Monthly Archives: February 2009

Rental mentality

American capitalism is broken, and in the race to fix it there is a lot of prognosticating about what will work, what won’t, and what things will look like after this crisis passes. One of the best things I’ve read in the latter category is Richard Florida’s article, “How the Crash Will Reshape America,” in the March 2009 issue of The Atlantic Monthly.

It’s a very long, in-depth analysis and rewards a full, careful reading; but since I suspect you’re not going to do that, let me sum up. Most of the article argues that industrial centers like Detroit are doomed in the long run, and that population-dense areas with diverse economies, like New York, will thrive, based on a notion of the “velocity of ideas” that such places generate, which may sound a little vague but rings true for me.

The article holds up Pittsburgh as a model for successfully managing the transition from a large industrial economy to a smaller idea-based one, and it wraps up with some prescriptions for managing this crisis to a comparatively soft landing. The most compelling suggestion the author makes is for “the removal of homeownership from its long-privileged place at the center of the U.S. economy.” Its benefits aside, homeownership creates economic ills of various kinds: for example, it anchors people to a region that may be in economic decline, producing a “creeping rigidity in the labor market,” when those people ought to be mobile and able to go where the work is. Further, government incentives encouraging homeownership distort demand, producing, for example, speculative bubbles of the kind we’ve just seen pop.

Richard Florida would rather see government policies favoring property rental, and calls the current tidal wave of foreclosures an opportunity: banks could be required to rent a foreclosed home to the erstwhile owners at the prevailing market rate (typically much less than a mortgage payment). This would achieve the goal of keeping families from ending up on the street, in a less artificial way than prohibiting foreclosures would. Just as importantly, it provides a basis for valuing some of those “toxic assets” you’ve heard so much about.

Digression: a big part of the problem in the financial world right now is that years of bad lending decisions have led banks to accumulate a lot of worthless assets on their books — worthless in the literal market sense that no one, no one wants to buy them at any price. In the absence of at least a potential buyer, it is literally impossible to compute a value for an asset, and in the absence of some way to place a value on those assets, banks will sooner or later be forced to “write them down” — to admit they’re worthless and that the bank as a whole is worth a lot less than before. If the bank’s assets shrink enough, its liabilities may overwhelm it, at which point it becomes insolvent.

This is one reason why compelling banks to turn foreclosed homes into rental properties is so attractive: in many cases it guarantees a stream of rental income from the property, meaning that the property now has a non-zero value even in a glutted real-estate market where the house itself can’t be sold.

I am a somewhat reluctant homeowner. Having grown up in New York City, renting was always the norm, and I never felt the urge to own my own home. But after a few sour landlord-tenant episodes, and after we made some money in the dot-com boom, and after our first son was born, Andrea got the homeowning bug and I went along — mainly because, even though renting had always been the norm, there was always lip service paid to the unalloyed good of property ownership.

I cottoned at once to Florida’s repudiation of this idea, but if we’re going to transform ourselves from a nation of hopeful homeowners to one of eager renters, there are some things about rental that we’ll have to make less painful. Here’s a short list of rental pain points that I’d want addressed if I were going to take that step myself:

  • Rent control (though unfortunately, when economists agree, the thing they agree about the most is that rent control is bad)
  • Ample notice of lease non-renewal or significant changes in lease terms
  • Authority to hire approved vendors for basic maintenance

Since I would expect to move more often as a renter, I’d also want a more robust and economical network of storage and moving services than exists today; but in a successful transition to the rental-oriented new-urban utopia of tomorrow that should follow naturally. I can’t wait.

Citizen George

Recently on the “parents” e-mail list at work, someone asked whether Hearst Castle would make a good trip for a 12-year-old, or whether they’d find it boring. Here’s what I wrote in response about how I’d make Hearst Castle interesting to a pre-teen.


Once upon a time there was a young filmmaker named George Lucas. Everyone thought he was a little weird, but one day he had a great idea. No one believed it could work, and he nearly killed himself making it a reality, but in the end he had Star Wars and he changed the world, and made himself rich.

What could he do with all his money? He could build a mecca for rebel filmmakers, that’s what, away from the suits and the beancounters of L.A. And so George began building Skywalker Ranch. But it was expensive, and he needed more money, so he hired some folks to make a new Star Wars movie. He hired some other folks to license Star Wars merchandise. And he hired still more folks to sell his splendid movie-production services to other filmmakers. He grew richer and richer, and built Skywalker Ranch bigger and bigger.

By now many years had passed. George Lucas was no longer young. His wife had left him. His friends, the other rebel filmmakers he’d hoped to bring into his fold, were scattered to the four winds, starting their own companies, making their own success. What could he do?

George could think of only one answer: get richer still. Build his empire bigger yet. He made more Star Wars movies! He took over the Presidio! He marketed cartoonish violence with no coherent story logic to young children! And he grew even more wealthy, but no less alone and unfulfilled. And he had become the very type of corporate executive whose influence he once sought to escape.

