Hospitality in Rawalpindi

I was recently reminded of the travel writer Dervla Murphy. Her book Full Tilt: Ireland to India With a Bicycle lingered on the shelves of my childhood home. It is a journal entry account of a solo bicycle trip across Europe, Iran, Afghanistan, (West) Pakistan and India. The journey starts in the winter of 1963. Her travel log is far from a dull diary style as her entries are picturesque and informative.

The landscape, as throughout Swat, was very green and we passed through many pinewoods where the aroma of resin mingled in the hot air with the scents of a multitude of flowering wild shrubs and herbs. Weeping willows lined some stretches of the road, granting a brief escape from the sun, ‘Irish’ bramble hedges and ditches induced homesickness, and on the slopes of the grey, round-topped mountains little green bushes like juniper grew thickly.

There were few travel resources when we ventured across Pakistan some five years later. Mostly plans were made based on firsthand accounts from other embassy personnel. Car travel was easy. The roads were uncongested in the countryside, and although city driving was haphazard, it was a slow-as-you-go type of driving. I can’t imagine depending entirely on a bicycle. Although there is the benefit of the pace allowing for lingering views of your surroundings, such as this approach to Murree.

The hour from 6.30 to 7.30 p.m. was unforgettable, with sun set colours tinting the snowy ridges of the Himalayan foothills, and long shadows stretching across the valley’s steep slopes, which were terraced and irrigated in orderly patterns and dotted by tiny mud houses. Then the cool radiance of moon light succeeded the brief dusk as I dragged myself up the last and steepest two miles to the P.W.D. rest-house where I’m now half asleep as I write.

This hill station lies to the northeast of Rawalpindi. The photo below of the head post office is at its town center.

I left Murree at 7.30, having called on the Irish Presentation nuns at the somewhat startling hour of 6.45 a.m. and got a terrific reception. They’re always so pathetically pleased to see someone fresh from Ireland that it’s worth the effort of answering all the usual questions for the umpteenth time. On the way out of Murree a carload of tourists stopped to ask was I the Irish woman? When I said ‘yes’ they asked if I was going to Madras, and I said ‘perhaps’, whereupon they gave me their address and told me I must stop with them.

Every time I’ve read one of Dervla’s accounts I’ve been taken back by her bravery. She shows a steadfast trust in the general good nature of human beings. And although she had a few run-ins over her travels, her adventures confirm that there are more people who are hospitable than not.

Lack of logic- rent control edition

This thread is from a month ago or so, but the data is still valid. There has been a precipitous drop in new construction permits in St. Paul since last fall’s election put rent control in place.

This thoughtful article on rents in the Minneapolis and St. Paul area confirms that rents have only been easing up until 2020. The author believes rents have been on the decline since then.

The actual advertised median rents for one- and two-bedroom apartments are lower โ€” in actual dollars โ€” in 2022 than they were in late 2018. Three-bedroom rents went up 2 percent over the four years, while inflation went up 11 percent over the same time. These shifts started more than a year before the pandemic. โ€œPostโ€ pandemic increases look big due to the atypical and extremely low rents during summer 2020. But trends show that Minneapolis rents have simply returned to pre-pandemic levels.ย 

This data is in high contrast to the inflammatory, high-rent-evil-landlord hype that was circulating prior to the elections. And despite this lengthy and analytical exposition of a responsive system, there is a parroting of the party line:

We also need more tenant protections, like just-cause eviction andย rent stabilization. We need to ensure that every person has the income to afford a home whether from increased wages, making housing subsidy an entitlement or social housing. Minneapolis minimum wage hasnโ€™t yet reached $15 per hour, and $15 is a long way from theย NLIHC-calculated $17.27 housing wageย needed to afford just a studio apartment in the Twin Cities.

Unfortunately, there is an audience for such questionable logic.

Missing Narratives?

I’m not a fan of the abortion debate. It’s painful on many levels, from both sides. But I do wonder why there are so few (none that I know of) who have written a reflective narrative about their experience. People gush at length about so many personal and controversial experiences. Many revel in being at the center of such things. But on this issue it’s crickets.

The silence is telling.

James Buchanan, the lighthouse and club goods

Hence, the theory of clubs is, in one sense, a theory of optimal exclusion, as well as one of inclusion. Consider the classic lighthouse case. Variations in property rights, broadly conceived, could prohibit boat operators without ” light licenses ” from approaching the channel guarded by the light. Physical exclusion is possible, given sufficient flexibility in property law, in almost all imaginable cases, including those in which the interdependence lies in the act of consuming itself. Take the single person who gets an inoculation, providing immunization against a communicable disease. In so far as this action exerts external benefits on his fellows, the person taking the action could be authorized to collect charges from all beneficiaries under sanction of the collectivity.

An Economic Theory of Clubs (1965)

Storytelling then and now

You know how all the marketing people like to say- let the ad tell your story? The whole story method seems to crop up on LinkedIn or on how-to advice to promote businesses on social media. One simply must come up with an interesting backdrop.

Storytelling now doesnโ€™t hold a candle to storytelling back in Bachโ€™s day. In the 1700โ€™s the account of the death and resurrection of Christ was sung out on Good Friday over a three plus hour service. Have a listen to the Netherlands Bach Society interpretation of the piece.

Personally, I prefer the time when a story was spun into something beautiful instead of a soft shoe move to peak the interest of a commercial audience.

Differences between culture, institutions, and platters

When people talk about the culture it seems like they are referring to a product. It is something you can point to and see its shape. For instance, the term popular culture conjures up images of the latest doo-wop band or a well-viewed film series or the latest forms of dance. It is the culmination of artistic products consumed by the masses.

High culture on the other hand tips a hat to a cappella choir singing St. Mathew’s Passion accompanied by a local chamber orchestra. Or to well-dressed patrons sipping white wine at an art gallery opening. The idea of culture summons up what there is to be consumed in a city dedicated to the arts. It is the experiential outcome.

Institutions also reside in the societal space. But the term emphasizes the commitment rather than the outcome. Political institutions are those dedicated to the appropriate functioning of a political system. The institution of the family refers to the rules and norms which enhance rather than detract from family relations. There are institutions which support the armed forces, or the justice system, or k-12 education.

Since institutions are defined by their objective, they are often qualified in terms of being strong or weak. This qualification refers to how well the society in question is meeting its objectives. Whereas culture is the end product– a work culture, a drug culture– institutions are the social goals people are willing to organize around and enforce at a high level. Yet both of these terms are used in the broadest sense. There is a vagueness of how it all works beyond naming the task at hand.

The one thing we can say about both cultural goods and institutional goods is that they are both public goods, in the modern sense. If a neighborhood has a drug culture, it may roam through all its streets. If a business has a paternalistic culture, all its employees will benefit from matching pension plans or flexible family leave. We are not talking about individual agents; we are talking about individuals who are just one in a group of many.

What both terms fail to include is any type of tie-in to resource limitations. And that is where platters come in. For the purposes of analysis, one must narrow down the view. One must pick a passion and a people and account for what they have to contribute to such endeavors. And once you do this it is easier to see how the competing interests in people’s lives only allow for so much dedication to cultural activity or institutional enforcement. The platter is a slice of communal activity to be placed under a microscope and analyzed.

Activism in lieu of Church

A few weeks ago, John McWhorter appeared on a talk hosted by St. Olaf’s Institute for Freedom and Community. It was entitled Antiracism as a Religion. He’s not the only public intellectual drawing lines between the needs of the woke and the services of religious communities. But he did write a book about it, Woke Racism: How a New Religion Has Betrayed Black America.

Edmund Santurri, the moderator, a philosophy professor at the college on the hill, seemed genuinely offended that McWhorter aligned a practice imbued with a holy sacrament with secular activism. And I see his point. Although the faith aspect of religious identity is only a portion of a relationship to a church. Many people attend worship in congregations where they do not agree with the entire catechism. The church going families I know participate in the church for the wide breath of community interactions both between congregants and with the greater public.

In a recent Bloomberg column, Tyler Cowen theorizes that this natural desire to be part of shared interests is what drives many tech workers to the Woke.

Wokeism does. In fact, this semi-religious function of woke ideology may help explain what many people perceive as the preachy or religious undertones to woke discourse.

You might wonder why this shared culture is left-wing rather than right-wing. Well, given educational polarization in the U.S., and that major tech companies are usually located in blue states, it is much easier for a left-leaning common culture to evolve. But the need for common cultural norms reinforces and strengthens what may have initially been a mildly left-leaning set of impulses.

Developing such a common culture is especially important in tech companies, which rely heavily on cooperation. The profitability of a major tech company typically is based not on ownership of unique physical assets, but on the ability of its workers to turn ideas into products. So internal culture will have to be fairly strong โ€” and may tend to strengthen forces that intensify modest ideological proclivities into more extreme belief systemsโ€ฆ

Marginal Revolution

All of this goes to support the theory behind this site. In the same way there is a human tendency for greed, there is also a tendency for compassion.

When people are isolated in their daily lives from those who could benefit from their good works– such as in the scenario of a company full of affluent highly educated workers– they are left with services that have no destination. It is plausible to say there can even develop a sense of unease about how much has come their way when well aware of the plight of many others. When denied that weekly outlet of giving that a church could provide, the wealthy workers may seize up with guilt.

And of course, it is all good and well that people should get involved with many of the non-religious associational affiliations like professional associations and company sponsored non-profits. It is recommended! Unfortunately, these can seem mundane. So when activists come along with promises of REAL CHANGE at revolutionary tempos, it’s all very appealing.

Hold Tight- Netflix Series Review

I’m three or four episodes in on this thriller-drama and am enjoying the intrigue. It’s one of those stories that introduces the audience to a variety of characters, only loosely linked at first. And then like a wide fishing net thrown over the water, it is drawn in tight until all the characters’ stories are touching. In the meantime, you are left wondering who means what to whom.

I was also attracted to the locality as the story takes place in Warsaw. Recently there’s been a photo cycling through Twitter feeds of Warsaw’s downtown skyline. It made me realize how little I knew about this city.

The characters are convincing. There’s some blood and gore but not too much. But most of all it’s fun as because it leaves you guessing.

Words for Wordle

There’s a fun little game to play when you need a fifteen-minute break from whatever has been eating away at your attention. It’s Wordle. The NY Times purchased the guessing game that went viral earlier this year. The player gets five guesses to solve for the word of the day. Clues are revealed by the tiles turning yellow (letter in the word yet not in right place) or green (correct letter in correct placement).

I like to go for as many correct letters as I can get in the first two attempts. Once you have three of four letters and perhaps the correct placement of at least one of them, my chance of a correct guess increases.

Some computer types with extra time on their hands tackled solving the puzzle in the least number of guesses. It turns out that the key is to pick a strong starting word. Here are some choices that should set you up for a three-try success: SLATE, SAUCE, SLICE, SHALE, TRIED, CRANE, and LEANT.

What’s your favorite Wordle strategy?

Institutional marketplaces

When you think of institutions, you don’t think of the definition of the word as much as examples: marriage, the family, the justice system, or the education system. These are commonly recognized as they exist across all societies. Even criminals have their own justice system. Institutions are loosely defined as the formal and informal rules that organize social, political, and economic relations. But if one wanted to use institutions as a defining element of economic activity, it is worth teasing out a few of their components.

If there are rules, it is implied that there is a group of people who both agree to the rules and maintain them. It is also logical that the rules are put in place to maintain or protect a shared value, a common interest. So, in talking about institutions, it only makes sense to state which group is attached to the rules and what exactly is their objective. Furthermore, if the group must take action to support or defend the rules, then we will call this work.

Consider the institution of marriage. The joining of two people by a vow of devotion to one another varies considerably across society. The impact of this variance can help delineate subgroups of institutional marriage groups. For instance, the swingers who find the swapping of partners at a poolside party are probably not spending a lot of time with couples at Good Shepard Lutheran Church in many a midwestern town. Which is a way of saying that the institution-M for the party people, sub-S, has a different social contract and obligation for W work, then the M sub-C who sing hymns on Sunday morning.

I don’t think anyone would challenge the claim that these two groups live and work on their marriage in different realms. But what can we call these special places where rules are created and enforced, where groups of people meet to work in the effort of securing a value for their social commitments? The word institution has too broad a reach and leaves out the notion of an ongoing exchange.

I like the visual of a platter. All the swingers are out there tipping on a platter, mixing with new members of their loosely held marital vows. While the church people recognize marriage time and again at weddings and baptisms and anniversary potlucks in the church basement. If there is a loss of life, people deliver casseroles. If there are signs of discord, the kids get invited out so the parents can work on the issues of discontent. The contract isn’t only to one another but in support of the institution.

These eco-socio-platters are the marketplaces for institutions. Failing to define them can lead to uncomfortable misunderstandings. According to my new book club book, Are Economists Basically Immoral? (Heyne) Laurence Summers got himself into a bruhaha by mixing platters.

Lawrence Summers, the chief economist of the World Bank, got him. self in serious trouble last December when he sent a memo to some bank colleagues arguing that polluting activities ought to be shifted from developed to less developed countries. He argued that the demand for a clean environment has a very high-income elasticity: which means that people become keener on it as their incomes rise. He said that wealthier people are ordinarily willing to sacrifice more for aesthetically pleasing environments than are poor people. Moreover–and I suspect this is what really got him into trouble- he claimed that the health effects of pollution are less in a poor country than in a rich country because the forgone earnings of people whose health is adversely affected by pollution are so much lower in poor countries, because of both lower incomes and shorter life expectancies. Someone leaked that memorandum to an environmental group and a hail of criticism descended on the World Bank and Lawrence Summers. Summers protested that his statements were designed as a sardonic counterpoint, an effort to sharpen the analysis.”

Making comparisons across vastly different eco-socio-platters will more likely make you look bad than good. By taking a stark look at the economic circumstances of poor people and propping their platter up next to where the rich people live, the audience could only feel outraged. Not because the observations were wrong but because they are empathetic to the plight of the poor more than the truth. Being so bluntly presented with the fact that people of meager circumstances have different life outcomes invokes a sense that all is not right in the world. In the public or institutional realm, this is the fuel that ignites action.

It’s not helpful, however, to have false comparison made which instigate action. And that is the fundamental reason why we need to define our platter. Swingers and Lutherans don’t mix.

Men playing boules

Somewhere on the island of Malta

When you think about a game (basketball, tennis, boules), how much of the game is about the rules and how much is about social entanglements? The idea is to play to win based on a set of predetermined rules. But in the process of doing so can there be interruptions? Who settles disputes? Is the audience able to comment and come to a player’s aide? Is there handicapping based on size or age of the players?

So, what say you? 90-75-50 percent of the process is the game, and the rest is social?

Dewey on Method

But while associated behavior is, as we have already noted, a universal law, the fact of association does not of itself make a society. This demands, as we have also seen, perception of the consequences of a joint activity and of the distinctive share of each element in producing it. Such perception creates a common interest; that is concern on the part of each in the joint action and in the contribution of each of its members to it. Then there exists something truly social and not merely associative. But it is absurd to suppose that a society does away with the traits of its own constituents so that it can be set over against them. It can only be set over against the traits which they and their like present in some other combination.

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.

Insights

When I was just joining the workforce, a reputable mentor leaned in and confided that people would really enjoy my insights. That has not been my experience. Not at all.

A couple facts of human nature must be acknowledged. First off, we donโ€™t want to be shown up. For example, some observations of the workplace, even by a lowly employee, may lead one to conclude that the man in charge is dropping the ball. Hence the man in charge does not appreciate insights. A great way to slow down a career is thus by providing them. Lesson one in workplace politics- make others shine and hope they bring you with them.

Many humans are susceptible to jealousy problems. Being insightful and recognized as such, can arouse feelings of envy. This results in two outcomes. Peers downplay the value of the perspicacity. Secondly, the keen observer will be left out of the next social gathering for the arrogance of making others feel diminished. Outrage.

We all like to hide things from ourselves. We can’t help it. And the motivation behind being unsupportive of a stronger peer is one of those things. It’s not convenient for the ego. So thatโ€™s the quandary. How to hide talent until it finds its perfect support structure to flourish and become unstoppable.

How many triggers are in this post?

It won’t take much googling to find out about the recent dust-up around Ilhan Omar’s illusion of quasi-universal American racism against Muslims. Instead of being distracted by the inflammatory nature of the post and reposting by a competitor for her seat for office, think about the mechanism she is using and how, in the past, it worked to her advantage.

First, you’ll need to know a little background information about the place where she grew up. As MPR reports, “Minnesota is home to the nationโ€™s largest Somali population, numbering 74,000 with 46,000, or about 62 percent, estimated to be born outside the country.” But it wasn’t always that way. Omar arrived with her family in the mid-’90s. By 1999 only 3% of the state’s population was of African American heritage and 8% of minority background. In the latest census, over 20 percent of Minnesotans are considered non-white.

The average Minneapolitan is politically blue- but many people have supported immigrants from the start. Church groups sponsored and supported families coming from Asia as well as Africa. But an increase in such a great number is bound to upset some taken-for-granted norms and expectations. The remedy for this is to advocate tolerance for that which you do not know. But how can you know what you do not know?

This is where the trick comes in. If you don’t know how people on an airplane will react to Muslims praying in an airplane, then you can be led to believe the worst in people by the expert local politician. Furthermore, a Minnesotan with little exposure to being abroad may feel obliged to go along with the outrage and turn on themselves (mysteriously the same people who nurtured the immigration process to start). This I’m-going-to-tell-you-how-horrible-you-are strategy has worked in a naive crowd who could in fact find a few horrible people to point to.

Things have changed. People are remembering that there are a lot of good people out there- in fact, most people are kind and decent. Ilhan seems to have lost her touch with reading the room. It will no longer be enough to be the beautiful rebel, sword in hand a la Jean d’Arc, on a quest against any evil human monster she chooses to pursue.

Tax Day USA

Today is the day you must file your taxes in the US. Expats are also required to file no matter where they live abroad. We pay federal taxes, as well as state taxes, which are established independently. Here’s an economist’s estimate on taxes ranked by the amount paid:

If I had an opportunity to influence tax policy, I would pursue two objectives. Create a process that a high school graduate can accomplish independently of any professional services. Create a process where taxpayers experience, in some way, the cause and effect of payment and services.

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.

Bertrand Russell remembers Joseph Conrad

I have a slim book called Portraits from Memory and Other Essays, by Bertrand Russell. Here’s what the famous mathematician-philosopher recalls about the author of Heart of Darkness.

