Thursday, December 31, 2020

Passages from Rick Perlstein's Reaganland: Amerca's Right Turn - 1976-1980

Perlstein quotes Theodore White's diary (author of Making of the President [various years])

"How long can you stay interested in the problems of inflation and the tax cut? There were five national elections in Germany the year before Hitler came to power in 1933; the last, which Hitler won, showed a sharp drop-off in votes. We've had politics up to our ears, are gorged with it." (Chapter 37, p.22)

...

Times were dire enough that "a former Nazi and Klansman named Gerald Carlson won the Republican nomination for the congressional seat representing the depressed automotive city of Dearborn, Michigan. He had spent only $180, had no campaign headquarters or phone number and electioneered mostly by handing out leaflets comprised of mug shots that appeared in newspapers during National Auto Theft Week." - Chapter 36, p. 18)

...

[At the beginning of his campaign, Reagan's staff] did their work with the help of an astonishly ambitious survey from Dick Wirthline....Respondents were invited to list the nation's three biggest problems. The most popular answer by far, with a 52.6 percent response was "inflation." But "government spending"--which, for Ronald Reagan had been instructing the public caused inflation--was listed by only 2.8 percent. Only 1 percent were vexed by "government control," 0.7 percent by "national defense," 0.9 percent by "too much welfare," 0.4 percent by "high property taxes." "Decline of moral values" was tied with "unemployment" for the second most cited problem, but it appeared few conceptualized it as conservatives did; the only social issue cited was abortion, by only one in a thousand respondents--2.5 percentage points less than those who cited "utility costs. Almost 55 percent said it was acceptable to 'terminate pregnancy at any time' (and only 01. percent listed it as a top issue). Nearly 64 percent favored the Equal Rights Amendment. More than 40 percent thought solar was the "best future energy source," only 15.4 percent nuclear power [and most were] survened before Three Mile Island.

   "Thus did the people planning Ronald Reagan's campaign discover that the nation shared his opinions hardly at all." [Chapter 29, pp.39-41]...which set the stage for an exceptionally deceptive campaign. Better marketing!

The Commodore, owned by the defunct Penn Central Railway hadn't paid taxes to New York City in six years when an "innovative" plan from the '70s--necessitated by Gerald Ford's refusal to bail out the city's finances--proposed "making redevelopment more attractive by promising the developers future tax relief. The beneficiaries would then be required to share future profits with the city; everyone would win." Trump was the one chosen to redevelop this property. 

"'So far,' he boasted, 'I've never made a bad deal.' The Commodore project, at least, was a good deal--for Donald Trump. To gain the property, and the opportunity to flay offits lanmark brick facade in favor of the gaudy bronze-tinted glass he preferred, he put up no money of his own, receiving $100 million in bank loans by negotiating an extraordinary labyrinthine deal with the New York Urban Development Corporation to forego real estate taxes in which the city was supposed to earn its money back within forty years, though Trump said that day would come in twenty-five...[Critics] calculated the deal would leave New York City $160 million in the lurch. That prediction proved conservative. Trump'lawyers had written the contract so that money only counted as 'profit' when Trump received it, while expenses were deducted immediately, and, years later, after Trumpos business parter the Hyatt Corporation dropped out of the deal and sued hime, New York City claimed they had been defrauded, and auditors discovered that the hotel was missing the most basic financial records and he brazenly violated generally accepted accounting principles" Chapter 29, page 32

The effects of austerity: "[In New York City] The summer of 1979 saw a record epidemic of bank robberies. The typical perpetrators were not the efficient professionals the authorities were used to, but desperately poor young men acting spontaneously. ... The police force began a training program to deal with this new breed of desperado--then suspended it because layoffs had produced a shortage of officers. Mayor Koch responded by suggesting bank guards should start shooting bank robbers themselves." Chapter 29, p.27

Sunday, December 27, 2020

Austerity for the richest nation on earth, while others relieve the COVID-19 pain

Stimulus Relief Funds

Australia:$ 1,993. a month
Canada:$ 1,433. a month
Denmark:Up to $ 3,288. a month
France:Up to $7,575. a month
German:Up to $ 7,326.78 a month
Ireland:Up to $ 1,793.44 a month
UK:Up to $ 3,084. a month
US:$ 1,200. to last for 32 weeks  

Meanwhile: Thailand’s Social Security Office to pay out workers at 50% of daily wages for up to 90 days if forced to stop work due to Covid-19 -  Pattya News. 

