The Ides of April, Edison and PCs

Legend tells us that a soothsayer warned Julius Caesar to “beware the ides of March,” which signified the middle of the month. This was before the invention of basketball, so I doubt that he was being warned of the danger of having his college hoops bracket busted. As it turns out, assassins were Caesar’s problem. But as history has shown us time and again, it’s the ides of April that have been a bigger problem for the rest of us.

I’ve always been more attuned to April 15th for a more personal reason: it’s my birthday. But many bad things have happened around April’s midpoint, and it has always bothered me. Lincoln was shot on the 14th, but died on the 15th. The Titanic struck the fatal iceberg late on the 14th, but took several hours, until the 15th to sink. April 15th is also the day that income tax returns are due here in America, which is no big deal now that I’m paid wages subject to withholding taxes, but was much uglier when I was paid only commissions or was a “self-employed” contract worker. That’s when real procrastinators find out just how much money they owe the government. Lots of people hate my birthday, thankfully most of them do so not because of me.

There are a host of other tragedies that have happened around the middle of April, and most of them are instantly recognizable by the word or two that denote the nearest city. Names like Columbine, Waco and Oklahoma City come to mind. This year as I sat in North Canton’s newest watering hole with my good friend and sipped a celebratory birthday cocktail, we watched the news feed on the big screen monitors above the bar as the name “Boston” was added to that infamous list. My thoughts and prayers go out to those people who found themselves in harm’s way.

Following closely on the heels of the Boston Bombing, another mid-April act of violence was committed against the American people. This one occurred in our nation’s capital and we know exactly where to find the perpetrators, although it’s doubtful that they will ever face any consequences to their act. The U.S. Senate voted to block legislation to expand background checks for purchasing guns. Recent polls taken by reputable organizations have shown that the majority of Americans in our supposedly representative democracy agree that at least this modest measure should be undertaken in an effort to keep mentally disturbed people from obtaining weapons designed to kill dozens of people quickly. However, the NRA, which now represents the interests of gun makers, not average gun owners, want no restrictions at all on gun sales. They’re willing to gamble with the lives of their children and ours that all such restrictions are bad for the sake of boosting sales. I think it’s a bet that most people don’t want to take, but our government responds best to bribery by lobbyists rather than to the wishes of their constituents.

As I was looking over a news service on my computer’s Internet server last week, I was reminded of another mid-April milestone. April 16th marked the 36th anniversary of the introduction of the Apple II, the world’s first easy to use personal computer. It’s nice to remember that some good things can happen in the middle of April. I wanted an Apple as soon as I heard about them, but I was a college student at the time, and couldn’t afford one. I worked on computers throughout my college years, but they were massive room-sized IBM units. It wasn’t until I started selling real estate in the mid-1980’s that I got a chance to work on a PC, but since then I have tried my best to make the PC a useful tool throughout my career. The personal computer has had a transformative impact on our world, and I’ve been around to see it happen.

Lately, I’ve been reading a book entitled The Age of Edison: The Electric Light and the Invention of Modern America by Ernest Freeberg. The title pretty much spells out the book’s content. Although we had candles, oil lights, and gaslight for many years, it wasn’t until electric light was perfected for mass consumption that the world was transformed into modern times. Of course Edison didn’t invent electric lighting. He didn’t even invent the incandescent bulb, but he did perfect it for mass-market consumption. We tend to think of Thomas Edison as a lone genius that toiled until he found the right filament to make his bulb practical. But his real genius came from directing the efforts of a group of highly skilled and intelligent workers to achieve his goals. In his Menlo Park and Orange, New Jersey laboratories, Edison pioneered the concept of organized research and development facilities.

It is difficult for us to imagine the world that existed before electric lights or the changes that occurred because of the rapid, widespread adoption of them. When the lights came on, factories could now work around the clock. Our entertainment, including theaters, sporting events and amusement parks, could now be enjoyed far into the night instead of being confined to daylight hours, allowing more people to enjoy them. Law enforcement initially praised electric street lights for casting its glow on the seedier elements of society and forcing them further into the shadows, but they also allowed for more late night carousing and the attendant social problems. The successful harnessing of electricity also gave rise to hundreds of other laborsaving devices, although in the process we often replaced beautiful artisan-produced items with cheaper factory-made goods. At the end of the nineteenth century America faced a shortage of workers. Electrical devices made up for that at the time, and became so successful that now we don’t have enough jobs to go around.

In our modern times, computers have had a similar life-changing effect on our world. It is also difficult for our younger people to imagine the world that existed before personal computers and cell phones, not to mention video games. In the businesses that I’ve been involved in throughout my career, we made huge increases in productivity primarily through the use of personal computers, and later, the Internet. Our bosses often resisted, hampered by the comfortable familiarity of doing things the way that they had learned them, as well as resisting the capital outlay required to purchase the latest technology. Things like fax machines and cell phones seemed like unnecessary extravagances at first, but quickly became requirements for doing business. Now, just as quickly, they are being replaced by newer technology. Hand held smart phones now handle most tasks done by several devices previously, and apparently modern workers much prefer text messaging and e-mails to actually talking with one another. Unlike electrical lighting, which allowed people to congregate outside of the home for longer hours, personal computing and its associated technologies tend to keep us physically separate from each other. At least that makes it tougher for potential bombers to do us harm, but I feel we have lost something in the process. The electrification of America has brought about constant change at an increasingly rapid pace, but change isn’t always good, it’s just different.

Edison’s beloved incandescent light bulb is now being replaced, although many seem to be reluctant to let it go. However, it will soon be illegal to sell one in this country. Modern LED bulbs are initially more expensive, but cost only a fraction to operate. The warm glow of incandescence is hard to replicate, but we have embraced change in the name of conserving our natural resources. At least that’s the story they’re feeding us. I think they want to sell more lamps and new lighting systems, but then I’m a bit of a skeptic. I have seen conclusive proof of the much lower electricity use of the modern bulbs, but I hope they can get the initial cost of the bulb down.

Although we give Edison much of the credit for the electrification of America, he was a supporter of the safer yet less efficient direct current (DC) system of distribution. He eventually lost out to George Westinghouse’s alternating current (AC) distribution system, which sends power across high voltage lines, then uses transformers to break down the current for home consumption. Edison worried about the dangers of AC, and went to great lengths to demonstrate the destructive power of his rival’s system, including a stunt that proposed the “Electric Chair” as a means of executing criminals (to his horror, the system became widely adopted by prisons for decades). He also filmed the electrocution of a rouge circus elephant. The film became quite popular; today we would describe it as a viral video sensation.

