Wednesday, March 27, 2024

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" is critical of Davis, but--bizarrely--touts Sacramento as the housing producer to emulate. Greenwald also wants less multi-family housing, and more single-family homes in Davis. Sacramento is still well short of the housing production goals it proposes by half or less, but it builds far more single-family housing. Wisely, I say, Davis builds almost none.

Davis is almost out of infill to develop, says Greenwald. He doesn't mention the Sacramento region has 20 years worth of unbuilt infill and yet continues to approve outlying development, which, in turn, means longer CO2-emitting commutes and infrastructure with roughly twice the maintenance costs of infill development.

Greenwald also does not mention the density needed to have working transit rather than long single-occupant car commutes. According to Berkeley planner Robert Cervero that density is roughly eleven units per acre at the lower bound--approximately that of the least dense attached dwellings, duplexes. Typical suburban neighborhoods don't have enough residents to support neighborhood commerce, or enough potential riders to support a bus stop. But we must have more single-family homes!

Incidentally, the most valuable real estate in the Sacramento region is pedestrian-friendly, mixed-use (residences, offices, commerce, etc.) McKinley Park. Buyers pay premiums to live in a neighborhood roughly twice as dense as most single-family developments, yet the Sacramento region builds precious few such neighborhoods.

Worse still, if locals build at lower densities than eleven units per acre, development consumes more land and favors the Central Valley's big business: land speculation. Davis doesn't favor land speculators, but Sacramento does. In fact, the City of Sacramento approved the poster child for bad development: North Natomas. 

Before it was built out, North Natomas was a twenty-foot-under-water agricultural floodplain surrounded by weak levees. It was so notoriously unsuitable for development that a federal grant to increase regional sewer capacity contained a $6 million penalty if that additional capacity served North Natomas.

The speculators didn't fret. They went all the way to then-vice-president G.H.W. Bush and got that prohibitive, up-front $6 million penalty transformed into a more palatable pay-as-you-develop fee--and they also got $43 million in grants to bring those substandard levees surrounding North Natomas up to pre-Katrina standards.

Pay $6 in installments, and get $43! Where do I sign? But wait, there's more!

The speculators bought, or more likely optioned, that ag land for roughly $2,000 an acre. Once they received permission to break up those 40 and 80-acre agricultural minimums for residential/commercial/industrial uses, they sold some to builders for roughly 100 times more. So...a 10,000% profit! Wow! But wait, there's more!

If the speculators exchange their land, once it has that value-added entitlement to develop, for some income-producing property like apartments or shopping centers, they defer income tax on that egregious profit indefinitely. So...10,000% profit, tax-free!

These policies still impact North Natomas residents even today. The levees had to be upgraded after Hurricane Katrina proved they might be inadequate, but the speculators were long gone, so the North Natomas homeowners have to pay more money in their property taxes to shore up those levees.

There are alternatives to these speculator-happy policies. Curitiba Brazil embraced one. The city bought the floodplain and turned it into parks. Curitiba is not rich, so they also got the municipal sheep to keep the lawns trimmed. Still, a poor city got large parks, and doesn't have maintain levees.

Another alternative is what Germany does. Those proposing outlying development must sell the land at the agricultural land price to the local government, then purchase it back at the upzoned price. The entire "unearned increment" (that 10,000% gross profit) benefits the public. 

And public amenities in Germany are very nice indeed. Unlike the US, where engineers grade our infrastructure a stunning "D+," and every so often a bridge collapses, German infrastructure is in good shape. Germans have single-payer healthcare, but they also offer higher education without tuition, even for non-native Germans. The arts budget for just the City of Berlin exceeds the US of A's National Endowment for the Arts.

Meanwhile, from another story about the future of Sacramento City's housing: "Building this [higher] density in proximity to high-frequency transit hubs … prioritizing infill development, that’s really where we’re gonna see us achieving housing affordability." You mean...like Davis?