Wait...wasn't Thailand a third-world country? 

Update: Vietnam – a poor country close to China with a population of almost 100 million – has had a total number of 35 (thirty five) Covid deaths. - Who's the shithole now?

Austerity is Absurd

(c) by Mark Dempsey

Pundits tout "tax and spend" as the way the federal government operates, but the government makes the dollars, so it must spend first, then retrieve some dollars in taxes, otherwise the population wouldn't have dollars with which to pay taxes. What do we call the dollars not retrieved in taxes? Answer #1: The dollar financial assets of the population. Answer #2: National 'debt.' Both answers refer to exactly the same thing.

Similarly, your bank account is your asset, but to the bank, it's a debt. Fighting for national 'debt' reduction is equivalent to demanding your bank reduce its debt to you--in other words, make your account smaller. It's hardly sensible, but it does serve to deceive the population.

How many times have you heard that national debt is a problem? A burden for future generations? Ask yourself: Is my bank account a problem?

So the austerity excuse for not spending without raising taxes is illegitimate. Remember, government must spend first, without any revenue constraint. The federal government is the only fiscally unconstrained player in the economy.

Congress required our central bank, the Federal Reserve ("the Fed") to publish an audit of its distributions after Lehman's bankruptcy. The Fed created $16 - $29 trillion in credit to prop up the banks whose Ponzi capitalism caused the collapse now called the Global Financial Crisis (GFC). Before and after the GFC, there was no tax rise, and no surge of inflation.

So we're not running out of money, and the coronavirus stimulus checks confirm that. We will run out of dollars when the Bureau of Weights and measures runs out of inches--never.

Furthermore, inflation does not stem from "printing" too much money, it's typically caused by a shortage of goods. In Zimbabwe, the Rhodesian farmers left, and a shortage of food initiated the hyperinflation, not money printing.

These observations are difficult for many people to accept. People are used to household economics, and "tax & spend" aligns with that exactly. The trouble now is that we need to mobilize society's resources to address significant problems, like a pandemic and the impending climate catastrophe.

Yet orthodox economics continues to promote the austerity narrative with theories like "crowding out," which assumes the economy is a zero-sum game and resources are completely consumed, so when government employs additional resources with its spending, it must do so at the expense of the private sector.  Yet, according to the Fed, the U.S. economy is at less than 75% of its current capacity. A more realistic economics would conclude that government spending would employ idle resources, not "crowd out" private use.

History demonstrates this conclusion is realistic, too. GDP growth rates increased dramatically when the government spent for the New Deal and for the big public works project we call "World War II." One could conclude the additional GDP growth was a result of bringing under-employed resources online. During World War II, government employed 50% of the economy. For the Green New Deal, it would only have to employ 5%, yet the austerity narrative discourages even that modest spending.

When governments practice austerity, savings shrink and economic instability grows. Historically, whenever government has succumbed to the siren song of "fiscal responsibility," significantly reducing deficits, the economy goes into a tailspin...100% of the time.

So...austerity is absurd, unnecessary and only serves to immiserate people. 

...

Mark Dempsey teaches a "Renaissance" senior education class at CSUS about heterodox economics, and recommends signing a petition to the Biden administration to abandon austerity and the staff that advocates it.

Saturday, December 26, 2020

There you go again, George Will, fretting needlessly about National 'Debt'

(c) by Mark Dempsey

George Will's latest column excoriates even his fellow "conservatives" for failing to address the problem of National 'Debt'... as though all U.S. citizens owe that debt to...well, someone.

But the truth is that National 'Debt' is like bank debt. Your bank account is your asset, but to the bank, it's a liability, a debt. Lobbying for a reduction in National 'Debt' is roughly like marching down to the bank to demand that the bank reduce it's debt to depositors...and make their accounts smaller. It's certainly not sensible.

So it's our central bank--the Federal Reserve--who owes the debt, and what it owes is a dollar's worth of relief from an inevitable liability--taxes. Reducing National 'Debt' is something Will explicitly equates with reducing social safety nets like Social Security and Medicare. We must cut Grandma's pension and healthcare, says Will, because bank debt is bad, and our assets are too large.