Some dark night in his cavernous mansion he will whisper the nickname of his beloved childhood hot rod, which no one will be around to hear, and expire.

William Randolph Hearst? He was the George Lucas of his day.

Update [15 June 2009]: George Lucas’ design for new building is twin of Hearst Castle centerpiece. Whoa.

Movie connections, part 1

Years ago I was a founding member of the Internet Movie Database. The other team members and I were distributed around the globe. We coordinated our efforts by e-mail and the occasional crowded conference call. In 1999 we finally all met for the first time, gathering for a memorable weekend in L.A. At that meeting one of our geeky pastimes was to quiz one another about movies. In person, and in real-time, this was a fun challenge; but when we got back home to our computers it was too easy to take a question from e-mail and use our own database to answer it. (Today it would be even easier, with Google.)

Then one of the members hit on an interesting kind of quiz that the database could not help with: he sent sheet music snippets in e-mail and challenged us to identify which movie’s theme music it was! Brilliant. I came up with my own solution to the problem: finding connections among multiple movies involving descriptions of scenes or other unsearchable aspects that require you actually to have seen the films. For a while I challenged the team with one such question each week, and it was a popular feature while it lasted. I have since used the questions at parties, shared them with trivia buffs, and mailed them hither and yon, but never posted them here despite promises to do so; so here is the first one. The answer appears below. See if you can solve it without peeking!

Believe it or not, there’s a top Hollywood actress who, in the space of two years, was in two otherwise unrelated major films in which her male costar’s lower jaw fell off! Who is she, and what are the films?

Here’s a hint if you need it:

show

The answer is:

show

When I posed this question to the denizens of Ken Jennings’ site, one of them reported that it’s now easy to answer this one “from scratch” via Google. Oh well. I’ll post a hard one next.

The Arbitration Fairness Act

Here’s some unexpected good news: the Arbitration Fairness Act has been introduced in the U.S. House of Representatives.

As I wrote last September, the mandatory binding arbitration clauses that are ubiquitous in the service contracts we sign are “as un-American a practice as I can imagine” because they deny you your day in court should you have a grievance. It’s a measure of how well the monied interests have us brainwashed that most of us think this is a good thing — there are too many frivolous lawsuits and too many lawyers getting rich, driving up the prices of everything, right? Wrong. That’s just what they want you to think.

So most of us think mandatory binding arbitration clauses are no big deal, if we ever think about them at all, and hardly any of us do, even though we agree to them almost every time we enter a professional relationship with someone: a doctor, a landlord, an employer. Which is why it’s such a surprise to see opposition to this practice getting a little traction in Congress — in these days of global megacrisis piled atop global megacrisis, the phrase “mandatory binding arbitration” isn’t exactly spilling from everyone’s lips.

So extra kudos to the sponsor of the bill, U.S. Representative Hank Johnson of Georgia’s fourth congressional district, for doing what’s right even when all the oxygen has been sucked out of the room. Let’s show him some love in the form of a token contribution to his campaign fund.

Séance

Beeeeep.

Hi, it’s me! Pick up the phone, please!

Beeeeep.

Hiya, son!

Hi, Mom! How are you?

I’m good, how are you?

I’m OK. I have some exciting news for you.

Oh, OK! What?

We finally used the sled!

The sled?

Yeah, the sled. You know — the Centennial Edition Flexible Flyer you once gave me.

I gave you a sled?

Yeah, don’t you remember? It was a really big deal. You used to keep asking me whether I had used it yet.

Ohh, yeah, I remember. That was a long time ago!

Yeah! Twenty years. You sent me that sled in Pittsburgh.

Twenty years you didn’t use the sled?

What can I say? We tried a few times but this was the first real opportunity we had.

I can’t believe that in twenty years you never had a chance to use the sled.

Well, keep in mind where I’ve been living for seventeen of those years. We got one millimeter of snow one day in seventeen years, and no one could believe it.

So where did you use it?

We took the kids to Tahoe. I wish you could have seen them. They loved the snow, and the sled works great! In fact it works a little too well — it goes fast, and it was a little scary!

For you, or for the boys?

Oh for me, definitely. The kids were fearless.

I can’t picture you scared on a sled.

Of course you can’t. The last time you saw me on a sled I was a fearless kid, like Jonah and Archer. It takes a grownup to be scared. Anyway, it was only scary until I figured out how well it steers, and how soft the snow is when you wipe out. It was hilarious — Archer was riding with me and we wiped out together, a couple of times, and each time he got out from under me and stood up and said, “Awesome!”

“Centennial Edition Flexible Flyer” — that must be worth something by now.

Yeah, probably. That’s part of the reason we’ve schlepped it around for twenty years.

If you keep it in good condition, maybe you can sell it for some nice bucks when the boys grow up.

Pshaw. I don’t want to worry about keeping it in good condition, I want to use it. It can’t possibly be worth more than the fun we have using it!

That’s the right attitude. I want to see pictures.

You will.