Bacon's Rebellion

  • A Love. A Lie. A Foreclosure.

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    James A. Bacon


    BR bloggers, you know who you are. You live in economically-distressed, forlorn areas such as Great Falls, McLean or the Countryside subdivision of Henrico County. Your brains are secretly hard-wired to the platform committee of the Republican Party. You project tolerance, but well, not exactly so.

    In your collective opinion, the housing crisis has been brought on by Freddie and Fannie lowering standards and giving money away to undeserving, dark-skinned Latinos or African-Americans or under-class whites. They have no right to aspire to a better way of life and a bigger house in a classier neighborhood. Who do they think they are? You?

    So it is indeed revealing that today’s Wall Street Journal has an intriguing book review. The author is Edmund Andrews, an economics reporter for The New York Times, who reveals all in “Busted,” how he fell for another woman and got divorced, how much alimony and child support he had to pay out, how he lied to get that huge house and how it all fell apart. Somehow, his experience rings very, very true.
    Like myself, Andrews is a member of the liberal news media. He was pulling down about $130,000 clams a year, not exactly BR bucks, but enough. Then, at age 50, he went through a midlife crisis.
    He rediscovered a high school flame who was “brainy, regal, sexy, fiery and eclectic.” The affair cost him his marriage and big payouts of alimony and child support. Still, the new wife and he had to live well. So, he bought a $460,000 house.
    Problem was, the net from his $130,000, given all the messy alimony and support, meant that in real life, there was no way he could qualify for a mortgage that big. But his mortgage broker said that he could use a “liars” mortgage application in which he didn’t have to list all of those painful liabilities. He didn’t have to pay principal for five years and given the skyrocketing market, he could simply refinance if things didn’t work out.
    Well, guess what happened? Things didn’t work out. Andrews started to miss the big payments. Pretty soon, he was in deep doo-doo. As for the trophy, No. 2, wife, she skeedaddled, and filed for bankruptcy (the reviewer notes that Andrews left this detail out).
    The lesson learned? “This crisis would not have been possible without breathtaking cynicism on the part of the brainiest people and the biggest institutions in American finance.” Everyone let themselves believe what they wanted, bottom line be damned.
    It also goes to show what can happen when mid-life crisis get out of hand. Andrews had to have the big house. Some people want Corvettes. Personally, I wanted, and got, a 20-year-old center-console fishing boat which I was lucky enough to sell at a good price after I realize that no one else in my family was interested in going out in it and the damned thing was eating up about $1,000 each season in repairs.
    Andrews points to a higher truth. If you want to understand the kind of greed that caused the financial crisis and the worst recession since the 1930s, don’t blame dark-skinned, poor people. Look in the mirror. Fellow BR bloggers, I am not going to name any names. But you know who you are.
    Peter Galuszka

  • Who Will Pick up the Pieces?

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    James A. Bacon

    It’s the thesis of my new blog, “Boomergeddon” (or, “The Retirement Crisis”) that the federal government will reach the brink of financial insolvency within the next two or three decades. If you buy my argument, another question logically poses itself: Who will provide essential government services when the feds go broke?

    Not California, that’s for sure. In the aftermath of Tuesday’s referenda, in which voters roundly rejected some $16 billion in tax increases, the finances of the “tarnished gold” state are looking more precarious than ever. California is an instance of a state whose governance system has failed. Blame the Ds, blame the Rs, blame whom you choose, but the fact remains, the state is all but ungovernable. And when the federal government follows suit, circa 2030, where would you prefer to be living?

    I explore that question in my latest blog post, “Who Will Pick up the Pieces,” where I include a table that might be helpful in making that decision: the current bond ratings of the 50 states. If If California is a prelude to a larger, society-wide disaster, only the fiscally strong will survive. Virginia is one. Go see who the others are.

  • “Cap and Trade” Part Two

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    James A. Bacon


    Funny how movements spring from nowhere.

    That’s the case with the Waxman-Markey “Cap and Trade” bill to restrict greenhouse gases that I filed about yesterday. There’s no question that the bill has legs given the orgy of lobbying over it that seems to have sprung from nowhere and is supplanting the economic crisis and the still-sizzling financial meltdown.
    Why, for example, are right-wing groups suddenly having seminars about Cap and Trade? Why are conservatives such as U.S. Rep Eric Cantor equating the Waxman bill as a threat on the level of global terrorism and Iran? What’s with the timing of the sudden anxiety?
    According to the Center for Public Integrity, a group that tracks lobbyists, the renewed interest quietly gained steam in this years first quarter when the business community realized that Barack Obama’s presidency meant that some kind of global warming law was likely. As many as 140 companies started circling their wagons, including makers of blue jeans, computer serves and sneakers. Food firms such as Land O Lakes, Tysons and the National Turkey Federation grabbed sand bags. Other than Duke Energy, whose CEO backs Cap and Trade, many utilities had been quiet but not any more.
    The Center lists the “Climate Top 10” of big-time lobbying firms that lead the lobbying pack. Richmond’s very own Hunton & Williams makes the cut with seven power, oil and gas companies.
    Right wing advocacy groups, such as the so-called Thomas Jefferson Institute for Public Policy, are setting up seminars to pump out their propaganda about the Waxman bill. Their call to arms is the supposed expense to stop global warming. The Jefferson crowd, which unfortunately was given and has seriously degraded the Bacons Rebellion e-zine, picked three speakers at a recent seminar at the Lewis Ginter Botanical Garden in Richmond who were obviously dogmatically correct and in tune with the institute’s world view which is shaped by the many lobbyists who run the organization.
    One speaker claimed that Waxman-Markey would cost the average family $3,000. Funny but the Congressional Budget Office puts the figure at $1,600, but what’s $1,400 when you’re trying to frame an important environmental initiative as needless and costly?
    As for Cantor’s concern, consider that for the past four of his election campaigns, Cantor has received money from powerful electric utility Dominion. The firm has given him a total of $88,097, according to the OpenSecrets, a contribution data base, and has been among the top five Cantor donors each time.
    To sure sure, lobbyists are springing to action because so much money is at stake with whatever approach goes to cut greenhouse gas emissions. The flurry of activity now means one thing: Waxman-Markey really does have a chance.
    Peter Galuszka
     

  • Is “Cap and Trade” Finally Here?

