Responding to External Reality

28 thoughts on “Responding to External Reality”

  1. Turned 60 a few months ago. Pretty darn good health. Some dough saved, no debts. Most importantly, not many huge needs or desires. Do not want or need a Rolex. Do not want or need to stay one step ahead of the latest Foodie Craze, which will inevitably soon change anyhow.

    Native Californian, in Orange County now, but the place is much different than what I grew up in. Obviously. 2018 population running on 1970s infrastructure. The Cost/Benefit just isn’t there anymore. Too expensive for what you get.

    Texas? I tire of the binary choice. Either California or…….Texas? Seriously? Someone mentioned in the previous comments that there are plenty of decent places out there. Trade-offs for sure, but it’s not ALL sucky once you get past Needles.

    If you absolutely, positively MUST live in San Francisco – well, knock yourself out. If I was half my age, maybe. Now? I just would rather not deal with the aggravation that goes with any Alpha-Class city.

    Right now? Plan is to get a decent pick-up and a +/-20-foot trailer. That’s all you really need when you think about it…..a comfortable place to sleep, eat, and clean-up. With the internet, the decision becomes much more of a no-brainer than even 20 or 30 years ago. North America is a big place. I’ve seen a fair amount – time to see the rest, while I can. Maybe scoot off to see a few places off the continent as well.

    1. “North America is a big place.”

      “That’s all you really need when you think about it…..a comfortable place to sleep, eat, and clean-up. ”


  2. While I understand what you are saying, and there is wisdom to it, it perfectly encapsulates my view of the trend in society. Generation Greed was followed by Generation Apathy — late Boomer and Gen Xers.

    “We’re screwed anyway, so let’s just worry about ourselves and not the situation at large. Can’t do anything about it anyway.”

    I suspect that view may be regretted after Generation Greed bankrupts the government, and we end up facing poverty, ill health and early death in old age.

    1. So… Let’s say you were living in the Soviet Union back in 1989-ish just before all of Russia’s institutions dissolved and the economy collapsed. Would it have been a good use of people’s time and energy to go to city council meetings to try and bring about structural change?

      Bosnians in 1992 before the war broke out?

      How about Venezuelans circa 2010 before that country melted down?

      Syria in 2011?

      The more effective plan for individuals is to understand the large scale nature of a situation and get ahead of the curve.

      And yes, the vibe of my comments here implies a larger set of structural shifts underway that make issues like rent control and displacement seem quaint. Time will tell…

      1. When I complain about the economic, fiscal, family and political consequences of decisions by Generation Greed, one response I get is don’t worry about it. Global warming will make the things I’m concerned about seem insignificant.

        1. I’ll have to blog about this to give a proper response. Stay tuned.

          I have no idea what exactly is coming. But I have a sense of the broad outlines. There’s entirely too much debt and structural fragility built in to all our institutions: household, enterprise, and government. Things are too precariously leveraged against other things that are also precariously leveraged. People assume that America is different. We were. We’re not anymore.

          I don’t anticipate the End-of-the-World. But when the dollar loses its status as the global reserve currency it might feel like the Zombie Apocalypse for a lot of people.

          Who manages to ride out these structural shifts better than most? People with minimal debt, people with skills (doctors, nurses, engineers) people who are young, healthy, mobile, beautiful, the stoic, the well connected, the ruthless. And mostly… the lucky.

  3. I think ownership of any housing without a mortgage bestows a greater degree of freedom and security. Yes, maintenance. Yes, taxes. Yes, natural disasters. But it’s a tremendous hedge against rising or falling property values, or loss of retirement assets. My wife and I have accelerated our mortgage considerably, and while that flies in the face of “conventional wisdom”, it is a form of “housing insurance”…we won’t lose it when our income and/or retirement assets drop.

    (I am writing this from a Midwestern point of view, where there is adequate fresh water, no measurable earthquake risk, small tornado risk, and no flood risk. Sure, we’re vulnerable in a SHTF total breakdown of social and utility systems, but so is everyone except you and the survivalists.)

      1. Okay… Generation Greed is a bit too pejorative. Yes, Boomers were born into an economy that was… booming. And they were given all manner of benefits curtesy of the GI Generation’s investments in public infrastructure, universities, etc. And the post war era was an unusually fertile time to be an American since the rest of the industrialized world had been bombed into dust. So yes, Boomers were lucky and pissed away that wealth decade after decade and are leaving a pile of debt behind for the rest of us to absorb. And by-the-way, the current reverse mortgage trend is one last way Boomers are borrowing from the future to keep themselves living comfortably until they drop – making sure their heirs will receive no inheritance. But on a day-to-day basis Boomers did what seemed like a good idea at the time rather than any coordinated effort to dismantle the national economy – although that was an unfortunate side effect.

