Mr Trump goes to Washington (2005 UN building renovation)

Interesting Congressional testimony on the costs of architects, building, renovation, etc in major urban areas like New York.

Posted in Infastructure & Rail, Urbanism | Leave a comment

“On Sale” – Does MSRP mean anything?

Normally I dismiss msn articles as clickbait but some of them are actually fairly good.  In this case, the article questions whether discounts to “list price” actually mean anything in the era of “e-commerce” where it seems that nothing is for sale at full retail.

http://www.msn.com/en-us/money/companies/it%e2%80%99s-discounted-but-is-it-a-deal-how-list-prices-lost-their-meaning/ar-BBqozSB?ocid=spartanntp

Always remember to comparison shop, both for the same model from other sellers and for equivalent models that will do the same function.

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Multiple Scientists: Stop Raking Leaves

I always thought it was weird that people didn’t realize they were slowing messing up their top soil by shipping off all the leaves every year.  It makes no sense to rake leaves unless you have a putting green.
LINK:  NWF: Don’t Rake Your Leaves

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Why do cities and urban areas exist?

I thought I would take a moment to think about why cities exist; its a question that would seem crucial to urbanist thought.  Mankind is naturally a social creature, but most people only keep a close circle of 10-20 people, which can be easily accomplished in the countryside.  Abraham maintained a household of hundreds of people as he made his way through the countryside grazing his animals.  I posit that cities are not a matter of wanting to be around a bunch of people for the sake of being around people, thus here are some of the historical rationales:

1. Physical safety
From very ancient times, through the classical period and middle ages, it was not feasible for a man or small family to provide physical protection against the bands of raiders and armies that were in search of loot (and women), especially in the times before force-multipliers like firearms.  Walled cities could keep out small groups of bandits and hopefully muster enough men to defend against more organized attacks.  Examine, for instance, the various recorded battles fought by the children of Israel when conquering the promised land; there were a wide array of small local armies protecting their various cities.  We see the same thing in the case of the classical Greek cities states and their colonies, the various merchant cities of the Middle Ages and Renaissance, the hundreds of principalities and bishoprics of pre-national Germany, the hundreds of  Indian princely states that existed aournd the time of British colonization, etc.   On a smaller scale we think of the French feudal system of local manors/castles, or in earlier times the wooden fort towns of the Gauls and Celts.  In the ancient countryside there was no “911” to call, few roads, no rapid communication, no hospitals, no permanent stores or merchants, etc.  With barbarians or foreign invaders on the loose, to be outside the orbit of a nearby city or castle town was quite dangerous unless you were wealthy enough to have a private army!  The exceptions to this occurred when there were large stable kingdoms or empires with law & order domestically and secure borders against foreign invasion, such as Rome when it was at its height, which allowed people the luxury to have vast rural estates in peace.  This would also include some periods in China, as well as monarchical France and England after the 100 years war, and so on.

2. Water Supply & food production
We take water for granted in modern Western society where we have harnessed water in amazing ways to pipe it to nearly everyone at low cost, but historically cities were placed strategically with access to a major river (or perhaps simply good wells or aquifers in the case of smaller settlements).  Water access was critical in the ages before modern plumbing and sanitation, both for day to day survival and especially for crop irrigation.  Without proper irrigation, farming is a sustenance-level only endeavor and heavily dependent on rainfall.  With river-based irrigation, we see the first major civilizations in Indus river valley, Babylon on the Euphrates, Egypt on the Nile.  Later examples of river cities are Rome on the Tiber, London on the Thames, Paris on the Seine, Vienna on the Danube, etc.  Control over major wells and rivers could not be maintained by any one person, for the reasons outlined in point #1.  Because everyone wanted water access, they congregated where it was plentiful.  And since water could not be easily transported, this congregation tended to be quite dense.