He spoke English with a very strong foreign accent, and nothing in his demeanor in any way suggested the sea. He was an aristocratic Polish gentleman to his finger tips. His feeling for the sea, and for England, was one of romantic love–love from a certain distance, sufficient to leave the romance untarnished. His love for the sea began at a very early age. When he told his parents that he wished for a career as a sailor, they urged him to go into the Austrian navy, but he wanted adventure and tropical seas and strange rivers surrounded by dark forests; and the Austrian navy offered him no scope for these desires. His family were horrified at his seeking a career in the English merchant marine, but his determination was inflexible.

The two became close friends. Each identified in the other a shared esprit.

In all this I found myself closely in agreement with him. At our very first meeting, we talked with continually increasing intimacy. We seemed to sink through layer after layer of what was superficial, till gradually both reached the central fire. It was an experience unlike any other that I have known. We looked into each other’s eyes, half appalled and half intoxicated to find ourselves together in such a region. The emotion was as intense as passionate love, and at the same time all-embracing. I came away bewildered, and hardly able to find my way among ordinary affairs.

A rebirth in rural MN?

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

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

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

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

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

The money doesn’t make it to its destination

I doubt it is a surprise to anyone that Black Lives Matters cannot account for $60 million of the $90 million they received in donations following the death of George Floyd. A recent purchase of a 6500 square foot mansion with pool, studio and many other flashy features drew attention to the organization’s finances.

The report has further fueled questions about BLMโ€™s finances barely a year after it released the first look into its finances. The foundation said it collected over $90 million in 2020 alone and committed $21.7 million in funding to various BLM chapters and grassroots organizations. With its operating budget set at $8.4 million, more than $60 million was unaccounted for.

Black Lives Matter purchases $6 million property with donation money

The group didn’t always attract large sums of money. It started as a hashtag #Blacklivesmatters in 2013. The call to arms took hold and grew into the rally call for protests following detrimental treatment of black Americans by the police and justice system. For many years the work involved organizing protests following the deaths of Trayvon Martin, Michael Brown, and Eric Garner.

If the social product is to reset conduct toward a minority group in and around criminal activity, BLM is the marketing arm of the industry.

In 2020 social media drew world-wide attention when a teenage girl filmed the death of a black man while a police officer held a knee to his neck. The dramatic unfurling of anger, protests, outside influence, sabotage, precinct burning, national guard intervention were all branded by the Black Lives Matter hashtag. When people (consumers) wanted to respond to unfair treatment to fellow human being, as the natural human response leads them to do, they sent their resources to BLM. But this is the same as sending money to the advertisers who create TV ads (sorry I’m old!) instead of paying the company in question directly and receiving a good in return.

BLM is an activist organization, a group that wants to shed light on an issue. The $90 million went to the advertisers not to actors within the system which needs correcting. And since they are not in a position to really change anything within the police/justice schematic, the money is too easily grifted.

When markets shift, who wins? Who loses?

Rates are on the rise making mortgage money a chunk more expensive. For example, a few months ago, the principal and interest payment on a $350K loan was $1452/mo at a rate of 2.875%. But today’s rates are hovering around 5.25% which pulls in a p&i of $1933/mo. This $481/mo shift will come as quite a surprise to consumers who have long gotten used to low, stable interest rates.

The rate increases are the result of efforts by the Federal Reserve to slow down inflation. As seen below, CPI has increased sharply in the last year and shows no signs of moderation.

Real estate makes up a portion of the index and traditionally an increase in the monthly cost of a mortgage will tamper demand. Although homes in top condition or in prime areas are still selling in multiple offers in our area, there is a sense that the hold-no-barred rush for housing is subsiding.

This makes buyers who are not knocked out of the market by the more ample payment one of the winners in the shift. Even if they pay about the same amount of money for a home, they are less like to give up other concessions such as a home inspection or a preferred closing date. Buyers who can no longer afford to buy are, for the time being, out of luck. New buyers, just getting approved, are held neutral by the rate shift. They have no relative comparison to other options; the new rates are simply what it costs to buy.

Sellers with mainstream acceptable homes are also held neutral in the shift. Plenty of buyers will still materialize for their homes, and although the escalating prices are falling away, the sellers will still secure a sale at today’s higher price point. Sellers of homes with a significant drawback- and these vary depending on the market- but things like shared driveways or proximity to freeways, these properties will struggle to attract a buyer. So, sellers of properties with more condition issues or physical drawbacks will lose in a quickly escalating rate environment.

Lenders are losers too. The past couple of years has been flush with refinancing. Higher rates dry that market up. Homeowners in need of cash with a mortgage at two and a half percent are going to look to other options rather than a refinance. Second mortgages have served this demand in the past. It’s the folks that must refinance to pay off an ex-spouse or consolidate higher-interest consumer debt who will lose out financially on higher rates.

First-time buyers who bought a few years ago should feel pretty good about their situation in hindsight. Since they bought, they have gained some nice equity and now they realize the benefit of a fixed payment at a low rate. While their friends in rentals experience periodic rent increases, the new homeowners have stabilized their monthly obligation. These are the examples that need to be talked up to give renters (who qualify) the confidence to become homeowners.

As a realtor, I look forward to a balanced market. Some consumers can act quickly and compete for properties. But many people need more time to think things through. A bit of a slow-down will bring a new set of buyers into the marketplace. And this is a good thing.

Minneapolis Fed Series

ย 

The Minneapolis Federal Reserve has started a regular zoom offering. Today’s event was part one in a rent stabilization series. Libby Starling from the Fed was the moderator. Edward Goetz, of the UMN and author of Clearing the Way, is known for favoring rent control. The two other panelists, Sophie House (NYU) and Jenny Schuetz (Brookings) offered new perspectives on the issue.

One objection stems from an efficiency issue. Creating an across-the-board rent control rule means that those who do not need a subsidy receive it anyway. Instead of targeted benefits to people in need of assistance, all renters benefit from an increased restriction. In fact, it is noted that all the rent-controlled apartments remaining in Manhattan are occupied by wealthy New Yorkers.

I like the image that a community has only so many dollars to devote to the financial support for people who can’t afford their housing. Worrying about the efficient allocation of this bundle of cash will keep the system tight and free(er) from fraud. Blanket rules mess with the market for rental housing. Targeting benefits while maintaining the natural flows in the shelter business will distribute resources based on priorities in an entire system.

Conjuring up a bag of cash marketed as subsidy housing money is one new framing. Another is to group types of consumers. The story of rental restrictions is always told as the battle between the poor and the horrible greedy landlord. These conversations seem more about taking money away from the investors (determining a *fair* appreciation) than trying to get people into the best housing situation. Mainstream buyers are not thinking about their seller’s finances when the make an offer on their home; they are thinking about the great kitchen and the short commute and the great schools for the kids.

When we’re trying to house the least advantaged, public dollars should be leveraged to put people in close proximity to the public services they need most. If they have kids, offer a subsidy to keep them in the same school district for the remainder of their children’s K-12 education. If they are a lower wage worker, see if the companies will participate in a subsidy which keeps the workers close-by. If the recipient of the subsidy is in need of regular medical care, have their stipend be tied to buildings close to significant medical facilities. Match the group of people the lowest rung of income to the neighborhoods which are best suited to notching them up and out of this social stratosphere.

There are some rotten landlords out there. And they need to be pursued for a higher level of service for any of the tenants who live in their buildings. But don’t tie up the bag of subsidy cash with buildings. This wastes social dollars and doesn’t get the intended recipients into the best match of housing supply.

GoldenEye- Movie Review

Rewatching GoldenEye was a lot of fun. It takes the audience back to the West versus the Russians with all sorts of flair. My favorite visuals are the numerous arial scenes which are very well done. They don’t feel gimmicky or dated. Just about every other form of transportation is fit into a chase or explosion scene of some sort- including James driving down the villains in a tank. Q sets 007 up with a fabulous BMW convertible.

The supporting women have some depth to them. This is Judy Dench’s first Bond movie, and she is looking sharp in 1995. She blends beautifully the strength of the position with a parental caring for her prize agent. Femme fatal, Famke Janssen, pulls off the psycho-sexy armed and dangerous woman. She’s a soldier who enjoys her job a little too much. The glamorous nerd who wins James’ heart is played by Isabella Scorupco. Sure- she’s beautiful too, but her real skill to save the world is, wait for it, coding.

There’s quite a bit of humor throughout the movie. Most of it centers around poking fun at the philandering, cocktail drinking Bond. Laugh off the old to usher in a newer 007, I suppose. If you know the franchise, you will laugh along. The computers will also make you smile. They are deep desktop boxes the size of a small black and white TV.

Pierce Brosnan isn’t my overall favorite Bond, but he does a good job in the film. It is a classic blend of dramatic scenes, chases, international destinations, and stunts. I thought it was well worth a couple hours of my time.

More from Downs

Anthony Downs wrote Neighborhoods and Urban Development in 1981, yet this quote is as applicable today as it must have been then.

Each city’s strategy must balance two sometimes conflicting objectives. The first is encouraging renovation, since it upgrades residents environments and benefits the city government fiscally. The second is minimizing harm to low-income renters. In loose housing markets, city policies can encourage maximum revitalization, since displaced households can find alternative accommodations without suffering much harm. But tight housing markets pose a cruel policy dilemma, because revitalization may then cause severe hardship for poor displaced households. They probably cannot easily find alternative accommodations without paying much more for them–if then.

A tension exists between two groups of housing consumers, each interested in the same option: the bargain-priced property. What isn’t discussed in time. If transitions are in sync with the natural timing of residents giving up their homes, then it is a win for the city to benefit from stronger housing stock, and the poor who has moved to better circumstance.

My concern is that there is a little public commentary about helping the disadvantaged to match with neighborhoods best suited to meet their public goods needs. The conversation always seems to be about keeping people put, …in dilapidated housing.

Let’s go for the double win. We have the capacity.

Old Fashioned Theft vs Social

Most people have a pretty good grasp on theft. An object belongs to one person and someone else takes it. There’s an ownership issue and a transference of the item or cash to another without knowledge or permission. For instance, a few weeks ago the news carried a story of an employee at Yale stealing electronic equipment. She ordered equipment over and above what was needed, sold the surplus, and pocketed upwards of $40Million. That’s a lot of cash.

One can only assume that she was able to get away with the scam for that long because she was in a position of trust. The status of employees was beyond reproach and hence normal protocols of employees taking at minimum a week’s vacation were waved away. This last part is social theft. It’s distinct from material theft.

Let’s take another example. Bernie Madoff plead guilty in 2009 to running the largest Ponzi scheme in the world and was sentenced to 150 years in prison. Taking people’s money and not giving it back to them is old-fashioned theft. The social component of Madoff’s scheme was to rely on his community ties to feed his graft. Wikipedia calls it affinity fraud.

Madoff targeted wealthy American Jewish communities, using his in-group status to obtain investments from Jewish individuals and institutions. Affected Jewish charitable organizations considered victims of thisย affinity fraudย includeย Hadassah, the Women’s Zionist Organization of America, theย Elie Wiesel Foundationย andย Steven Spielberg‘s Wunderkinder Foundation. Jewish federations and hospitals lost millions of dollars, forcing some organizations to close. Theย Lappin Foundation, for instance, was forced to close temporarily because it had invested its funds with Madoff.[109]

When an actor internalizes a benefit received by being a member of a public group and then steals, the deceit is double.

Spring will be blooming soon

Northern Lights Azaleas

It snowed here today. Which has me thinking all the harder about the early spring blooms which will be appearing shortly in my garden. I love them- all of them. The one featured above is a dwarf bush rising only about a foot from my landscape rock. But the blooms are so luminescent that the shimmer of the petals will catch your eye from below.

Diversity Education

As for many professions, Minnesota Realtors are required to complete fifteen hours of continuing education per annum to maintain their license. This coursework may cover a variety of issues, and some of it can be unexpectedly helpful. The required modules are often redundant or heavy on regulatory dates and descriptors. This year it revolves around discriminatory covenants written on deeds from the 1920s-to 1940s. These are reprehensible in their blatant racism toward non-Caucasians.

I think revisiting this history is important. We should be reminded that nice people, perhaps even relatives of local realtors, don’t always do nice things. That said, I think it is important to tell the story accurately. A portion, perhaps 20-25% of the lots, had exclusionary covenants. The portion of non-white residents in Minnesota at that time was less than 1% of the population.

Population Trends

I guess what I’m trying to point out is that just because a portion of a population can be criticized for what always should have been unlawful behavior, doesn’t mean that everyone behaved poorly. You don’t need an entire population to be in your home court to lead a happy and productive life. And to set that expectation will only lead to disappointment.

The glory of long sentences- Steinbeck

Chapter 3 – Grapes of Wrath

THE CONCRETE HIGHWAY was edged with a mat of tangled, broken, dry grass, and the grass heads were heavy with oat beards to catch on a dog’s coat, and foxtails to tangle in a horse’s fetlocks, and clover burrs to fasten in sheep’s wool; sleeping life waiting to be spread and dispersed, every seed armed with an appliance of dispersal, twisting darts and parachutes for the wind, little spears and balls of tiny thorns, and all waiting for animals and for the wind, for a man’s trouser cuff or the hem of a woman’s skirt, all passive but armed with appliances of activity, still, but each possessed of the anlage of movement.

What is public, Sidewalk clearing edition

When I started writing more extensively about the economics of neighborhoods, I thought a good place to start was by dislodging the concept of public and private from the old school delineation. This version says that certain goods are public by nature, as in the notorious lighthouse whose beams bring all boats to shore safely. And it is right for the government to administer public goods which make up the public sector.

My view is that societies determine what they (they can be the citizens in a democracy or a dictator or an elite group in an autocracy) want to be public and what they desire to remain private. I wrote about it in a little lengthier piece, Our Problem is a Problem of Design.

How people come up with what is private and what is public is interesting from a resource distribution standpoint. But it isn’t money that is usually the driver for what is public. It is personal safety. The Hennepin Avenue Bridge in Minneapolis started out as a private endeavor allowing for crossings across the mighty Mississippi in the early years of the grain mill district. But repairs and safety concerns, in the end, pushed the overpass to transition to the city. Transport, in general, seems to fair better in government hands.

Let me bring you back to the snow removal story. One would think it parallels a consumption model of, say, water delivery. The household uses so much water and is billed for it. This isn’t accurate as there are no other means of obtaining water. The city acts a monopoly supplier of the good. And it is fairly straightforward and uncontriversial to bill by consumption.

Presently many residents do clear the sidewalks fronting the road to their homes. Let’s spitball it at 75%. This is labor provided at no cost to the public out of civic mindedness. If the city chose to take on the removal of snow as a public good, they are walking away from .75 x $20mil (the cost of the program) or $15mil. Plus, it seems with a little leadership, and city council support instead of neglect, there would be a capacity for folks to voluntarily pitch-in and clear more walks.

The thing about public goods is that they must be provided to all. Once a good is publicized, then the cost for the entire community is borne out by the public. In this case, the analysis points to further civic engagement rather than adding to the already full plate of demands on the city’s budget.

The story of the snow on sidewalks

When it comes to neighborliness it’s hard to get concrete numbers. There is a general sense that pitching in and helping out is a good thing. But does it count as economic activity? Here’s a story about snow falling on sidewalks that helps demonstrate the cold hard cash of being a good neighbor.

Sidewalks are common features of residential areas allowing the public to walk along the road. People stroll for exercise; they walk their dogs; they catch a bus at the bus stop. Residents are sometimes surprised when the concrete needs to be replaced that they are responsible for (the relatively costly) expense. The long-established norm is that the owner of the building behind the walk is the caretaker of the public walk. In a winter climate, the household also must clear the sidewalk of snow. Failure to do so can be hazardous as melt and refreeze makes for icy walkways.

The city of Minneapolis has been suffering from a lack of interest by residents to tackle to forty feet runs. A March 23rd editorial opinion in the Start Tribune calls a spade a spade, “let’s acknowledge that Minneapolis has an unacceptably large population of residents who feel no particular obligation to keep their walks clear.” It was written in response to a proposal that is making its way through city hall for the city to embrace the chore. The instigating motivation is people’s safety– “An unshoveled walk gets in the way not only of walking, but also of sightless navigating, of wheelchair maneuvering and other modes of travel that most of us need not master. When walks are covered in snow, a blind woman using a white cane cannot tell the difference between a residential street and an open field. A man in a wheelchair cannot negotiate the snow and ice, and might choose to risk traveling in the street instead.”

Please be aware that there are already serious repercussions in place for the n’er-do-wells who find it difficult to put their hands on a shovel. Here’s a violation letter:

I spoke with the crew who was clearing snow one morning. The gal said they can co up to thirty front walks in a day. Let’s see, 30 x $229= $6870. Paying six employees for eight hours of work only comes to $1680. It seems like a good money maker! But maybe they have to wait until someone complains to justify going out and shoveling.

This isn’t the first time shoveling has been a news feature. In 2018 the president of the Minneapolis City Council, Lisa Bender, was sited. Two of her constituents got creative and made an instructional video.

Another factor in shovel-gate might be the proportion of renters to owners in the city which runs about 53-47%. Owners receive the violation letter, but renters are in many cases responsible for snow removal in single-family homes, duplexes, and tri-plexes. Perhaps the process would be more effective if the $229 fee was directed at the residents of a dwelling.

Some argue that folks are disabled and for that reason cannot clear their walks. The US Census reports that 8.8% of city residents fall in that category. One would think that there is a capacity amongst city residents to lend a hand and help the few who can’t fend for themselves. But instead of pursuing a culture change, the city is looking into publicizing (my word, nationalizing at the city level). As one can imagine transferring a job to a bureaucracy is a little pricey. They are anticipating $20 million in this case.

Just to review the dynamics here. Most cities count on the goodwill of neighbors to clear walkways for the public. This is unpaid labor. For cultural reasons the residents of Minneapolis resist this norm. Instead of working on converting the mindset and showing people that it can be rewarding to lend a hand to someone in need, the city is pricing out the service. This process of making public something that was handled privately is called publicizing (the opposite of privatizing). The process will not only be more expensive, but it will also forgo the capacity of citizens to participate in their community. Publicizing is a change of structure not just a form of payment. It eliminates the possibility of citizens to see how simple gestures go a long way in communal endeavors.

And the price of neighborliness- for all you economists- is $20 million.