        I see our current situation as part of a larger historical cycle. The Boomers behaved in a rational manner based on their place in the cycle – just as people back in the early part of the 20th century did. But decades of excesses and too much debt lead to the crash of 1929 and WWII. We’re about to experience the same kind of shift. The debt will be washed away along with old regulations (or lack thereof) as a new generation takes hold of the levers of power and reworks all our institutions.

        1. Perhaps. But when I was forced to come around to your point of view a decade ago, it was a sad day for me, and I’m still pissed off.

          Meanwhile, when will “a new generation take and hold the levers of power and rework all our institutions?” Have you noticed the ages of the leadership of the two major parties?

          At least it appears one prediction will come true — we will in fact get medical marijuana followed by legal assisted suicide in place of Social Security and Medicare, instead of nothing. But they’ll probably tax the hell out it.

          1. The “new generation” is not yet 40; 10 more years. GenXers (37-53) will get elected in the meantime as the older Boomers (now 72) leave the scene, but I’d wager for now it’ll mostly be later Boomers (those now 54-63) just because there are so many of us.

            One thing I’m a bit optimistic about: It may in fact be a late Boomer/GenX coalition that tries another generational fix of the big entitlements (Social Security and Medicare) but they will have to do immigration reform/path to citizenship for DREAMers/exclusion of formerly “illegal” non-citizens to pay for it. And maybe cannabis legalization/taxes as part of the deal too. But this would require the present Congressional fossilized leadership and hyper partisans to depart the scene, maybe a 50/50 bet?

            1. You nailed the demographic transition perfectly. The Don and Hillary Show will come to an end via the actuarial tables. Millennials will assume positions of power in earnest in twenty years. In between it will be younger Boomers and older GenX – although Millennials will be entering public life earlier and stronger than expected.

              The project for the next generation of American leaders will be managing involuntary contraction. There’s simply no pleasant way to do that. Big fun.

              One of the assumptions in your scenario is that immigrants will want to stay in the US and that more will continue to be attracted to our country. You have to at least entertain the possibility that an economic and political meltdown will make going elsewhere or staying home more attractive. More than a few of my friends – some foreign born, some native – are considering having one foot out the door. Just in case. You never know.

  4. My mother was like J.’s Maine Friend: she, too, found it hard dealing with the realities of life. I can recall one move I helped her make out of a small 2-bedroom unit in a duplex near beach-front. Her land-lady got tired of maintaining the building, and sold it to a young man who was going to renovate the duplex and re-sell it at the higher price point he was certain to get in that location. Mom knew she had to move, and yet I had to drag her out of her unit while the builders were literally working around her! Mother is with the ages now, and no longer presents “moving challenges” to her children. My own plan B details are vague at this point, but one thing’s for sure: I’m going to downsize. Therefore I’m not going to need – or be able to keep – quite as much stuff, and so I’ve become an active contributor to Goodwill, and the like. It’s easier to sift through stuff at moving time if you’ve been doing it all along.

  5. I feel like I’ve experienced all sides of the crazy California market:
    – Owner move-in evicted out of a place in the Mission in the 90s. I landed in a bad roommate situation that I felt I couldn’t escape because rents were rising.
    – Had the most amazing subsidized student housing on the Presidio for a few years (SFSU used to do this). Until I graduated.
    – Gave myself the scarlet letter C (Bad Credit) which landed me in a “gunshots at night” kind of neighborhood in LA (MacArthur Park), where I moved after graduation in 2001.
    – Moved back up here into an in-law. For selfish reasons, I broke the lease, but the new apartment fell through and I moved onto my brother’s couch. Thank god I have a brother with a couch.
    – Then into a residential hotel in the TenderNob for years. It was really gross but actually gave me some stability to get my financial house in order.
    – Finally got a “real job”, which, thanks to my wife’s superior accounting skills and years of saving, has led to home ownership and rental properties.

    So yeah, I made a lot of bad decisions and just a couple good ones. I was blessed with good timing and people that helped me. I think if I had replayed my job, rental and credit history today, I would’ve ended up homeless or out of state in a matter of months.

  6. When Willie Brown was mayor I attended one of his January State of the City speeches. Someone asked him about housing and rent controls. He commented that you’d be surprised at the number of vacant buildings that were often owned outright by some widow who let them sit rather than contend with the city’s housing laws. Eventually, they’d be left to her heirs to deal with. He said that if some means could be derived to encourage these people to sell quite a bit would come on the market. Now, Willie exaggerates a lot, but there’s probably some truth to that.

    My big problem with affordable housing (affordable housing is defined as housing that is restricted as to what it can sell or rent for and occupants must qualify by income) is that in the Bay Area the planning community intends that most new housing be “affordable”. The Plan Bay Area, a coordinated housing plan among all Bay Area cities and counties, figures that over 50% of new housing should be restricted as affordable. Affordable housing is unprofitable to build, so it requires subsidies. Most local governments general plans acknowledge that the subsidy funds aren’t there, so only a small portion will be built no matter what the plan says. And a few are squeezed in here and there in developments where most units are market rate.