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    James A. Bacon

    Is a serious plan finally in the making to limit carbon dioxide emissions in the U.S.?

    It very well could be since a number of key Democrats in Congress, including Rick Boucher from the Virginia coalfields, have agreed to a number of closed-door compromises that might make it fly. The bill is being shepherded by Rep. Henry Waxman, a California Democrat.
    If passed, the bill could have huge implications for Virginia. For one reason, it would affect how much CO2 that Dominion, one of the largest coal-burning utilities in the country, can pump into the air. Ditto American Electric Power, the nation’s No. 1 coal-burner, and Old Dominion Electric Cooperative, a Henrico County-based utility serving rural areas in Virginia, Maryland and Delaware, that wants to build a monster $6 billion coal-burning plant in Surry County, not all that far from the tourist havens of Williamsburg and Jamestown.
    As it now stands, the bill would set a limit on greenhouse gases. Carbon dioxide would have to be cut by 17 percent by 2020 compared with 2005 emissions, and 83 percent by 2050. Unlike a policy favored by President Barack Obama, the right to emit greenhouse gases — making up 85 percent of the total — would be given away. Obama wanted them sold at auction.
    Utilities would get 35 percent of the allowances and billions of dollars would be spent to help research new technologies that would capture CO2 at big generating plants and somehow send it deep in the earth into a kind of permanent storage. Doing so, would keep utilities using coal and thus help the Virginia coalfields. Boucher helped orchestrate the idea and it has support from such coalfield groups as the United Mine Workers of America.
    Not everybody likes the effort. Eric Cantor, the Henrico Republican who is Minority Whip, told a luncheon at the World Affairs Council of Greater Richmond Monday that the bill “would do nothing but raise costs.” I was at the luncheon since I am a WAC member and later spoke to Cantor who said that the Waxman bill is much more restrictive than another proposal shot down last year that had been pushed by Senator Joe Lieberman and our own John Warner. I find Cantor’s position curious since his own party’s candidate for president last year backed some kind of cap and trade law.
    The Waxman bill is drawing fire from the other side of the aisle, too. Greenpeace USA says that Waxman’s initially laudable effort has been undermined by lobbyists.
    So, what to make of this? First off, something needs to be done about CO2 and global warming despite the head-in-the-sand naysayers, including (dare I say it) our very own and beloved Jim Bacon, founder of this blog. Secondly, giving away rather than selling allotments in “cap and trade” does favor utilities and that is reason for pause. Thirdly, finding a way to deep six CO2 in the earth sounds good but the technologies aren’t mature and it might further other bad aspects of coal, such as mountaintop removal. Clearing the way for more coal use (55 percent of electricity in the U.S. comes from coal) might only aggravate the serious damage mountaintop removal is doing to Central Appalachia.
    True, the economy is still a mess, but what happens with Waxman’s bill will have huge long-term implications, such as whether large portions of the Eastern Shore and Virginia Beach face a waterlogged future.
    Peter Galuszka

  • Check Out the “Retirement Crisis” Blog

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    James A. Bacon

    Kudos to EMR and Peter G. for keeping Bacon’s Rebellion a lively venue for discussing real issues during my prolonged absence. I’m parachuting in just to say hello — and to let Bacon’s Rebellion readers know about my new blog, The Retirement Crisis.

    While Bacon’s Rebellion explores the theme of environmental sustainability, The Retirement Crisis tackles the theme of fiscal sustainability. Both are weighty. Both are game changers. No, that’s too mild. Both are civilization changers.

    But of the two, I believe that fiscal collapse is more imminent than the environmental collapse. And if we can’t forestall the one, the United States won’t have the resources to avert the other.

    The new blog focuses on the “retirement crisis” in a raw appeal to peoples’ self interest. Questions about multitrillion-dollar budget deficits, age wave-induced shortages of global capital, the overwhelming burden of carrying the national debt, and the disintegration of the retirement safety net are too abstract for most Americans to wrap their brains around. By making the case that the federal government will be unable to keep the promises made regarding Social Security, Medicare, Medicaid and other entitlements, I’m hoping I can make the case that these issues will impact readers directly.

    I urge Bacon’s Rebellion readers to bookmark The Retirement Crisis or sign up for the RSS feed. I promise you, we’ll have a lot of fun — and perhaps even nudge the needle of debate at the national level, just as we did with Bacon’s Rebellion in Virginia.

  • THE COST OF HEALTH CARE

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    James A. Bacon

    ONE ASPECT OF SETTLEMENT PATTERN’S IMPACT ON HEALTH CARE COSTS – UNDER USED MEDICAL OFFICES.

    The escalating cost of health care is a drag on society and a potential death threat for every citizen.