Sonnet 98

William Shakespeare

From you have I been absent in the spring, When proud-pied April, dressed in all his trim, Hath put a spirit of youth in everything, That heavy Saturn laughed and leapt with him, Yet nor the lays of birds, nor the sweet smell Of different flowers in odor and in hue, Could make me any summer’s story tell, Or from their proud lap pluck them where they grew; Nor did I wonder at the lily’s white, Nor praise the deep vermilion in the rose: They were but sweet, but figures of delight, Drawn after you, you pattern of all those. Yet seemed it winter still, and, you away, As with your shadow I with these did play.

Downs talks more about the public and the private

In his book Neighborhoods and Urban Development, Downs makes the case that a certain number of run-down neighborhoods are necessary in an urban area to house the poor. He presents a life cycle view of housing that says the wealthy buy new construction as it is the most expensive, the middle class settle into the midrange homes, and the poor find the least expensive housing in properties that are nearing the end of their useful lives.

Through the 60s, many slummy areas in the US were bulldozed. Minneapolis razed an area called the Gateway District in the name of urban renewal. By the 70s there were already regrets about this unscrupulous destruction of a city’s history. What Downs is saying is that these areas are necessary for affordable housing. Yet in his day, cities did not want to host such services and competed to let other municipalities bear the burden of this public service.

As a result, every municipality is engaged in a competitive struggle with other municipalities in its metropolitan area, each trying to get rid of its deteriorated housing and to avoid accepting any more. These struggles are hidden by the unwillingness of anyone to admit that a certain amount of deteriorated housing is necessary to house the area’s poorest households. Instead, all espouse the myth that deterioration could be completely eliminated if only everyone tried hard enough. That would in fact be true if nonpoor households were willing to pay the public subsidy costs of helping the poorest households occupy housing that met middle-income standards.

From an analysis standpoint, it is important to note that different levels of government act as a private parties even when engaged in public objectives. The citizens of a municipality share the resources of that city, but they are perfectly happy to push off other obligations, even incented to, on a neighboring city. In the same way, school districts compete for students from strong supportive families. There is a morphing within the levels of governance depending on whether the analysis is inward-looking (a public action) to outward-looking (a private action).

The change to note from when Downs wrote this book in the early 80s is that there is a different view of homes or buildings in poor condition. Probably due (at least in part) to his insights, policymakers realize a property in poor condition can be a source of affordable housing. There is even a name for them, NOAH, naturally occurring affordable housing.

Competition still exists between cities around affordable housing issues. But now it is in securing state levels funds from Minnesota Housing Finance Agency to make new mixed-use housing projects feasible. Due to the expense of new construction and the lower-income from below-market rents, a subsidy is needed at all levels to make these buildings work. At least the syncing of the public objective aligned, though not always I grant you. Instead of pushing low-income housing off on others, wealthy cities can find themselves competing to house the poor through a mixed-use project. Unfortunately, they tend to lose out on the support necessary to fulfill their obligation to the needy.

The age of infrastructure

Actor Will Smith got a little attention at the Oscars on Sunday. And I’m not talking about the negative attention, but rather the recognition for playing the part of father and coach to Venus and Serena Williams in the movie King Richard. It’s the inspirational story of parents who make things happen for their kids. But what does that entail exactly? The trade of all the family’s extra resources and time to the sole focus of advancing, in this case, the girls’ abilities to achieve greatness on the courts.

I like to think of this as the mom job, the I’m-there-just-in-time-for-whatever-it-is-you-need job. The support worker in a family makes sure everyone gets fed and to their doctor’s appointments. After the priorities of food and health, they follow up on extracurricular interests. And if time permits, they volunteer in those organizations which advance the family’s interests. While some people are making fun of home economics majors, Hollywood is rightly pointing out the power of the position.

Infrastructure jobs are turning out to be a powerful tool in fighting wars. No longer is the tough-guy action figure the primary hero in a foreign war narrative. Now the people greeting refugees at the train station, communicating the number of beds they have available on cardboards signs, are heroes. You can be recognized for giving shelter over the internet too, through a donation to Airbnb. Patrons are booking weeks that they do not intend to use, and the hosts are return notes of gratitude.

It seems that the secret is finally out. You don’t have to be the front man to be valuable. You can be a support worker in a family or in a community and be powerful. So instead of pursuing a politic of tearing down, let’s use social infrastructure to build up. And create some cool new stuff.

*Neighborhoods and Urban Development*

Tony Downs (1930-2021), an economist known for voting patterns and transportation, wrote about real estate. I thought it would be fun to dabble in his 1981 book Neighborhoods and Urban Development to see how the material holds up some forty years later. I must also point out that he matriculated from one of our best local schools, Carleton College, located in the bucolic town of Northfield about an hour south of the Cities.

In the beginning pages of the book, the author tackles delimiting what is meant by a neighborhood. I suppose to set off balance anyone who thinks a locale is simply a set of buildings, stale structures set upon parcels of land, he claims that neighborhoods are awash with the constant motion of resources.

Three aspects of urban development are fundamental to that understanding. One is the dynamic nature of urban neighborhoods (urban includes both city and suburbs). Each neighborhood experiences constant inflows and outflows of residents, materials, and money. Consequently, neighborhood stability can be achieved only by balancing these opposite flows, rather than by stopping them.

I don’t think Downs would care for NIMBYs as they are transaction busters. Although he doesn’t call the influx of resources, and the outcome of what is done with those resources, transactions. No matter. The key concept is that groups of people are moving in and out of areas. Data describing snapshots in time provides little insight as it is the movement and progression of interactions over time that is informative.

As his second descriptor, Downs points out that there is a dual nature to neighborhoods. The first one concerns the dwelling as a place to live. This is a privately titled structure, cared for and accessible to its owner. Yet at the same time, each dwelling is linked to communal services like expressways. The activities imposed by the road system can put strains or add features to the various units of housing.

The second aspect is the dual nature of urban neighborhoods. They are not only places to live, valued for themselves, but units of urban development inextricably linked to all other city neighborhoods and to the entire metropolitan area. For example, a new expressway connecting downtown with the suburbs may cause multiple shifts of activities and people. Industrial and retail employment (including some displaced by the highway) moves to the suburbs; office employment grows mainly in the downtown area; low-income inner-city households displaced by the highway shift to neighborhoods farther out; households initially living in these neighborhoods emigrate to new suburbs. Thus a major transportation improvement affects the population and land use of dozens of neighborhoods, including many nowhere near the new highway itself.

To review, Downs describes a landscape where economic activity occurs in a dynamic manner across neighborhoods via interactions of people, resources and cash. In the process of these ongoing exchanges, there are effects to private property as well as the communal property that links them.

Note: The third aspect has to do with the split between city centers and suburbia. We seemed to have progressed past this rigid divide as metropolitan areas have grown and morphed to the point that thus rigid distinction has faded.

What was normal then, may not be now

In recent years a ton of political capital is being invested in promoting the idea that homes are too expensive and virtually out of reach for most Americans. This seems like an exaggerated position, so I went to the US Census to see if the information is corroborated with data.ย The Minneapolis-St. Paul Metropolitan area is a geographic area that enlarged its composition to include thirteen counties. For the purposes of this chart, I pulled just the original five-county area.

Comparing the total number of households (1,112,883) to the total number of housing units (1,170,643) leaves a generous surplus of 57,660 units. Of course, there is a need for a certain number of vacancies so people can circulate. But as long as there are vacancies it is difficult to make the argument that sellers and landlords hold a monopoly in the marketplace. As long as there are landlords with empty units then tenants impact the pricing through their choices.

US Census

Perhaps more importantly than availability is how the monthly cost of housing stacks up to monthly income. And in all three counties, the median debt-to-income ratios fall in what bank underwriters consider a comfortable range of 21-27%.

The cost of homes has indeed been on the rise. Many argue that the prices are simply regaining their position after plunging so deeply following the great recession. Perhaps the complaints that we are hearing so much about has more to do with the framing of where people think they should be able to live, rather than price.

If we go back one hundred years, families found shelter in properties similar to this one.ย 

According to the tax records, this home has a foundation size of 660 square feet and a total above-ground living space of 1120 square feet. For a point of reference, that footage allows for a living-dining room, kitchen, and small room on the main level and a loft bedroom or perhaps two sleeping spaces upstairs as it does have a dormer window. The lot runs right along the railroad tracks and there is an outbuilding in the back of the property where they kept chickens.

I happen to know the history of this home. It was built in 1923 with insurance money. The original structure housed my grandfather’s family of seven kids and was destroyed when lifted off its foundation by a tornado in 1919. In all, forty-four city blocks in Fergus Falls, Minnesota, were destroyed. Families lived in a state of disrepair over several years until the funds came through for construction.

By mid-century, the one-level home (we call them ramblers in Minnesota) was the dominant style of choice. Huge tracks of land were parceled out into what became known as suburbia. Some would have you believe this was the result of a conspiracy, an evil plot to spread out and consume a lot of land. But the only force in play were families’ desires to live in two- or three-bedroom dwelling with one bathroom on a parcel they could call their own. Tour the new construction homes of today and you will note the conformity to consumer demand.

Both of these types of homes are available throughout the Twin Cities. Some are expensive, some are not. It all depends on their location. The dissatisfaction in the available housing seems to be about more than the structures of the homes. People seem to want to have more choices between areas. It’s not that there is no housing, it is that they feel the housing they aspire to is too expensive.

This story is compatible with what we see in the census numbers, but it doesn’t help those who desire a higher standard of housing. The solution here is to better match households with the neighborhood amenities which benefit them the most. Because what is acceptable at different stages of life will dictate where one finds the most suitable housing. And this should make people feel there is more value in their living situation.

The outcome of all this political interest in the cost of housing can be damaging. Recently the city of St. Paul established the most restrictive rent controls in the US. The data doesn’t support it. And already there are signs of disinvestment in housing projects. Activism without a cause always leads to inefficiencies.

Hit and Run- Series Review

I can recommend this Netflix series to those who enjoy the action-adventure, spy thriller type of film. There are a whole host of bad guys and chases, good guys and fistfights, the ‘I’m not so sure if you are good or bad guys and break out of the handcuff moves. Fortunately, the cast is excellent in both the male and female categories. The actors make the series.

Lior Raz is great as the romantic tough guy who is betrayed by a beautiful CIA operative played by Kaelen Ohm. To make up for the cheating wife, there are two other excellent female roles. Sanaa Lathan plays a NY journalist who is vested in getting the real story out to the public. She skillfully juggles her doubting husband with her professional obligations. Moran Rosenblatt pulls off a credible performance (if sometimes a little amusing) of a very pregnant Israeli policewoman.

The plot suffers a little in parts. Although, I’m not sure I’m a very good judge of espionage realism, as I have no first-hand experience. The intrigue is spooled out slowly and there are plenty of surprises. There’s also plenty of hand-to-hand combat by both genders. Perhaps a little too much death and destruction- but it goes with the genre.

The episodes are usually about 50 minutes in length which matches up nicely with the time I want to devote to a little TV downtime. The setting jumps from Israel to New York so I get my cross-cultural fix. The nine episodes are showing on Netflix.

The lovely tale of *The Peasant Marey*

We’ve all experienced those moments. Out of the blue, a crease in our brain releases an image or a passage from many years ago. It appears in great detail as if the stage lights are shining on it. While in prison, the great Russian author Dostoevsky tells of such a vision. His short story, The Peasant Marey begins: “It was Easter Monday.”

The setting is grim. His fellow inmates are coarse and fowl and most unpleasantly quarrelsome. Out of sport or ill-temper, a band of six pummel a drunkard. And in the confusion of the prison yard, a passing phrase from a fearful colleague seems to trigger Dostevsky’s memory. “Je hais ces brigands!”

The notion comes to Dostoevsky across time. It is painted out clear to him in impeccable detail. A message his brain has been waiting to send for decades. Waiting for the right moment when a new circumstance will make its truth undeniable. As a young boy, while out near a peasant working a field, he comes to imagine that a wolf is nearby. He is certain he is in danger and runs to the peasant Marey.

The serf is the lowest, humblest in the household. His fingers are coarse, thick, and sopped in mud. The young Fyodor is the refined future, educated and well-groomed. Yet at the moment the fear of his surroundings is all-consuming, the unpresuming Marey is transformed into the rescuer. In a simple turn of circumstance, the meek become powerful.

A voice of doubt might question, “How could that be so, the lowly peasant could have an impact of such magnitude?” The memory shows up to offer the answer. Surrounded by the bleak existence of prison life, Dostoevsky is reminded how the downtrodden become powerful. Such work leaps over time and class. And he sets out to “look at these unhappy creatures with quite different eyes, and that suddenly by some miracle all hatred and anger had vanished from my heart.”

The Christian themes are thickly woven into this story not even seven pages in length. But the impulse to care for the vulnerable, the ability for all to participate in the unity of the whole, the challenge of waiting over elongated time frames for renewal, are universal in nature.

Power players are not just politicians

One afternoon, years ago, when I was going in to pick up my now college-bound daughter from daycare, the girls were seated at a dwarf-sized table. A leader in the group had already emerged sputtering out the rules to the game underway. I was fascinated that the quest for power showed up at such a young age.

But since then, I’ve noticed that as soon as a few folks cluster, a power player emerges from the shadows. Sometimes it is a most unlikely candidate. And it’s a good thing too as many of these jobs are not of the high-profile glamorous types.

When the PTA needs a notes taker-secretary for their meetings. The gala needs a group to go out and hit up the businesses for donations. The youth basketball association needs a tournament director. Lots of work, no pay. What you do get is to have the final say and a little bit of recognition for pulling it off.

Insecure power-seekers (PS) are not so nice. They are often self-appointed directors of social events who like to manipulate who can come and who gets left out. Often casual get-togethers serve the same function as rounds of golf for businessmen: it’s a time where some voice concerns or needs and others step in with solutions or resources.

Often PS’s are not the best at anything specific. They have instincts on how people congregate. They have skills in re-direction. The talented ones are really good at people. The untalented ones are annoying.

What I’m trying to get around to saying is that people who enjoy and work the power levers are at all levels of society. Any model built to represent the infrastructure of cooperative interactions must take this into account.

Parade of Homes

From March 12th- April 10th builders showcase their model homes by having them open to the public. It is a convenient way for buyers to get out and look at what is being built around the metro. Some people go to see the latest trends in home design and decor. Some are interested in the latest technology. But many are considering a move and would like to build new.

The key appeal to the building is the personalization of choosing some of the finishes. There are very few truly custom builders, these work at the top of the price range, but even national builders allow the choice between several packages of finishes. Some buyers feel so strongly about having a hand in the creation of the home as well as being the first owner that building is their only option.

This explains how they justify the price they pay for that privilege. New builds are beautiful, crisp, modern- but they are not cheap.

Buyer making plans with a builder rep via Skype

Out of the 343 new properties on the tour, only a couple are priced below the Twin Cities metro median sales price of $340K. Most of the least expensive options are townhomes, but one is a split entry with the upper level finished. Most are also located on the outer peripheral of the urban area. Or in other words, half of the metro home buyers can purchase homes at lower prices and in closer proximity to infrastructure like jobs, education, medical facilities, shopping, and so on.

If a chief accountant of the community had to select a type of property to offer to members who needed help paying the rent, it is clear that she could stretch her public purse further by going with existing homes instead of new. The math is pretty clear.

Maybe life hasn’t been that bad- Minnesota Housing Stats Edition

We’ve heard a lot about housing lately, in the press and from public policy types, but I’ve never thought the issue to be as dire as it is being portrayed. As a baseline, I thought it would be helpful to know just how many housing units are available for occupancy. The US census gives us this information.

Form the US Census Bureau

I was surprised to see how stable the state’s profile has been over the last decade. In percentage terms, there has been little movement between the categories. We are well above the national average on the owner-occupied unit at just under 72%.

The population count for the state was just reported at 5.7 million. With an average household size of 2.6, the state needs 5.7 divided by 2.6, or 2.19 million homes. These can be townhomes or single-family, rentals, or mobile homes. Fortunately, the census shows that the state has 2.458 million units or 268,000 more units than reported by the US census workers.

There are all sorts of reason why units maybe empty. There will always be vacancies caused by folks in transit between residents. Some of the properties are second homes. But even with a vacancy rate of 10%, that still leaves 22,000 properties up for grabs.

I only point this out to suggest that there is a bit of slack in the system. How to get these units in use and available will only alleviate some of the pressures on housing demand.

I think the numbers above also allude to this sector being pretty stable over the last decade. Stories of fractures and implosions may have been overblown.

Not so fast tech companies

Decades ago, when I was a manager in a corporate environment, I received some training which included an assessment. What I remember was the criticism. I scored poorly on not offering my employees a vision for their future.

I probably also retain the memory because, after a bit of reflection, I could still not put my finger on any examples of just that- verbalizing a future. But now more than ever I can see the importance of it.

Tech companies have swarmed over the real estate industry in the last dozen years. Two items seem to attract them. First the sheer dollar figure of the commissions paid to realtors. And second, the absolute certainty that realtors do not earn (or if you would rather, deserve) their fee. It doesn’t matter that the occupation of a Realtor has been in existence for over one hundred years. It doesn’t matter that the profession is one of the most monitored by commerce departments everywhere for price setting. People with advanced degrees claim collusion and cartels.

If you have been a part of the industry for the past thirty years you can vouch for the fact that every variation of for sale by owner to fee-based marketing to full commission brokerage has been tried. With the advantage of technology which unleashes exposures to all levels of buyers, you would think that the share of homes sold by owners would be up. In fact, the opposite is true.

According to the National Association of Realtors:

  • Onlyย 7%ย of recent home salesย were FSBO salesย this year.
  • FSBOs typically sell for lessย than the selling price of other homes;ย FSBOย homes sold at a median ofย $260,000ย last year,ย signi๏ฌcantly lowerย than the median ofย agent-assistedย homes atย $318,000.
  • The majority ofย FSBOย sellers,ย 57%, knew the buyer of the home.

But still, tech companies persist in the narrative that the likes of Open Door, Exp, and Compass are the wave of the future for the industry. That what they do and how they do it is novel. They will be more efficient. One of their bragging points is the number of agents they are recruiting to their brokerages across the nation.

Mike Del Prete

From what I hear they are paying bonuses to those agents to make the switch. And with salespeople being opportunists, it is not surprising that some make the jump. But while I think these tech companies are simply going down the well-trodden road of the traditional agent broker relationship, I do give them credit for spinning a better tale of the future.