So...I'd suggest Mr. Greenwald find some other jurisdictions to admire when it comes to housing policies. Sacramento has a long way to go before it can do as well, or as sustainably as Davis.

--

The author of this piece spent nearly a decade on a Sacramento County Planning Advisory Council (CPAC) and observed the above and many other dismal Sacramento planning practices.

Thursday, March 21, 2024

The US is addicted to militarized Keynsian stimulus

Here's an interesting take on capitalism as a support for huge military budgets: Marx observed that real, competitive capitalism tends to drive profits downward. We can't have that! So, unproductive military spending is one answer. I'd call it a stupid answer, but it would have to rise several levels before it reached stupid.... but that's what we have.

Meanwhile, military contractors have spread their operations out so many states' employment depends on them. A job guarantee could address this political maneuver, but until there's something to deal with out-of-work defense plant employees (and fossil fuel workers) we're going to be stuck with big military budgets (and many coal mines).

The latest Copaganda on retail theft

 

Wednesday, March 20, 2024

Nice! Robot Weeder

 

Sunday, March 17, 2024

A quick review of the "Dune 2" sequel

(Full disclosure: My wife and son loved Dune, but hey, they're drama queens. And yes, I read the book. Not my cup of tea then, either.)

My take: If you want to spend nearly three hours watching dark, depressing landscapes, with dark, simple-minded, depressing mood music behind it, and not even the tiniest bit of levity, or humor...this is the movie for you. 

Oh yes, and don't forget: planet Arrakis has gigantic worms that make "spice"--a drug that allows you to see into the future (essential for interstellar travel)! But you're supposed to already know this.

And sure, every desert creature on earth is small because the hot sand doesn't provide much to eat, but heck, this is fiction, so all bets are off. Still, the gigantic worms were a blow to my willing suspension of disbelief. Sand is apparently a gigantic worm super-highway--they zip to and fro, sometimes with riders and cargo. Never disclosed: How do they load the cargo, and how do they dismount? I'd call that a plot hole you could drive a gigantic worm through.

So ... the movie itself hit me with an audible "thud"--like that anvil that plagues Wile-E-Coyote--and simply did not impress at all as entertainment. I actually love some of the cast. In Guardians of the Galaxy Dave Bautista masterfully and hilariously plays Drax the Destroyer but he's wasted as Glossu Raban (a bad guy) in Dune 2. In Guardians, he's delightfully clueless. In Dune 2, he's just clueless.

If you want palace intrigue, like Dune 2 attempts to explore, go to Youtube and watch The Story of Yanxi Palace (Chinese with subtitles). It's ten times more clever than Dune (the book or the movie) and has a spunky heroine to boot.

In summary: Two thumbs down. Oh, and I'm disappointed in myself, too -- some people (like me) never learn. Dune 1 was, if anything, worse.

"Fiscal Restraint is Dead"...and I say "thank goodness!"

(c) by Mark Dempsey

The following is an email sent to Debra J. Saunders (dsaunders@reviewjournal.com), whose editorial appears in the March 17, 2024, Sacramento Bee (Headline: "USA IOU. Brother, can you spare a trillion?") and starts with what is quoted first in my email.

Dear Ms. Saunders,

I read your editorial in today's Sacramento Bee, the one starting with "Fiscal restraint is dead" and that includes the clever characterization of Biden's fiscal policy "Call it: Tax and Spend More--and Still Borrow More." It's cute, succinct, and, unfortunately, sadly misguided.

In effect, you ask us to believe dollars grow on billionaires, and the federal government must get its dollars from the population. That would make federal debt the equivalent of household debt. But, unlike a household, the federal government creates dollars. It can make as many as it needs at the direction of Congress. Federal debt is nothing like household debt. It's like bank debt.

Your bank account is your asset, but thanks to double-entry accounting, it's also the bank's liability–the money the bank owes you. Getting the bank to diminish that debt would simply make your account smaller. Not very sensible.