3. Specialization & Commerce
Mankind, in order to emerge from the basic “hunter-gatherer”, nomadic herdsman, or sustenance farming lifestyles and into a more stable and technologically advanced life with all the benefits of specialized manufactured goods and commodities, must first create a surplus of food (by congregating near watered land in point #2) so that artisans can be sustained without having to work in the fields.  Secondly, there must be a market for their wares (it does no good to produce beautiful pottery in the wilderness where there is nobody to trade with – you will starve!).  The degree to which a society can create surplus food is the degree to which it can afford for people to specialize into non-agricultural fields.  Only about 2% of the US population today is involved in farming, but in colonial times past it was as high as 80-90%!  The advent of tractors, mechanized planting & harvesters, modern fertilizer, etc made this possible.  Once there is a food surplus, the city or society can then create an additional surplus: one of manufactured and crafted goods, as well as various commodities from extractive industries like timbering and mining.  These goods can be traded with other cities to gain from competitive advantages and additional specialization.  This is again where city placement comes into play, with most of the world’s great cities being situated in bay areas that allow for sea commerce (or otherwise on interior rivers and other significant trade routes).  Cities thus gave the individual in ancient times very advantageous access to the goods and services that were unavailable in the countryside (there were no Amazon drones or mail order catalogs!).  Even into the 1800s many rural people had to make their own tools, clothes, cookware, building materials, and other basic items.  I have hand-made tools passed down from my great-great-grandfather in West Virginia.
The urban concentration of artisans and manufacturers created a positive feedback loop – cities were where the goods were made, thus where the goods and commodities were bought and sold, thus where there was demand for labor and other services, and where surplus capital was re-invested, etc.  Due to the limits of transportation and communication, it had to be so; only the most high value goods such as silk and spices could justify extended supply routes.

There are of course other causes of ancient & medieval cities, but these three are probably the most important.  The reason I have laid out these essentially obvious points is because we must recognize that in most 1st world countries – especially the US – the justifications of physical security, water availability, food production, commerce, transportation, communication, etc do not apply with anywhere near the same degree that they used to.  A person can live just fine in a tiny town or rural area, with full plumbing, electric, appliances, computers, telephones, etc.  Cars and highways leave few people outside a days drive to hospitals and other essential services.  With a strong military negating outside threats and county sheriffs in even the most rural areas, nobody worries about roving bands of outlaws – its just the opposite; people are much more afraid of urban gangs!  With modern logistics, no one worries that the grocery store will be out of stock, even in the smallest town.  With modern postal systems, electronic payment clearing, and internet communication, many service businesses like insurance, accounting, design, IT, telecom, etc can locate in obscure areas without needing to be in a city.  Even manufacturers can locate in smaller towns that ever before because robotized manufacturing requires less labor than ever, commodities can be brought in on rail or by truck, and their labor can drive 30 minutes or more in personal automobiles if need be.

Therefore, if urban areas are going to be revived and strengthened in the US, we must recognize that cities are no longer indispensable in the ways they used to be, but must rather offer a better lifestyle in NEW ways in order to attract and retain people and businesses.  The appeal must be to more than simply the base survival advantages that ancient cities afforded.  Many cities still take for granted that businesses and people will always demand to live there and have high taxes as a result, which drives people into suburbs and exurbs.    The “Steel City” of Pittsburgh no longer has a single steel mill.  The rubber industry of Akron and machine tool industry of Cincinnati are shadows of their former selves.  We need not mention Detroit.  Part of this is due to the specific circumstances of industry moving to other countries entirely, but a large share of it is moving to smaller towns and suburbs to reduce costs in ways that used to be impractical logistically.  Anyone interested in urban revival must seriously brainstorm about the infrastructure, zoning, tax & labor law reforms, and other factors that can convince serious manufacturing and service jobs to locate in traditional large urban centers.  Without this key base of jobs, the US is destined to endless sprawl and urban decay.  Not everyone can have an artisan bakery, craft beer bar, or other trendy thing that is the rage here in Portland.  Without an industrial base, those businesses have only each other for customers, which is not sustainable, as I explain here: https://urbansaving.org/2013/07/26/re-orienting-to-a-saver-producer-mindset/

Posted in Economics, Urbanism | Leave a comment

The Return to Gold, Part I

I am going to begin posting a series of articles about the inevitable return to a stable gold standard (or the alternatives to a gold standard which are 1) hyper-inflationary chaos or 2) One World Order “mark of the beast” style digital currency (hopefully we aren’t at that point yet although its Biblically speaking inevitable) or 3) some combination of 1 & 2, or of 2 & GOLD, where the trust people have in gold is exploited corruptly).