The Steve Jobe’s overtones run rampant.

If traditional brokerages with established reputations in their market want to retain agents, they will need to learn to communicate their vision of the future of the industry.

Retrospective

I wasn’t very interested in philosophy when I was younger. It seemed like word games. I liked number games; they were more reliable. But now I see that some fundamentals need to be established, some givens as we say in math, to build an argument. And philosophy tackles how to go about talking of such things.

Many people want to ignore the givens and the rules they operate under (ironically, these are the people who want everyone to follow their rules). I suppose that is why there is my philosophy or your philosophy. So, you start to unravel the yarn to get to the very beginning.

Where else would that be except in the Garden of Eden? Under an apple tree, men and women are confronted by their weaknesses. Before them is a landscape full of potential, yet sin is simply and inalterably part of them. This basic and inextricable potential of humans to do good and harm is the first fundamental truth. Even if the thought of it quickly evanesces like a mirage over the dessert. Good and bad aren’t divvied out by occupation or race or gender. Managing this truth seems difficult for many.

Humans are also vulnerable to desires and greed and jealousy. They respond to recognition and love and kindness. They seek personal satisfaction as well as communal warmth. And although each human may possess each of these attributes, their relative impact comes in a myriad of combinations. As actors, humans are guided and influenced by these characteristics as they make choices throughout their lives.

I suppose that last part means I believe in something called free agency. Which is true. I also believe that for economic value (not psychological or spiritual or emotional value) one must only consider tangible resources that are present. Formulating solutions on aspirations, or how we might imagine things to be, is for another conversation.

To summarize: Humans are flawed and respond to many of the same levers. Resources must be tangible and available to feature in the calculus. With these tenets in mind, you can show how people gravitate toward optimizing outcomes for themselves and their kith and kin in the utilization of resources.

A real estate agent’s agency

In Minnesota real estate agents are required to give clients an Agency Disclosure at first substantive contact. The commerce department’s concern is that salespeople, being all friendly and personable, hide who they are really working for in the transaction. A buyer’s rep sitting in a Parade of Home’s model, for instance, is working for the builder. Their agency is to secure the best price and terms for the contractor. A buyer who walks through the door may think they are working for them.

It is important for consumers to know the structure of representation. But not only in a real estate transaction. People hide their representation all the time. Take the on-going Minneapolis teachers’ strike. The message pouring out through social media is that ‘it is for the kids.’ (Thirty thousand in total who have not been in school since last week.) Yet the head of the teacher’s union reveals her true agency is to fight the patriarchy and capitalism.

Her intentions are misrepresented. In fact, one relative calculus might show that her actions are at the expense of the kids.

She is not the only organizer whose primary sphere of action is at odds with the cause they claim to represent. John Steinbeck’s novel In Dubious Battle depicts the organizers of a strike for farm laborers as separate, even outsiders, those they claim to represent. The (communist) party members’ objective, or their agency, isn’t to the workers but to the destruction of the power players, the Fruit Growers Association.

It might seem like a fine distinction, but through their actions one can see that it is not. The organizers in Steinbeck’s novel have no compassion for laborer who get hurt, or whether, in the end, they will be better off. The leader of the strike does not care that the school children, many of whom were already behind in their learning, are once again out of school. Their only objective is to unseat the power structure.

Perhaps the commerce department should oblige these organizers to pass out agency disclosures. Because the cost of their action is costly to our communities.

Therapy pets

There was a lot of eye rolling and disbelief when regulations came down that landlords were obliged to accommodate a tenant’s need for emotional support pets. All it takes is a letter from a doctor to force a property owner to relinquish one more right of ownership.

Although there was a time I would have been just as cynical, I have come to appreciate the joy people derive from their furry companions. Who else consistently greets you with such exuberance? Who else senses your strife and wedges in as close as physically possible? Who else is so willing to please?

There’s no denying the positive impact of man’s best friend.

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.

Pricing a lake view

The inaccuracy of Zestimates and the failure of Zillow to make money from their i-buyer program are both reminders that real estate is difficult to price. The standard method used to appraise property is to search out similar structures in nearby neighborhoods and then make adjustments based on the variation in features. This works well when there is significant turnover in property. The market activity provides a number of ways to bracket properties into price ranges.

Things get a little more complicated when the home sits on a premium lot, in particular lakeshore lots. There’s only so much waterfront property. The surcharge for the land is further complicated by the variation in possible approaches to the water. There are steep drop-offs which offer striking elevated views, yet some people don’t wish to tone their calf muscles through stair stepper exercises. There are flat lots where the home is set back to the point of a creating a tunneled view. There are marshy shorelines and pristine-clear-water-over-sand shorelines.

More often there is not a suitable comparable of the complete package of lot and building, so you have to do a separate analysis using the nearby non-lakeshore homes and then adding a premium. Otherwise, you can further afield to a somewhat similar lake and structure and come at a price from that direction. With less data, the span over which the price may settle becomes larger.

In the end an assessment is just an estimate of what the market will bear- the price is ultimately determined between the pool of buyers and the seller.

Culture that is Minnesotan

The Andover Huskies pair off against the Moorhead Spuds. 

It’s high school hockey time in Minnesota. It’s a big deal. People take the whole week off work so they can attend the games which are played on the same ice which hosts the NHL teams. And just like for the pros, their stats are published in the Start Trib.

The arena is packed, and the sections are color coordinated with spirit wear. The announcers know the players and the playersโ€™ parents. They know the rivalries and the record holding winners.

But the most talked about hockey topic is Hockey Hair. See for yourself.

https://brobible.com/sports/article/minnesota-high-school-hockey-tourney-hair-mullet/

The social side of price

I think it would be hard at this moment to refute the notion that there is a social side to price. The ongoing conflict in eastern Europe provides ongoing evidence for the incorporation of both pecuniary and communal aspects of trade in a free market economy. It is clear that a barrel of oil at x price is not simply a barrel of oil at x price.

As countries who support a liberal world order scramble to reorient their trading partners for their energy needs, Americans in particular will see themselves underwriting this institution at the gas pump. The price paid for Russian oil was too low as no thought was given to the risk of dealing with people who blow up children’s hospitals. No accounting set aside a reserve.

This isn’t the first revelation of this kind in the last few years. Covid made clear the added expense of relying on overseas markets for things like protective wear and pharmaceuticals. The cost of a drug is cheap until your foreign supplier cuts you off. Then, as the commercial goes, it’s priceless. I think it’s plain to see there is some other equilibrium. And this includes a social cost component of price.

Just to further dig into the structure of my theory, let’s get back to oil and how there came to be a dependence on an unsavory trading partner. Although the US is capable of being energy self-sufficient, there are pressures for climate activists to halt pipelines and oil drilling operations. What’s wrong with that is they are advocating to solve a public problem in the wrong public. Climate change effects the globe and the public is the human race. Hence the economic implications are also global.

To isolate one country and feel good about cutting off their production while still consuming the good, just sourcing it from another country is, an aberration of a solution. And as most people who follow these things can point out, to force an inappropriate solution, simply means you pay elsewhere.

Tragically, this exchange is paying for the tanks and the bombs and the shells which are falling in Ukraine. Let’s become better accountants.

Emily Dickinson’s words do not disappoint

LXVI

THERE is a flower that bees prefer,	
And butterflies desire;	
To gain the purple democrat	
The humming-birds aspire.	
  
And whatsoever insect pass,	        
A honey bears away	
Proportioned to his several dearth	
And her capacity.	
  
Her face is rounder than the moon,	
And ruddier than the gown	        
Of orchis in the pasture,	
Or rhododendron worn.	
  
She doth not wait for June;	
Before the world is green	
Her sturdy little countenance	        
Against the wind is seen,	
  
Contending with the grass,	
Near kinsman to herself,	
For privilege of sod and sun,	
Sweet litigants for life.	        
  
And when the hills are full,	
And newer fashions blow,	
Doth not retract a single spice	
For pang of jealousy.	
  
Her public is the noon,	        
Her providence the sun,	
Her progress by the bee proclaimed	
In sovereign, swerveless tune.	
  
The bravest of the host,	
Surrendering the last,	        
Nor even of defeat aware	
When cancelled by the frost.

Did COVID kill the identity play?

For quite a few years now the vertically integrated messaging apparatus has cut off their political opponents by selecting an identity group to support (whether requested or not) and cancelling those who objected to their activism. The feminist claimed they spoke for all women and those who didn’t support their agenda were against female aspirations. End of story.

Some good things came of this. A few workplace creeps were set ablaze by societal spotlights and had to scuttle away like coach roaches looking for the shadows. But recently it’s been clear that the ploy is mainly used to acquire power and not solve for a balance of resources amongst causes in a fair society. Those who have learned to turn the levers of control enjoy it so much they’ve forgotten the end game.

But how is it that a few can engage an army of not particularly political types to align with the interest du jour? Enter the woke. If you want to maintain your membership in the fashionably intellectual (dare I say elite?), then your conversation, your nodding and humming all must follow the woke agenda. Any lack of compassion for the latest identity group, any attempt to point out degrees or harm or beneficence, any suggestion that the support of one group would imply a detraction from another, ejects you from the cozy cocktail party with a scarlet letter and a do-not-invite notation in a communal address book.

I’m hopeful COVID has changed all this. The latest banter on a Facebook group conversation certainly suggests as much. A school district had just announced that children would no longer be required to wear masks at school. Inevitably there is the lazy parent who posts something about poor communication from the school board– which warrants a response in all caps: IF YOU TOOK THE TIME TO READ THEIR COMMUNICATION YOU WOULD GET IT. Then the activist pipes up. She can’t possibly imagine how people expect her child with health issues to attend a school lacking the necessary protection.

This accusation of putting a child at any risk would have been woke enough to silence any crowd- pre COVID that is. Twenty-four months of isolation and alternative schooling methods has generated a list of other grievances which come along with mask wearing. The settling of resources can no longer be pulled to the most aggrieved. People are evaluating trade-offs on albeit serious issues of health and education.

People are thinking for themselves again. A potential health concern is no longer the trump card it once was. There is a spectrum of tradeoffs concerning health. Let’s hope that reality makes its way into our regulatory bureaucracies.

To plan a walk

If you want to get the most out of walking, a little forethought can go a long way. I used to walk my dog in a loop around my house for two thirds of a mile and call it good enough. Life was busy and this fifteen-minute daily routine seemed adequate. Now my husband teases me when I pity the couples I see striding curbside, and he asks if I want him to pull over to give them advice. I have yet to take him up on his offer, but I will post some notes here.

Tip number one: with a little effort you can find some great spots to walk within a very short drive of your home. Take a look on google maps and use the various overlay settings to find trails. Anything that is highlighted in green is usually a park or nature setting. Often there are paths along waterways from simple streams to the likes of the Mississippi River. A little sleuthing will guide you to a much nicer environments than the pavement outside your front door.

When you first take up walking it’s a hard to get a sense of distances and just how long of a walk you want to tackle. Perhaps you start with a twenty-minute commitment, which is about a mile. If there are no obvious loops, you can always walk along a scenic path in one direction and simply turn back to where you’ve parked your car. Before you know it one mile won’t seem like enough and you’ll be able to extend the length of your walk. We like three miles as we can get it done in a little less than an hour and come away feeling like we got some exercise.

It is quite useful if you have a watch which tracks your distance. I recommend keeping track of all your jaunts in the beginning, before you have a set routine. It’s easy to forget or making excuses to cut it short. Measuring is a great way to keep on track and feel good about what you have accomplished. There are a variety of apps that do this as well. I think Run Keeper offers options for running or walking, for instance.

Discovering new trails is one of the best parts. You have to open to a disappointment when trying something new, in case it doesn’t pan out, but more often than not you discover a delightful new path through mature oaks or sugar maples. It was always in your back yard, and you didn’t even know it.

Say cheese- you are on camera

Thanks to tech everything is on camera these days. Police cameras pick up the granular details of a traffic stop. Ring doorbells identify car jackers. And Russian soldiers are captured stuck in an Ukranian elevator.

In the throes of a rally or a protest laced with property damage or a war, it’s sometimes hard to see who will be celebrated and who will be condemned. One thing is certain, the likelihood of being fingered has gone way up. Take this guy. He’s meme material.

History might not laugh along with the field officers who carried out orders to open fire on civilians evacuating on pre-determined routes. And should the final analysis not support your story, it will be more and more difficult to find safe haven in this world of facial recognition and mass media.

The capacity for liberty

Merriam Webster’s fifth definition of CAPACITY is as follows:

5:ย theย facilityย or power to produce, perform, or deployย :ย CAPABILITY

//a plan to double the factory’sย capacity

also:ย maximum output

//industries running at three-quarterย capacity

Let’s do a little thought experiment. Let’s think of all the ways the capacity to support and advance the liberal democratic form of governance was underestimated.

There are all sorts of stories out on Twitter and other media outlets describing means and methods people around the world are assisting the Ukrainians in their time of need. From the business community, we have seen airplanes leases cancelled and major retailers like Ikea close their Russian outlets. As far as person-to-person transactions go there are reports of people booking VRBO’s as a means of cash transfers. Berliners lined up by the hundreds at the train station with signs offering up rooms in their homes to refugees.

To be sure the VOICE that has stirred this grass roots response in that of Ukraine’s leader, Volodymyr Zelenskyy. He surely was underestimated.

Means by which everyday people, no matter their country of origin, may offer time and resources to the cause has been transformed by technology. It can be as straight forward cash transfers. It can be as personal as allowing a young soldier to call home and make the situation more transparent. It can be as sophisticated as Elon Musk activating his commercial internet network.

In addition to technology, it appears that there has simply come a time for people like the Germans to rise to the occasion. They are digging in more than any other country to step up for greater military and social support beyond their borders. But others like Sweeden, Finland and Switzerland have also heard the call to trade in favor of democratic governance systems.

The old school way had to be initiated through heads of state. The modern era allows individuals to participate without borders. One might estimate that this moment has revealed a capacity for the liberal world order not seen in thirty years.

The Greeks had a way with words

from The Oedipus Rex of Sophocles, Scene 1

TEIRESIAS:

You are the madman. There is no one here

Who will not curse you soon, as you curse me.

OEDIPUS:

You child of total night! I would not touch you,

Neither would any man who sees the sun.

TEIRESIAS:

True: it is not from you my fate will come.

That lies within Apollo’s competence,

As it is his concern.

OEDIPUS:

Tell me, who made

These fine discoveries? Kreon? or someone else?

TEIRESIAS:

Kreon is no threat. You weave your own doom.

OEDIPUS:

Wealth, power, craft of statesmanship!

Kingly position, everywhere admired!

What savage envy is stored up against these,

If Kreon, whom I trusted, Kreon my friend,

For this great office which the city once

Put in my hands unsought-if for this power

Kreon desires in secret to destroy me!

He has bought this decrepit fortune-teller, this

Collector of dirty pennies, this prophet fraud

Why, he is no more clairvoyant than I am!

And a bit further on the blind guy goes on.

TEIRESIAS:

You are a king. But where argument’s concerned

I am your man, as much a king as you.

I am not your servant, but Apollo’s.

I have no need of Kreon’s name.

Listen to me. You mock my blindness, do you?

But I say that you, with both your eyes, are blind:

You can not see the wretchedness of your life,

Nor in whose house you live, no, nor with whom.

Who are your father and mother? Can you tell me?

You do not even know the blind wrongs

That you have done them, on earth and in the world

below.

But the double lash of your parents’ curse will whip you

Out of this land some day, with only night

Upon your precious eyes.

Your cries then-where will they not be heard?

What fastness of Kithairon will not echo them?

And that bridal-descant of yours-you’ll know it then,

The song they sang when you came here to Thebes

And found your misguided berthing.

All this, and more, that you can not guess at now,

Will bring you to yourself among your children.

Be angry, then. Curse Kreon. Curse my words.

I tell you, no man that walks upon the earth

Shall be rooted out more horribly than you.

Watch out for moms with weapons

MINNEAPOLIS (FOX 9)ย –ย A 53-year-old woman and Minneapolis homeowner is claiming self-defense, and protection of property in aย deadly shooting in her yard last week……The homeowner who pulled the trigger claims, she fired several warning shots. But the man advanced towards her.

Fox9 News

She told detectives she first fired four warning shots into the air with a handgun, but when he advanced and appeared to reach into his waistband, she eventually shot him with a rifle.

To paint a church

ย 

If Wall Street is the mainstay of pecuniary transactions, then the church (of the denomination your choice) is that of social welfare. Still- even centers of voluntary good works have needs that are best served in private markets. One of those is the maintenance and upkeep of their assembly halls.

The photo above is an example of a spectacular building whose beauty requires regular and costly upkeep. For that reason, from what I hear, the parishioners have considered replacing it with a more modern structure. This in turn upset some local folks in this town of 4500 people who can’t bear the thought of it being leveled.

To model this scenario let’s consider what is public and what is private. Though the church owns this fine house of worship privately, other townsmen and women feel that its historical value is public to their community. But there are others who could have a public interest in this beautiful building beyond the valley in which it is nestled in. There are enthusiasts of architecture and enthusiasts of Catholicism and enthusiasts of the American frontier. The preservation of this structure undoubtedly has support beyond what is obvious.

The traditional method of holding onto vintage buildings is to create historic districts. This lays the ongoing expense at the doorstep of the party who holds it in private ownership. And these districts often depress the market value of the parcels as restrictions are not market friendly. In other words, to take what should be traded in the public sphere and force those desires into the private market is inefficient.

It would make more sense if the ‘publics’ who have an interest in this building had a structural option to support the maintenance. Since they are the ones who appreciate the value of preservation, they are the most likely to voluntarily support such activities. And due to this, resources will find their way to projects most suited to consumers intentions.

A crisis to learn by

The situation in Ukraine has captivated an audience jarred by the reality that there are still political actors in the world who will initiate violence without any provocation. The tenacity of the Ukrainian people and their ability to resist their super-power neighbor has forced scads of entities to reevaluate their stance on state sovereignty.

I am one of the millions turning to twitter and broadcast journalism to scrounge for the latest news clips and opinions. This is where it has been reported that Sweden, Finland and Switzerland have all come out in support of Ukraine. Since these countries have traditionally remained neutral during European conflicts, their willingness to devote resources has a double impact to a regional goal of liberal democratic governance.