You also cite the sequence of federal fiscal events as "tax and spend." Where do people get the dollars to pay those taxes if the monopoly creator of dollars doesn't spend them first? The correct sequence is "spend first, then retrieve dollars in taxes." Since the spending logically must precede any tax revenue, it cannot be provisioned by taxes. The taxes are important to create the demand for dollars, but they do not fund federal programs.

Incidentally, what do we call the dollars spent, but not retrieved in taxes? You know...the ones in your wallet? Answer #1: the dollar financial assets of the population. Answer #2: national debt. Both answers describe the same thing, just as your bank account is your asset, but the bank's liability.

Like most fans of "Fiscal Responsibility™," you also seem to believe we'll run out of dollars if we continue on this path. Do you also believe the Bureau of Weights and Measures will run out of inches, or the scorekeeper at the ball game will run out of points?

No less than former Federal Reserve Chair Alan Greenspan says the federal government "cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit."

Here's Greenspan lecturing Paul Ryan about the same thing:
 

Deficit scolds want to cut federal spending, especially the programs responsible for 85% of federal outlays–the military, Social Security, and Medicare. Military spending is seldom cut, but social safety nets enjoy no such immunity. Cutting those is especially cruel since these programs are not particularly generous now and 65% of seniors have only Social Security and Medicare to fund their retirement.

The real intent of this proposed austerity, then, is "labor discipline." That's the message that you had better take whatever crappy job is on offer or suffer the indignities of poverty, even homelessness and starvation. If you're extra rebellious, we'll put you in a cage. As a consequence of our allegiance to labor discipline, with 5% of the world's population, the US has 25% of its prisoners.

The austerity is cruel and completely unnecessary. Treating people well even reduces crime. The US incarcerates at five times the world's average, per-capita, seven times more than Canada does, even though Canadian crime is actually less than US crime (per-capita). But, unlike the US, Canada doesn't have medical bankruptcies. The US has half a million every year.

What you're promoting is, in effect, the whip in the hands of the plutocrats--perhaps the ones for whom you work. Is that really what you want to do?

Saturday, March 16, 2024

Debunking (Conventional) Economics

by Mark Dempsey

Unfortunately, conventional economics is bunk. To explain that statement, I've conducted a CSUS Renaissance (senior education) Zoom class recently that goes into some detail about why conventional economics gives intellectual respectability to some of the worst human impulses, and to discuss what realistic alternatives exist. 

Economics itself is a social science whose scope spans everything from psychology to mathematics, so it's pretty comprehensive, and is often the justification for public policies we currently enjoy. 

Recommended: If you want to clearly see the slides in the presentation, click on the icon in the bottom right of the video screen.

Here are links to the full class recordings. Each video is about 90 minutes:

Class #1 Recording - Introduction, technical Zoom matters, and a bit of psychology
Class #2 Recording - More psychology and a brief examination of the complexity of the subject
Class #3 Recording - Money, its origins and definitions, Modern Monetary Theory (MMT)
Class #4 Recording - a (brief) look at conventional economics, and its history and shortcomings
Class #5 Recording - Government, public money, and what spending it gets. Banking
Class #6 Recording - Recaps previous classes, and concludes with an alternative narrative to what's currently on offer.

If you prefer text to videos:

The Slides

Class Text

My blog

Friday, March 15, 2024

The effect of sanctions on Russia (Hint: no biggie)

From Michael Roberts' blog. Contrary to Western predictions, Russia has weathered the sanctions imposed by the NATO allies without a significant downturn (see the graph below)

Excerpt:

Over the past two years of war, Russia has managed to steer through sanctions, while investing nearly a third of its budget in defence spending. It’s also been able to increase trade with China and sell its oil to new markets, in part by using a shadow fleet of tankers to skirt the price cap that Western countries had hoped would reduce the country’s war chest. Half of its oil and petroleum was exported to China in 2023. And it became China’s top oil supplier in 2023, according to Chinese customs data. Chinese imports into Russia have jumped more than 60% since the start of war, as the country has been able to supply Russia with a steady stream of goods including cars and electronic devices, filling the gap of lost Western goods imports. Trade between Russia and China hit $240 billion in 2023, an increase of over 64% since 2021, before the war.