The Ohio-born Edison also has a local connection to my hometown area. His first wife died when Edison was in his late-30’s, leaving behind three young children. His friends quickly realized that a man like Edison, who often worked in his lab through lunch and dinner and then late into the night as he obsessed on his latest idea, would need help to raise his children. They introduced him to Mina Miller, the daughter of inventor/industrialist Lewis Miller, who is from Greentown, Ohio, just up the street from my hometown of North Canton. Edison and Miller married at the Miller home then returned to New Jersey and eventually had three more children. The old Miller home still stands near the square of Greentown, which isn’t really a city or even a village, but merely the name for a crossroads between Canton and Akron.

My mother and her family lived in the Greentown area for many years. Mom, her sister, and two brothers all attended Greentown High School. The school started at the time of the initial electrification of America, in the late-1800’s, and graduated its last class in 1957, in the midst of the Atomic Age (the school district was absorbed into the North Canton system). My Uncle Ralph graduated in the Class of 1941 (http://highschool.greentownohio.com/1941.pdf) and made the local papers when he was signing his enlistment papers on December 8, 1941, the day after Pearl Harbor. It wasn’t a knee-jerk response to the attack; he had actually signed up weeks before, and was just showing up according to schedule. Aunt Millie was one of sixteen members of the Class of 1944 (http://highschool.greentownohio.com/1944.pdf) while my mom graduated in 1949 (http://highschool.greentownohio.com/1949.pdf). My Uncle Robert (we only called him “Buck”) left school for the military before graduation, but his wife was a graduate in 1954.

The graduates of Greentown High organized an alumni association in 1908, and have held reunions for members of all of the classes every year since then. This summer will mark the 105th reunion. Several years back, the torch was passed to the “younger generation” of the association. Thus began my connection with the school when my mom became the treasurer of the alumni association. She received a card file with names and addresses of all of the alumni as part of her duties. Up until that year all correspondence had been addressed by hand. While handwritten addresses may be more aesthetically pleasing, arthritic hands demanded a change of procedures. I looked over what she had been given and told her that I could simplify her task. We set up a database for the graduates on the computer that could be used to print mailing labels and name tags. That year, we developed what has become known as “the list”.

No new names are ever added to the list, but instead each year it becomes shorter as members pass away. This year, the oldest graduate passed away at the age of 106. There is a dark joke circulating among the committee that all too soon there will be no need to hire a caterer for the annual event. Instead the remaining graduates will be able to fit around a single table at an area restaurant. So it goes for the little group born in the age of electrification that will expire in the age of computers. Or will the progress of technology name a new age before the group’s light is finally extinguished? As the electric producing industry entered the twentieth century, even its founder, Thomas Edison, declared that he didn’t really comprehend it anymore, and focused his attention on motion pictures.

It was a combination of security cameras tied into computers that helped the authorities identify the Boston Marathon Bombers, and an infrared camera that helped locate one of them who was lying in a boat, bleeding. The progression of technology can be used for good, but can also be twisted for use by forces of evil. My hope is that the world will become more like the little group from Greentown High School, constantly seeking out the company and fellowship of their fellow graduates with an emphasis on their shared experiences. However, the cynic in me also realizes that most technological advances are eventually perverted for malevolent purposes. Let’s just hope that there is another “age” following along behind the computer age, and not the extinction of mankind.

      

   

Two Movies and a Book

I really like movies, especially the ones that surprise me unexpectedly. There are many things in life that surprise us. Some of them are good surprises, while others are not. I’ve been told that I was a “surprise” for my parents. Some of us are dismayed to find out that they were not born from the grand designs of their parents, but personally, I’m quite content to be a “love child.” Seems a bit more romantic than entering this world as a planned decision. Often, surprises occur because they run counter to our expectations. Many find great discomfort when reality runs afoul of their preconceived notions. Over the years, I have learned to just roll with the punches and take life as it comes. There are times when I get upset by having expectations that far exceed the reality of experience, but I mostly try to maintain an even keel.

Recent weeks have seen the release of many highly advertised films for home consumption on DVD (I’m not high tech enough to go Blu-Ray just yet). I like movies almost as much as I like books, and while I prefer the full cinema experience, there are various reasons why viewing movies at home makes more sense for me, so that’s where I usually watch them these days. Recent events at movie theaters are troubling, and I like to see movies without the fear that some nut job is going to open fire on everyone there. Last week, I got five movies that I really wanted to see, with Steven Spielberg’s Lincoln topping the list. I love learning about history; this film is filled with recreations of important events from our past and it’s supposed to be mainly accurate from an historical perspective.

Also included in my bounty of films was the Robert Zemeckis film Flight starring Denzel Washington. I knew the film had a great action sequence involving a plane crash, and I’ve enjoyed Denzel’s work since his days playing a doctor on TV’s “St. Elsewhere.” I watched this movie first and although I didn’t really expect too much from it in comparison with the others I had seen or were about to view, I really enjoyed it. In fact, I liked it better than Lincoln.

I learned how to fly an airplane while I was a student in college. One of the perks of going to a really big university like Ohio State is that they have their own airport and fleet of aircraft. Of course I also learned that in order to become a really good pilot one would have to invest more time and concentration into the endeavor than I was prepared to give. So I abandoned it to the experts. In the film, Washington’s character is an extremely talented pilot, sort of like the real-life pilot, “Sully” Sullenberger, who heroically landed his powerless jet on the Hudson River and saved everyone on board. But unlike the clean-cut Sully, Denzel’s character is an alcoholic who uses cocaine to keep him alert enough to fly. But because he is also an exceptionally talented flyer, he is able to pilot his damaged aircraft to a controlled crash landing and saves almost everyone on board.

If you’ve ever known an alcoholic or drug addict, watching Flight was all the more realistic, because you know that it is tough to overcome those demons, and backsliding occurs frequently in real life as it did in the film. But eventually goodness triumphs in the film, although at a great cost to the main character. Likewise in Lincoln, the goal of passing the 13th Amendment that permanently outlawed slavery in this country was achieved. Goodness triumphed, but the main character was lost shortly after his goal was achieved. But we all knew that was going to happen. Maybe that’s why the film was a bit of a disappointment; we all knew how it had to end.

