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Showing posts with label resilient communities. Show all posts
Showing posts with label resilient communities. Show all posts
Wednesday, June 26, 2013
Sunday, June 16, 2013
The Slow-Motion Financial Implosion of Detroit
I wrote about Detroit's financial problems three years ago when the city's leadership had a viable plan to fix the city by downsizing its infrastructure. The Detroit Works Project had a blueprint for renewal in 2010. The city has since squandered the time and money it could have committed to that plan and is now facing imminent bankruptcy. This disaster was a long time in the making.
Read Detroit's financial statements. The CAFR for FY 2012 has the bottom line up front on page 2, with an accumulated deficit of $326.6M from several years of operating deficits. The CAFR itself is ironically interspersed with happy photos of fun things going on in Detroit. Maybe next year's CAFR can show the Mayor and his state-appointed emergency financial managers turning shovels on bare dirt where their offices used to sit. The Single Audit Report is even worse, with up-front warnings of material weaknesses in Detroit's internal controls over financial reporting. The federal government has every right to cease funding programs in Detroit given these weaknesses, but politics means more than financial sense.
Detroit's credit rating at Moody's has seen almost nothing but downgrades and downgrade reviews since 2010, with the exception of February to December of that year when credit facilities backed by the State of Michigan stabilized Detroit's outlook. The city had that window of opportunity (during which I wrote my blog article on Detroit's potential for unbuilding) to quickly begin its downsizing. The city instead has been paralyzed by public employee unions whose members have enjoyed generous pay and benefits for years and are still resisting fiscally responsible cuts to benefits.
I think Detroit had the right intention to downsize itself but picked the wrong means to execute. Reviewing the Detroit Works Project's strategic framework reveals color-coded maps of the city's center. The city designated much of its inner core as blighted where no redevelopment would be allowed and tried to pigeonhole specific industries into specific neighborhoods. That's micromanagement, and it's dumb. Detroit is in no position to pick and choose which companies it will allow to move in. Contrast this approach with San Francisco, which has given tax breaks to several digital media companies that came to The City regardless of the neighborhood where they chose to settle.
Detroit's detailed plan for renewal is probably going to come undone out of necessity if receivership forces it to move faster. Farms and ranches will sprout again within city limits and former unionized workers had better learn how to plant rows of corn. City managers should radically and immediately liberalize their approach to zoning.
The lessons of Detroit for the state of California are obvious. Sacramento policymakers are committed to more of what hasn't worked: more spending on underperforming public schools, more taxes on high income earners, more regulations on business, and more protection for public employee benefits. None of that is going to work in Detroit now that Motor City is crossing an event horizon on its way to collapsing into a singularity.
Read Detroit's financial statements. The CAFR for FY 2012 has the bottom line up front on page 2, with an accumulated deficit of $326.6M from several years of operating deficits. The CAFR itself is ironically interspersed with happy photos of fun things going on in Detroit. Maybe next year's CAFR can show the Mayor and his state-appointed emergency financial managers turning shovels on bare dirt where their offices used to sit. The Single Audit Report is even worse, with up-front warnings of material weaknesses in Detroit's internal controls over financial reporting. The federal government has every right to cease funding programs in Detroit given these weaknesses, but politics means more than financial sense.
Detroit's credit rating at Moody's has seen almost nothing but downgrades and downgrade reviews since 2010, with the exception of February to December of that year when credit facilities backed by the State of Michigan stabilized Detroit's outlook. The city had that window of opportunity (during which I wrote my blog article on Detroit's potential for unbuilding) to quickly begin its downsizing. The city instead has been paralyzed by public employee unions whose members have enjoyed generous pay and benefits for years and are still resisting fiscally responsible cuts to benefits.
I think Detroit had the right intention to downsize itself but picked the wrong means to execute. Reviewing the Detroit Works Project's strategic framework reveals color-coded maps of the city's center. The city designated much of its inner core as blighted where no redevelopment would be allowed and tried to pigeonhole specific industries into specific neighborhoods. That's micromanagement, and it's dumb. Detroit is in no position to pick and choose which companies it will allow to move in. Contrast this approach with San Francisco, which has given tax breaks to several digital media companies that came to The City regardless of the neighborhood where they chose to settle.