Contrary to Western forecasts, Russian industry has grown due to war-related production, while demand for domestic manufactures has also increased due to a fall in imports because of sanctions. The automobile industry – which was hit hard initially, as Western and Japanese car manufacturers left Russia en-masse – has been recovering strongly month by month, as Chinese companies have stepped in.



....And the Russian economy remains fundamentally natural resource linked. It relies on extraction rather than manufacturing. Mining accounted for around 26% of gross industrial production in July 2023, and three industries – extraction of crude petroleum and natural gas, coke and refined petroleum products manufacturing and basic metals manufacturing – made up more than 40% of the total. “The regime is resilient because it sits on an oil rig,” says Elina Ribakova, a non-resident senior fellow at the Peterson Institute for International Economics. “The Russian economy now is like a gas station that has started producing tanks.”

War production is basically unproductive for capital accumulation over the long run. And Russia’s potential real GDP growth is probably no more than 1.5% a year as growth is restricted by an ageing and shrinking population and low investment and productivity rates. The profitability of Russian productive capital before the war was very low.

The Russian war economy is well placed to continue the war for several years ahead if necessary, but when the war is over, Putin may face a significant slump in production and employment.

....

Meanwhile, a contradiction from Foreign Policy: Claims That Sanctions Hurt Europe More Than Russia Are Wrong

Tuesday, March 5, 2024

Big news: Victoria Nuland resigns....And Synema elects not to run

 Ms. Nuland supervised the US-encouraged Ukraine coup that occurred in 2014, helped select the new Ukraine government (no messy democracy needed) and has cheerlead the war ever since. That she's resigning, and being replaced by the ambassador who was in place when the US withdrew from Afghanistan is a faint glimmer of hope for peace.

For more, see commentator Gilbert Doctorow's article: Victoria Nuland resigns: what can this mean for U.S. policy on Ukraine?

Also: Comment from Naked Capitalism... and Glenn Greenwald

Also: Kyrsten Synema elects to not run.

Sunday, March 3, 2024

We do not have a fractional reserve banking system. Banks create deposits out of thin air.

Answering the question "Does the U.S. have a fractional reserve banking system?"

From Quora::

No. The U.S., as well as pretty much every other country, uses what is better described as a credit creation system.

In a true fractional reserve system, banks collect and then lend out 'hard' currency, in the way we have all learned from the old story. It is easiest to think of hard currency as coins – the bank has 100 coins; it can lend out 90, and keeps 10 on hand in reserve. The next bank collects those 90 coins; they can lend out 81, and keep 9 in reserve, etc., etc., until you end up with the same 100 coins in existence, plus 900 in bank accounts. Bank lending is limited by the amount of hard currency in existence. By extension, cash withdrawals are limited as well.

The way banks actually operate is by creating credit on ledgers. Loans are “funded” 100% with credit; if you take out a $1000 loan with $200 in interest, your bank simply marks up your account by $1000, and holds your promissory note, nominally worth $1200, as their asset. M1 has just increased by $1000, and bank equity has (nominally) increased by $200. The loan, and the funding, are complete at this point. When you write a check that is deposited at a different bank, reserves (“hard” currency, liabilities of the central bank) are transferred from your bank’s reserve account to depositor’s bank’s reserve account, your account is marked down, and depositor’s account is marked up. This transaction is financially neutral for all parties.