I’ve also been trying to finish a book that I picked up at the library throughout all of this movie watching. I mentioned it in a previous post, Smuggler Nation by Peter Andreas. The book details the influence of smuggling on our country from Colonial times through the present. It’s a very interesting book that reveals a side of history we seem to have little desire to confront, but has had an enormous impact on us all. I usually race through most books, but lately I find this one difficult to pick up, even though I’m almost finished with it. The first part of the book was entertaining and informative. I learned aspects of history that I didn’t really know before. But as the book touches on more current problems, it becomes more and more frustrating as I read about how our government’s reaction to smuggling has caused more problems, and escalated other problems to the point where things seem totally out of proportion.

Perhaps that was the problem that I had watching Lincoln. Observing the political process that was required to pass the amendment was a sickening experience. There’s an old saying that the two things you should never watch being made are laws and sausages. They’re both messy procedures.

In our nation’s effort to control drug smuggling, we first attacked the problem by focusing on the drug user, and increased criminal penalties as we outlawed the drugs. Then we tried to go after the smugglers. But since the desired drugs were now illegal, it became much more profitable to smuggle. Every time our country has success in slowing one source of smuggling, or one route used by smugglers, another took its place. The smugglers also gained more power and more wealth as a result, causing an upward spiral that continues to this day. We’ve become the world’s biggest jailer, and expended billions of dollars to stop the flow of drugs. It hasn’t worked.

We would be much better off if we completely decriminalized drugs. We could then divert the resources used to fight smuggling to the treatment of the drug addicts. It would be much cheaper than the amount we spend to imprison everyone involved. But our politicians are too weak and our process too messy for this to ever happen. As we were shown in Spielberg’s film, our political process was an ugly thing. It’s probably even worse now than it was in 1865. No one has the intestinal fortitude to stand up in Congress and say that they want to decriminalize drugs because most of their constituents are too uneducated to understand why this should be done, and the truth is that most of our politicians are too stupid to understand the overall concept as well. It’s much easier to say that a drug addict is a criminal than to admit that they have an illness that is treatable.

One problem is that smuggling creates a lot of wealth for those with the balls to get involved. Some of our nation’s major family fortunes were started by the proceeds from smuggling. Wealth buys votes, now as it did in the past. Lots of people are profiting from the legal efforts to stop smuggling. However, they would profit much less if smuggling were actually ended. That’s the other problem. Despite the fact that voters think of stopping smuggling as a desirable outcome, those involved in the process actually want it to continue. That’s because they are making profits from the process, not the end result.

It’s a problem in other areas as well. As I write this, the gun lobby is paying, in one form or another but usually within the boundaries of the law, for amendments to be added to unrelated legislation that will make the enforcement of any future gun control legislation to be more difficult, or even impossible. This is happening as polls show that the majority of Americans favor gun control legislation, especially in areas of background checks and limits to magazine capacity. Several states have already passed their own gun control laws, and federal action of some sort may even pass someday. But is it going to have the desired result? Probably not. The rich people are inciting the uninformed to resist, not because it is in the people’s best interest to have assault rifles and handguns with high capacity magazines, but because it will allow the rich people to gain even greater wealth. They will then retreat behind the fortified walls of their gated communities while the rest of us dodge bullets.

Personally, I’d like to have a machine gun. Something that could fire several hundred rounds per minute would be just fine. While we’re at it, I would also like an F/A-18 Super Hornet jet fighter, fully armed. After all, I have the constitutionally protected right to bear arms for my own personal protection, do I not? If having an extra 5 shots in the clip of my AR-15 is something that we should allow, why isn’t it possible for me to get my machine gun, or that jet? The fact is that someone wisely decided that it would be foolish for a civilian like me to have a fully armed military jet, or even a machine gun. In reality, I’m fine with those laws. I have no desire to get into a fire fight with my neighbors (although the idiot next door has tempted me at times) or to patrol the skies for enemy insurgents (I quit flying over 30 years ago, remember?). Those are actually reasonable constraints on my personal freedom designed for everyone’s safety. Just like having functional breaks on the car I drive is a reasonable law. Passing reasonable gun control laws is in the best interest of everyone, except the merchants of death that profit from gun sales. They’ll find other ways to make more money, they always do. As for me, maybe I’ll feel safe enough to go see a movie in a theater again. After all, I really like movies.

Prince William's Job

There are rumors going around that Britain’s Prince William may soon be out of a job. No not that job, the UK is not doing away with its monarchy and young William remains second in line for the throne, after his father and grandmother, the Queen. However, William’s present job as a pilot for the Royal Air Force’s search-and-rescue helicopter service is supposedly being farmed out to an American-based private company in an effort to save the government some money. I’m not sure I like the idea.

I’m not a die hard Anglophile and I don’t really care one way or another about the British Royal Family. Prince William seems to be a very nice young man, with a pretty wife and a child on the way. As far as employment opportunities, I think it’s safe to say that the Prince will have enough on his plate to keep him busy for the rest of his life. There is also little chance of his family going hungry any time soon. What bothers me is privatizing a service such as a helicopter search-and-rescue group. You see there really are jobs that are best performed by a government, where profitability is not the chief concern.

Suppose you are fortunate enough to be boating off the coast of England when a nasty storm comes up and capsizes your little craft. A private company is tasked with rescuing your incompetent (or just unlucky) butt from the frigid water, but determines that the storm is too dangerous to fly into because the corporate office has estimated that there is a significant enough probability that they might lose a multimillion-dollar aircraft. Your sorry ass just isn’t worth the risk. But suppose you then radio the rescue pilot and inform him that your sailing companion that day is none other than Donald Trump, who has guaranteed that he will cover any potential financial loss to the company. Is the rescue then attempted on that basis? Doesn’t really seem right does it?

“Privatization” is a popular buzzword these days and the concept is seen as a viable alternative to the ever-increasing size of government. There are many areas that the government could extract itself from and save the taxpayers some money, but there are other areas where it really isn’t a good idea. Imagine that you’ve taken a temporary assignment in a foreign country with a history of political unrest. One day a protest group devolves into a riotous mob and one of the targets of their hatred du jour is any American (including you). You flee as the angry mob approaches, running down an alley where you trip and fall, tearing your jeans and scraping your knees. Turning the corner, you sprint toward the safety of the American Embassy, which is just a block away. You are tattered and bloody, but safety is just steps away.