I figure the best way is to skip background information and jump straight to content as it comes to me.  For the first installment, I am re-posting an article where Nathan Lewis offers an excellent overview of the current political realities facing the relatively new development of floating currency systems as opposed to a classic fixed-value system.

Politics Vs. Reality In Monetary Reform
By NATHAN LEWIS (Forbes Contributor and author of New World Economics blog)
(This item originally appeared at Forbes.com on October 1, 2015.)

Politics is like the weather. Every day something new. Economic principles, however, are more like the mountains. They don’t change much, even though they might be momentarily clouded by the weather.

I am an advocate of gold-based money. “Gold-based” means, specifically, a currency whose value is linked to gold. One way to do this is to literally make coins out of gold and silver, and that was common in the sixteenth century. However, since 1850 or so it has mostly meant banknotes with a value linked to gold, and other subsidiary instruments like bank deposit accounts. In U.S. history, the dollar was linked to gold at a ratio of 20.67 dollars per ounce of gold, from 1834 to 1933. It was just like any other fixed-value system, such as the one that links the Danish krone to the euro at a rate of 7.46038 krone per euro today.

The United States, and most every other developed country within the Bretton Woods arrangement, had gold-based money up until 1971. The countries whose currencies were most reliably gold-based — in other words, were not devalued and did not float — tended to be very successful economically, and also became world financial centers. This was true of the United States until 1971; Britain before a series of devaluations beginning in 1914; the Dutch between 1600 and 1800, and so on back about as far as you want to go, even to Babylon and Sumer around 2500 B.C.

Nevertheless, despite this multi-century global track record of success, for some reason people think this is a bad idea, and that the floating currency arrangement that appeared by accident in 1971 is a good idea. Even a brief look at the data shows that this has no support whatsoever. According to the U.S. government’s own laughably lipstick-applied statistics, the median full-time male income (chosen because it eliminates issues relating to increasing paid work by women, household size and other factors) is less today than it was in 1972, over forty years ago. This is probably the first time that income has fallen over a forty-year period in U.S. history.

Before 1971, incomes had a roughly 2%-per-year growth trend going back a century to 1870. Over forty years, this would have meant an increase in income of 121%. Getting paid double. Not a decline.

During our forty-plus-year experiment in floating currencies since 1971, we’ve had a decade of punishing inflation (1970s), a constant patter of currency blowups (Latin America in the 1980s, Mexico 1995, Asia, Brazil and Russia in 1997-98), and a string of asset bubbles (continuously since about 1998) followed inevitably by asset-bubble-busts. Alongside these more dramatic events, we’ve had a constant grind of debilitating monetary chaos, plus an economy that hasn’t been very healthy since about 2000.

Hardly anyone would disagree with this assessment, and yet people think I am silly and the floating currency people are smart. Obviously, this has nothing to do with economic reality. It is a matter of politics.

Whenever you have an environment of monetary instability, the overall economy suffers but some entities benefit. In an environment of rampant devaluation, for example, exporters of manufactured goods can often do well because they can take advantage of the collapse in worker’s salaries that accompanies a collapse in currency value. Domestic industries, however, dry up and blow away because the impoverished workers don’t have any money to spend on anything but bare necessities.

Thus, over time, the exporters become relatively wealthy and the domestic industries become poor or disappear altogether. With wealth comes influence, and the exporters are thus able to promote all kinds of arguments that what the country really needs is more devaluation, to keep afloat the export industries which, by that point, are the only healthy part of the economy.

Between 1990 and 2000, the value of the Russian ruble fell from about 4/dollar on the black market to about 25,000/dollar. (They eliminated three embarrassing zeros along the way.) And yet in 2001, after the ruble has enjoyed a bit of stability, many Russian exporters (and the academic economists in their thrall) complained that what they really needed was: more devaluation! Their business model depended on it.

I hope I don’t have to convince you that hyperinflation is a bad idea. That’s an economic principle. But the politics of the situation were that: Russia really, really needed more currency devaluation – according to some influential people. Even after they just had a lost decade of disastrous hyperinflation, this was still taken seriously.

