bell. Happily I read through the entry filling a gaping hole of knowledge about a premier poet. But when I came to this section of the article the photo put my brain into a bell tower at high noon.

I visited Harar as a child so I went digging, and sure enough.

There it was there amongst the shots of winding streets, colorfully scarves vendors in the marketplace and city gates that lead into this ancient walled city on the eastern edge of Ethiopia.

The mind is an awesome and perplexing thing. More often than not it won’t recall a name at a gathering, leaving me, once again, socially awkward. But then–out of the blue, it will recognize an image from deep in the past.

New city, new energy

From the BBC:

On the edge of the Saudi Arabian desert beside the Red Sea, a futuristic city called Neom is due to be built. The $500bn (£380bn) city – complete with flying taxis and robotic domestic help – is planned to become home to a million people. And what energy product will be used both to power this city and sell to the world? Not oil. Instead, Saudi Arabia is banking on a different fuel – green hydrogen. 

Rain drops

‘At least the weather has been nice’ has been a passing phrase in 2020; a Minnesota nice way of putting a positive spin on a dreadful year. The stretch of sunny 60 degree days in our forecast has me deciding which outdoor tasks I can still accomplish. Some readers may not appreciate these temps, but just a few weeks ago an early storm wrapped the landscape in a four inch blanket of white, catching the Autumn Blaze Maples startled with all their leaves yet to drop.

The proper order of things is for the leaves to turn their brilliant oranges and golds and reds, then drop, then get raked up before the snow flies. It’s not the end of the world if the leaves don’t get raked up but blow around in the back yard until snow covers the landscape for a good chunk of the calendar. Come spring, however, when the thaw comes out of the ground, you’ll contend with a soggy mess. There’s the possibility that south winds will dry them out over the course of March, April and May. But the grass will emerge yellow and thin.

Having a patchy pelouse doesn’t make your home inhabitable. It doesn’t come under the must-respond-immediately-and-fix like a furnace when twenty below temps are testing your weather stripping. Heat is essential in a Minnesota winter. Water drips are up there with heat. As water on the loose tends to leave unsightly stains and make things moldy. There are things that you can’t do without and there are things that do damage if you pay them no mind.

A whole host of chores nag at you even though only a few are desperate. Take cleaning the gutters, for example. With an Indian Summer rolling in I get a second chance to get out the ladder and use rubber gloved hands to dig out the leafy debris. Otherwise a stream of snow melt off the roof will overflow, dripping persistently right next to the foundation. A few years of neglect does little damage, but eventually water digs its passage, and seeps through the foundation. Decades go by and the whole foundation wall starts to bow due to the water drops hitting like bullets into the soil and down against the walls. Something as simple as not cleaning the gutters can cause the foundation to collapse.

Community work shares this housework feature, that there are different levels of need that pull one into service. There are those tasks that need immediate attention and receive it. You can’t very well drive by an abandoned crying child at the side of the road. That’s a pull over no-matter-where-you-are-supposed-to-be and help moment.

Then there are those itty bitty items that get pushed aside like the intersections that really need a stop sign. Busy people have yet to get down to city hall and insist on better measures. When a tragedy rustles neighbors into action, there’s a lot of head shaking as to how that risk hadn’t been better assessed.

Assessing long term risks and drawing them all the way back to the present day, into the everyday lives of busy moms and dads, takes the memories of grandmas and grandpas. A shared knowledge of what eventually could happen if you put off the small maintenance items is vital. Only tackling the immediate emergencies, and burning all other time on cosmetics will pull you up short. At the worst time (inevitably) you discover that all the mechanics in your house need replacing, and the foundation is about to blow. Communities are like houses.

It takes decades to run down a house to the point of it being a tear-down. At any juncture, owners can jump in with enough willpower and enough resources to set it straight again. The better path is for people to evaluate all the long term risks, and use this knowledge to divvy up the present day work. Estimating the relative value and effort necessary to maintain and build-on what is already in place. It’s better when several generations supervise and assess the risks and rewards of the work which needs attention.

Remote real estate

Saint Helena hangs in the Atlantic between the eastern reaches of South America and the west shores of Africa.

It is one of the most isolated islands in the world and was uninhabited when discovered by the Portuguese in 1502. It was an important stopover for ships sailing to Europe from Asia and Southern Africa for centuries.