When you arrive at the gate, who is it that you want to be standing guard? I say please let me see a U.S. Marine, well-trained, well-equipped, and steeped in a tradition of duty and service to his country; a protector to whom the concept of being a fellow American really means something. What if instead you found a private security guard that had witnessed the approach of the dangerous looking mob behind you and decided that the corporation that he works for really didn’t pay him enough to take that risk, and locked you out? I don’t know about you, but I really don’t like the idea of trusting my life to a rent-a-cop.

Let’s say you don’t boat and don’t travel. You may think my examples are a bit too far-fetched to matter to a hard-working, self-reliant type like you. Well then how about if your granny (or any sweet little old lady that you know) lives in a city where much of its public services have been privatized and farmed out to for-profit companies. Now Granny gets a bit confused these days, and she forgets to pay the invoice for her monthly fire-protection plan that she received from Fire Protection Company, Inc. Of course, the worst thing happens and Granny’s scented candle burns down and catches the curtains on fire. In moments, the house is engulfed in a fiery conflagration, and dear sweet Granny is trapped inside. She is lucid enough to call for help (hopefully the 9-1-1 service wasn’t eliminated in the budget cuts), and the fire truck arrives in moments to rescue the poor thing. But wait, they receive a call from the home office. Seems the resident of that particular house isn’t paid up. Sorry lady, no rescue today. We gotta let it burn. Oh, by the way, we gotta let you burn, too. Think this an impossible example? It’s happened here in the good old U.S.A. (well, they haven’t let a granny burn to death…yet).

Governments have grown large and increasingly expensive, which is a problem. Yet there remain many areas that are better serviced by a tax-funded public organization than a privately-funded corporation. Being a “libertarian” doesn’t mean that you love freedom more than anyone else does, it just means that you’ve got some different ideas about how to run things that haven’t gained popularity, and perhaps shouldn’t. There are those people in our society, usually with wealth and power, who would have us believe that they have better solutions to the needs of our people than our more traditional ones. Personally, I’m all for new ideas or new technologies that can save us money. But let’s make sure that we think very carefully before we adopt any of those ideas. Oh by the way, our British cousins just may want to rethink getting rid of William’s current job, too. The RAF is probably better suited to saving lives than a company with a focus on the bottom line.

A Sea King helicopter

(Prince William's current ride)

        

     

If You Build It, They Will Come...Or Will They?

My last post concerned the reuse of an old factory facility in my hometown of North Canton, Ohio, the Hoover Company, and how the developers were taking advantage of historic tax credits to make a good deal even more lucrative for them. Some of the comments I received on Facebook suggested that I was against the entire concept of the reuse project. I’m not against it at all; I favor doing creative things with old buildings. I am against our government handing out free money to millionaires while ignoring those Americans who work hard and ask little from their state.

There’s another creative reuse plan for an old factory in the news now. It’s the former Hercules Engine factory, located just south of Downtown Canton. A group of developers that includes a member of the Timken family have purchased the property and want to remake the complex into a mixed-use facility. According to their website, the “…mixed use project will include residential rental apartments, class A office space, retail and restaurant space and a new Convention and Event Center. This brand new state of the art Convention and Event Center will, among other things, serve as the new home for the three primary events of the Pro Football Hall of Fame Festival (the enshrinement dinner, the gameday luncheon and the fashion show).” You may think I’m some sort of anti-progress Luddite, but I’m not a big fan of this project. Read on and I’ll tell you why.

The project is in the news because the Canton City Council voted to provide a $3 million loan for the first phase of the project, which will turn 125,000 square feet of former factory space into 95 market rate residential apartments. There was one council member voting “no” on the loan. After looking over the plans, she asked the question that no one wanted to hear: “Who would want to live there?” Such honesty in a politician should be recognized and rewarded. Oh, by the way, the project will qualify for millions of dollars in historic tax credits from both state and federal government, just like the Hoover Company project.

Getting people with money and good jobs to move back into the urban core is the Holy Grail for many cities, and Canton has been trying to do this for decades. Suburbanization has decimated cities. Most of them look like ghost towns on the weekends when the lawyers, bankers and government workers head home to the suburbs. Back in the mid-1980’s, I had an office job in Downtown Canton as a commercial real estate appraiser. I enjoyed working downtown; we wore suits and neckties to work, had lunch at Bender’s, the Mergus Restaurant or the Mayfair Tavern, and took a walk around town after lunch when weather permitted. We were located downtown because it was close to the county office buildings that included the real estate property records (land and building information, sales information, tax maps, transfer records, etc.) that were essential to our operation. The county government itself was an important client that needed appraisals for things like sewer easements and tax complaints. A few of us would come in to work Saturday mornings, when we wouldn’t be interrupted by telephones and clients, and could crank out some reports.

Coming to work on a Saturday was an almost surreal experience. Unlike weekdays, there was hardly any traffic, restaurants were closed for lunch, and parking was plentiful. I parked in one of the city’s newest parking decks that was located a block away from my office and connected to a new hotel and adjacent office building by enclosed skywalks. If it was raining, I could walk across the street in the protection of the skywalks, through the hotel and into the office tower, then exit the building and quickly cross the street to my office building, avoiding most of the rain. But it was much easier and quicker just to go outside and take the sidewalks. One Saturday, as I walked down the steps in the parking garage (there was no need to take the elevator since I was so close to street level because the deck was almost empty) I encountered a homeless man sleeping across the bottom of one of the steps. I carefully and quietly stepped over him and continued on my way. I did stop at the parking attendant’s booth and informed the woman working there of the unusual situation. She was flabbergasted and asked me what she should do. I pointed through the parking deck toward City Hall, adjacent to the west and said, “The police station is right there. I’d call them.” Then I crossed the street to my office and got some work done.

We didn’t stay downtown much longer, but it wasn’t really because of homeless people bothering us on weekends. Some of the data we needed was made available on computer disks, and the rest could be retrieved by one worker that we sent after it as required. Later, all of the data was available online, and continuously updated. Having a suburban office was closer to home, had an attached parking lot, and was more convenient to everything we needed, so we moved. Likewise, many banking operations were moved to suburban locations. Even law firms moved out of the city because they could be closer to their clients as well as a greater variety of restaurants and services. The lawyers could drive in to their infrequent trips to the courthouse when necessary. The process of suburbanization was started by the automobile, aided by the computer, and completed by the vast amount of information available on the Internet.