    The current administration has vowed to do something about escalating health care costs. One idea is to increase the number of doctors. However, doctors are not anything like widgets. Having a greater supply does not drive down the cost. Doctors have worked for centuries to raise the bar to becoming a doctor and thus limit the supply. That seems to have worked to the doctors advantage but it will not work in reverse without draconian intervention in ‘private practice.’

    In a CNN commentary titled “We don’t need more doctors” two well qualified observes today make good case for a proposition that all who want to cut the scale of Agency spending should applaud.

    While the Association of Medical Colleges advocates a 30 percent increase in medical school enrollment, Professor Christensen and Dr. Hwang at the Innosight Institute argue instead for transformational change in the delivery of health care. Their diagnosis matches EMR’s experience.

    Fundamental Transformation of health care anyone? It goes hand in hand with Fundamental Transformation (FT) of settlement pattern, FT governance structure and FT the economic system.

    What society needs is not just a better delivery system but better educated, better trained and more motivated citizens who can manage their own health care. Only the president and hypochondriac billionaires have doctors who know enough about the patient to ‘manage their health.’ All doctors can do is mitigate the crisis when the patient gets sick. Usually it is too late and that is why a quarter of what is spent an individual’s health care is spent in the last three months of their life.

    There is a settlement pattern perspective that will not save as much money as many aspects of systemic change in medical service delivery but one that needs to be considered if only to expand the universe of health system transformation options:

    Society does not need more doctors AND it for sure does not need as many doctors offices.

    How is THAT important? Thousands of new doctors offices have sprouted up in the past decade. Building and maintaining doctors offices that are not used full time is a waste and the cost is passed directly to those who need medical help and to all tax payers.

    How did this happen?

    Every doctor likes to get out of the office – a little golf on Tuesdays, fishing in Montana next week … and have someone to cover for them 24-7. No one can blame them but this means that group practices are very attractive. Group practices are attractive to both specialists and general practitioners. (The desirability of practicing in a group contributes to why many smaller Urban agglomerations in Urban Support Regions have no doctors – but that is another story.)

    Medical practice business advisors recommend from 5 to 25 in a group practice depending on the specialty and the settlement pattern. Because of the dysfunctionally low distribution of human settlements, getting a critical mass of patients to support a practice of 6 to 10 doctors in one location is not easy.

    The solution, especially in Beta Communities of under 10 persons per acre, is multiple offices. Under recent past conditions – cheap gasoline, luxurious Large, Private Vehicles, electronic connectivity, tax advantages and developers who profit from packaging a build to suit for a limited partnership made up of doctors – multiple offices are a win-win.

    The trend has been for group practices to have 2, 3, 4 or 5 offices where one or more doctor practices when the schedule is convenient. It is a grand slam. All the expenses, including depreciation on the building, can be written off and the doctors have flexibility as well as building equity in real estate. (What is the past tense of ‘building equity’?).

    It is not just doctors that are doing this. Dentists, especially specialists, do it too as well as most of health related professionals.

    How big is the problem? The doctors offices that sit empty much of the time would pay for building a lot of hospitals and walk-in clinics for those who really need health care provided by those who do not cost hundreds of thousands to train.

    How to cure the waste? Only allow a doctor’s practice to write off the cost of only one office per doctor. In a heartbeat there would be a whole new advocacy group for better settlement patterns. The benefit of grouping medical services is a current hot topic in the field – see “One-Stop shopping for Better Health” WaPo 21 April 2009. More on that soon.

    In the meantime, there are many ways to cut the cost of delivering health services but if the whole health care system were examined in a way that ferrets out waste such as the excess of Class A speciality office space, the cost of health care would be a lot different.

    EMR

  • A Trip Back to West Virginia

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    James A. Bacon

    When I was nine years old and was living in the Washington suburbs, my father, a Navy doctor, decided to retire. He chose to move us to central West Virginia and join a medical practice — a strange choice since we had no ties at all to the area. But Dad was always altruistic and thought he might be able to do some good. It was 1962 and community service, John F. Kennedy style, was the prevailing mood.

    So, we left affluent Bethesda, Md. for rural, coal-battered Harrison County. I had been taking French in the fourth grade back in Bethesda, but when I got to school in the Mountain State, I found that my arithmetic book had been in use since it was printed in 1903. Culture shock is probably too mild a world.

    But I learned a lot. At night we’d hear the throb of diesel locomotives as they pulled a coal haul up a branch line. I would walk for miles, hiking up the hills that had been laid open with big shovels on strip mines. Few laws were in place then, and people would find the beautiful vista next to them blown up and ripped apart for coal.
    Coal operators were supposed to shove the dirt back, but few did. The coal was heavily sulfuric, so leachate from rainwater created orange-yellow ponds of toxic water. We used to gather the skulls of animals next to them, and when we were old enough, blast them apart with the .22 caliber single shot, bolt action rifles that every boy in the Mountain State, including me, had to have.

    My point is that for the several years we lived in West Virginia in the 1960s, I grew to love the place. Some of my school mates’ dads were miners. Some worked on the strip mines. And there was an uneasy history kept quiet by the authorities. The famed rebel organizer Mother Jones was actually put on trial once in town, but I didn’t learn about it until years later. We still were living there when a deep mine explosion killed 78 miners at Farmington on Nov. 20, 1968, including the fathers of some grade school friends.

    So, I was glad that Style Weekly, the only print media outlet left in Richmond that actually does any real journalism, sent me out to southern West Virginia to do a piece about Massey Energy, the Richmond-based firm whose name is usually associated with cancer treatment centers and charity.