A sudden crisis, whether due to a pandemic or this military incursion, provides a backlight to the duality of actors’ actions. In principle, countries stay out of the affairs of their neighbors. But when a bully shows up and violates a foundational tenet, then resources can shift to become public resources to a newly formed coalition

And this duality is not only being laid out plain to see between political entities. The borderlands between what is private and what is public is also on display in banking and financial systems. Accounts are being frozen. If the rich Russians can’t get their millions, they may not like the drag on their lifestyles. Payment communications are hampered by booting Russian banks off SWIFT. And to be sure these measures cause a loss to the business partners in the west.

Still, many say the sanctions are not enough. The dependence on Russian oil is a good-as-gold cash flow to pay for all the tanks and bullets and bombs that are being dropped on the Ukrainian people. On this evening’s news the tradeoffs being discussed involved pushing environmental advocacy to the side in order to produce and ship North American oil to Europe.

In this dynamic, instead of a public cause like the environment being pitted against the private benefits of big business, there are two valued public causes vying for resources. And in this case, it would be helpful to find where the pricing shows up in order to guide politicians in choices representative of their constituents. When is better for their people to choose safety over climate, or climate over governance, or…

Because every city budget, or country budget, or state budget is a statement on the relative demand for resources amongst the list of public ambitions. Yet the settling of the accounts is due to political jockeying or loud interest group activity. It would be more helpful to have access to a numerical framing de, one which is determined from recent tradeoffs between actors.

The Blind Men and the Elephant

I seem to come across two types of articles about real estate. The first is straightforward but rather boring as it simply reports the latest price movements in a ticker-tape-announcement sort of way. The other is a much more complicated, rambling article which touches on every aspect of housing that one could imagine. These remind me of a parable which originates out of the Indian subcontinent. The story describes a handful of men trying to address an issue by groping at it from all sides. It goes something like this.

A group of blind men heard that a strange animal, called an elephant, had been brought to the town, but none of them were aware of its shape and form. Out of curiosity, they said: “We must inspect and know it by touch, of which we are capable”. So, they sought it out, and when they found it they groped about it. The first person, whose hand landed on the trunk, said, “This being is like a thick snake”. For another one whose hand reached its ear, it seemed like a kind of fan. As for another person, whose hand was upon its leg, said, the elephant is a pillar like a tree-trunk. The blind man who placed his hand upon its side said the elephant, “is a wall”. Another who felt its tail, described it as a rope. The last felt its tusk, stating the elephant is that which is hard, smooth and like a spear.

Wikipedia

Pricing and homelessness and house maintenance and building restrictions and greedy developers and disgruntled renters and building equity and housing density and parking and so much more can all be jumbled into one passage about, real estate. It’s too much.

We need some rules.

Most of the population of the area under consideration navigates and open market system of securing housing. They are as much of a price setter as the sellers, including the developers. Who has the upper hand in the market goes through cycles and it noted by things like time on market or number of properties taking a price reduction before receiving an offer. We’ve been in a sellers’ market for a number of years and people have seemed to forget that a buyers’ market will be here in due course.

But the brings up a second category of conversation. The number of dwellings versus the number of households in the area of interest is rarely printed. It seems like looking into this metric would be helpful. Otherwise, it is unclear what happened to reduce the dwellings or to increase the households and thus forcing the increased expense. It would also bring into better focus what groups of people maybe hanging onto unused properties. For instance, if the issue were that older folks had transitioned into assisted care yet couldn’t come to terms with letting go of their property, perhaps there would be some inducement to make that happen.

The third category is around how groups of people learn to live side-by-side. This brings in all that comes before a city council. There are, and rightly so, rules made at the state level as well. In Minnesota we have an intermediate level of governance, the Metropolitan Council, which controls the expansion of the metro. Logistically the number of layers of governance from an HOA to a city to the Metropolitan Council to the State has led to some significant inefficiencies. There is work here to be done to better coordinate these providers of public services.

On the flip side you have all the private activities that go into building new and maintaining existing structures. This makes up category four. The motivations and markets that drive these efforts reside in the traditional economic realm, and rightly so. Contractors, plumbers, electricians, homeowners, carpenters, landlords, banks, and so on all how this operates, and for the most part it runs well.

However, at some point, someone decided that category five, those that need help with their housing, should be the wards of the housing developers. I think it came out of the political language: “We need to build more affordable housing.” New construction is not affordable, it is the most expensive type of housing. This destined-to-fail concept was laid at the feet of those that construct buildings. The real conversation here is not how to fit xx many affordable (by who’s standards?) units into a new project. It is who and how will the entire public (city, state) pay to subsidize the rent for those who can’t pay for themselves.

The final conversation is about taxation. But that’s too complicated to tackle on a Friday evening. But maybe we can turn the elephants back into the jungle?

Markets in Competing Interests

Today this appeared on Twitter.

The Lt Governor has been a strong advocate for trans youth since she ran four years ago. The posting indicates a continued dedication of her time and interest and political capital to this sub-group of Minnesota’s youth.

A new candidate for Hennepin Couty Sherrif (the largest county in the state, maybe 20% of total population) Jai Hanson, challenges her, and asks why the other kids don’t deserve to be nurtured to their true and full selves.

A third observer makes the claim that these are not competing issues. Herein lies the practical problem. People who feel versus people who count.

Some folks seem to think that the caring and demanding more is all it takes. I care about our schools so I’m going to ask for more resources for the kids. I care about the loss of life due to drunk driving, so I’m going to push for driver safety programs and prosecution of drunk drivers. There’s no thought given to length of the agenda, or whether their issues take all of the air out of the room. There’s a flat-out denial that resources are finite. If you care, you can make anything happen.

In reality, if you are gearing everyone up for one group of kids, then you are not gearing them up for another group of kids. The efforts of activism, or the labor to promote and voice social issues, has a set capacity. It’s not about caring enough.

Help with ID

I’m pretty sure these photos were taken on a trip through the Indus River valley, and on up to a hill station in the most northern part of Punjab province, Pakistan. The only lost city that makes sense is one established by the Greeks when they invaded India in 180BC, the city of Sirkap. But if anyone out there can confirm? It would be a great help in confirming a segment of my childhood travels.

From Wikipedia:

The site of Sirkap was built according to the “Hippodamian” grid-plan characteristic of Greek cities. It is organized around one main avenue and fifteen perpendicular streets, covering a surface of around 1,200 by 400 meters (3,900 ft ร— 1,300 ft), with a surrounding wall 5โ€“7 meters (16โ€“23 ft) wide and 4.8 kilometers (3.0 mi) long. The ruins are Greek in character, similar to those of Olynthus in Macedonia.

Numerous Hellenistic artifacts have been found, in particular coins of Greco-Bactrian kings and stone palettes representing Greek mythological scenes. Some of them are purely Hellenistic, others indicate an evolution of the Greco-Bactrian styles found at Ai-Khanoum towards more indianized styles. For example, accessories such as Indian ankle bracelets can be found on some representations of Greek mythological figures such as Artemis.

Wikipedia

The Commonplace

By Walt Whitman 

The commonplace I sing; How cheap is health! how cheap nobility!

Abstinence, no falsehood, no gluttony, lust; The open air I sing, freedom, toleration,

(Take here the mainest lesson-less from books-less from the schools,)
The common day and night-the common earth and waters, Your farm-your work, trade, occupation,

The democratic wisdom underneath, like solid ground for all. 

1891

Sending Signals

I’d be curious to know which non-verbal cues are the most readily interpreted. Language seems like it would rank right up there near the top. An accent reveals someone’s location of origin. Although in the US a tinge or a twang, here or there, can cover a large geographic mass.

In Minnesota we have a number of cities with American Indian names like Edina, Wayzata and Mahtomedi. A stumble here puts the speaker clearly out of state. The use of soda or pop lets us know who is from Wisconsin or Illinois.

But what about other indicators, facial expressions for instance. There are those who greet people full on, eyes wide, and smile bright. There are those who look down and away and mumble. There are again others who stand upright, rigid and talk with the hushed MPR voice that they do so well on Saturday Night Live. Each of these descriptions may have led you to conjure up an image and start coloring in some thoughts around these characters.

Facial gestures can also steer conversation. A hard stare, a doubting wrinkle at the brow, a mocking curl of the lips, are all tools that one can use to impose status, perceived or real, over another. And this type of power, is oh so important in managing the conversation and the direction of the interaction.

Body language is on a continuum. You’ve got the leaners and the straighten uppers, the gesticulators and the laughers. But I’ve always been impressed with the brashness of those who will turn their shoulder (or full body) to create a block between a newcomer and a gathered group. I mean you might as well shout for all to hear: “I don’t want you here!”

People are so caught up in what is said. I find the silent part of language is far more sophisticated. This is where the demarcation of in-group and out-group are drawn. This is where it is quietly confirmed whether you’re in, or out.

Memories

My grandmother delighted in the woods. From a young age she led my brothers and I in through the underbrush, searching. Nature was a treasure chest waiting to be discovered and she was Indiana Jones leading the adventurers into the cavern full of gold.

These were not well-groomed urban parks with asphalt trails meandering through a grove of trees, edged by grass, keeping walkers out of the mud. She took us into a dense cropping of oaks and maples and elms. All of them shooting up wildly, looking for the light. Large trunks lay where they fell after a significant windstorm, embarrassed by their exposed roots toppled to one side. A thick cover of faded dull leaves lay thick across the forest floor.

I can still see her in her cotton white shirt embroidered at the neckline, mint green Bermuda shorts and practical tan shoes. She would reach down, gather us around, and gently push the undergrowth to the side. With the delicacy of a hand model, she would pull back the cover on an earthy Jack-in-the-Pulpit or an elegant Lady Slipper.

She delighted in her success at finding us these special flora amongst all the mundane. For the rest of the outing we’d hear on repeat, “Weren’t we so lucky to find the red trillium, weren’t we? ” White trillium carpets the woods in the early spring before the leaves emerge, but we found ourselves nodding in agreement at the fortitude at coming across the red variety. How could you not get caught up in her enthusiasm?

As we got older my brothers lost interest in her guided tours or took up spending hours on my grandfather’s aluminum fishing boat. But I continued to tag along. She’d hear from someone in town where blueberry bushes had been spotted in some wayside ditch on a remote up-north road. With couple of empty plastic ice cream buckets in the back of her red VW bug, off we’d go to find what the woods had to offer us.

“Look,” she would say. Look at the bloom, the owl, the stream, the berries, the poison Ivy! Look. If I have any skills in observing nature, it is thanks to my Oma.

No Asymmetry- just- what is public and what in private

All urban neighborhoods have rules. The garbage cans, for instance, in our neighborhood must be kept inside a garage or behind an enclosure of a certain dimension. The can might always sit on the private lot, even while down by the curb on collection day. Yet the city residence at some point gathered up in the city council chambers and voted that garbage bins are unsightly and hence violate the public enjoyment of our streets.

Although property rights secure ownership of the home and plantings and outbuildings, the neighborhood considers the outer appearance of the street as a shared good. And hence feels it reasonable to set some guidelines for those who don’t pick up on the nuances of social norms. To be sure these vary from place to place throughout a metro area. Some cities are fine with RV’s in the drive, while others do not permit extra cars in the drive and require garage doors closed while not in use.

Changing times present changing issues. The advent of Air B&B led to concerns around properties being used for entertaining instead of everyday life. Although the use of the short-term rental property is just for the structure, the noise and traffic that come along with vacationers is a negative externality to the neighbors. They are interfering with the public space shared amongst the group. And that is how it ends up on the city council persons’ agenda.

So how about the other way around? If a neighbor uses private resources to do a project which has positive externalities, is it reasonable for them to knock on the door across the street and ask for some equity payback, for having increased the value of the neighborhood? Can they say, “See the lovely $70K custom landscape job, with perennials bordering a gorgeous paver driveway and the welcoming front patio? I just increased your home value, so get your checkbook out and give me a little of that extra equity you’ve got tucked away in your house value.”

The error in the thinking here is in categorizing the goods as public or private. The activity which was done (hiring a designer, picking out the plan, hiring a landscape firm) was achieved for private purposes. The activity did not touch the neighbors’ private goods, like damaging a basement through flooding or perhaps taking down a tree that was right on the lot line. These landscaping transactions are in the moment and fungible.

Improving the facade of your home and thus elevating the ambiance on the road also directly impacts the neighbors (in the same way that a burnt out, boarded up house has a negative impact). This is a public impact. With public goods, you don’t see the cash until you exit the group. The stock of all the public goods tied to the neighborhood may go up and down through the ownership time period- but it is only upon leaving the group that a dollar figure is recorded on these non-fungible values.

Noticing the different mechanisms is a keyway to identify whether a good is public or private.

The reasons why a homeowner would over improve their property knowing that they pay the tab and others will benefit through externalities are important to understand, especially in policy recommendations. The net result of one improvement is generally a cascading effect of others. When people enjoying what they see across the way, they tweak their own property as it pleases them. Sometimes a little seed money from a city can be a catalyst to get the ball rolling.

These are the borderlands where publics and privates get negotiated. In city council meetings and across back fences. There is no one recipe. A reactive, amicable and consistent system of governance seems key.

Tipping at Windmills

I have to say I’ve never read Don Quixote but the drawing of a slender man holding a spear, sitting astride a horse, with a windmill on the horizon quickly comes to mind. A one-line plot synopsis goes something like this: “Don Quixote is a middle-aged gentleman from the region of La Mancha in central Spain. Obsessed with the chivalrous ideals touted in books he has read, he decides to take up his lance and sword to defend the helpless and destroy the wicked.”

As the self-appointed knight goes looking for a fight he runs into all sorts of ruffians and ne’er-do-wells. He brings trouble upon himself and accomplishes little on behalf of the needy. So- here’s the question. Do high morals come first and then the search for those in need? Or is it best if those in need show themselves, so that their situations can be rectified? Perhaps Cervantes was trying to tip his hand indicating cards in favor of the later not the former.

Indeed, there is a story breaking in the Twin Cities right now that indicates if supply of funds is made available with lofty intentions, the criminals show up for the taking. And take they do. The Sahan Journal reports:

Between 2018 and 2021, Feeding Our Future accessed $244 million of federal child nutrition money. The FBI alleges that little of this money actually went to feed children. In a series of search warrants, the agency lists tens of millions of dollars allegedly redirected toward personal spending, including luxury cars, expensive property, and high-end travel. 

Part of the quarter of a billion dollars went to fourteen properties including $2.8M for a Minneapolis mansion, $500K for a fourplex, $500K for an apartment in Nairobi, $2.5M for a commercial space on Lake St, $1.1M for two lake lots in Prior Lake, $575K for a home in Savage, $14K on lawn care, $87K on vehicles, $49K to travel agencies and the list goes on….

And what was it the non-profit professed to be doing in order to access those federal dollars? They claimed to feed 60,000 children in November of 2021 out of a small one-story building. Did the logistics of how all those children were descending on that location not occur to those in charge of dispersing funds?

It was just back in 2015 that a similar con was discovered involving fictitious daycare provision in the same community. The restitution at that time was reported at $4.6M but there were allegations that $100M had been funneled out of the country. Yet instead of calling out criminality, this is how the politician representing that the district responded.

State Rep. Ilhan Omar, DFL-Minneapolis, said she’s troubled by the reports of childcare fraud, but notes that the fraud investigations wouldn’t be possible without communication between DHS and the Somali community.

“Vilifying an entire community โ€” as stories like this often do โ€” does not serve justice or get results. Collaboration does,” said Omar in a statement responding to the Fox 9 story.

It seems to me that when administrators go looking for a cause they create a market which someone steps in and fills with a demand. Want a woke endeavor but can’t find one? – We can fix that! And sure enough. That kind of cash flow will find a pocket to line. I hope they realize Don Quixote was a bit mad.

Words from Unpopular Essays

Philosophy has had from its earliest days two different objects which were believed to be closely interrelated. On the one hand, it aimed at a theoretical understanding of the structure of the world; on the other hand, it tried to discover and inculcate the best possible way of life. From Heraclitus to Hegel, or even to Marx, it consistently kept both ends in view; it was neither purely theoretical nor purely practical, but sought a theory of the universe upon which to base a practical ethic.

Bertrand Russell

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.

For Valentine’s

e. e. cummings

since feeling is first 
who pays any attention 
to the syntax of things
 will never wholly kiss you,

wholly to be a fool 
while Spring is in the world

my blood approves, 
and kisses are a better fate 
than wisdom 
lady i swear by all flowers. Don't cry
-the best gesture of my brain is less than 
your eyelids' flutter which says

we are for each other: then
 laugh, leaning back in my arms 
for life's not a paragraph

And death i think is no parenthesis

Look for the winners

I was at Wal-Mart a few weeks ago and kept passing the same shopper as we meandered through the aisles, her going in one direction and me in the other. She was on her cell and was talking loudly as people do. I only caught bits of conversation as I replenished my pasta supply or tried to remember which condiments were running low. She was relaying the equity situation in her house in a heady manner, the way people talk when there is money involved. She was going over it as if to sort it out herself, how the equity she had gained was something to work with, but then she would also be paying more on the next purchase. It was unchartered territory.

There is a tendency to talk about the real estate market as one great monolith of a thing which spans the entire US. Although it is true that you can look at aggregate numbers for the entire nation, doing so eliminates many insights. Proclamations about rising prices (or falling for that matter) is rather ho hum. Concluding that rising prices is bad as it prohibits or makes it more difficult for newcomers to enter the market is true but fails to acknowledge the winners in the market.

History is quickly forgotten, so I’ll dust off this chart to remind everyone of the homeownership rates for the last twenty years.

Loose credit pushed many buyers into homeownership from the early 2000’s until the crash started in 2007. The common refrain back then was if there was a pulse, there was financing. And the rise in homeownership rates climbed nicely by 5%. A lot of the mortgages were initiated at a below market rate which was fixed for seven years. Once the favorable payment expired many consumers went into default, and hence the steep decline in rates during the crash.

But some first-time buyers, who wouldn’t have qualified if the loose credit hadn’t been offered, did hang onto their properties. And now, twelve years later, they have a nice amount of equity. These are one of the groups of people policies should be focusing on today. Like the modest shopper in Wal-Mart, they have gained a nice equity position yet don’t quite know what to do with it.

Here’s another story of a first-time buyer who was able to use family connections to purchase a home off market. Her relative used their equity to move up, and she secured a lovely home. I find these stories much more interesting than, Stop! Prices are rising. The sky is falling!