So cities must come up with creative ideas to get people to come back downtown. There are cities such as New York, Boston, Chicago and others that don’t have this problem, although they do face problems. People are willing to live downtown because they usually work there, plus there is a wide range of services readily available and there are things to do at night like professional sports teams, art galleries, theaters, restaurants and night clubs. Small cities like Canton haven’t really had such a complete array of choices for decades.

I heard a story once, I don’t know if it’s accurate and have since forgotten most of the details, but it sounds right so I’ll tell it here. Back in the ‘80’s Canton managed to get a minor league baseball team to locate here. They just had to build a ballpark. The man hired to aid economic development for the city proposed that the city acquire and assemble a group of unused or barely used properties near the city’s core and raze them in order to build the facility. It would bring people downtown for night games, allowing for development of restaurants and bars to service the fans before and after the games. This would hopefully build upon itself. More nightlife would lead to more interest in living downtown leading to additional support facilities and additional attractions: an upward spiral. I think it was a great idea.

Instead, the city chose to build at the south edge of town, in a flood plain at the end of a grungy industrial street. The facility would have decent access to the nearby interstate highway as well as on-site parking, but wouldn’t be within walking distance of downtown or any pre- or post-game eating or drinking establishments. It worked well for a short time, but the novelty soon wore off, and the finances of the team suffered. The city’s economic development director realized that the city government didn’t have a clue how to help themselves and soon departed for better opportunities. Eventually, Canton lost the franchise to nearby Akron. Guess what they did. They razed a group of properties and built a ballpark close to the city core. Bars and restaurants located nearby to serve the sports fans. It seems to be working pretty well for them.

Canton has been trying to lure people back downtown for years. An energetic young developer bought and renovated several old office/retail buildings near the square and managed to find some tenants to fill them. Happy with his initial success, he took over a project to renovate the historic Hotel Onesto into market rate apartments. The building is an architectural gem and retained much of its interior beauty, plus had a newer parking deck attached. The city’s mayor, a one-time high school cheerleader turned politician, gushed about how wonderful the project would be and said that she was ready to move-in as soon as they were ready to have her. The project still languishes unfinished long after completion was scheduled and no one lives there yet.

Several new restaurants have been opened nearby, and an “arts district” was created. Most of the restaurants received good reviews and were popular, at least for a little while. Some have closed, others reopened under new owners, but for the most part, none of them have had real long-term success. Lack of convenient nearby parking has been a problem. Our weather isn’t that great most of the time, and most diners would prefer to park in an adjacent well-lit parking lot than hope to find a convenient spot on the street. As yet there are no nearby residents who could both walk to the restaurant and afford to eat there when they arrived. Urban blight and its associated problems remain a significant problem that most cities cannot overcome.

Which brings us back to the Hercules project, and the perceptive question posed by the skeptical councilwoman: just who would want to live there? Of course the developers have market studies to assure any skeptic that market demand exists for the project and folks will be lining up to rent the cool urban loft-style apartments as soon as they are available. During my career in real estate, I’ve read dozens of such reports. Most of them are not worth the paper they are printed on except to the author who gets to charge dearly for this collection of “insightful analysis”. Figures lie and liars figure. Almost any MBA student could assemble data that seems to support the desired conclusion. I’m pretty sure I could still do it myself, but since I don’t like to mislead people, I don’t think I would. The problem is that market rate apartments must effectively compete with other apartments in the market.

Young professionals, the most desirable group of tenants, seek someplace to live that is convenient to work as well as amenities such as restaurants, dry cleaners, supermarkets, nightclubs and restaurants. In fact, these things are desired by almost all potential renter groups except older empty nesters (another important demographic), who might be less concerned about an exciting nightlife but more interested in other cultural amenities. There are also far fewer employment opportunities in downtown areas these days, so most potential tenants are already working in the suburbs. This project is located far enough away from all existing amenities that most would prefer the safety of driving to the prospect of a long walk through what still is considered to be a “bad” end of town. That negates the one thing that makes downtown living more desirable than suburban living: the prospect of a safe and easy walk to your destination. The most desirable alternative for most renters are nice suburban apartments, which continue to be constructed without fanfare or any government assistance (other than our current tax laws, which are a major help to all apartment developers). The financing for the Hercules project is falling into place. They probably will build it, but will anybody care?

At one point of time in its history, the Hercules factory provided 5,800 good-paying industrial jobs right in the heart of Canton. If renovation plans proposed by the developers succeed fully, there will be 95 families (of one or two each) living on the site, plus an additional group of low-paying support jobs for the convention center, hotel, and restaurant. There are also plans for more “Class A Office Space” at the site that would provide more jobs, but the demand for downtown office space has been falling for years, and the current state of technology offers little hope for near-term improvement in this area. Thanks to computers, even the federal government now allows some people to work from home, mirroring trends in the private sector.

So is there something better that could be done with an old industrial facility like the Hercules plant? Here’s an interesting idea: the best use for an old industrial plant is for an alternative industrial use. Space could be made available for start-up companies at little or no expense in hopes that some of them will succeed and bring jobs back to the city. If they needed to grow, a contract would require the city to help them find or build larger space within the city limits. How about if we paid unemployed industrial workers three years of unemployment benefits upfront under the condition that they use the money to form manufacturing cooperatives that would occupy space and bring jobs back to the city? With new jobs comes increased income tax revenue for the city. This money must be used to address the problems of urban decay.

More people would be willing to live in the city if there were more employment opportunities and they weren’t worried about crime. There would be less crime if there were more jobs. The workforce would be improved if there were improvements in education, and there would also be less crime committed by better-educated young people facing more opportunities. The problem is that all of these solutions require money, and that money comes from our taxes. Right now, we are using tax dollars to pay millionaire real estate developers to renovate facilities that either don’t require additional economic incentive (the Hoover Company project) or to provide benefits for projects with dubious outcomes (the Hercules project). I think that these tax dollars should be used in other ways to solve the underlying core problems that are at the heart of our cities’ problems, and provide for economic growth that will benefit everyone. Right now, we are using the tax dollars for the benefit of the real estate developers in hopes of some of it trickling down to the rest of us. So far, that hasn’t worked out very well at all.

View of former Hercules Engine factory, Canton, Ohio

 
 

Significant Architecture...or Making a Good Deal Better?