    Yet Massey Energy (the Massey family sold their interests years ago) is anything but their Richmond image. Run by a strong-willed CEO, the firm is regularly sued for any variety of matters, including safety issues, deaths, mountaintop removal and union bashing. Last year, the EPA ordered it to pay $20 million for Clean Water Act violations, the largest penalty of its kind. In 2000, a Massey sludge pond spill in Kentucky was judged to be several times the size of the Exxon Valdez tanker disaster in Alaska.

    The firm’s CEO contributes heavily to West Virginia political campaigns, especially that for judges and drew controversy when he was photographed vacationing with the then-chief of the West Virginia Supreme Court on the French Riviera.

    I also visited with environmentalists worried about the threats of floods from sludge ponds and coal silos spewing coal dust next to elementary schools (see photo). But the most stunning thing I saw was mountaintop removal, which is strip mining on steroids. A fairly new concept, it was a topic for a report I did for BusinessWeek back in the 1990s. It is a quantum leap from the old strip mines I used to play on.
    See the story at:

    Let me know what you think.

    Peter Galuszka

  • What’s With VPA Going Private?

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    James A. Bacon

    The Virginia Port Authority has always been a kind of strange duck — not quite public, not quite private. Its leadership swings one way or the other as whims suited.

    If it needed money from the state’s transportation funds, it was suddenly more public. But if the news media wanted data about top officials’ salaries, its coloration changed, lizard-like, back to being private, at least until 2007, when salaries were finally disclosed.

    The VPA, an “autonomous state agency,” was created in 1952 and operates three major water cargo facilities in Norfolk, Portsmouth, Newport News as well as a transshipment facility in Front Royal. Just about all of Virginia-bound cargo containers, the most popular way of sending goods, goes through its facilities. The VPA boasts of some of the best deepwater facilities on the East Coast, although aggressive Savannah has beat out Hampton Roads in terms of volume and the global recession has cut shipments everywhere.

    For years, the VPA was run by J. Bobby Bray who helped built up its facilities, and while personable enough, was surrounded by a tough squad of gatekeepers who tended to regard him as a kind of deity needing protection. Until he left several years ago, Bray held court in posh offices on Norfolk’s waterfront and was frequently seen schmoozing with legislators and state officials in Richmond.

    So, one has to wonder what Bray’s role is with proposal to run the facilities and invest in them from CenterPoint Properties, which is an arm of CalPERS, the California state pension system. The Chicago-based firm has presented an unsolicited offer to lease the port with all kinds of goodies thrown about.

    Bray says he likes the idea and small wonder he does. The former VPA executive director is now with Kaufman & Canoles Consulting which has been hired by CenterPoint to help prepare its bid, according to The Virginian-Pilot.

    Bray told the Pilot’s editorial board that other groups are talking about the same kind of public-private partnership deal with the VPA but that they “just didn’t, fit whereas CenterPoint did.”

    Further details are somehow not available. We don’t know who the other supposed contenders are. Bray could not be reached when a Pilot reporter called for more details. But then, that’s par for the course, isn’t it?
    Consider that Virginia loves public private partnership deals. It is a cunning way that the state’s fiscal conservatives can unload public facilities onto private entities and not have to raise as many taxes while praising free market economics and letting somebody else make a profit. And, private entities can bail out projects after somebody in planning screws up on traffic volumes and tolls or other sticky little details.

    That’s just what the state did with the Pocahontas Parkway in Richmond when the superhighway and magnificent bridge spanning the James River did not live up to revenue expectations. Panicky state officials, worried about what a default would mean for the state’s pristine bond credit rating, got the Australian TransUrban firm to bail them out.

    So what goodies is CenterPoint Properties and/or the California Public Employees Retirement System offering? From what I can make out of the deal, CenterPoint pays VPA $500 million upfront, an ongoing profit share of up to $1.3 billion and greater cargo volumes if it lets CenterPoint manage its properties for something like 60 years.

    CenterPoint claims that the state would $8.9 billion in economic benefits. About half of that, $4 billion or so, would come from money the state would save by not having to run operations. The private firm would get the VPA’s annual claim on 4.2 percent of the commonwealth transportation fund which last year amounted to $36 million. CenterPoint would fund the deal with a 39 percent equity payment and 61 percent in debt that it would absorb.

    VPA would continue to get $987 million in annual payments from CenterPoint and pay local communities such as Norfolk which is still being paid for terminals VPA took over years ago.

    What does CenterPoint get? Some pretty darned good cargo facilities built with considerable public money and (semi) public oversight, that’s what. And CenterPoint gets first rights to develop the gigantic Craney Island spoil site which has long been intended for a massive new cargo crane facility costing billions. Craney Island must be one of the best, and last, undeveloped deepwater port facility sites left on any American coast.

    CalPERS is one group that the financial community watches closely for market cues. It had been reputed to have some of the brightest and most aggressive investors short of TIAA-CREF. But don’t forget that in last year’s financial meltdown, CalPERS took some huge lumps by having invested in dicey California real estate, losing about 35 percent in its housing portfolio and forcing a shift in top management.
    So, forgive me for being simple, but am I missing something here? What’s the urgency? Why does a big time institutional investor like CalPERS so badly need to come swooping in to line up managing some of the best and most promising port facilities in the U.S., especially when it is taking a huge hit with bad real estate plays? Is VPA going under and we don’t know it? Can’t Virginia’s officials can’t help themselves when they hear the words “public private? They seem to absolutely love shoving public projects paid for with public money off to the private sector because it fits some kind of fiscal philosophy they all subscribe to, the real public be damned.
    Or is it inside baseball? Given Bray’s conflicted involvement, that’s probably a fair guess.