[submitted as a letter to the "liberal" Sacramento Bee, which republished Will's column]


Tuesday, December 22, 2020

From "Strong Towns" --Where Investment Pays off: Poor Neighborhoods!

Your City's Wealth Isn't Where You Think (investing in poor neighborhoods pays off)


The most shocking insights to come out of the Strong Towns movement are that the best financial investments cities can make are small and almost always in our poorest neighborhoods.

To be clear: By “best” I’m not talking about investments that are the most equitable or somehow judged to be morally superior. And I’m also not using the word “investment” to indicate some abstract notion of future payoffs, like the suggestion that investing in better healthcare or workforce development will theoretically pay off someday according to some economist’s PhD thesis.

What I’m talking about is hard currency. Invest a dollar and get back a dollar plus a real return on that investment. This is shrewd economics, the kind that genuinely builds wealth over time.

Here’s one more shocking detail: Not only are small investments in poor neighborhoods the lowest risk, highest returning way for a community to build wealth, they are also the best way to lift people out of poverty without displacing them from their neighborhood. That is the core of the Strong Towns approach to capital investment.

Mapping the Finance of Poverty

I assisted the data analytics firm Urban3 with preparing a profit and loss map for the city of Lafayette, Louisiana. We examined and mapped all of the ongoing expenses the community experienced, including maintenance of roads and streets, sidewalks and drainage systems, underground pipes, transit service, public safety and more.

We also analyzed and mapped all of the city’s sources of revenue, including sales and property tax income as well as utility fees and other ongoing revenue streams.

When we finished this analysis, we mashed all of these maps together to provide a profit and loss map for the entire city. The map indicates in dark green the profitable parcels, those that contribute more in taxes and fees than they require in ongoing service and maintenance costs. The map also shows in red the parcels where the community is losing money, places that require more annually to serve and maintain than they contribute in taxes and fees.

The higher the bar, the greater the disparity. Here is Lafayette’s profit and loss map.

This map, created by Urban3, illustrates the tax value of each property in Lafayette. Green areas create a net profit and red areas are a net loss. The higher the block goes, the larger the amount of profit/loss.  A blue/green version now available thanks to the work of a generous contributor (for those that are red/green colorblind).

This map, created by Urban3, illustrates the tax value of each property in Lafayette. Green areas create a net profit and red areas are a net loss. The higher the block goes, the larger the amount of profit/loss. A blue/green version now available thanks to the work of a generous contributor (for those that are red/green colorblind).

There are two distinct areas that are profitable. The first is the core of the city, the historic downtown located in the center of the map. The second is a crescent of green that lies just to the east of the downtown. This includes the poorest neighborhoods in the community, areas that are in extreme distress.

Here are photos of these neighborhoods. The core downtown is improving but still struggles in many ways. It doesn’t pass the eye test for prosperity. The poor neighborhoods are worse and would be considered blighted by any standard.

Lafayette 1.png

Lafayette 2.png
The rest of the map is red. The areas where the city is losing money includes all the big box stores, strip malls, franchise restaurants, gas stations, and windy residential streets with the large lots and cul-de-sacs. These are the affluent parts of Lafayette.

Here are some representative photos of these areas, which should be familiar to everyone as it is the ubiquitous pattern of development adopted here in the United States after World War II.

What becomes obvious with this map is that the poor neighborhoods are profitable while the affluent neighborhoods are not. Throughout the poor neighborhoods, the city is already bringing in more revenue than they will spend to maintain the neighborhood, and that's assuming they actually maintain the neighborhood (which they have not been). If they fail to spend the money on maintenance, the profit margins will be even higher.

This might strike some of you as surprising, yet it is important to understand that it is a consistent feature we see revealed in city after city after city all over North America. Poor neighborhoods subsidize the affluent; it is a ubiquitous condition of the American development pattern.

Lafayette 3.png

Screen Shot 2020-11-12 at 11.47.57 AM.png
The Financial Productivity of Blight

As an example, consider what is probably our most famous case study here at Strong Towns, the Taco John's in my hometown of Brainerd, Minnesota, as described in "The Cost of Auto Orientation."