Series Review: The girl from Oslo

I was hoping to watch the series Tehran but since I was on Netflix the algorithms offered me this instead (Tehran is on Apple TV). Itโ€™s only one season with ten half hour episodes.

The film takes you to a variety of settings as the story plays out in Oslo and Israel and Egypt. The characters are also interesting as they represent different aspects of each of these areas.

The plot is suspenseful and for the most part believable. Weโ€™re about two thirds of the way through but it wonโ€™t take long to view the rest of the episodes as itโ€™s top of the list for TV entertainment.

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.

Story of the TikTok poster and a rent-controlled apartment

A young woman from New York City created a media stir last year, when she posted shots of her scrumptious apartment on the upper west side of Manhattan (where all the famous people live). She gave an on-line audience a peek into the dreamy lifestyle of making fresh again an old-world charm unit in one of the most expensive real estate markets in the world. It’s no surprise that a school of media swimmers followed her. This story line has already proven successful in the sitcom Friends which aired for ten seasons.

Just like Monica (Courtney Cox) on Friends, the special ed teacher inherited her rent-controlled apartment. It is her childhood home, and the rules allow for a transference of benefit from parent to child. Unlike on TV there are monthly fees associated with the utilities and maintenance of the unit. Given the age of the building, I can guarantee you that $1300/mo rent does not cover the normal combination of heat, electric, water/sewer, common area updates, exterior maintenance which is usually collected through condo fees. For comparison, here’s a listing for a condo built in 1981 and the condo fees run $1424/mo.

Whereas this story has captured the imagination of many who would love to swap living situations with the young New Yorker, others may wonder how this came to be. I can’t supply the context for the imposition of rent control a number of decades ago, but I think today’s housing advocates might see the inefficiency of one individual receiving such a significant benefit. Nor do I think voters today (knowingly) would divert money from the flow of funds through the housing market in a way which would allow this scenario to develop downstream.

Therein lies the danger of using laws to replace economics. Laws are static whereas economic systems are dynamic.

Say a group of people, whether a rural town. or a suburb or a big city have a certain capacity to provide resources for the housing of some community members. We do this naturally of course, when we house our children or perhaps an elderly relative. An example of a dynamic change is how the norms have varied on when children are launched into the real world. Whereas boomers mostly left home at eighteen, millennials stayed on avoiding homeownership and household formation. (Joint Studies for Housing Study- Harvard)

But over and above family ties, the community pays part (or all) of the rent for those who cannot care or themselves. Funds can be funneled through non-profits like Caring and Sharing hands which operates entirely on private donations. At a city level there is an authority to use tax increment financing (TIF), usually in conjunction with monies from the state level. At the federal level the section 8 voucher plan is the largest component of HUD’s budget. These bureaucratic mechanisms are slow and unresponsive to demand.

The disjointedness of subsidy providers is even less able to match individuals and families with the community infrastructures which not only support them but also allow them to participate in a productive manner. Ideally it is through increased involvement in mainstream activities which allow move people back into self-sufficiency, and eventually homeownership.

It’s important to note in the TikTok story that the parents never became homeowners. They never increased their wealth through property ownership. Most probably because there were too many incentives in place to retain their apartment. And the same is true for their daughter. Not only is the TikTok’er afforded a place to live, but she is also monetizing her lifestyle through social media. From what I hear, YouTubers can earn quite a bit when their videos are viewed in the 100’s of thousands. And why shouldn’t she make such extractions? She is simply complying with the incentives set up by the rent-control agreements of years gone by.

The Recall

By Rudyard Kipling

I AM the land of their fathers.
In me the virtue stays. 
I will bring back my children,
After certain days. 

Under their feet in the grasses 
My clinging magic runs. 
They shall return as strangers. 
They shall remain as sons.

Over their heads in the branches 
Of their new-bought, ancient trees,
I weave an incantation 
And draw them to my knees.

Scent of smoke in the evening, 
Smell of rain in the night-
The hours, the days and the seasons, 
Order their souls aright,

Till I make plain the meaning 
Of all my thousand years- 
Till I fill their hearts with knowledge, 
While I fill their eyes with tears.

Veblen, Context, and Claire

Context isnโ€™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.

Investigative reporter starts at NYT and gets 4.2K suggestions for stories

Let’s speculate on reasons for the lack of trust brewing in the non-profit sector at the moment.

Cash- A notable seismic shift in philanthropy since the onslaught of apps and everything social is the ability to tap anyone’s good will. Set up a GoFundMe and boom- thousands of dollars appear. Lots of money on the move with little firsthand knowledge of how those dollars are being distributed is bound to give fodder to conspiracy theorists.

Case in point- GoFundMe recently refunded almost 10million to donors supporting the trucker rally in Canada after eligibility of purpose is scrutinized. Which leads to the next trust buster. The short synopsis which accompanies the funding request often lack a complete flushing out of context (which I hear is in scarce supply these days). The public gets caught up in the cause of the moment and then has donator remorse when they realize that perhaps they didn’t quite understand organization’s mission.

But to be fair, the replies to David Fahrenthold’s tweets range from medical fraud to mega churches, from patriotic themes like Wounded Warriors to AARP of all things. The gist seems to be that the feedback loops on the not-for-profit are waving in the wind like those crazy inflatable advertising men.

The daily grind of Dinner

The early years of dinner-for-the-family is all about tricking and tom foolery. How to make the key foods, that you know the toddlers will lift off their plates and consume, into some new version of itself by adding a colorful stack of carrot sticks or a half circle of goldfish swimming the edges of the plate. Just keeping them astride their stool for a bit longer with a distraction of some sort might earn you an extra bite of their meal.

Shopping wasn’t too much of a burden as their pallets were limited. The work was definitely at the table and not so much behind the scenes. But that all changes once they meet their first vegetarian. The abrupt assault on the woes of meat products comes at you as fast as a horse running for the barn. Abruptly there is nothing in the pantry that will quench their appetite. A new menu and grocery list is required posthaste.

Fortunately, within a week, most middle schoolers cave to their stomachs rather than pursue the higher moral standing of a vegan diet. At least my meat lovers did (thank the lord). But little did I know, a new foe was about to sabotage my grocery, pantry, prep and serve routine. Ennui. Exactly. The “there’s nothing in this house to eeeaaattttttt.”

I’d patiently list off all that was in the ready: enchiladas, kung pao chicken, hamburgers, wild rice soup, pork chops and rice, and of course tacos or spaghetti, amongst other versions or pasta. No, no, no and no. Nothing was enough. The shelves were bare; their stomachs empty; isn’t there something I could do?

I learned by now from the moms at the baseball fields or basketball courts that they had thrown in the towel. Frozen pizza, Costco dinners, and take out were the options offered up in their households. And it’s not to say that we didn’t see of a few of those through our household at dinner time either. But more than the health aspect of prepped food is the economy that bugged me. Frozen Bertolli’s packaged chicken alfredo and penne costs three times what it would to make at home. And barely saves anytime as long as you have some grilled chicken in the freezer and all the other ingredients.

But that’s the key, isn’t it? Making dinner isn’t just the fifteen to twenty minutes of prep and another half hour to cook. One has to know the family’s interests, have the products on hand, be agile and knowledgeable enough to pull it all together. The work involved in feeding a family is by far the most time-consuming activity in homemaking and it is known to be a significant contributor to health and better living.

I teased them through their late high school years that they thought a multicultural chef lived in the fridge and would jump out like some Suess character to accommodate their every culinary demand. Fortunately, it just took a little separation from home, and half a school year eating food from a university cafeteria, to adjust their point of view. Now our dinner table is a destination for a nice meal and visit.

I don’t regret having put in that time instead of bailing on the whole thing. They will start out with more knowledge on how to run a kitchen then I did. And now my job is a cream puff.

Swerve

Louise Erdrich owns a bookstore in an old part of Minneapolis. It’s a brick one story store front next to a restaurant which serves patrons at tables on the sidewalk in nice weather. Inside it’s stuffy with books like an oversized wool sweater. There are armchairs between the bookshelves to sit on and browse the pages of potential purchases. Once I saw a late-middle-aged women in glasses, chomping on gum, as she speed-read a tome as if she were in a library.

I frequented the store through the anticipated demise of tangible print. There may have been as few as three independent bookstores in the Twin Cities around 2010-2012. Being a well-recognized author, Erdrich could keep one going on her own reputation (probably at great personal expense). Anyway, the support staff on site were subtly helpful, available with insights from behind the cash register perched on an over-sized oak display cabinet. This is how I came upon the book, The Swerve: How the World Became Modern, by Stephen Greenblatt.

The Swerve: How the World Became Modern (paperback edition: The Swerve: How the Renaissance Began[1]) is a book by Stephen Greenblatt and winner of the 2012 Pulitzer Prize for General Non-Fiction and 2011 National Book Award for Nonfiction.[2][3]

Greenblatt tells the story of how Poggio Bracciolini, a 15th-century papal emissary and obsessive book hunter, saved the last copy of the Roman poet Lucretius‘s De rerum natura (On the Nature of Things) from near-terminal neglect in a German monastery, thus reintroducing important ideas that sparked the modern age.[4][5][6]

Wiki

I had asked for a book that would offer up some history in an entertaining manner, and it provided that and more. As the story is told, one can see how a whole sets of ideas can be set off in the wrong direction. And at that time other thoughts are ignored and put to the side, only to be the subject of great discoveries at a later date.

It’s refreshing that the study of economics seems to be taking an assessment of its own history. During the cold war there was such a dichotomy between capitalism versus all the rest, that ideas were smothers if political implications found them unfriendly. And then there were greater hurdles around languages and translations. Maurice Allais for instance refused to have his works translated from French. He was recognized with the Nobel Prize in 1988 “for his pioneering contributions to the theory of markets and efficient utilization of resources.” Yet many other economists from the English-speaking world are given credit for observations which he (perhaps) got after first.

I would think the internet will make it easier for people in pursuit of similar interests to find each other going forward. In the meantime, never forget the past.

The paradox of the outsider

Say you lived in a small rural community. Maybe there is one main grocery store in town and three churches of various denominations. All grades k-12 are taught in one building, with the younger ages on one side of the building complex. The senior high kids get the classrooms closest to the gym and the middle schoolers fill the classrooms sandwiched in between. Busses bring in kids from rural route addresses.

Now imagine one family is experiencing financial difficulties and the couple is separating. The land they farm came down through her family, so she is staying on the site to try to make a go of it. Eighteen months in, the past due notices are piling up and she comes to terms with the reality of having to sell. Normally this productive land is swept up by competing farmers wanting to increase their holdings. The nearby owners are usually particularly interested as the expense to move large farm equipment like combines is expensive. But the sale stalls- why?

In a small, isolated community there are only so many social activities, through church or the school sports or maybe a community center. When you run into someone at the high school basketball game or service on Sunday you don’t want to read across your neighbor’s face that they think you took advantage of their misfortune. When the idea is to get out and enjoy a round a golf or relax over a beer at the VFW, you don’t want to run into the lady who may feel like you stole her inheritance.

The paradox is that community is meant to be there for each other when times are bad. But in this case the aversion of being accused of profiteering is damaging to those who need help the most. And this is how an outsider can step in, easily appraise a favorable situation and finalize the purchase. The cost of social stigma is not felt by the outsider.

This a corruption of some kind. The community breaks its own rules and allows a profit to leave the group for another. A sense of loss remains. People turn on the outsider. They are the profiteer! They are not to be trusted.

Wright county Iowa

Poem about parents from Edna St. Vincent Millay

SINGING-WOMAN FROM THE WOOD’S EDGE

WHAT should I be but a prophet and a liar,
Whose mother was a leprechaun, whose father was a friar?
Teethed on a crucifix and cradled under water,
What should I be but the fiend’s god-daughter?

And who should be my playmates but the adder and the frog,
That was got beneath a furze-bush and born in a bog?
And what should be my singing, that was christened at an altar,
But Aves and Credos and Psalms out of the Psalter?

You will see such webs on the wet grass, maybe,
As a pixie-mother weaves for her baby,
You will find such flame at the wave’s weedy ebb
As flashes in the meshes of a mer-mother’s web,

But there comes to birth no common spawn
From the love of a priest for a leprechaun,
And you never have seen and you never will see
Such things as the things that swaddled me!

After all’s said and after all’s done,
What should I be but a harlot and a nun?

In through the bushes, on any foggy day,
My Da would come a-swishing of the drops away,
With a prayer for my death and a groan for my birth,
A-mumbling of his beads for all that he was worth.

And there sit my Ma, her knees beneath her chin,
A-looking in his face and a-drinking of it in,
And a-marking in the moss some funny little saying
That would mean just the opposite of all that he was praying!

He taught me the holy-talk of Vesper and of Matin,
He heard me my Greek and he heard me my Latin,
He blessed me and crossed me to keep my soul from evil,
And we watched him out of sight, and we conjured up the devil.

Oh, the things I haven’t seen and the things I haven’t known,
What with hedges and ditches till after I was grown,
And yanked both ways by my mother and my father,
With a “Which would you better?” and a “Which would you rather?”

With him for a sire and her for a dam,
What should I be but just what I am?

The word- nonmarket

I think it is unfortunate that economic literature adopted the phrase nonmarket valuation when using hedonic equations for securing a numerical value for public goods, or proxy thereof. The method of econometric calculation is used all over the world to secure numerical values for impacts of everything from wildfires to airplane noise to crime. You might notice that these are all goods which benefit (or detract) from the welfare of the public nearby.

Just to be clear- I’m referring to methods which involve the use of home sales values when properties are sold in an open and active market. There is no denying that the exchange of real estate for funds is a market transaction. Which is why I find it baffling that a component of a market generated price would be termed nonmarket.

Of course, buyers pay more for less airplane noise, or take a hit when a home is on a busy road. If it is a freeway instead of a through street with the occasional bus rolling by, the seller will need to take a bigger discount. Hundreds of buyers and sellers come up with these outcomes in a market. The discount of living in a flood plain or near a high-risk forest fire area or under the power line is derived by markets. The premium for the wooded lot or the view of the Rockies is determined by markets.

I think what is being drilled down on here is that the components cannot be separated from the bundles. And the features of the crime level or the subway or the quality of the schools are derived from efforts (or networks) of nearby participating neighbors. That makes these components of the total price non-fungible- they cannot be sliced off and traded.

But they are most definitely priced in a market environment. Nonmarket makes no sense.

Why watch a ’58 film with Loren and Grant?

My husband always groans when I delve into classic films. But watching Sophia Loren and Cary Grant team up in an endearing romantic comedy in the film Houseboat was worth it.

Here’s why:

  • Powerhouse lead actors are typically cast in strong films.
  • It was produced in 1958 yet the two marriages are far from nuclear family.
  • The painted backdrops are hysterical.
  • The audience must play along when a derelict houseboat is renovated in a snap by a family with three kids.
  • The adults leave for an evening at the country club without a thought given to a sitter.
  • Group gawking at Loren is entirely acceptable.
  • Bonus shots of DC as Grant works for the State Department.

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 โ€œa political action intended to stop the Twin Metals project without conducting the environmental review prescribed in law.โ€ 

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.

How we talk about the Homeless and the Housed

It was refreshing to see this post from Matt Yglesias regarding the homeless population in Europe. One of the most tiring things I found when I came back to Minnesota to go to college was the erroneous (and all too frequent) comparisons fellow students made between Europe and the US. One exchange program to Sweden and the fountain of suggestions on how we’d all be better off doing it the Scandinavian way was ever flowing.

Another pet peeve of mine is how homelessness is written about in the media. It shows up in articles around the cost of housing, right in there with scandalously high-priced luxury homes and the persistently rising average median price of homes. I question why people do not realize that the chronically homeless do not participate in open market real estate transactions, and hence in no way influence the cost of housing. When costs are escalating some people in financially precarious situations lose their housing, often temporarily. But these aren’t the homeless living in tents alongside the main roadways of our nation’s capital.

Which brings me back to the substack article at SlowBoring. Yglesias takes the time to point out that what market rate mainstream residents care about most is how the homeless are affecting their neighborhood public goods. (And I’m not saying they shouldn’t). Locals want to be able to use their parks without repercussions for their safety and access public transit and use the libraries for that matter. The objections to the lifestyle of the homeless has more to do with their neighborliness than their housing.

But I’m not here to give advice on how to remedy this group of societies issues. I’m here to point out that any shelter for these folks will have to be provided for them. They are not part of the market, and many don’t plan to be, as described by Jeanette Walls in The Glass Castle. Assistance to put the fraction who tumbled into their predicament during rapidly escalating prices back into the stream of self-provision, is common sensical. But there will always be a segment of the population who will need to be subsidized.

It just seems like issues of the homeless need their own articles. Mixing the topic of homelessness in with a hopping real estate market is like bringing up the number of entrepreneurs who fail every time there’s a breakout unicorn to write about. As we all seem to have short memories, I’ll take a moment to remind everyone that during a recession, when real estate prices are in a downwards spiral, folks also find themselves without shelter. Again- the homeless are neither borrowers nor sellers nor renters in real estate. And thus, to feature them in a discussion about pricing seems to be more of a trigger than anything else.

Monopolies in the private and in the public

There is a watershed moment in the works as a Democrat, Amy Klobuchar, and a Republican, Chuck Grassley from Iowa, are teaming up against big tech.

Over the last twenty years a lot of leeway has been given to companies who needed control of frameworks in order to build what we know now as an ecosystem on the internet. A century ago the railroads were given similar leeway as they laid down tracks from east to west across the country. But now there is an appetite to disengage the big players from their power positions and open up opportunities for smaller players to get in the mix.

Most people agree that monopolies in the private sector work against the consumer. If producers gang up and set prices, then consumers have no choice but to pay what is asked of them. When producers compete for their customers’ business, then they become lean in an effort to provide the best product at the best price. The private interest of each individual producer is isolated from the private interest of a conglomeration of producers.

In this blog I describe a transformation which takes place when a group of people acting in a public interest compete for products against other groups acting in their public interest. For instance, during the early days of the Covid N-95 masks were a hot commodity. Minnesota and Iowa and Oregon were all out in the marketplace trying to secure orders from abroad. All were attempting to pursue the public interest of safety for Americans, yet in acting as groups, they bid up the prices of the masks. The appearance was a pursuit of a public good, yet since each were interacting at the state level, the economic behavior followed the private market mechanisms.