Yet another news item from my local paper caught my attention yesterday, and this one is literally right up the street. The former world headquarters of the Hoover Company, located right on the square in North Canton, Ohio, has petitioned to be listed on the National Register of Historic Places. The former factory has been shut down for several years, and all of the manufacturing that once took place there now happens in places like Mexico and China. Only the buildings remains, and they were purchased by a group of investors who wish to transform the complex into a multiple use facility. Now you may think that I would be all for this sort of creative reuse thing, and generally speaking I usually do favor such projects. But this time, I’ve got some problems with it.

If you don’t know, The Hoover Company once made leather harnesses at its factory in the center of the little village of New Berlin, just up the road from Canton. In the early years of the 20th century, as the automobile began to replace the horse, “Boss” Hoover bought the patent for a suction sweeper device that had been invented and produced by a local custodial worker. New Berlin changed its name to North Canton during World War I, and Hoover abandoned the harness industry in favor of vacuum cleaners, and built a highly successful business around it. For years the business flourished and the Hoover family became benefactors to the surrounding city. Eventually the business was sold to outside interests, and finally, like many American manufacturers, the jobs were sent overseas where wages are lower and environmental concerns more lax.

Now when I think of buildings listed on the National Register, I think of places steeped in history, like Independence Hall in Philadelphia, or architectural gems like the Chrysler Building in New York City, both of which are buildings worthy of preservation. The Hoover Company buildings are a group of structures of various styles, none of which are particularly attractive or even interesting. The part of the buildings that face the town square are very basic mill type factory construction, and were abandoned for production purposes by the Hoover Company long before they stopped making vacuums at the plant because the space was old and obsolete. The developer has shown sketches that show the front façade being transformed into an almost unrecognizable group of shops, restaurants and apartments. The rear of the building, once very good quality manufacturing space, has already been converted to office and classroom space. The former world headquarters office building sits mostly unused, because it cannot easily be converted to office space that would be desired by the market. So much for saving the buildings for the sake of historic preservation.

In truth, the buildings don’t even really belong in the center of the city. Ask any urban planner and they would tell you that factories should be located well away from residential areas and retail centers. But the city grew around the factory, and they both benefited, so there they sit. If the site were a vacant piece of land, it would be desirable for many uses, but not a factory. In fact, if the site were vacant land, it would be worth far more than what the current owners paid for it in 2008 (with all of the buildings on it). You may think that I’m crazy for saying such a thing. It does seem to defy rationality, but trust me; in this case I know what I’m talking about. I’ll get back to that issue in a minute.

The mayor sent a letter of support along with the application. He justified his support of the site’s historical status by citing the iconic smokestack and how the building is North Canton’s most recognizable landmark. Of course, it’s the biggest building in the city, and does sit right in the middle, making it rather difficult to overlook. He also included little tidbits of information like the fact that in England vacuuming the carpet is referred to “hoovering” the carpet, which lends further support to the company’s historical significance. Here in North Canton, former home of the Hoover Company, we refer to vacuuming the carpet as “vacuuming the carpet.” Guess we’re not as clever as those Brits.

So why are these real estate developers really so keen on getting this complex on the National Register? Have you guessed yet? Let’s see, what is the one thing that motivates real estate developers above all else? If you said “creating a lasting legacy through construction of architecturally significant structures” then you’re a bit more idealistic than is safe in today’s society. The answer is simple: money. Being on the register doesn’t prevent them from changing the looks of the building, but it does allow them to qualify for a tax credit equal to 20% of the rehabilitation costs. There’s also a state tax credit available. Now rehabilitation costs are already an allowable tax deduction. They are a normal cost of doing business. But tax credits are applied to all income tax owed. They come right off of the bottom line and are way better than simple tax deductions.

So what we are doing here is allowing millionaire real estate developers to pay less taxes, right after we increased taxes on wealthier Americans. This was done because we needed more revenue to cover our nation’s growing expenses. It was a smart thing to do, and we have witnessed improving economic conditions since the new tax rates took effect. Giving this group of people lower taxes also decreases their cost of doing business and gives them an unfair advantage in the market for commercial space. Other millionaire real estate developers that don’t have this advantage have to charge more for people to rent space from them. Doesn’t really seem fair to me.

Let’s get back to the question of the underlying land. Right up Main Street from the Hoover Company, there used to be a delightful little root beer stand. It was painted bright orange and had cute carhops that delivered delicious food and sweet root beer floats to diners in their cars. It was a much more pleasing slice of Americana than the ugly factory down the street. But several years ago, when drug stores were transforming the way that they do business, one of them decided that the corner where the root beer stand sat would make a great location for their drug store. They bought the site, tore down the root beer stand, and then built a drug store that looked just like a hundred other similar ones. The site was worth more as vacant land than it was as a root beer stand. In a side note, a little while later the drug store chain realized that they had over-expanded their operations, and filed for bankruptcy. The drug store was abandoned, then was sublet for use as a dollar store, which pays much lower rent.

So if the land is worth more without the factory buildings, why don’t they just tear them down and start over, like they did with the root beer stand? For one thing, it is very expensive to tear down old factories. They’re full of things like asbestos, which must be disposed of properly (and expensively). Also, when you tear down a factory building, environmental tests must be performed on the site, and any problems must be remedied before anything can be built on the site. So any problems caused by things that had seeped into the ground (tanning solutions, PCBs, oil, grease, solvents, etc.) over the many decades that the site had been used for industrial purposes would have to dug out, properly disposed of, and replaced. That’s really expensive. So instead we “creatively reuse” the site, and keep its secrets buried in place. We creatively reward the entrepreneurs that undertake the task by allowing them to buy the property for very little money, then give them tax money in forms of grants, low interest loans, and other incentives, and finish it all off with huge tax credits. Is this any way to do business, or run a government for that matter?

At this point you’re probably guessing that I’m some kind of Marxist pinko, out to destroy big business and the American way. I’m not. The fact is we need real estate developers because we all need someplace to live and shop. Houses and apartments are better places than caves, and it’s much easier to gather food at the supermarket than get your buddies together and hunt down a buffalo. I’ve known the local partner in the Hoover deal most of my life. He’s not a bad man. I’ve had dinner with him and I stopped to talk with him only a few weeks ago. He thinks of developing real estate as something fun to do, and it’s important to him that he’s still having fun. I’ve also spoken with the California partner in the deal and he seemed very personable as well. Someone has to take the risk, and these guys are willing to do it. Risk must also be rewarded. But we don’t need to overcompensate. A nice piece of pie is just fine; we don’t need to cover it with ice cream, add a dollop of whipped cream, and then plop a big juicy cherry on top.