The situation today is a little different. We haven’t had hyperinflation, but today’s floating currency environment tends to favor financial/speculative sectors and disfavor industrial production and domestic services. This is no surprise. Andrew Carnegie warned that such a thing would happen back in the 1890s, when there was a discussion about devaluing the dollar. Indeed, it was even noted in the De Moneta by Nicholas Oresme, written around 1375 A.D. – the first tract on monetary topics in the Western world.

Today, it’s not the exporters that are favored by monetary conditions, as it was in Germany in 1922 or Russia in 1994. It’s the financial sector, which is supposed to be a minor intermediary between saving and corporate investment, but has morphed into a giant parasite.

A lot of arrangements that date from the postwar period – Social Security, healthcare, pensions, the university, owning a 2500 square-foot suburban house with two cars – are in the process of falling apart. They were appropriate for the world of fifty years ago, but not for today. However, people today have a sort of death-grip on this sinking ship, because they don’t see an alternative. They want to get their Social Security payments, make the payments on their mortgages, car loans and student debt, and retire on their 401(k) plans stuffed full of junk-bond ETFs or their woefully-underfunded defined-benefit pension programs. They certainly don’t want government defaults and bank bail-ins.

As one asset bubble after another turns to bust, and sovereign governments everywhere creep closer to the brink of default, people see that central banks have had something to do with keeping this sinking ship afloat a little longer than would have otherwise been the case. True, the ship is sinking in the first place in part because of this funny-money environment, and the asset bubbles and stagnant incomes it has engendered. If people had stuck to the economic principles (including gold-based money) that made America great over two centuries, we might be sailing happily into a prosperous future.

And, if the “ship had sunk” on all these decrepit postwar arrangements, let’s say around 2012, accompanied by sovereign defaults and bank restructurings, we might be well on our way to creating new arrangements that are much more appropriate for today – to everyone’s benefit.

But that is a little too abstract. Just kick the can a little longer, please.

Obviously, this is short-term expediency for personal benefit — perhaps the single most common element of human affairs. But, most people have a hard time telling lies, so it is much easier for them to embrace the self-delusion that they are expressing great principles.

The result of all this is that, today, we have the European Central Bank “printing money” (expanding the monetary base) at a rate of about 60 billion euros per month (7.1% of GDP per year), while people are braying for more. The Bank of Japan has been expanding at a rate of 80 trillion yen per year (16.3% of GDP). Now the Federal Reserve, having declined a widely-expected rate hike in September, and after keeping the Fed funds rate target at essentially zero percent for nearly seven years, might be on its own path to a fourth round of “quantitative easing.”

Now, let me explain this: the Bank of Japan is now purchasing Japanese government bonds at a rate of 16.3% of GDP per year. Which is a good thing, because the Ministry of Finance has to sell 170 trillion (34.6% of GDP) in bonds this year, to finance rollovers and new deficit spending, without letting prices fall and yields rise. Other governments are doing much the same thing, or did, or are getting ready to do it again. Monkey-see-monkey-do has always been the first principle of government.

You can buy a heck of a lot of can-kicking for this kind of money. And, since the beginning of 2013 or so, there doesn’t seem to have been a lot of consequences. Measures of inflation are actually lower than many would like. So do more of it! That is the politics.

However, I don’t think this money-for-nothing environment is going to last too long. It has already lasted a lot longer than it should, in my opinion.

I could be wrong. Maybe the printing press really is the ultimate path to economic salvation and worldwide commercial dominance. Funny how no other government discovered this previously.

Eventually, the weather will change. I think that the old principles of economic management – like Stable Money linked to gold – will become a lot more popular. Maybe, popular enough to put into practice. This would probably be a little while after people lose hope that all of today’s unsustainable things can be sustained just long enough for it to be someone else’s problem.

Article by Nathan Lewis, find his book here: http://www.newworldeconomics.com/GTOAFMpage.html
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Posted in Economics, Precious Metals | Leave a comment

Counter-revolutionary Music of the Week – Marche du Régiment du Roy, JB Lully

Marvelous march from monarchical France.  Jean-Baptiste Lully is one of my favorite composers.  I prefer the structure and refinement of Baroque to more abstract and romantic late classical.

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Own Something!

I’m sure there is an article waiting to go with this old poster, but I’ll just put this here for now….
photo

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