The block on the left [above] has been labeled as blight. It's run down and neglected. The block on the right with the drive-through franchise restaurant is the same size, has the same amount of public infrastructure, and costs the same to provide ongoing service and maintenance. It just has a more modern development approach, one that is new.

This is poor and blighted versus affluent and modern. The cost to the city is the same but the poor block is worth 78% more and, subsequently, pays 78% more taxes to the city, than the affluent block.

Total value: $1.1 million

Total value: $1.1 million

Total value: $618,000
Total value: $618,000

This is no doubt surprising for those of you not used to seeing this kind of analysis. Most cities never do this kind of math let alone include it in a public policy conversation. Yet, it is a consistent pattern we have witnessed in cities of all sizes and geographies. Poor neighborhoods subsidize the affluent; it is a ubiquitous condition of the American development pattern.

Making the Best Investments

The best kind of financial investment is one with low risk and a guaranteed positive return. A money manager would do those kinds of investments all day, every day. They might be boring, but they are the foundation of wealth creation.

For cities that have done the math on the financial returns in their neighborhoods, the best investments are obvious. As I wrote in Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity:

The low-risk side of our public investment portfolio is as obvious as it is boring: Local governments must prioritize basic, routine maintenance in neighborhoods with high financial productivity (high value per acre).

For example, the downtown of Lafayette should never want for basic sidewalk maintenance. Those poor neighborhoods next to the downtown should never have streets full of potholes, overgrown ditches, or backed up pipes.

In Lafayette, these high-productivity neighborhoods are cash-flow positive. In cities more atrophied than Lafayette, the highest value-per-acre neighborhoods may not be profitable, but they have the best chance of becoming so, better than any other neighborhood in town. This is where our greatest wealth is; all we need to do is stabilize it.

Just take care of the neighborhood; it’s that simple.

To be clear, I’m not suggesting—as many professional city staff would be inclined to believe—that maintenance means big, transformative projects. That is what maintenance has come to mean; large projects built all at once to a finished state with efficiency as the value elevated above all others. What results is a short period where everything looks nice followed by a long period of decline that ends in an extended, sometimes permanent, state of dilapidation.

No, I’m describing maintenance that is more like the way the Walt Disney Corporation maintains their theme parks: ongoing basic maintenance with an obsessive attention to detail. See a streetlight out: replace it. See a weed: pull it. See a crosswalk faded: repaint it. See a sidewalk broken: fix it. The poor neighborhoods that are already generating such wealth for the community need to be showered with love and attention. Financially, that’s the best approach.

Building Wealth in Poor Neighborhoods

Building wealth throughout our poorest neighborhoods will not be done at scale. There is no series of large projects, no massive centralized initiative, that will bring about real wealth creation without also inducing displacement.

Fortunately, the scale of the activity means that it’s the kind of thing any community can undertake, regardless of size, regardless of budget. Building wealth begins with the recognition that the best growth investments—the ones with the highest financial rate of return—address a real and urgent need experienced by people living in the neighborhood.

At Strong Towns, we’ve developed a simple, four-step process for identifying this kind of opportunity and making it happen:

  1. Humbly observe where people in the community struggle.
  2. Ask the question: What is the next smallest thing we can do right now to address that struggle?
  3. Do that thing. Do it right now.
  4. Repeat.

The key to the first step is humility. Emptying our minds of as many preconceived notions about the problems and solutions in a place as possible, we humble ourselves to observe as a proxy for lived experience. We are trying to understand, from the perspective of those who struggle to use the city as it has been built, where those struggles are. A great way to observe is to walk with someone – literally treading the path with them – to understand how they struggle.

Observation is so much more powerful than even asking. When cities do surveys, focus groups, or public hearings, they are engaging in a format comforting to the decision-makers, not those they are seeking input from. Subsequently, public officials are not going to get the insight they really need. This is why I wrote that most public engagement is worthless. If we want to identify the best investments, we need to get out of our comfort zone.

Where the first step requires humility, the second requires self-discipline. Instead of seeking the comprehensive solution, instead of trying to fix everything once and for all, we take our humble observation (which, if we’re truly humble, we must acknowledge is incomplete and maybe totally wrong) and just try to make that struggle a little bit better. We discipline ourselves to work in the smallest increment possible.