    Peter Galuszka

  • Megaprojects Fall Hard

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    James A. Bacon

    Nearly nine years ago when I was moving back to Virginia, I had to pick a place to live. Somehow, we ended up in southwestern Chesterfield with a house on a lot with huge loblolly pine trees — an attraction that I guess involved me somehow channeling Eastern North Carolina where I had lived off an on since I was 18 months old.

    It is the outer edge of fast-growing suburbia, exurbia, I guess, but I am sure EMR will set me straight. Traffic wasn’t too bad and here and there were old farms with giant oak trees still flanking U.S.360, better known as Hull Street.

    How things have changed. First, there was a mad rush of strip malls and new subdivisions. The old farm is now a Super Wal-Mart in the making. New restaurants of all types popped up, generally enriching the choices if you can get past the dearth of decent service. The labor pool out here in exurbia is truly thin. Last week, when a relative was visiting and we tried out a new seafood joint, it took three waiters and 45 minutes just to get our drink order straight.

    Now comes the news that one of the largest planned subdivisions — Lower Magnolia Green — has defaulted on a $96.9 million loan and the land is up for auction. The plan had been for 3,550 new homes although not that many have been built and even fewer occupied, leaving owners in the lurch because it seems that some promised amenities won’t be coming anytime soon. I wondered what was going on since every time I drove past, I saw some bulldozers, but they hadn’t been moved in weeks.

    This is the second time since the recession began that Chesterfield has seen a major subdivision tank. Last fall, as economic storm wailed, an even bigger project called Branner Station with 4,988 homes was put on indefinite hold. I know that plenty of projects in even faster-growing Loudoun and Prince William Counties have suffered similar fates.

    Not a bad thing, actually. Chesterfield needs a breather. The Magnolia Green project dates back to the early 1990s when Chesterfield’s Republican board was packed with pro-growth types. It wasn’t so much that they were bankrolled by developers, although they were, it was that growth became a kind of religious mantra for them. And we’ve been paying for the consequences ever since with overstuffed schools, roads, bad waiters, etc.

    The popping of the real estate balloon did Magnolia Green in. And that brings up another point. One of my favorite economic columnists is James Surowiecki of The New Yorker. His most recent work looks at the financial services industry and there is a tie to Chesterfield’s woes with overbuilding.

    To understand what has been happening in finance in the past few years, Surowiecki says we have to deconstruct the various phases of financing. Banking used to be considered a boring, plodding career path. Rather than being an end unto themselves, banks merely worked to serve more creative endeavors, such as setting up U.S. Steel and International Harvester in the late 19th Century or helping electrify cities and the countryside in the 1920s. My grandfather was part of that. We was a bank president in Western Massachusetts, among his other businesses, and helped wire his town with light bulbs. The next wave came with financing info tech in the 1980s and 1990s.

    But this latest banking boom is very much a different animal. As Surowiecki writes: “The housing bubble was unique, and uniquely awful. Each of the previous waves had come in response to a profound shift in the real economy. With the housing bubble, by contrast, there was no meaningful development in the real economy that could explain why homes were suddenly such much attractive or valuable. The only thing that had changed, really, was that banks were flinging cheap money at would-be homeowners, essentially conjuring up profits out of nowhere.”

    As banks joined in the party and raked in profits, at least for a while, we ended up with “acres of empty houses in Phoenix,” Surowiecki writes.” Or, for that matter, lots of ripped up red clay and idle bulldozers in Chesterfield.

    What’s next? Perhaps a rethink of how Virginia’s county boards and their planning staffs consider such mega-projects in the future. They may be distracted with budget shortfalls, but the chance is right now to make a major shift in philosophy. Will they seize it? I hope so.

    Peter Galuszka

  • NOTES ON A & M SETTLEMENT PATTERN COMMENTS

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    James A. Bacon

    TMT:

    EMR read that WaPo story about “commuters” from Page County too. It was painful.

    Steve and Ricky made location decision that they THOUGHT were in their best interest.

    But it turns out they were not in their best interest.

    What they believed to be good decisions turned out to be bad decisions because many other equally uninformed citizens believed the same things.

    They watched the same evening news and the same sit coms, they consumed based on the same advertising… They all made mistakes and the collective impact is dysfunctional human settlement patterns.

    If Steve and Ricky had only known something about the collective impact of least-common-denominator settlement pattern and consumption decisions …

    But then Steve smokes so his decisions about human settlement patterns (and other forms of consumption) might have been just as bad as his decision about human health…

    If location-variable costs had been fairly allocated Steve and Ricky (and their “wifey’s” and all the others who made similar decisions) would never have been tempted to make those bad decisions.

    The Steves and Rickys of the world are why if markets are to work they must be informed. The playing fields need to be leveled, not tipped in favor of the Masters of the Universe.

    The Steves and the Rickys are why there needs to be an end to the Business-As-Usual political duopoly. Both parties try to dupe citizens into NOT looking out for their own REAL self interest. (Want a current example? Try the McDonnell / Bolling “More Energy, More Jobs” Program. Or the programs of the candidates from the other clan.)

    The Steves and Rickys are the reason there must be an end to what now passes for ‘journalism,’ The current pap fails to get to the root causes of most citizen concerns about the future – and makes those who are caught in reality seem like victims rather than coconspirators. See THE ESTATES MATRIX

    Steve and Ricky might have learned about the how to make smarter decisions. Books and journals written since the 1920s lay the issue out in detail.. The 1920s was when the impact of today’s settlement patterns first started to draw attention and criticism.