A five day ferry ride from Cape Town takes Napoleon buffs to his final resting place on the island. See more great photos from The Atlantic.

Counting Intentions

If you could count intentions, package them up and gift them, the residents who had their homes rebuilt by Brad Pitt’s Make It Right Foundation, following the devastation unleashed by Hurricane Katrina, would be wealthy. Instead, the 109 property owners of the Lower Ninth Ward of New Orleans are taking legal action against the Hollywood superstar for “unfair trade practices, deception, fraud and negligence.”

Just a little earlier this month, another home in the development was demolished. As Federal courts pull apart the issues, it will be interesting to see how judges view the dynamics and assign responsibility. On the one hand you have the wealthy part-time philanthropist, full-time mega-movie-star, versus a group of mortgage paying homeowners, but then throw in architects with a penchant for environmental activism, builders, suppliers and the crime scene quickly gets muddied. The setting has changed from what Oprah.com describes here in 2010:

Leggett-Barnes and her family are some of the first homeowners in what will become a 150-house community constructed by the nonprofit Make It Right foundation, established by Brad Pitt in 2007 to build environmentally sound residences for low- and middle-income families. “We’re cracking the code on affordable green homes,” says Pitt, who envisions the Lower Ninth neighborhood as “a ‘proof-of-concept’ for low-income green building nationally, maybe even worldwide.”

The plan started with everyone on the same page. The recently homeless needed to return to plots of land, which for some, had been in their families for a couple of generations. Brad Pitt pledged 5 million dollars to take the edge off costs and provide the seed money for what ends up being a 27 million dollar project (that’s $247K per house). But then a new public objective starts to emerge, one driven by an environmental passion. Oprah.com notes:

A Make It Right house is eco-friendly from top to bottom, using at least 70 percent less energy than a conventional house of the same size. “We don’t just want to make homes ‘less bad’ for the environment,” Pitt says. “We want them instead to have an environmental benefit.” Thanks to their ventilation systems and solar technology, Make It Right houses emulate trees, purifying the air rather than polluting it and harnessing the sun’s rays to produce more energy than they consume. The homes are available exclusively to people who lived in the Lower Ninth before Katrina, and Make It Right guides families through the financing process.

It wouldn’t be the first time two objectives were tackled simultaneously: Help families rebuild their homes and make the structures energy efficient. Both admirable. But don’t miss that last sentence, ‘help them through the financing process.’ And just like that we’re off the philanthropy playing field and into the private market game. In this venue the owners are expecting to purchase from a developer, not an actor-philanthropist-activist. They sign for a mortgage. The most common number for the debt was around $150K, bringing the final cost per house to somewhere around $397K.

Just for comparison here is a listing for a new construction home in New Orleans posted on Realtor.com today.

Even at $397K (not including lot cost) one might say the extra money was well spent on energy conservation measures and intended health benefits. One might say that, if the properties hadn’t started deteriorating within a few short years.

By 2015, as most construction concluded, the project had cost almost $27 million. But complaints about the construction and materials used in the homes had already emerged.

These transactions had a philanthropic and environmental and private market component to them. The additional inflow of funds to cover the environmental objectives came in, but the new owners of these properties do not appear to have engaged as critical consumers for the core product. They didn’t check into the materials or the mechanicals or the plans. Just talk to a builder rep if you question whether consumers who build with them hover (daily) to ensure they are receiving what was written up in their purchase agreement. Perhaps due to the power of stardom, or the actual dollars being spent on their behalf, the home-buyers seem to have stepped aside and allowed others to do their bidding. Until as the New Orleans Advocate reports:

In September 2018, homeowners Jennifer Decuir and Lloyd Francis sued Make It Right for what they alleged was deficient construction that caused mold, poor air quality, structural failures, electrical malfunctions, plumbing mishaps, rotting wood and faulty heating, ventilation and cooling.

The dynamics of philanthropy allows for an individual (or group) with extra funds to choose a public need and steer their resources accordingly. The recipients are asked only to consider reciprocating at some future date, should they find themselves in a similar situation. If the courts place the blame on Brad Pitt will that inhibit the flow of goods and services from the wealthy to those in need for fear of liability? Were the end consumers not responsible in a buyer-beware type of way to check out what they were buying? From what the articles (USA Today, NPR), they had owned and maintained homes in the past.