This is where you will get an argument from fractional reserve people. Since the bank ends up transferring hard currency, isn’t this just a more complicated way to describe FR banking? Well, no. The bank didn’t need to collect reserves before making the loan; reserve requirements are calculated days after the loan was made. Also, the central bank will always supply enough reserves to banks, so hard currency isn’t a limiting factor. Finally, if you picture two banks, each creating identical loans that get deposited in the other bank, no reserves will be transferred, yet $2000 has still been created. Which is pretty much what happens on a large scale every day – the amount of loans created every day is far greater than the net amount of reserves that must be transferred in settlement at the end of the day. In our credit creation system, reserves are merely settlement funds. If you dissolved the central bank/settlement agent tomorrow, banks could still operate just fine settling up among themselves, using mostly bank-created credit to do so. If things got really unbalanced, they could then settle up using other assets. No “hard currency” required for loans or transactions. The central bank is now merely a useful tool for settlement, funding government spending, and backstopping banks in crisis.

This paper by Richard Werner explains the three theories of banking in good detail:

The Bank of England's paper on the subject, is a more technical read.


Charlie Munger criticizes conventional economic thinkers

As a partner of Warren Buffet, Munger has been a spectacular success, out-performing market averages often. He points out the following are flaws in typical economics (from talk nine in Poor Charlie's Almanack) and MBA thinking:

1. Fatal Unconnectedness, leading to man-with-a-hammer syndrome, often causing overweighting what can be counted.

2. Failure to follow the fundamental full-attribution ethos of hard science.

3. Physics Envy (hard form efficient markets theory - too much precision in physics-like formulae)

4. Too much emphasis on macroeconomics (the fallacy of composition fools even Munger, or he's trying to distract from systemic problems)

5. Too little synthesis (with other disciplines. Raising prices can sometimes psychologically convince buyers the product is better..Also: conventional thinking omits higher commissions, in effect bribery!)

"Why did Max Planck, one of the smartest people who ever lived, give up on economics? Planck's answer is "It's too hard. The best solution you can get is messy and uncertain."

6. Extreme and Counterproductive psychological ignorance.

7. Too little attention to second and higher order effects. (consequences have consequences, economics ignores gaming the system[s])

8. Not enough attention to the concept of febezzlement (functional equivalent of embezzlement --leads to false feelings of prosperty)

9. Not enough attention to virtue and vice effects - "The cash register did more for human morality than the Congregational Church....guilt, dervied from religion, has been a huge driver of a reliability ethos, which has been very helpful to economic outcomes for man...to function best,  morality should sometimes a pear unfair, like most worldly ougcomes. The craving for perfect fairness causes a lot of terrible problems in system functions."

10. Not enough attention to embedded Ponzi schemes

"It's not bringing in the new ideas that's so hard. It's getting rid of the old ones." - Keynes

Saturday, March 2, 2024

Housing first can work

See Housing First Can Work If Done Right (worth reading the entire thing)

Excerpt: 

"Despite enjoying decades of bipartisan support, Housing First programs have become a target in the culture wars. Housing First provides housing and wraparound services that are not predicated on sobriety or psychiatric treatment. Conservative critics challenge this approach, arguing instead that people should be required to work and participate in abstinence-based addiction treatment or faith-based programs to be eligible for housing.

"These opponents of Housing First begin from the flawed premise that human pathology is the root of homelessness. By contrast, research clearly shows that housing shortages, wage inequality, and high rents—not mental illness, substance use, or even poverty—are its real causes. These structural factors explain why homelessness is more common in Seattle and San Francisco than in Detroit or Oklahoma City, where there is still plenty of addiction and mental illness, but where people with these conditions spend their time indoors."

Good public policy related to homelessness, is not necessarily cheap, but it's cheaper than building bigger jails. (from the above link) "It is true that by keeping people in homes and out of emergency rooms and jails, Housing First programs can reduce costs in overall municipal expenditures. Yet many of those who experience homelessness do not cycle through ERs or have costly health issues. Housing this part of the population might be the right thing to do, but it won’t necessarily save money.

"Cost is also tied to city-level housing markets and regulations. Houston has worked miracles with Housing First, but Los Angeles has floundered. The difference lies in the fact that Houston has abundant housing supply and few restrictive zoning laws. In Los Angeles, efforts to build new units have been thwarted by NIMBYism, high costs, and the uncertainty that surrounds all construction projects in California. To make progress in addressing homelessness where housing is in short supply and construction delays are inevitable, we need to invest in short-term shelter options while taking steps to expand the housing supply in the long run."