So did anything historically significant really happen at the Hoover Company site that warrants its inclusion on the National Register of Historic Places? The vacuum cleaner wasn’t invented there. It was just another factory. True, they did produce desirable, good-quality products, some of which continue to function as they were designed to more than fifty years after they were made. That would be newsworthy these days, but the history of our country is full of companies that did the same thing. But this really doesn’t have anything to do with history, unless you mean the history of greedy people taking advantage of a system that they designed so they could have a bigger piece of the pie than anyone else gets, all while claiming to be protectors of our great heritage. And that’s not really newsworthy because greed happens all of the time and we are being lied to every day. There are far better things that we could be doing with our tax dollars than using them to put a cherry on the top of an already lucrative real estate deal.      

   The former Hoover Company plant, located on the square in North Canton, Ohio

Good Economic News and Reading the Fine Print

Good news! A report in the paper a few days ago said that all of the wealth that was lost when the financial markets collapsed during the Great Recession a few years back has now been recovered. This occurred thanks to a large increase in the stock market, and to a lesser extent by a more modest increase in housing prices. Before you go hog wild and start investing in the market, or even engaging in a bit more consumer spending, please read the fine print. Most of the gain has come from rising stock prices. The wealthiest 10% of American households own approximately 80% of all stock. The rich are again getting richer. Yes, the wealth has “returned,” unfortunately, it went to fewer people than it came from. Increased wealth from the slight rise in housing prices (far more Americans have their primary wealth tied up in their homes) was much less, but still positive.

Here’s what will happen (if I had some extra money, I’d wager it all on this). The increase in stock market values will lure some of the marginal investors, the little guys, back into the stock market in order to share in the gains. It would be foolish to miss out on this rising tide of wealth after all. When enough of them have invested, the more savvy investors will start selling short, in essence betting that the market will go down. Then it will go down. They’re called “market corrections” but they really just divert money into the “correct” pockets (hint: it’s not your pocket). Those who have sold short will again see their wealth increase, while the little guys will again lose wealth. But the wealth didn’t really disappear; it just relocated to the bank accounts of those people who are wealthy enough to know how to game the system.

I first stated learning about our nation’s stock market at an early age, when I was taught that it was a mechanism that allows a large group of small investors to own shares of large corporations. We choose to invest in companies that have a bright future, so that our wealth can increase as the company profits from its good business practices and decisions. It sounded like a fine idea to me. I owned stock in a local manufacturer long before I was licensed to drive a car. Its stock price (mostly) rose steadily, and they sent me a little dividend check every three months.

It’s odd how as we get older, we begin to get a fuller picture of how things really work. When I was in graduate school, I was actively engaged in the full-time study of financial markets in pursuit of an advanced degree. In order to keep current on financial affairs I subscribed to The Wall Street Journal and looked it over daily for new nuggets of information that would further my education. One day I was reading the story of a man who had attempted to “corner the market” in potato futures. His plot was discovered and he was banned for life from trading in the commodities market. When asked for his reaction, it was reported that he shrugged it off, responding, “It doesn’t matter. We’re all just gamblers. I’ll find somewhere else to gamble.” He wasn’t an investor in his nation’s future but instead just played his hunches for profit, even if it required breaking the law.

That was an eye opening moment for me, but it didn’t quite open them wide enough. After I graduated, I wanted to get a job in the financial industry, so I applied at one of the largest and most prestigious brokerage houses. I was interviewed and tested. Turns out that while I was technically well versed in the subject, I wasn’t considered to be a top-notch salesman, which is the primary requirement of the job. I’m way too honest with people to be an effective salesman. A friend of a friend that I knew from college did get a job with the same firm. He had graduated with mediocre grades studying marketing, which is considered the lowest academic group on the business school totem pole. I was in the top ten-percent of my class studying finance (a more challenging discipline). I heard that he did very well in his career because he could sell.

I had an earlier experience in college that also proved eye opening. The first history class I took included the happenings in the Roman Empire under the first emperors. The information on debauchery and excessive over-indulgence was far more than I had ever been taught by our sanitized textbooks and old movies. I love history, especially when you can explore it in more depth and get to the root of issues. I was at my local library the other day and saw a book entitled Smuggler Nation that was written by a history professor at Brown University, so I took a chance and picked it up. It has been an eye opening experience as well.

I’ll probably be writing more about this book later, but for now I can say that illegal smuggling is heavily intertwined with our nation’s history. The Boston Tea Party is considered a primary seed of our nation’s quest for independence. But it had more to do with the population’s preference for lower cost tea smuggled into the country through the Dutch than for a desire for self-determination. The American Revolution was financed from profits made by smugglers. John Hancock is known for his prominent first signature on the Declaration of Independence, but the Hancock family fortune was derived in a large part from the profits made by smuggling. Another signer of the Declaration was Robert Morris, known to history as the “Financier of the Revolution.” Care to guess where his fortune originated? If you guessed “smuggling” then you’re catching on. In later years, Morris was financially wiped out by unwise land speculation and spent some time in debtor’s prison. Sometimes you’re lucky, other times, not so much.

During the War of 1812 (which has its primary roots in illegal trade) it might have been possible for the U.S. to conquer all of Canada because the defending British troops there were cut off from supplies and on the brink of starvation. They were saved by profit-mined Yankee farmers (who were also smugglers) when they drove herds of cattle north across the Canadian border and received three times the price that they could have gotten locally. It always pays to read the fine print, especially history’s fine print.

In other news, the number of Americans seeking unemployment aid fell again, driving the four-week average down to its lowest level in five years. We now have a rising stock market and increasing job growth. This follows closely on the heels of a tax increase on our nation’s highest wage earners. This is exactly opposite of the prediction made during the most recent election by those who pushed for a tax cut for wealthy “job creators.” Wouldn’t it be nice if voters could possibly retain this information for at least four years?

However, I don’t really see that much improvement in our local economy, especially among lower wage earners. This group of people also had a “tax increase” which was actually a result of a temporary cut in social security taxes that was allowed to expire at he beginning of the year. The result was that the group of people who could least afford to pay more taxes saw their take-home pay decline. Retailers that depend on this group of consumers, such as Wal-Mart and Family Dollar Stores, forecast that their sales would suffer. Despite this prediction, Wal-Mart stock has increased since the beginning of the year, while Family Dollar’s stock has actually fallen slightly.