Could the same be said for public school unions, that they appear to be a public interest whereas they are truly private? The k-12 schools are provided on behalf of a public interest in an educated citizenry. And although many teachers carry a civic spirit, everyone would expect them to look after their private interests when negotiating the terms of their employment. Certainly, there was a time where the amplification of speaking as a group, with the help of a union, was necessary.

But the teachers’ union has grown in scope and power. They not only dictate teacher contracts, but get politicians hired and have greatly influenced the opening and closing of schools during the pandemic. And in those activities, they have failed to act in the public interest of the children’s education, as they are by essence guarding the private interests of their teachers.

I think I’m not alone in categorizing the teacher’s union as a monopoly in the k-12 industry. I doubt teachers can influence or overturn membership. I doubt that all teachers stand behind their union. I know many parents don’t. If you want to break up tech, why not break up the teachers’ union? They both show monopolistic behavior over a public utility.

The Lost Daughter- Movie Review

If you are an action/adventure film enthusiast I’m not sure if The Lost Daughter is right pick for your Saturday night viewing pleasure. Whereas James Bond movies open with a large landscape panning of a dramatic ski slope decent, this film meanders along an oceanside road for as long as it takes the sun to set. Whereas Bruce Willis navigates amongst hundreds of frantic bystanders taken hostage, this film has the camera angle so tight to the lead and her children that you can’t help but smell Johnson’s baby shampoo. Whereas the violence in action adventure is noisy, loud and explosive, the violence of the female sort is gut wrenchingly mean.

This is a movie about women. Women as mothers, as wives, as cheaters, as power brokers, as party goers, as needy. There are many layers to how all the players are set in motion. And of course, the femme fatale is a bushy bearded male who steals away the lead knowing she is easily baited by the public recognition he lavishes over her professional work.

On a first viewing I just want to enjoy the surface layer, with all the beautifully framed shots. But my subconscious is signaling there is more there to be seen, and to plan on a review at a later date. Though not heavy on action, there is intrigue. The movie starts slow but builds and with the help of an unreliable narrator, one discovers a need to learn more about Leda’s story.

Walking Around Money – Short Story Review

I started liking short stories when I first found Flannery O’Connor, probably because that was her preferred genre. Then I picked up The Best of American Short Stories because the volume had been edited by David Brooks- and then I was sold on short stories as a way of sampling a new author over an afternoon on the couch. The first selection in a volume called Transgressions (edited by Ed McBain) is Walking Around Money by Donald Westlake who is just one more prolific writer who was not familiar to me.

He’s a crime writer. This sixty-page caper is full of great language for his less than brilliant partners in crime. Take this description, for example.

Dortmunder and Andy Kelp and the man called Querk sat in silence (shoosh) a while, contemplating the position Querk found him self in, sitting here together on these nice wire-mesh chairs in the middle of New York in August, which of course meant it wasn’t New York at all, not the real New York, but the other New York, the August New York.

In August, the shrinks are all out of town, so the rest of the city population looks calmer, less stressed. Also, a lot of those are out of town, as well, replaced by American tourists in pastel polyester and foreign tourists in vinyl and corduroy. August among the tourists is like all at once living in a big herd of cows; slow, fat, dumb, and no idea where they’re going.

This is language I appreciate and enjoy. The plot is tight and fresh. Now that I’ve bumped into him, I’ll have to find more pages written by Mr. Westlake.

Why aren’t more developers building?

I listened in on a housing forum discussion today and in the chat a question appeared: “Why are developers not building more housing?” Below is a graph representing the nationwide trend. The trend follows here in Minnesota.

As you can see during the recession of 2007 the industry went from a production level of 2,200 to 500 (thousand). Or the production dropped by over 75%. And still hasn’t recovered a decade later.

The story of why can be told by thinking through what that drop between 2006-2008 meant for thousands of individuals whose assets and livelihoods were tied up in new construction. It’s common for land developers to spend several years of work, from conception to approval to shovel in the ground, before collecting earnest money checks for a new-build that takes another six months to close. The recession left thousands of projects half done with foreclosure notices piling up at the county. Development is a high risk, with a lot of upfront costs, type of business. Once you fall off that bronco, it’s hard to climb back in the saddle.

Others were bit too hard to forget that time period. Building requires all types of workers from framers to concrete contractors to plumbers, electricians, and finish carpenters to name just a few. If three quarters of the jobs closed down, then just as many workers were caught unemployed. This meant looking for jobs elsewhere. Many from the Twin Cities went up to work on the oil fields up in North Dakota. This tore families apart who were already reeling from financial pressures.

Maybe an industry could get back on top of these objections after four or five years. People forget about the past and remember what it was they liked about their previous occupation. And new construction permits have gone up mostly lead by large national builders. Undoubtedly another constraint is the annual upping of regulatory requirements. Builders have to explain these extra costs to the consumers and simultaneously know that they are often framed as greedy, profiteers. That probably gets old.

The public may not remember the wind-swept developments with foreclosure signs, but I’m sure the investors do.

Assumptions and Assurances

Quite a few years ago when I was at the Carlson School getting an MBA at night, I recall a foreign student from Sierra Leon, or thereabouts, and I shaking our heads at the chatter of our fellow classmates. They were all off on a tangent on how easy this or that would be to accomplish. The foreign student and I were ticking off the number of implicit assumptions which held our fellow students’ ideas together.

The structures which support commerce in America are taken for granted by those who have experienced nothing less. We take it for granted that our money will at the bank, for instance. (Or even that the bank will open on time as I recall the Sierra Leonian noting) Most consumers not only anticipate the ability of financial institutions to keep our funds safe, but never bother to balance their accounts, as the bankers do all of that.

When I was a loan officer sitting behind an oversized wooden desk, my clients, from across the high gloss polish, would sign their mortage papers but never read them. They listened politely as I highlighted the terms and obligations for repayment, nodded, and then put pen to paper. In exchange for the blue ink on the promissory note which detailed possible foreclosure action for non-payment, they happily received a check. And so, it goes in America.

The fluidity in the marketplace and lack of concern with lengthy legal documents can be attributed to regular assurances people hear from all those around them. Their parents have bought a home, and it all went OK. Their friends used such and such mortgage broker and despite an inconvenience over some last-minute documentation, the rate and fees were as expected.

Of course, there are situations that lead the consumer dissatisfaction as well. A while back there was that interest free financing for six months at time of purchase of furniture or a large TV. But then the credit card didn’t send the statement with the balance in time, so the consumer was charged retroactively for 180 days of interest. More often than not these gotcha gimmicks get brought to the attention of the attorney general, and even though the duped don’t get repaid, future misleading advertising is curbed.

With the little bit of work and an audience for stories of assurances, the institutions which make for reliable financial services is maintained.

Moving Chains Paper- offering new housing opportunities throughout Helsinki

City-wide effects of new housing supply:
Evidence from moving chains
by: Cristina Bratu, Oskari Harjunen, Tuukka Saarimaa*

Abstract
We study the city-wide effects of new, centrally-located market-rate housing
supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly
reach middle- and low-income neighborhoods and individuals. Thus, new marketrate construction loosens the housing market in middle- and low-income areas even
in the short run. Market-rate supply is likely to improve affordability outside the
sub-markets where new construction occurs and to benefit low-income people.

As far as why a paper, which many would think of as addressing common sense, needs to be written. This tweet best explains it best:

This might seem obvious if you’ve ever read the literature (this process is normally called ‘filtering’) or indeed if you’re a renter who has moved around a lot, but the theory gets a lot of critique from those who don’t like what it suggests about the need to build more…

… And because you need access to the whole population address history in order to *prove* that market supply frees up more affordable homes for lower income households, it’s hard for researchers to do (lack of data/privacy issues). So good to have this extra empirical evidence!

The paper also has some interesting findings on the role of social housing as well. Tl;dr all new housing supply has a good impact across the city. Lots of interesting charts too!

Get the feeling most of the people giving me reasons it’s wrong haven’t read the paper, since they are arguing against points that a) this paper doesn’t make, and b) are irrelevant to the findings of this paper ๐Ÿ™ƒ

I’ve had people saying “housing in Helsinki is expensive, so this paper is wrong & we need socialism” AND “the reason housing in Helsinki is cheap is because of socialism”.

… the paper is not about what prices in Helsinki are. And it supports both market and public housing.

Originally tweeted by Anya Martin (@AnyaMartin8) on January 14, 2022.

Sorting: Home Price is not the same as Rental Price

It’s more expensive to live in New York City than Omaha Nebraska. If you are only going to relocate to Denver for a couple of years, you should rent instead of buy. Housing prices suffer in Baltimore due to high crime rates. These are all statements that don’t need an explanation. Living in a city full of opportunity is going to cost more than in a city a fraction of its size. The commitment to purchase a property is both financially and emotionally taxing for a short stay. And high crime rates make just about any neighborhood a tough sell.

It is easy enough for consumers to observe these strong market indicators. But if we want to start digging deeper into what market prices of housing can tell us, than we must be a more careful about sorting.

If we wish to look at housing costs in an open market environment and break the values down in order to find market preferences for attributes tied to the neighborhoods, then we must choose between either (residential) home sales data or rental data. Otherwise, the statistical outcome will fail because these are two different market transactions.

Purchasing a property is a multi-year commitment. Renting is generally a year at a time. The rule of thumb on how long a buyer should anticipate staying in their home has varied over the years. Back when I first got in the business the benchmark was seven years. Between real estate fees to move- perhaps around 7.5% of value- and the closing costs of financing, a buyer requires several years of appreciation to break even on purchasing versus renting.

But I’d argue there is more to it than this sketch of dollars and cents of the buy versus rent decision. For comparison’s sake let’s consider the actions taken by a homeowner or a renter or an Airbnb occupant. They are all enjoying shelter in the same location of a city. An individual walks by an alley and there is a body lying near the dumpsters. The Airbnb people will probably finish their stay and not mention it to anyone, although they will probably rethink their choice of lodging for the following visit. The renter may or may not call an authority like the police. If bodies in alleys become a routine occurrence they will probably move.

I think you know where I’m going with this. The homeowner is the most likely to get involved and not only notify the authorities but follow through with contact to a city council member and so on. This is work done on behalf of the neighborhood with no financial compensation. It is a job taken on as an investor in the neighborhood who aspires to live in a safe and desirable environment. The homeowner is willing to make this investment whereas the Airbnb and renter are progressively less likely.

The relatively transient nature of renting can affect price in other ways. A consumer maybe willing to pay more to be near key features, especially arts and entertainment venues. The reasoning goes that they know this is a temporary situation so why not enjoy something that they will not have access to once they have to come down to earth and purchase a property. Or they choose over-the-top structural amenities and a higher level of finishes, again not available to them once the concession of a long-term purchase stretches their resources in other directions.

The analysis of rental prices in determining the implicit prices of neighborhood amenities are valuable. But will not yield the same results as the analysis of home prices since consumers are not purchasing the same items.

But what should be worth a mind-blown emoji and seems to be greatly ignored is the reliable impact of public goods on home prices. In addition to knowing a school district is worth $xxx of a home’s value, and all those other observations at the beginning of this post, just about anyone can run a regression on a laptop. Just go into the county records, collect the price of 100 similar homes by area, plug them into Xcel columns as well as FBI crime data relevant to area and school test scores for the property. Then go to Data Analysis>Regression>Ok and generate a lovely statistically significant relationship.

The relationship of price to crime and school performance is so strong it doesn’t even need the most general of sorting. But most other things will.

Mystery writer discovered

Trust me when I tell you that thrift stores are the perfect place to meet new favorite authors. I’ll often stop into the shop after having dropped off a back seat full of neglected household goods and clothes that no one seems to wear. Days like these are relaxed, otherwise I never would have been sorting through closets, piling the items in my car and delivering them to the drop off window.

Sometimes the book shelves are organized, sometimes the books are tipping off the shelves. No matter. I scan the shelves for titles I know or covers that look interesting. If I’m unfamiliar with the author I google their name. I’m sure that’s how the Ruth Rendel book ended up in the basket of books by the overstuffed armchair in my living room. The search reveled that she has over sixty titles to her name and is one of Britain’s most recognized mystery writers. Well, that was news to me!

Friday evening when I was looking for some non-screen entertainment my hand landed on it where it had been waiting to be read. It succeeded on all counts. There is suspense. There are interesting settings (or maybe I’m just nostalgic for Europe). The level of character development is of greater complexity than commonly found in the genre. The author strings you along until the last few pages with red herrings and dead ends.

And I doubt I would have found Ruth Rendel except for the wonderful recycling effect of donations to a thrift store.

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.

The Survivors- Movie Review

I clicked on this 1983 comedy with Walter Matthau and Robin Williams on a bit of a whim. It is not highly rated, but I’ve been curious about comedy and what I failed to see in it back when I was younger. Much of the humor is derived from subtle plays on social norms. If you are not from the area, or lack proficient language skills, or are not in tune with current political situations, the laugh often slips right on by you.

Walter Matthau is admirable (I am just realizing what a tremendous career he had!) and keeps the movie together. Robin Williams is not my favorite even though he pulls offs some great lines and gestures. But mostly what I found interesting is the harsh review of US bureaucratic services. This was a time of high interest rates and high unemployment, and a discouraging mood is present throughout. As a result, one does come away impressed with the speed and fluidity of the disbursement of Covid relief funds.

The home seller’s POV

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

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

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

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

A house as a bundle of implicit prices

Yesterday’s post was about how the implicit price for neighborhood public goods, or what some people call amenities, like schools, parks, city services are a portion of the final sticker price of a home purchase. Buyers in the housing market consider square footage, beds, baths and the level of landscaping, but also make choices of financial consideration when comparing the infrastructure in the neighborhood and surrounding area. Just how long it will take to get to work or whether there are medical facilities close by are all contenders in the battle for the right bundle of components wrapped up in the final purchase.

The mathematical technique used to identify these bits of the final sales price, each dedicated to an amenity, is to solve for a hedonic equation. That is to line up a set of prices against data thought to be considered by consumers prior to purchase, and then solve. For instance, the violent crime rate is a very strong indicator in metering out a buyer’s sense of safety, and k-12 test scores are faithful representations of feelings around schools. When an econometrician equates prices to this data it is called running a regression.

Of course, there is much to this statistical process, and many mistakes can be made or avoided depending on how the problems are structured. But what I want to talk about is conceptionally what the coefficients, the numbers dictating the value (or maybe impact is a better word) of each amenity. It feels like a price since the unit of measure is dollars. For example, if a home in one school district were compared to the same home in more favorable district, the natural log of the coefficient gives the value as a percentage. In considering a purchase the buyer could say they would have to pay ten percent more for one home over the other. Or that there is a forty-thousand-dollar premium (on a 400K home) to purchase in the better district.

Sherwin Rosen who first wrote about this process in the ’70’s warned against thinking of implicit prices (the prices of the categories which make up a product) as an actual price since they come together as a bunch. In housing this is particularly true. One can’t make a wish list of features and tell a manufacturer to build it, like your latest laptop. One is not able to blend a prespecified structure and plunk it down just anywhere. For the most part consumers often bend on some desirable features in order to get others.

Buyers are also attracted to a variety of public goods at different times if their lives. Families with children in the home care about schools. Working stage of life folks need daily commuting infrastructure. Later stage in life people may want access to medical facilities. And it is these groups of people who are vying and competing for the homes which best offer the desired benefits.

Home economics is a study of bundled goods and grouped consumers.

What’s in a house price

All we’ve heard for the last several years is how the price of housing is going up. Up. UP! And for the most part that is true. Whether it is because Millennials are finally getting on their feet and need a place to have their own families, or whether the baby boomers are not moving to the lower priced condos and giving up their family homes, there is no doubt that there is a housing squeeze.

But seriously, for as long as I can remember, except in deep recessions, people have thought housing is expensive. Because it is! It is the largest portion of people’s monthly budget. And this distraction about the cost of a home is the most uninteresting fact one can take away from home prices. House prices are a rich reflection of the revealed preferences of a community.

An economist in the early part of the twentieth century by the name of Paul Samuelson came up with the idea that when consumers chose different products, they reveal what best suits their needs. This differed from theories up to that point which placed the burden on policy makers to decide which goods provided the greatest utility to consumers.

Samuelson’s relationship with economics is lengthy. This excerpt paints the broadest brush of his brilliance. “In receiving the Nobel Prize in 1970, Mr. Samuelson was credited with transforming his discipline from one that ruminates about economic issues to one that solves problems, answering questions about cause and effect with mathematical rigor and clarity.”

One economist, his junior by twenty years, heard the clarion call for greater mathematical representation of economic theory. Zvi Griliches contributed to a publication called Economic Statistics and Econometrics published in 1968. In a paper called Hedonic Price Indexes for Automobiles: An Economic Analysis of Quality Change, Zvi pulled apart the prices for automobiles so that he could show how much consumers were paying for improved engines or length of the vehicle or other features. By comparing the components of the cost of vehicles he distinguished between inflation and consumers revealing a preference for higher quality provided by advanced technology.

But back to real estate. The economist credited for using this statistical method (taking the price of a complex product and using data to divvy out the weighted values of its various components) was Sherwin Rosen in his 1974 paper Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition. Now this is exciting! The price of a house can tell you how much one school district is favored over another. It can tell you the value effects of violent crime, or proximity to mass transit.

The implicit prices tell us that we trade in public goods as well as private goods. We shop for city services and good roads, for youth programming and parks, as well as for good schools and safe streets. The implicit prices tell us how groups of people choose bundles of public goods. Real estate prices are incredibly rich with feedback.

So can we stop with the “They are so expensive.”

Grandpa and Sam McGee

Opa grew up dirt poor in northwestern MN, one of a large family of Swedish immigrants. He was more or less orphaned when he was sixteen, so he persuaded a couple of buddies to see if they could winter off the land up along the Canadian border.

Whenever the temps and wind chills dig into the minus twenty, minus thirty range, I wonder how they pulled it off back around 1923. It’s no wonder that one of his favourite poems was The Cremation of Sam McGee. He knew it by heart and needed little prompting to recite it to you.

The Cremation of Sam McGee

BY ROBERT W. SERVICE

There are strange things done in the midnight sun
      By the men who moil for gold;
The Arctic trails have their secret tales
      That would make your blood run cold;
The Northern Lights have seen queer sights,
      But the queerest they ever did see
Was that night on the marge of Lake Lebarge
      I cremated Sam McGee.