There’s plenty of blame to go around. The architect John C Williams collected $4 million in fees. There were permits and inspectors and building codes. And maybe some blame should end up at the lenders’ door for not questioning the innovative, but untested systems, going into the project. In the end they are on the hook for the paper if a homeowner walks and abandons their property. But mostly, in the for-profit market, the relationship between the developer-builder and the home buyers establish the acceptable combination of durability, green components and price.

The problem wasn’t a lack of intentions. The problem was that the philanthropist-activists bypassed the marketplace and all the small interactions that make it up. The fatal flaw was the thought that with enough money, and passion, all the feedback and tussles between consumers, and inspectors, and building code committees, and brokers, and city planners, and developers, and real estate agents, and electricians,…that all those players interacting in a market setting, just doesn’t matter.

The market continues to shuffled through the consumer choices when judging the environmental impact of products. Standards are set by producers of furnaces and A/C units; power companies offer home energy audits and neighbor consumption comparison; neighbors talk to each other; contractors share incentives; all in the effort to advance a public goal of energy savings. But at each step that goal must be incorporated into the overall integrity of the purchase at hand, or homes will fall apart just like those in the Lower Ninth Ward.

Praise for Brad Pitt remains high, and the contention remains that his intentions were and are completely genuine. It looks, however, as if he will pay dearly for moving toward an ambition without vetting it through the market system. This story shows us that it is not enough to imagine a better world, and poof! It will happen. Progress takes the engagement of all players, giving feedback through action and pricing. Progress depends on markets.

Neo Liberal–Twitter

A thread by Ben Winegard

“Neoliberalism is a complete failure”

I mean unless you care about poverty, literacy, life expectancy, and freedom. Oh, but neoliberalism really is a catastrophe to social conservatism, you say. Think again!

Nonelites can now read. That’s kind of cool!

Another cool thing: Children are not dying anymore.

If you are into political freedom, we even have something for you!

Messing with Time- Disney

Disney has added a warning at the beginning of its classic films (Lady and the Tramp, The Aristocats, Dumbo to mention a few) to pre-empt them from being torn down, ripped up or cancelled in some fashion. The disclosure is basically a reminder that society changes over time.

While these cartoons do not represent today’s society, they are being presented as they were originally created, because to do otherwise would be the same as claiming these prejudices never existed.

Does Disney have the cultural capital to quell the mob? To take away the quills from the Robespierres before they write another dozen orders of destruction?

As groups decide how to proceed with the statues that were gingerly removed after 90 odd years of barely any note, I hope they look to Disney for more than just entertainment. Because remembering the past is vital to understanding the work that needs to be done to step up the stakes for tomorrow.

I’m not sure if Disney’s common sense approach will work. To point out that one might not agree with the actions of decades gone by seems too simple. To remind people that, should they feel embarrassed, disappointed, or enraged with the habits of their forefathers, they can use those sentiments to forge a better future; that the future is in their hands, not the dead guy on the pedestal.

Time will tell.

A public of Two

When I was young 50th wedding anniversaries were common. The local golf course was the venue for gatherings and cake, and for testimonials from friends and relatives. Stories about the young couple’s meeting and courtship, and then marriage and the crazy baby years, were spun out over the white table clothed tables. Maybe there were even stories of difficult times and persistence. In today’s world an announcement about an anniversary surpassing the 30 year mark is commented upon, oddly with: WOW! Congratulations!!

This most basic public of two, (as the property they share is available to them both and actions of one effect the health, wealth and well-being of the other) continues to be threatened by a considerable risk of dissolution. “About 90% of people in Western cultures marry by age 50. In the United States, about 50% of married couples divorce, the sixth-highest divorce rate in the world. Subsequent marriages have an even higher divorce rate: 60% of second marriages end in divorce and 73% of all third marriages end in divorce.”

You would think the benefits of a longer life would be an incentive for all those folks to stick together. The CDC reports: “Previous studies have found that married persons have lower mortality rates than unmarried persons, attributable to either selectivity in entering marriage (i.e., healthier people are more likely to marry) or health-protective effects of marriage, or a combination of the two (1,2). ” Even in the COVID numbers we find “strong and stable families seem to be more resistant to the pandemic.”