This isn’t because we are obsessed with the incremental. It’s because, as Jane Jacobs suggests, our neighborhoods must be a co-creation. By disciplining ourselves to act incrementally and iteratively, we allow people—our friends and neighbors living in the neighborhood—to react to the change and demonstrate to us, through their actions, where the next struggle is.

This is why, in the third step, we don’t form a committee. We don’t hire a consultant. We don’t pause eighteen months while our grant application is processed. We’ve humbly identified a struggle and then identified the next smallest thing we can do about it, so we just go out and do that thing. We make things better with what we have now. Right now.

And we’re comfortable with that action, not because it’s a comprehensive solution, and not because it totally eradicates struggles from our neighborhoods, but because we’re also committing to the fourth step, which is to repeat the process over and over and over. This is the process of co-creating, the way neighborhoods are made by everyone, for everyone.

We can make our cities financially strong while broadly increasing wealth and prosperity. That is the essence of a Strong Towns approach, one that every community has the capacity to put to work right now.

Lincoln embraced violent overthrow of a violent system: slavery

From here:    

At his Second Inaugural, in March 1865, Lincoln embraced [John] Brown’s penetrating insight that slavery was already a system of violence and so could not be eradicated peacefully. Echoing Brown, Lincoln explained the Civil War’s staggering death toll as divine retribution for two and a half centuries of ‘blood drawn by the lash’. He was reminding his listeners that violence in America did not begin when John Brown unsheathed his sword; it was embedded in slave society from the outset. And in the end, as Brands concludes, ‘Union arms, not Union arguments, overthrew slavery.’

...a bit of a contrast to the plea for reconciliation from Lincoln's First Inaugural when he pleaded for our "better angels" to be reconciled, and certainly a contrast to modern attempts at political reconciliation.

 

Monday, December 21, 2020

A Few Public Policy Links

From Ralph Nader: Organizing a local congress watch.

From Strong Towns: Poor Neighborhoods Respond Better Than Rich Ones to Investment.


Coronavirus tips

 

Wednesday, December 16, 2020

Sunrise Mall Redesign

 (c) by Mark Dempsey

Design concept for Sunrise Mall from sunrisetomorrow.net

 

Like most retail properties, Sunrise Mall is suffering because of lower traffic in the pandemic, and the rise of online shopping. It has also lost one of its big anchor store--Sears--and is currently 40% vacant, without many of the features that attracted customers previously, including holiday celebrations.

Like most local governments, the City of Citrus Heights relies on the sales tax revenue from this mall to pay for public services, so they are concerned enough to commission a redesign to revive it. The redesign includes residences (market rate, affordable and senior housing), park space, and even a permanent location for the farmers' market that currently occurs in front of the mall on Saturdays. The sunrisetomorrow.net website provides the details.

There's a compelling case to combine residences with retail now. Not only is Sacramento short of housing, but the fastest growing demographic is over 85, while single-use retail throughout the country is suffering. Being able to walk to the mall for entertainment, shopping or food is likely to be a major draw. The redesign also provides Citrus Heights with a genuine town center, and perhaps a less diffuse identity than the conventional mall design. This could even be the start of reviving residence/retail combinations in smaller malls.

Mixing different uses--retail, housing and even offices--makes this a "lifestyle" center. The commercial success of such centers is well-documented. They produce roughly 50% more sales per square foot than single-use retail. It makes one wonder what keeps commercial builders from including more residences with the retail centers they build. Perhaps the current crisis will move them to reconsider.

Meanwhile, mixed use has many commendable features. It is the only real remedy for congestion--the Southern California Association of Governments confirmed not even double-decking their freeways could do that. Mixed use, with a pedestrian-friendly destination not only gets people out of their cars--and how many of us want to encounter more 85-year-olds on the road?--it provides a potential transit hub. Sacramento, and Citrus Heights' public transit system is so second rate, one cannot even ride a bus or light rail to the airport.

In any case, the enlightened Citrus Heights planners deserve kudos for bringing that city to suggest this plan, even if now it is just a plan, not a commitment to build the redesign.

 

The Davis Vanguard Wants to Sacramentorment Davis Housing

(c) by Mark Dempsey Editor David Greenwald's recent Davis Vanguard commentary " Housing Production Continues to Fall Well Short &qu...