Now Sam McGee was from Tennessee, where the cotton blooms and blows.
Why he left his home in the South to roam 'round the Pole, God only knows.
He was always cold, but the land of gold seemed to hold him like a spell;
Though he'd often say in his homely way that "he'd sooner live in hell."

On a Christmas Day we were mushing our way over the Dawson trail.
Talk of your cold! through the parka's fold it stabbed like a driven nail.
If our eyes we'd close, then the lashes froze till sometimes we couldn't see;
It wasn't much fun, but the only one to whimper was Sam McGee.

And that very night, as we lay packed tight in our robes beneath the snow,
And the dogs were fed, and the stars o'erhead were dancing heel and toe,
He turned to me, and "Cap," says he, "I'll cash in this trip, I guess;
And if I do, I'm asking that you won't refuse my last request."

Well, he seemed so low that I couldn't say no; then he says with a sort of moan:
"It's the cursรจd cold, and it's got right hold till I'm chilled clean through to the bone.
Yet 'tain't being deadโ€”it's my awful dread of the icy grave that pains;
So I want you to swear that, foul or fair, you'll cremate my last remains."

A pal's last need is a thing to heed, so I swore I would not fail;
And we started on at the streak of dawn; but God! he looked ghastly pale.
He crouched on the sleigh, and he raved all day of his home in Tennessee;
And before nightfall a corpse was all that was left of Sam McGee.

There wasn't a breath in that land of death, and I hurried, horror-driven,
With a corpse half hid that I couldn't get rid, because of a promise given;
It was lashed to the sleigh, and it seemed to say: "You may tax your brawn and brains,
But you promised true, and it's up to you to cremate those last remains."

Now a promise made is a debt unpaid, and the trail has its own stern code.
In the days to come, though my lips were dumb, in my heart how I cursed that load.
In the long, long night, by the lone firelight, while the huskies, round in a ring,
Howled out their woes to the homeless snowsโ€” O God! how I loathed the thing.

And every day that quiet clay seemed to heavy and heavier grow;
And on I went, though the dogs were spent and the grub was getting low;
The trail was bad, and I felt half mad, but I swore I would not give in;
And I'd often sing to the hateful thing, and it hearkened with a grin.

Till I came to the marge of Lake Lebarge, and a derelict there lay;
It was jammed in the ice, but I saw in a trice it was called the "Alice May."
And I looked at it, and I thought a bit, and I looked at my frozen chum;
Then "Here," said I, with a sudden cry, "is my cre-ma-tor-eum."

Some planks I tore from the cabin floor, and I lit the boiler fire;
Some coal I found that was lying around, and I heaped the fuel higher;
The flames just soared, and the furnace roaredโ€”such a blaze you seldom see;
And I burrowed a hole in the glowing coal, and I stuffed in Sam McGee.

Then I made a hike, for I didn't like to hear him sizzle so;
And the heavens scowled, and the huskies howled, and the wind began to blow.
It was icy cold, but the hot sweat rolled down my cheeks, and I don't know why;
And the greasy smoke in an inky cloak went streaking down the sky.

I do not know how long in the snow I wrestled with grisly fear;
But the stars came out and they danced about ere again I ventured near;
I was sick with dread, but I bravely said: "I'll just take a peep inside.
I guess he's cooked, and it's time I looked"; ... then the door I opened wide.

And there sat Sam, looking cool and calm, in the heart of the furnace roar;
And he wore a smile you could see a mile, and he said: "Please close that door.
It's fine in here, but I greatly fear you'll let in the cold and stormโ€”
Since I left Plumtree, down in Tennessee, it's the first time I've been warm."

There are strange things done in the midnight sun
      By the men who moil for gold;
The Arctic trails have their secret tales
      That would make your blood run cold;
The Northern Lights have seen queer sights,
      But the queerest they ever did see
Was that night on the marge of Lake Lebarge
      I cremated Sam McGee.

What squatter cities can teach us

I really like the first half of this TED talk by Stewart Brand (0-8:00). He captures the progress of people coming together in cities to provide public goods, like a marketplace and schools, cable and water, so that they may pursue their private desire to navigate the opportunities of large urban centers.

“These people are valuable as a group, and that’s how they work.” Stewart Brand (3:31)

Settlements in Dhaka, Bangladesh, are shown as an example (6:58). When we lived in Dhaka in the late ’60’s this region was one of the poorest in the world. By the time this video was made in 2006 progress was underway. But just this year all indications are for continued success.

From today’s Dhaka Tribune:

He (Minister Muhammad Tajul Islam) said when the Awami League came to power in 2009, per capita income was hovering around the $700-mark. It increased to $2,554 in a decade under the leadership of Sheikh Hasina.ย 

He added that it may increase to $3,000 in 2022. ย 

https://www.dhakatribune.com/bangladesh/2022/01/09/lgrd-minister-per-capita-income-to-exceed-3000-by-2022

Brand’s predictions for a prosperous outcome for the people filling up the slums came to fruition in Bangladesh. Yet I take issue with how he refers to the economic activity as an informal economy. This term is a bit slippery, but its most prevalent definition is taken from the viewpoint of the political state. This, for example, from Wikipedia: “An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government.”

The activities specified by Brand in the development of schools is a story of parents pooling money to hire teachers to educate their children. There is a cash element to this procurement of the public good, as well as a non-paid time portion from the parents involved in organizing and managing the teachers. But thereโ€™s nothing hidden or under the table in these proceedings.

Education is known to be the most important contributing factor to pulling people out of poverty. How it is described in the TED talk does not matched the definition of an informal economy. The state did not provide a public-school education in the slums, but I think weโ€™re all past the notion that government has a corner on this sphere of the market.

Public goods are traded throughout the west as well as the east within groups of people who share a common objective. This is accomplished with a combination of paid and voluntary positions, with an input of shared and private resources.

Finding family more valuable

People in the prime earning years of their work careers are leaving it all behind. Some have no plan at all except to be done with what they used to do and look forward to perhaps consulting options or other opportunities. Others resigned with the intentions of helping with their grandkids as the burden of at home schooling and work and having something of a marriage was taking its toll on their kids. The numbers for the Midwest are clear, with quit rates climbing to all-time highs, as shown here by FRED.

For some the virus has made life too stressful. The uncertainty of whether your kids have a reliable place to be during work hours is a significant concern under any circumstance. The last minute need to take leave from paid employment to look after a quarantined kid creates an entry on the positive side of the on-going debate whether the family would be better off with one worker dedicated to family affairs.

Many people settle into the extended family model where grandparents or aunts and uncles show up for a childcare shift throughout the week. This also alleviates the stress of transport to and from daycare in twenty below weather sliding over ice covered roads. The anxiety of a worker when faced with being late to pick up their infant is palpable.

People are making quality of life choices. It appears that Covid has drawn people up short on past choices about paid employment versus employment which allows greater time spent building equity in family relations, or flexibility to pursue other associational interests. Once people start sharing such ideas with others, a little self-reflection can set off a chain reaction.

Labor, like any commodity, is compensated by a mix of pecuniary and social rewards. Where individuals, couples, or extended families find the balance of enough cash and enough time to keep the family support systems in play so that everyone is safe and fed and healthy. And then there’s the altruistic side of people who feel the sheer reward of adding to the public goods market whether through education or their many other talents.

Accountants are underrated

Numbers people are underrated. You probably have not heard of Amatino Manucci or Luca Pacioli, but they played a key role in the development of commerce though without the glamourous appeal of the adventurer types like Marco Polo or Vasco da Gama. They made contributions to the double accounting system.

Manucci kept the accounts for Giovanni Farolfi & Company, a merchant partnership based in Nรฎmes, France. Manucci was a partner for the Salon, South of France branch. The writing, entirely in Manucci’s hand, is neat, legible, and mostly well preserved.[3] Financial records from 1299โ€”1300 survive that he kept for the firm’s branch in Salon, Provence.[1] Although these records are incomplete, they show enough detail to be identified as double-entry bookkeeping.[1] These details include the use of debits and credits and duality of entries.[1] “No more is known of Amatino Manucci, than this ledger that he kept.”[3] Amatino Manucci did not invent the double entry system, that was a 100-year process (perhaps a 9,000 year process). 

Wikipedia

This was about the time that the Papal seat was moved to Avignon, just a short distance from Salon. The area, known for hilltop fortified villages, was surrounded by sophistication and learning.

Luca Pacioli, an Italian mathematician, Franciscan friar, collaborator with Leonardo da Vinci (there’s someone we know), came along a couple of centuries later accomplishing the great service of putting the method into a textbook.

The first published work on a double-entry bookkeeping system was the Summa de arithmetica, published in Italy in 1494 by Luca Pacioli (the “Father of Accounting”).[21][22] Accounting began to transition into an organized profession in the nineteenth century,[23][24] with local professional bodies in England merging to form the Institute of Chartered Accountants in England and Wales in 1880.[25]

Wikipedia

The double accounting system improved the accuracy of the bookwork for transactions. Keeping proper records goes a long way to maximizing profits and use of time. Having a running tally of the monetary movement also leads to confidence amongst parties to a trade. There’s a history, a verification of how things were done as a reference.

What is exciting is there are new efforts afoot to better account for intangibles in business such as “the value of business owners’ time and expenses to build customer bases, client lists, and other intangible assets.” Our very own Ellen McGrattan at the Minneapolis Federal Reserve, along with Anmol Bhandari at the U of MN, had a paper published in May 2021 which finds that the accountants have been missing a sizable amount of business assets. From the abstract:

We discipline the theory using data from U.S. national accounts, business censuses, and brokered sales to estimate a value for sweat equity in the private business sector equal to 1.2 times U.S. GDP, which is about the same magnitude as the value of fixed assets in use in these businesses.

Sweat Equity in U.S. Private Businessโˆ—

In the concluding paragraph of the authors suggest that there is a problem with how this capital is categorized.

Most of the applied work focuses on one attribute at a time and imposes a strict dichotomy on the nature of the asset: alienable or inalienable, specific or general, tangible or intangible. One of the key messages from our work is that sweat capital does not fit neatly in these dichotomies. Furthermore, the fact that these assets are a substantial part of private business value will likely necessitate a review of some of the classic results concerning the boundary of the firm and its capital structure.

A portion of the efforts and energies a business owner puts into his/her company is not the same as the work an employee is paid for to show up for a job. The labor of the owner has a non-fungible bit which is retained in the business. The later transaction, cash for time worked with no further obligation, is fungible.

It sounds like McGrattan is recommending a new accounting system to keep track of these entries.

Valuing persistence

Melissa Dell, an economist at Harvard, writes about persistence. One of her studies considers evidence of the effects of colonization in Indonesia. The Dutch controlled the archipelago caught between the South China Sea and Australia starting in 1610 with the establishment of the Dutch East India Company. Although the trading entity evolved, control of the territory and its resources lasted into the twentieth century.

Dell finds that the European presence left behind some societal benefits which persist to the present day. From the abstract of The Development Effects of the Extractive Colonial Economy: The Dutch Cultivation System in Java.

We examine these in the context of the Dutch Cultivation System, the integrated industrial and agricultural system for producing sugar that formed the core of the Dutch colonial enterprise in 19th century Java. We show that areas close to where the Dutch established sugar factories in the mid-19th century are today more industrialized, have better infrastructure, are more educated, and are richer than nearby counterfactual locations that would have been similarly suitable for colonial sugar factories.

Using a method of comparison between two similar geographic areas, the researchers were able to prove that the existence of factories and supporting works carried forward as a system, even after the colonizing power departed. It appears that the economic value of the factory extended beyond the daily production of the product at hand; that there is a residual benefit beyond the export produced (to the benefit of the Dutch) which remained attached to the land.

We also show, using a spatial regression discontinuity design on the catchment areas around each factory, that villages forced to grow sugar cane have more village owned land and also have more schools and substantially higher education levels, both historically and today.

Modeling this in the public/private-externalize/internalize framework would start by identifying three groups: the Dutch, the in-Indonesians and the out-Indonesians. The story of colonization which has been popular of late only involves one transaction. In this case it would be the Dutch reaping private monetary rewards from the sale of sugar to all the ports on the sailing route through the Straits of Malacca, around past Ceylon, past the Cape of Good Hope and on back to Europe. And although this is true, it leaves out a bunch of other trades.

Dell’s work indicates that the in-Indonesians (the ones who worked in the factories) ended up better educated. Their interactions with foreigners included being taught skills required of the job. Because it was to management’s benefit, time was spent to provide a public good to the locals which they then internalized. Similarly, because it was a benefit to the Dutch in a private sense, significant investment was made in transportation infrastructure, as noted here.

The analysis thus far has focused on the private sector, but public investments may also be an important channel of persistence. The historical literature emphasizes that the Dutch government constructed road and rail networks to transport sugar to ports. The Dutch made large infrastructure investments precisely because it was profitable for them due to the extraction of a surplus, and they would have been very unlikely to make these investments elsewhere in the absence of extraction

These public facilities were a public good to all the Indonesians who chose to use them. But Dell goes further in her analysis to suggest that the in-Indonesians persisted in developing infrastructure after the Europeans departure as they were simply more in-tune to the process of petitioning government for improvements. Perhaps their higher level of property ownership also motivated them to pursue a public good as they themselves would privately benefit.

To tell a story as a one-sided transaction does not do history justice. A complete accounting of all the transactions needs to be in play to evaluate whether everyone came out better off, or not.

Easier to see, when seen from abroad

Tim Taylor, an economist across town at Macalester College, was taken by poet Roya Hakakian‘s lengthy description of voluntary efforts to support associational objectives. If you were doubt whether individuals voluntarily give time and resources towards public goods, this list should set you straight. Everything that follows is taken from Tim Taylors blog the Conversable Economist:

I was also intrigued by Hakakian description of being surrounded by a nation of fund-raisers for small causes:

You used to give a coin or two to the poor of your city, or drop a banknote in the collection box at your place of worship, or help a neighbor or a friend with a loan. But these were a few small exercises at best. Here, people give regularly. Squirrels collect acorns, and Americans raise money. It is as natural as any instinct for them. Children offer lemonade on sidewalks to raise money for the kittens at the animal shelter. Girl Scouts go door-to-door selling cookies so other aspiring girls can become Scouts too, and do the same. Mothers organize bake sales to help pay for a new neighborhood playground. Teens give to the GoFundMe campaign of a filmmaker working on a documentary about the endangered aardvarks of Angola. Even Santa, the nationโ€™s gift giver in chief, appears at the threshold of major department stores every December, ringing a bell at the side of a siren-red donation bucket. Overworked cashiers will not scan your items before listlessly asking if you would like to donate a dollar to the fight against something or other. Once a year, arsonists take a day off so firefighters can stand at intersections holding up their rubber boots, charming drivers into pitching in a few dollars. At the registers of greasy gas stations, two things are always guaranteed: the noxious smell of fuel and the cardboard quarter receptacle for St. Jude Childrenโ€™s Research Hospital. In some movie theaters, films cannot start unless the ushers have walked aisle to aisle passing the empty popcorn container to collect money for whatever the star in the public service announcement
urged the viewers to donate to. Entertainers hold telethons to raise money for this disease or that. Rock bands compose songs for disaster victims and give them their proceeds. Radio broadcasts are interrupted so the hosts can make appeals for a donation, which the local attorney or dermatologist matches. Runners run, bikers bike, and comics crack jokes, all to help raise money for the needy. Politicians bombard their supporters with emails, asking them to give five, ten, twenty, or more dollars toward making a better tomorrow, when, in addition to a higher minimum wage and universal healthcare, there will also surely be more emails asking you to donate again. Corporations have charitable arms. Dignitaries ask for money to build homes for the destitute. In television commercials, celebrities, holding doe-eyed babies in their arms, urge viewers to adopt a child on another continent through a monthly contribution. Anything is possible in America, even raising a baby by subscription.

When Americans do not raise money, they raise necessities. They have book drives, blood drives, food drives, turkey drives, even car drives. If they cannot solicit you in person, they send you letters. Heaps of envelopes arrive in Americaโ€™s mailboxes every week asking the
citizens to donate to one organization or another. Fundraising is a behemoth as vast as any industry. โ€ฆ You may be naturalized already, but unless you begin writing checks for people you have never met, living in places you would never visit, you are not a real American.

No nation so rich has ever asked for more money. They do not need the order or the permission of some authority to tell them what to raise and for what cause. They take matters into their own hands and wage campaigns to save the pandas, protect the bees, or reverse beach erosion. What is at the heart of all this fundraising is the same thing that is at the heart of all other perfectly American thingsโ€”an irrepressible self.

For interested readers, hereโ€™s the full Table of Contents for this most recent issue of Capitalism and Society, with abstract and links to papers.

Squeezed out of the house

Most coursework taught in a classroom setting under the guise of real estate is centered on one of three aspects: appraising, financing, and legal underpinnings. In fact, most of the reports generated around real estate feature these same three topics. The recent sales data is sliced and diced along with market times and the rates offered by the mortgage brokers.

Cornell University proves to be an exception in its course offerings which include a wide range of topics on all aspects of real property. In addition to the oh-so-common Finance and Investment class, there’s a taxation course and one on hospitality real estate finance. There is analysis of transaction and deal structuring, and advanced project management for real estate development. There is an emphasis on flushing out the business side to real property.

But the courses designed to teach the work which happens(ed) in the home has been severed from the neighborhood and become Policy Analysis & Management (PAM). The evolution of the 1920’s department of the Department of Household Management is depicted in the flow chart below. Clearly 1969 was a breaking point from the quaintness of home, a throwing off of the apron in favor of an upwards and onwards momentum to a more distinguished framing.

Cornell University, the History of PAM

Another course offered at Cornell is Urban Economics and Real Estate Markets. The course description reads: “A theoretical understanding of the economic forces affecting urban land market change and development is needed for decision-making in the real estate profession… The two core models at the center of the course are the model of urban spatial structure that stems from the work of Alonso, Muth and Mills…” (Alonso, William (1964) Location and Land Use. Cambridge: Harvard University Press.)

A few years before the functions of health and human services were being detached from the geography of cities and suburbs, Alonso noted that the location of a central business district (CBD) created a spatial relationship within a city which affected real estate. While a model based on jobs and income and the commuting of a workforce was used and developed in the interplay of real estate uses in a city, the jobs of a homemaker in educating and feeding and educating her children found a new home in the Health and Human Services Departments across the nation.

This was unfortunate timing.