Things only get worse as people age and live alone which leads to a crisis of loneliness. In Minnesota the total number of housing units is 2,477,753. With the total population at 5,639,632 the average number per household ends up at 2.49. So everytime you can think of a household made up of more than two people, there is someone living alone. The estimates I saw came in at 20-23% of the population. That’s a lot of singles.

So what gives when the advantages of coupling are out there for all to see. I’m starting a list:

  • With both parties in the work force, the short term transactional nature of business sub-plants the long term ambitions of a social contract.
  • Fear of being duped -don’t take it.
  • The transactional measure of giving ‘enough’ should be replaced by the social measure of giving their best effort.
  • Lack of celebrations that recognize couples in front of an audience.
  • No standards for friends and family to support or constructively comment.
  • Avoid failing at marriage by not getting married.

The data proves that marriage is good for us. So why folks don’t invest a little more work in staying together is odd to me.

Messing with Time

Such a long list of public statues have been pulled down, defaced, and parkways and buildings have been renamed, that the whole culturally sensitive activity has become banal. Standing in line to do their part are student activists at the University of Kentucky who have been demanding the removal of a mural from the 1930’s, one depicting the settling of the Commonwealth of Kentucky. But not everyone is sympathetic. Long time climate activist, writer and poet, Wendell Berry, is suing.

Now, Wendell Berry — the writer, farmer and longtime Kentuckian — is suing the university over its decision to remove the mural, arguing that because it was created through a government program, it is owned by the people of Kentucky and cannot be removed by the university. (Mr. Berry knew the artist of the mural through his wife, who is a niece of Ms. O’Hanlon. Mr. Berry’s wife, Tanya Berry, is also a plaintiff in the lawsuit.)

Perhaps it is time that the courts weigh in on the issue. The period where the passion of the moment, the outrage, perhaps has expired. Voicing a need for change is acceptable, it is desirable. The public square, whether physical or over electronic media, is part of the system. Yet at some point the voicing process is over. At some point destruction to emphasize the severity of the issue becomes destruction to feel powerful. At some point attention to the issue at hand starts to itself erode other worthy causes.

The Minnesota Court of Appeals recently issued an opinion regarding the appropriateness of alining time with the crime. Even if the law changes at a later date, it ruled that the perpetrator cannot be exonerated if the deed was unlawful at time of conviction.

A defendant is not exonerated within the meaning of Minn. Stat. § 590.11, subd.
1(c)(2) (Supp. 2019), when his conviction has been vacated based on a later clarification
of the law, when the conduct violated the law under existing precedent at the time the
offense was committed.

Shouldn’t it follow that the reverse should also not be allowed? That today’s cancel culture cannot convict based on revisions to laws dictating new standards which make historical actions unlawful? Those artists (in this case a woman-which in and of itself should be revered) and their subjects and the commissions which hired the work be done were operating within the guidelines of their time. Not some future reality yet to be conceived.

If anything these artifacts should be kept around because they are there to tell our story. Sir Bertrand Russell wrote an essay offering some ideas on what history should do for the general reader. Here is a section that points out that a history is needed precisely to address the ever changing nature of ‘human affairs.’ It appears in Portraits from Memory and Other Essays.

Our human story is ever evolving. We operate on a time continuum. Thus it seems, that if for no other reason than to avoid making complete fools out of ourselves, we must evaluate events under the conditions in which they occurred.

Is it Public or Is it Private?

Marginal Revolution University is an incredible source of economic knowledge. In addition to the course work there are videos and games. Here’s one designed to help distinguish between public goods, private good, common goods and club goods. At the end of the game there is a cheat sheet of how to classify these goods and services.

Pure Private Goods/Services (excludable, rival)
● Haircut
● Pizza
● Website design
● Table service at a restaurant
● Snuggie
● House


Club Goods/Services (excludable, non­rival)
● Netflix
● Amusement park
● Uncongested toll roads (highway)
● The movies
● YMCA membership


Common Goods (non­excludable, rival)
● Busy city street
● Hospital E.R.
● Tuna in the ocean
● The meadow where your sheep graze
● Wildlife
● Forests


Pure Public Goods/Services (non­excludable, non­rival)
● Wikipedia
● National defense
● Uncongested city street
● City fireworks
● Air to breathe
● Google
● Asteroid defense

To understand the economic arrangement I talk about in this blog, these categories have to be rearranged. I ask people to consider that there are two natures to every product: public and private. The nature is dependent upon who, or which group, has access to the goods.