    More when we get to Larry’s observations.

    Accurate:

    Good to learn the details of your relocation decision.

    You will find a lot more folks in the Houston NUR that agree with your outlook on life than you did in the Portland NUR. Tom DeLay is a local hero. Many seem to hold Bob Barr, Ron Paul and Mike Huckabee in high regard.

    EMR knows something about Houston – an A & E firm for whom he was a Sr. VP planned and engineered large projects in the Region, SPI had an office there for a few years and EMR visits from time to time.

    Let us know how you like the weather in July, August, September and October. Some really like it. Some, not so much.

    Where did you decide to buy your $100k home? Is it near your new work and great places to get Services / Recreation / Amenity?

    Have you been riding the new Light Rail system? Let us know what is happening around the stations? Does it look anything like what is happening around the Light Rail stations in the Portland NUR?

    Has TexDOT figured out a way to pay for more circumferential expressways?

    After you have been there a year and add up ALL your costs, let us know what you think about the total cost of living. One reason house prices are so low in the Region is that the property taxes are so high.

    Depending on what you choose to do, living CAN BE cheaper in Texas and in the Houston NUR than many other places. That is because Households, Agencies, Enterprises and Institutions have been subsidized by the consumption of Natural Capital, not just in Texas but world-wide.

    Look forward to getting your report.

    Groveton:

    You have a point about Mosquitoes and Alligators.

    In the context that Larry presented, however, EMR still goes with the reverse roles. It is human settlement patterns that have citizens and their Organizations in their jaws – folks like Steve and Ricky. They think it is ‘the economy’ but it is the distribution of human activity at and near the surface of the planet.

    In the long term and with respect to collective impact, mosquitoes HAVE BEEN far more deadly – like dysfunctional human settlement patterns.

    No one pays much attention to the settlement pattern until it bites them – like it did to Steve and Ricky in Page County.

    Mosquitos and alligators or alligators and mosquitos, either way, human settlement patterns control the economic, social and physical trajectory of society.

    Larry:

    You did not bother to read Deep Economy before you started asking questions about the small Urban enclaves in Georgia.

    EMR could provide you with insights based on small towns in where he has lived, worked and visited in Georgia, Montana or in the Heart Land (See Column of 3 Oct 2005) or on jobs (24 May 2004) but then you would not believe EMR if he took off a month a spelled it all out for you again. You would dive into the pepper silo looking for flyspecks.

    If you are serious about finding some answers to your questions, here are some places to start:

    You could read Mike Shuman’s Going Local: Creating self-Reliant Communities in a Global Age. Many specifics are compatible with McKibben’s perspectives in Deep Economy.

    You could look in on Rosseta, PA to get some clues – or at least read about it in Chapter 1 of Gladwell’s Outliers.

    It you do not want to go that far, check out Abingdon to see why it is different than Luray (in Page County).

    Or if you want to do your research in Georgia check out why Tifton, Dahlonega, Madison and St. Marys make ‘best small towns’ and ‘most charming towns and villages’ lists and the places you describe do not.

    You could become a leader in one of these places and attract other ‘Lone Eagles’ to build Balance. Or you could help them evolve a Water Buffalo Commons when everyone moves to the Atlanta NUR, one of the smaller MSAs or one of the 12 Micropolitan Areas in the state.

    Bet there are a lot of Steves and Rickys in the Georgia towns you describe. Hope they make good decisions about where to go next.

    Some time ago EMR suggested that if a nation-state sets out to create a consumer driven economy, they must have a comprehensive strategy to educate the citizens in something beside Mass OverConsumption.

    Bad information and Myths about the way the world works wastes a lot of lives.

    EMR

  • A & M SETTLEMENT PATTERNS

    Posted on

    by

    James A. Bacon

    There is no escaping the economic, social and physical importance of human settlement patterns.

    Larry Gross has it ‘almost’ right concerning human settlement patterns in his comment following A & A HOUSING. He just has the alligator and the mosquitos mixed up.

    It is human settlement pattern that is the ALLIGATOR.

    Economic Prosperity (including the type and location of Jobs), Social Stability and Physical (environmental) Sustainability are more than just MOSQUITOES but they are determined and controlled by human settlement patterns.

    Sorry Larry, the cumulative impact of 12.5 Percenter decisions cannot be papered over with cute analogies.

    For a refresher on reality check out Bill McKibben’s Deep Economy: The Wealth of Communities and the Durable Future. McKibben presents a profoundly important but partially flawed and a little out of date perspective on the trajectory of civilization. More on both the good and the bad of this important book soon.

    EMR

  • A & A HOUSING

    Posted on

    by

    James A. Bacon

    What one has been reading about Affordable and Accessible Housing for the last five years at Bacons Rebellion is confirmed by WaPo.

    Some clarifications:

    1. Aggregating data by municipal jurisdiction is deceiving. “Upper Montgomery County” (Radius = 25 Miles) is more comparable to Eastern Loudoun County (Radius = 25 Miles) than it is to “Lower Montgomery County” (Radius = 5).

    2. Municipal borders to not identify organic components of human settlement pattern – Fairfax County contains all or most of 9 Beta Communities.

    3. “Average” prices are poor measures of real conditions with widely varying parameters over large areas – Fairfax County is 244,000 acres.

    4. WaPo uses the word “core” but the WaPo “core” is 13 times smaller in area than the Core of the National Capital SubRegion (area inside the Clear Edge) as defined by Regional Metrics.

    With these reservations, see the map in WaPo’s 2 May 2009 Real Estate section on home values.