Another recent story in the financial news details the return of American manufacturing jobs. Companies including General Electric, Hewlett-Packard, and Apple are relocating some of their overseas manufacturing back to the U.S. because of huge savings in transportation and logistics costs, combined with high productivity of American workers. But exploring the fine print tells us that the items being manufactured cater to the high end of the market. Of course, that’s where all of the money is. Our products designed to sell to our nation’s poorer workers are still manufactured overseas by even poorer workers.

Do yourself a favor and don’t stop learning. Dig deeper into the roots of stories. Explore historical contexts and above all, read the fine print.

Robert Morris, known as the "Financier of the Revolution,"

wealthy smuggler and unwise land speculator

 




 
         

Multitasking, Smart Phones...and Dumber People

My car magazine arrived in my mailbox yesterday. It was late (usually it shows up at the end of the month) and I was beginning to worry that it wouldn’t come at all. Magazines and newspapers seem to be on the verge of extinction, another victim of our instantaneous world of high technology. A glossy car magazine can’t embed a video of a new automobile racing around the track or carving up curves on a scenic mountain road like their online versions do now. We seem to demand that level of technology these days. We don’t need to read a book if we can see the movie. We can watch news on TV and get any relevant information in a matter of seconds instead of having to read about what someone else observed and get a more complete back story. We don’t need imagination to play games because today’s video game systems render action in real time, full color, high definition, and 3-D action. Watching a car go fast down the road has to be superior to just reading about it, right?

I don’t think it is right at all. If an article is well written, I actually get to experience more of the feeling that driving the car imparts than I would just watching it drive by in a video. An insightful journalist has skills that a mere reporter of an event lacks. It is an important distinction that we are all too willing to toss aside as we rush to implement new features available on our smart phones and electronic tablets. It is also subtracting an important element from the equation: our ability to think and reason, and to exercise our imagination. There is also a simpler reason that I like a nice lightweight glossy magazine over a laptop computer, smart phone, or an electronic tablet: it’s much easier to take with you into the bathroom to read while attending to other business. I think of it as the original version of multitasking, and perhaps the only one worth attempting.

There were several things I noticed as I glanced through this month’s magazine. First of all, it seemed pretty slim. Advertising revenues are what make magazines profitable, and this one has far fewer ads for cars than it used to. In fact, I found something amazing as I leafed through this issue: there were no ads from American (Ford, GM, or Chrysler) car companies. This is a magazine with headquarters near Detroit, Michigan. In fairness, there was an ad from Honda, which despite being a Japanese-owned company, manufactures most of the cars that they sell in the U.S. here in Ohio. I also found out that two popular small cars sold by Ford and Chrysler's Fiat brand are actually assembled in Mexico. So much for “Buy American.”

The second thing in my magazine that interested me was an article about the new LED headlamps that will be used on the next generation S-Class Mercedes-Benz. These headlamps are a technological tour de force, incorporating daytime driving lights, turn indicators, fog lights, high and low beam lights, and cornering illumination in one unit, all while using much less energy than other types of lighting through the exclusive use of light emitting diodes. They also include movable masks, that are computer controlled to avoid blinding the drivers of oncoming vehicles, as well as vehicles being overtaken on the road. The article concluded by saying that vehicles bound for the U.S. market will not have the full range of features because our regulations will not permit them.

For many years, from the 1940’s through the 1980’s, cars on American roads were required by law to use seven inch round sealed beam headlamps. In other parts of the world, lighting was much more varied, and better. In Europe a Mercedes roadster like the one my brother drove was equipped with a stylish unit that incorporated all lighting needs in a single unit on each side of the car. In America, these cars had separated round sealed beam headlights for high and low beams, as well as separate fog lights. I had a Mercedes sedan from 1975 through 1983, and it used four round headlamps that were inserted into rectangular spaces on the front of the car. It also had two rectangular fog lights that hung under the front bumper, and were constantly being damaged by parking lot blocks and other road hazards. In Europe, the rectangular spaces on the front of a similar model car held all lighting, including high and low beams, and fog lights. It was a much more stylish, as well as a much safer solution. In Europe, studies said that their new lighting technology was safer, while studies in this country said that sealed beam headlights were safer, although the truth is probably between these extremes. Likely it depends on who funded the studies in the first place. In any event, U.S. laws have since been amended to permit greater flexibility in lighting design, but we still lag behind the learning curve by not permitting the newest designs, such as Mercedes’ new masked LED lights.

There are many people that decry our country’s extensive and sometimes inane system of over-regulation, claiming that if we could eliminate most of them, our economy would flourish. The free market would be used to determine what is best for everybody. The problem is that the free market wouldn’t stop someone from dumping poison into the air or water because it’s much less expensive than following EPA regulations. The free market allows far too much unscrupulous behavior before it theoretically adjusts to prevent unwanted behavior.

Where does the answer lie? It would be helpful to streamline our regulatory system and eliminate rules that don’t provide benefits, especially in terms of health and safety. But it isn’t really over-regulation by our government that results in economic inefficiency. It is time to use our imagination and our powers of reasoning. Start by enriching yourself by reading some books, then let’s use our empowered brains to elect representatives that will truly represent our interests, not the interests of their sponsoring corporations and special interest groups. In terms that free-market proponents will understand, we need to eliminate the economic incentive that causes our law makers to vote for those things that enrich the small portion of our wealthiest citizens while ignoring benefits for the entire population. Our politicians tell us that they must be masters of multi-tasking, and consider what is best for everyone, but these days it seems that all of their efforts go to protect whatever lobbying group is providing them with the most resources. We need some serious changes to laws regarding campaign financing and lobbying.

Recent behavioral studies have reported several interesting findings. Multitasking really means that you are doing two things at once and both of them poorly. Our smart phones are hindering us from making relevant observations about what is really happening in the world around us. In other words, smart phones are making us dumber. Exercising your brain is the best thing you can do for your health. Let’s all start trying to really think again. We can all imagine a better world than we live in now.

New Mercedes-Benz headlamp

Question: If a person from 1950 were to suddenly appear before you today, what would be the most difficult aspect of modern life to explain?

Answer: I carry in my pocket a device which allows me to instantaneously communicate anywhere in the world, and also offers access to the totality of mankind's knowledge. I use it to view pictures of cute kittens and puppies, and to get into arguments with strangers.