Let me give you an example. A haircut seems like a pretty straightforward private good. The exchange is between two individuals where the customer clearly owns the hair. But what if the haircut was given to disadvantaged kids in an elementary school by a barber who was providing the service as a gesture of community involvement?

The purpose of the activity is to enhance a child’s self esteem and in doing so increase their productivity at school. The barbers work for free so no money is exchanged to make this a private transaction. There are no production reports, nor does this get measured as a part of GDP. This service is done as a public service not a private transaction. Mind you not just anyone can get the free haircut. Only the kids at the elementary school in question. Everyone else must pay. So the public nature has to be attached to that grouping: it is a public good for the elementary school kids.

This is the reason a haircut cannot be classified exclusively as a private service. In due time, I will sort through this whole list of goods and services to convert you to the new classifications of public and private! In due time.

Who is NOAH anyway?

It was three to four years ago when the acronym NOAH (naturally occurring affordable housing) started appearing in presentations and in print. The sale of a 698-unit apartment complex in Richfield, a modest first tier suburb adjacent to South Minneapolis, and the subsequent fallout from tenants having to relocate in light of the new owners’ ambitions to rehab the ailing structure, brought this situation into focus. The term emerged from the realization that there can be a time when both landlords and tenants benefit by rents low.

Analysts talk about housing like it is a static product. How many units are for rent, with how many bedrooms, and how many square feet. People talk about housing as if the most interesting thing about it is its physical parameters. But properties change over time. What is brand-new, mechanically up-to-date today, becomes tired and dated in the course of a dozen years. People change over time too. A single adult transitions into married life and a family changing their housing needs.

Housing structures have a cycle. New means no repairs but new also means (relative to comparable used properties) the most expensive. As properties age they can become dated and repairs can start to be overlooked. Usually used properties are supporting some mix of these two: the roof is new but the furnace midcycle; the counters are granite but the appliances from a decade gone-by.

Wear and tear and maintenance can also vary depending on the tenants. A drive around any large University campus will show off some student housing that is a little worse for wear. And some landlords are better than others at keeping up on property demands. It can be that the owners are at a later stage of their investment and are happy enough to keep doing repairs instead of replacements, and ignoring the dated carpet runners in the hallways. As long as their renters are happy with stable rent, all parties allow the property to age.

Keep in mind the economics of the lower rent. The owner, by letting improvements slide and just getting by on minimal repairs, has in effect allowed the building to decrease in value. The lower rent is a transfer of building value to the renters. The decreased building value in the open market attracts an investor who is then motivated to do the renovations. And with this the new investor attracts renters who can pay for them.

This most probably describes the evolution of the large apartment complex in Richfield. Other expenses can also impact an owner’s decision to sell.

Dickens sees NOAH threatened across the region, and said landlords get no choice when property values — and thus taxes — rise. Maintenance costs and upkeep also climb, with costs typically passed to tenants.

Is it not beneficial to the community or the renters for a building to deteriorate to the point of condemnation. So the process of an investor rehabbing an aging building in and of itself is a good thing. The reality is that structures depreciate over time, and repairs can only be ignored for so long. NOAH wasn’t a discovery of something new, it just revealed a situation in the open market where both the provider of the housing and the residents found an agreeable equilibrium. For a time.

The biggest takeaway from the acronym is that there is no secret money tree that will appear and save the most vulnerable from their housing burden. NOAH occurs as a situation where an investor tolerates some devaluing of property which is then reflected in lower rent to tenants. But it cannot be sustained without the building becoming a teardown. In the end, when people can’t afford their housing expense, some other group will have to cover the difference.

The Trick with Triplexes

A little over a year ago Minneapolis was getting a lot of attention for ending single family zoning which secured one family home for one lot in 70 percent of the city. Politco ran a headline with dramatic vivid language of strangleholds, and further reported on how activists were taking victory laps following the City Council’s 12-1 vote to reverse single family zoning across the city. The Atlantic ran an article. And the New York Times gave Minneapolis‘s story first consideration in their article.