    Appraisals for refinancing (not foreclosures) of even well located dwellings in the Radius = 40 to Radius = 50 Miles Radius Band suggest values are down 50 percent from late 2006.

    That brings them to about where historic trends would put shelter values but for the Agency fueled housing bubble and HyperIndividualism – the erosion of the balance between private rights and community responsibilities.

    There must be Balance of J / H / S / R / A at the Community scale if there is to be Affordable and Accessible Housing to support a economic, social and physical sustainability.

    Trickle Down and ‘drive-til-you-qualify’ was never an intelligent choice for providing shelter but now that humans (led by the US of A’s citizens) have burned through much of the Natural Capital accumulated over the last 2 Billion years it is time for Fundamental Transformation or Collapse.

    EMR

  • Broadband’s Problems in Poor Areas

    Posted on

    by

    James A. Bacon

    Years after the introduction of the Internet, it seems amazing that some citizens of the Old Dominion do not have access to broadband, but that’s the way it is.

    For-profit companies ignore mountainous areas or poor flatlands because they claim it costs too much to pay the installation costs. For several years, governments have promised to fill the gap. Indeed, Barack Obama identified the problem in last year’s campaign and promised solutions which could cost $7.2 billion in stimulus package money.

    But as The Washington Post points out today, even government involvement is dicey. It looks at two small Southwestern communities — Lebanon and Rose Hill — and shows just how different their broadband experience has been.

    In Lebanon, a small burg where the tobacco fields end and the coalfields begin, Rep. Rick Boucher and Gov. Mark Warner put together a $2.3 million grant package to wire the area. It was wise move because defense contractor Northrup Grumman and software maker CGI swooped in to take advantage of the new, nearly instantaneous communications and created 700 jobs paying about $50,000 a year.

    Poor Rose Hill had a different story. Boucher brought grants worth $700,000 in part for the multi-billion settlement with four tobacco companies in 1996 and other sources to wire Rose Hill. But only three homes have signed up for the service which costs about $50 a month.

    It is stories like these that make the U.S. a Johnny-Come-Lately in broadband. Among advanced industrial nations it comes in pathetic 15th place, down from 13th place a few years earlier. South Korea, Japan and some European countries are farther ahead.

    Some argue that it is easier to wire the crowded neighborhoods of Tokyo or Seoul and there’s truth in that. But the lame performance hurts the U.S. as it struggles through recession and tries to make a tech comeback amidst tough global competition.

    Part of the problem is the easy-profit, next-quarter thinking of the big U.S. communications firms. It is much easier for Comcast or Verizon to wire concentrated downtowns or rich suburbs faster since they can jack up their prices and go for a triple play of broadband, digital phone and cable television all in one expensive monthly price of about $200. Doing so gets them a faster and fatter return on equity and makes them look better on Wall Street.

    That sure was the case in Philadelphia a few years ago when I wrote a story about the problem for a national business magazine. Inner ghetto areas were left behind as rich, white neighborhoods got wired. One African-American small business owner told me that he wanted broadband for his business but doesn’t want to also have to pay hefty fees for HBO, Starz and ESPN which he doesn’t watch when he is working.

    Philadelphia’s government bravely launched a $15 million broadband project and Earthlink won the contract. But it was a bad play since Earthlink was hit hard by its exposure to antiquated DSL technology and got in such financial trouble it dropped Philly. Some private investors got the project for a song and few residents have signed up for broadband.

    In Southwest, other anomalies come into play. Lebanon has a high high school graduate rate and is the locus of a coalfield economic development authority. These people were highly annoyed with me some years back when I did a piece on the coalfields that didn’t paint the rosy picture they wanted. I noted that coal is dirty, dangerous and cyclical. Locals have trouble getting adequate health care given their isolation. One hospital in Clintwood, the only one for miles around, shut down abruptly because the Ohio company that owned it went out of business.

    Still, Lebanon had an edge over Rose Hill which has a much lower education rate, the Post reports.
    The jobs that Lebanon got are good deals because too many times, the only new employment people find is with call centers that shut down as fast as they set up.

    The problems also raise questions about Virginia’s tobacco commission which decides how to divvy up the oodles of bucks the state gets from the tobacco settlement. Years ago I wrote about how the first act of the highly-politicized commission was not to pay for health care or infrastructure or educate kids not to smoke. No. They gave thousands away to holders of tobacco quotas, some of whom lived in Brooklyn, Las Vegas or the Gold Coast of Chicago and had very little to do with Virginia. This was done on the theory that they were going to lose money. Go figure.

    Anyway, the tale of two towns in the mountains shows the problems of providing broadband in poor or isolated areas. It’s amazing since it is already 2009 and most of us take broadband for granted.

    Peter Galuszka

  • Why Can’t Richmond Be Charleston?

    Posted on

    by

    James A. Bacon

    I took a pleasant spring break trip last week, but my love-hate relationship with Richmond came roaring back to life. That gnawing emotion came back when my wife and I traveled to the Low Country of South Carolina and spent a rainy night in charming Charleston. When I left, I asked myself the usual question — why can’t Richmond ever get it together?

    I’ve been visiting Charleston off and on since the 1970s and have stayed at a number of hotels. This time it was Elliott House with our own brick entrance just a little North of Broad. Dinner was a cheap, oyster-stuffed happy hour at a local bar and the next morning, we did the usual rounds of the market, some art galleries and the Battery where the elegant homes run vertically to tap every sea breeze and some have special supports to avoid the same kind of damage wrought by an 1886 earthquake.