Also see:the previous post, Even Good Public Policy Struggles with Sabotage

How to talk to mainstream journalists

 

Friday, March 1, 2024

Even Good Public Policy Struggles with Sabotage

This account of Oregon's attempt to adopt an "enlightened" de-criminalized approach to drug addiction documents how its execution sabotaged its success. Its failure has been widely touted as proof that you just can't be too nice to addicts. Why it failed is a little more relevant. Just handing an addict a ticket, without making sure addicts have an alternative (rehab) is ineffective, and that's what the Oregon cops were doing.

This is reminiscent of the "enlightened" approach to mental illness. The Kennedy administration closed the big one-flew-over-the-cuckoo's nest federal asylums, saying they would fund alternative, smaller transitional housing...and then didn't fund the alternative. Reagan closed the big California asylums, too.

Now the homeless are demonized as addicts and mentally ill--and there are certainly addicted, mentally ill homeless--but the real story for the majority of the homeless is that rents have been rising faster than incomes. The problem isn't one of resources, either. The US has more vacant homes than homeless. The resource distribution is misguided too.
 
People take note of these policy failures. One "Dead-Head" (hippie) Oregon woman who was a fan of decriminalization thought "it was wrong to respond to addiction with criminal punishment. But now she feels decriminalization 'wasn’t the best idea.' But why? Because America is not a place 'where there’s a lot of public assistance.' In other words, we’re too cruel and stingy to actually help drug addicts, so the only option is to throw them in prison!....

"But even if Oregon did increase addiction services and get the police to actually try to help people, there are still some foundational assumptions behind the state’s decriminalization plan that have to be questioned. First, the very idea of relying on police is questionable. I agree with the law’s critics that a system where police give meaningless citation tickets to drug users is not going to do very much. But why are police the ones we expect to deal with people affected by substance use? The system should be designed so that police aren’t interacting with these people at all, but rather unarmed aid workers who are actually trained in how to convince a person with a substance use problem to seek treatment. (Police are mostly trained on how to use force to ensure compliance with legal rules.)

"Second, even providing good, free services for substance use disorders and connecting people with them successfully doesn’t address some core reasons for widespread drug use. In his powerful book about the War on Drugs, Chasing the Scream, Johann Hari argues that it’s not just that drugs are made of addictive chemicals, but that being poor, lonely, and traumatized increases people’s likelihood of using:

Chemical hooks are only a minor part of addiction. The other factors, like isolation and trauma, have been proven to be much bigger indicators. Yet the drug war increases the biggest drivers of addiction—isolation and trauma—in order to protect potential users from a more minor driver of addiction, the chemical hook. If we legalize, somewhat more people will be exposed to the chemical hook in drugs—but the even larger drivers of addiction, trauma and isolation, will be dramatically reduced.

"Legalization does not necessarily substantially reduce trauma and isolation, however, even though we know prison worsens these problems. We still live in a very isolating society. A strong social support system is important, and legalization alone doesn’t make America a less atomized society. We have a loneliness crisis in this country that makes it harder to address drug use crises." (from the initially linked article, well worth a full read)

Update #1: The Oregon legislature just re-criminalized drugs.
 
This misguided approach is not just confined to "justice-related" items. Here's an article demonstrating the sabotage, ignorance and arrogance infects even infrastructure development too


At a press conference last month, flanked by sheriffs and attorneys, Ohio Attorney General David Yost announced the indictments of two utility executives who allegedly tried to “hijack” state electricity policy for their own corrupt ends by paying $4.3 million in bribes to Sam Randazzo, then chair of the state Public Utilities Commission. The two men stand accused of trying to bilk taxpayers out of $1.2 billion on behalf of their former employer, FirstEnergy.

Cats with jobs

  pic.twitter.com/tZ2t2cTr8d — cats with jobs 🛠 (@CatWorkers) April 18, 2024