Yet in this first part of 2020 their have only been, drum roll please, 3 permit requests to take advantage of this up-zoning. The reason being, according to the Government Affairs Director with the Minneapolis Realtor Association, Eric Meyers, “even though new zoning laws permit triplexes, the underlying code was still written with single-family homes in mind. Height restrictions are the same, as are setback requirements.” A seemingly simple request to increase the height of a garage peak by one foot drew an extensive and heated debate. 

Since demand for housing continues to be strong in Minneapolis –the median sale price has risen 5.5% over the last twelve months– and hence the need for more housing units is unwavering, one would think that the spirit of releasing the stranglehold of the single family home would make the process more forgiving.

Emily Hamilton at Bloomberg explains it best: Want More Housing? Ending Single-Family Zoning Won’t Do It. Regulations that have been built over years won’t be undone with that quickly. Think of this at step one. Now investors are reconvening to put together documentation on the obstacles that stand in the way of the envisioned housing option. They will spend time and resources to go back through the city process and seek approval for building conversions and new builds.

Some investors will call it quits and sit out this process as they fear it is too expensive. But it is in this back and forth between the private and the public that incremental changes are made in order to achieve the goal of more housing units. And in doing so lower the cost of homes.

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Here’s the deal 101

Our local NBC news outlet recently ran a story about an elderly couple receiving help from neighbors after being criticized for not keeping up the exterior paint on their home. It totaled $67,000 worth of help. There is no name given to this transfer of money. When a private party helps themselves to $67,000 from their employer it is called embezzlement. When a politician helps themselves to $67,000 from their campaign fund it is called corruption.

The old school explanation for this activity is to denote it as a form of charity. But is it really a gift? Neighborliness is a term that shows up on surveys. But what does that mean? I see this exchange between the neighbors of Gloucester is the most basic transaction in a economy of groups. Let’s pull it apart.

It all started with an anonymous note left for the couple which read, “Please Paint Me! 😦 Eye sore – Your Neighbors. Thanks.” Although clearly written by one individual, the message is presented as a community concern. Signed, your neighbors. You’ve probably heard this type of chatter before. A house on a main road is dilapidated, or decorated with eccentric siding. Comments like, ‘I really wish someone would do something about that place.’ Or, ‘Some people are bringing down the neighborhood!’ So although one neighbor wrote the note, thoughts of this nature were undoubtedly mulled over by many a passerby.

A personal residence is deemed the bastion of private property, and property rights are a keystone feature of our economic system. But the note indicates that there is a hazy area not reflected in the legal deed, filed in the county records, which spells out the owners names. The area residents feel they have a right to demand that the exterior meet their expectations. This is not a novel idea. In fact cities even have ordinances which address the exteriors of properties regarding thresholds for debris removal and grass mowing.

The couples’ daughter took to social media to voice her response to the note. She points out that her parents had lived in community for the past 50 years. And that during this long history they had maintained their home, and hence contributed many years of service towards an acceptable streetscape. “My family for many years took care and maintained this house as best they could…” 

The reason for the disrepair could happen to anyone, it was an act of nature. The article reports that “Marilyn, 72, developed multiple sclerosis about 30 years ago and is mostly confined to her bed, and Jimmy, 71, recently recovered from a quadruple bypass…” Health concerns take time and resources away from the couples ability to comply with the norms of the neighborhood.

Once the word got out about the need, once demand for goods and services was established, a voluntary response from the community resulted in a $67,000 balance in a GoFundMe account. Currency is very liquid, yet these funds are not fungible. As the report confirms the money is “to be used for new siding on their home, new windows, roof and stairs.”

There is no reporting of free riding or extortion, even though funds are seemingly extracted from a greater group to a private party. Nor is this activity portrayed in a religious or moral sense. The voluntary transfer of resources to improve the exterior of the home is held together by a communal objective, one that the recipients contributed to over. This transparent and voluntary activity is the most basic transaction in economy of groups.

“People look out for each other in Gloucester,” he said. “If somebody needs some help, we just get together and do it. It’s all just very heartwarming.” What I hear him saying is that Gloucester is a town with a free an open economy. And yes, that is heartwarming.