    But what are we telling younger people, especially Hispanics? It seems we are telling them that we envision a future for a limited number of them to live in deed restricted units that while they may rent or sell for below market rates, they will also never be permitted to garner the increase in equity that so many of us older homeowners have gained. Furthermore, only a lucky few will get to live in a cheap apartment. The rest can go to Texas.

  7. I’ve been reading this blog for a while and this post exemplifies why. This sort of clear-headed analysis is exactly the sort of thing that you don’t find many places. Our journalist class is full of very bright, very earnest people who will absolutely tell you why something is wrong or how they think things ought to be or what overarching political ideology we need to get there, but with a diminished capacity to simple look at things the way they are and see the small pragmatic steps that will actually carry us forward.

    Your friend in Maine is an archetype. There are a lot of Americans who just take large parts of their lifestyles for granted, who don’t understand the extent to which those lifestyles have been explicitly and implicitly subsidized by policies that simply cannot and won’t continue in perpetuity. Some people are going to see the changes coming and take action in one direction of another, but a lot are simply going to pretend like this can all go on forever and end up having some manner of breakdown when they finally digest the reality that it won’t.

    1. There’s a part of me that suspects my friend in Maine may end up in a better position than the wealthy people who will be living in her old luxury flat – about five minutes after 1) the next market crash 2) earthquake.

  8. I have a client in SF who owns some apartment buildings and I learned that because the rents are so astronomical, there’s little incentive to minimize vacancy. It’s ok to leave units off the market so they can be renovated slowly for less expense (price, quality, time; choose two), because not only is the increased rent from the renovation going to be a windfall, but the rent of the other units is already so out of whack from the actual maintenance and operation of the building that full occupancy isn’t required to still make bank. There’s going to be renters lining up for those units when they do come online anyway, so there’s very little risk. What’s a little more artificial scarcity among friends eh?

  9. The fact that rent control exists at all in a place like the United States blows my mind. It seems go against all of the commerce-driven, individual choice, anti-welfare values that seem to predominate over there. Yet people live that way for years, like on the edge of a volcano.

    1. And sometimes the volcano erupts…

      Rent control is a local thing in a small number of municipalities. New York City, San Francisco, Santa Monica… Basically, older more liberal, highly desirable places with a history of union organizing and such. The rest of the continent? Not so much…

      There are pros and cons. I can’t honestly say if rent control is a good or an evil. My friend got a great deal for years while others struggled to find a one bedroom apartment they had to shared with three room mates for infinitely more money. Is that fair? And my friend’s land lady could have gotten so much more cash out of the place… Winners and losers…

      1. Rent control seems like a poor substitute for what’s actually needed: public housing. Housing is so clearly an essential requirement, that where the market fails to provide it, it must be provided by the state. Rent control, affordable housing, etc. are fudges.

        1. Housing is essential, sure, but nobody “deserves” to live in a specific place. There are plenty of incredibly affordable places to live in America. Furthermore, as Johnny pointed out in this very post, The SF/Californian government has already fucked up the housing market in SF, nobody should be arguing for them to become more involved.

          1. I wouldn’t immediately blame “The Government” for f-ing up the housing market without looking at all the voter approved – and voter demanded – rules and procedures that constitute official policies. It’s a long list of restrictions imposed by existing property owners to prevent other people building things and shifting costs off of current residents on to people who don’t yet live here. The government is…. us.

            California is simply experiencing the long term consequences of decades of accumulated constraints on the market. At a certain point the market will push back in unexpected ways and kill the golden goose.

            Don’t be so quick to praise other places like Texas for being pro growth. Texas will have its own unintended consequences to deal with in due time…

            1. Thanks for this thought-provoking post. In the comment above you write, “Texas will have it’s own unintended consequences to deal with in due time…” I’ll be especially interested in what you have to say about Texas.

              1. People forget that California was a magnet that drew people from all over the US and the world for decades. Land was abundant and cheap. State and federal investment in everything from highways to aqueducts to university campuses exploded. Construction of homes, factories, and offices boomed in every direction. The population doubled. Then it doubled again. Then again.

                Today California is experiencing the unintended consequences of that growth. The infrastructure is aging. The desirable land is mostly paved over or protected. Long term obligations for infrastructure maintenance, pensions, and salaries is outstripping revenue. And the population is unwilling to agree on a rational plan for addressing these challenges.

                Texas is simply a couple of decades behind the curve. At a certain point it too will hit a wall and hard choices will need to be made. I’m not convinced that Texans will do much better, although the language and posturing will have a different flavor.

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