    As we drove off, I kept wondering why Richmond, which has arguably more history and is a bigger deal as a city, comes nowhere close to its Southern cousin as a glamorous tourist destination. True, Richmond doesn’t have the dramatic setting between two wide, tidal rivers or the mild, subtropical climate where the sticky sweet perfume scent of gardenias wafts everywhere.

    But Richmond surely has the history from Patrick Henry to the antebellum South to the War. The conflict may have started at Charleston but it was run from Richmond. Architecture is different, with Charleston having more Latin influences but Richmond’s no slouch given Church Hill’s Federalist townhouses, the stately mansions on Monument and the Victorian porches in the Fan, not to mention Jefferson’s magnificent state capitol.

    So why does Richmond give me the blahs? Why is its downtown so lackluster? Where are the tourists when its not Race Week at RIR or Folk Festival time? How come Broad Street still looks like Atlantic Avenue in Brooklyn and Schockoe area has never reached its cobble stoned potential? After all, Richmond is a lot closer to major population centers and, unlike Charleston, is right next to the major north-south interstate.

    From what I know of Charleston, which isn’t that much, the city wasn’t all that big a deal until the 1970s. It was pretty much a Navy town with strip joints and lots of earmarks from Mendel Rivers, its military-crazed overseer in Congress.

    A lot of what is Charleston today is the brainchild of long time mayor Joseph P. Riley who started unlocking the city’s tourism potential when he arranged for the unusual if not unlikely Spoleto Festival back in the late 1970s. This celebration of the arts modeled after one in an Italian town immediately drew tourists — so many, in fact, that Riley urged city residents to rent out rooms in their homes because there weren’t enough hotels. Thus was born a booming Bed & Breakfast industry.

    Charlestonians managed to remake and renovate their town’s various charms. They didn’t want to turn into a tourist trap where nobody lived like Williamsburg or an out-of-control party town like New Orleans. Charleston, despite its small population of about 126,000, remains one of the top five travel spots in the U.S. and from all appearances from our pedestrian tour, it is thriving.

    Why can’t Richmond? A lot of reasons, I guess. One is that we just don’t have a Riley who is competent enough and has enough staying power to get things done. Doug Wilder had the potential, but ruined it by perpetual squabbling. The white and black city leadership never can get it together. Despite their lip service, the whites actually moved out to Innsbrook years ago. The Broad Street revival hasn’t happened yet and one wonders if a few new court buildings will be worth driving miles to see on a Friday night. True, First Friday is a hit, but it has limited appeal pretty much to teenagers like my daughters.

    The rich African-American culture just steps away in Jackson Ward was ruined back in the 1950s when white leaders dug a superhighway right through the neighborhood, moving thousands of black residents each month in the process. Eugene Trani, the empire builder and outgoing president of VCU who got his usual fawning treatment from the Times-Disgrace Sunday, hasn’t helped matters by throwing up lots of ugly, bland, boring college buildings from Oregon Hill to MCV.

    Even Norfolk, once a Navy town hell hole of unspeakable ugliness, has remade its downtown to take advantage of its watery venue, albeit the effort is now showing its age.

    So why can’t Richmond be Charleston? I just don’t have a good answer.

    Peter Galuszka

  • DISPERSAL VS FOCUS

    Posted on

    by

    James A. Bacon

    DISPERSED RENEWABLE ENERGY SUPPLIES VS FOCUSED SETTLEMENT PATTERN ENERGY DEMAND

    Time again to consider things that directly impact humans ability to achieve a sustainable trajectory for their civilization.

    First, two great items from CNN today:

    1. Time has “The Great Recession: America Becomes Thrift Nation.” A lot of great Timesqe poster material.

    2. EMR does not often quote former Speaker Hastert’s staffers but John Feehery has some good things to say about “What’s Driving the U.S. Over the Cliff?”

    BOTTOM LINE FROM BOTH: If a nation-state sets out to create a consumer driven economy, they better have a comprehensive strategy to educate the citizens in something beside Mass OverConsumption.

    Now to Energy:

    Readers of this Blog may recall EMR’s perspectives concerning the dispersed distribution of renewable energy sources and the focused energy demand of Urban civilization.

    WaPo today tees off in a good direction with “In Green Energy, an Environmental Paradox: Wind and Solar Projects May Carry Costs to Wildlife.” Well, it is not JUST wildlife…

    Those interested in the topic of spacial distribution of human activities will find the graphics on the jump page (A 14) of critical importance.

    Check the “demand for land” graphic and then recall that at MINIMUM densities that functional Urban settlement patterns for the projected 2050 population would occupy less than five percent of the Lower 48.

    See where the renewable sources are located and then recall where 85 percent of the population is – in a dozen MegaRegions. The demand is not close to the foci of the renewable resources.

    The article focuses on the impact of transmission lines on wildlife. It does not even mention the gross waste of transmission line loss carrying mega watts past Open Land.

    Nor does the story mention the need to cut energy demand, recycle waste heat and carry out the other energy conservation strategies that result in even more compact settlement patterns.

    The area per Terawatt-Hour graphic is worth the cost of the paper today.

    EMR

Now Available

Book cover of 'Dust Mites: A Second American Revolution' by James A. Bacon, featuring astronauts planting a flag with a blue and white emblem on a lunar landscape, with Earth visible in the background.
For sale on Amazon.com

The year: 2075. The American colonies on the Moon are getting restless under Washington’s tyrannical rule….

This second edition of “Dust Mites” has a snazzy new cover, includes helpful lunar maps, and is 5,000 words tighter than the original. The sequel, “Trogs,” is scheduled for publication this summer.

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