Detroit's detailed plan for renewal is probably going to come undone out of necessity if receivership forces it to move faster. Farms and ranches will sprout again within city limits and former unionized workers had better learn how to plant rows of corn. City managers should radically and immediately liberalize their approach to zoning.
The lessons of Detroit for the state of California are obvious. Sacramento policymakers are committed to more of what hasn't worked: more spending on underperforming public schools, more taxes on high income earners, more regulations on business, and more protection for public employee benefits. None of that is going to work in Detroit now that Motor City is crossing an event horizon on its way to collapsing into a singularity.
Friday, May 31, 2013
Crowdfunding for Decentralized Wealth
I attended a Commonwealth Club lecture today by Gar Alperovitz, author of What Then Must We Do? I won't spoil the book for you, but he contends that the concentration of the control of wealth among a small elite and a handful of corporations make America's systemic problems unsolvable. Labor unions are no longer powerful enough to serve as a countervailing power to corporate control of wealth and state socialism is an unsatisfactory alternative to free markets. His solution lies in democratic, decentralized ownership of wealth. I think he'd really like the concept of resilient communities but he touched on older concepts that already work. He mentioned some models; I'll mention others.
The Democracy Collaborative's Community Wealth project is a clearinghouse for models that share access to capital. The National Cooperative Business Association is a home for co-ops that have been around forever. The Bank of North Dakota is the only state-owned bank in America and it's been successful for almost a century in providing capital to private enterprise. Many of us have seen NCUA's credit unions in our communities. Entrepreneurs who sell their companies to their workers' own ESOPs can reap very attractive tax benefits. Real estate investors can use land trusts to limit liability and expand their options. The Mondragon Corporation is an example of how a cooperative ownership structure can adapt to a complex enterprise. The University of Wisconsin Center for Cooperatives studies, well, what else but co-ops. The Hub is a global network-cum-movement for microenterprises with a Bay Area presence. B-corporations are not-for-profit corporations that are chartered to serve a public interest. CiviCRM is an open-source platform for fundraising and contact management; I regret that I missed CiviCon 2013. I also regret that I'm missing the Public Banking Institute's Public Banking 2013 conference this weekend, but I've already got plenty to do.
Some of these models may seem a bit touchy-feely and environmentally green for die-hard free market fans but I hope they get over that knee-jerk reaction. I'd like to see an ecosystem of these types of grass-roots financing and organizing tools grow up as alternatives to the unstable model of TBTF megabanks that are wrecking the economy. There's enough room for profit in these enterprise structures for conservatives to like. The New America Foundation's Asset Building Program sure looks a lot like George W. Bush's call for an "ownership society."
The hodge-podge list of tools above begs a return to the author's question about what we must do now. I got a chance to ask a question of my own when I asked Mr. Alperovitz how the crowdfunding phenomenon can contribute to the growth of these concepts. He was optimistic about the potential of crowdfunding but didn't have specific data on hand. There's my window of entrepreneurial opportunity. I'll get specific right now.
B-corps are already using crowdfunding platforms like Kickstarter and Indiegogo to raise donations. Once FINRA finally completes its SEC-mandated certification of crowdfunding portals for JOBS Act compliance, they can raise equity capital. I think public banks operating in each of the fifty states could operate their own crowdfunding portals. Anyone who wants to start a co-op or credit union could step on up and launch fundraising from the public bank's portal. Companies that sponsor ESOPs could borrow directly from the public banks so the ESOP can buy the company's shares. REITs that organize as land trusts could use the public bank for 1031 exchanges and trust services. Makers, here's your chance to grow new organizations making brand new things.
The ecosystem I just described above will probably require legal changes that will enable public banks and crowdfunding portals to work together in the ways I've imagined. State governments can perform their traditional role as public policy laboratories by experimenting with different forms of governance for this co-op ecosystem. Resilient communities will need a myriad of management structures and funding mechanisms. Entrepreneurs should educate policymakers on how to make this happen. That is what we must do, answering the question above.
The Democracy Collaborative's Community Wealth project is a clearinghouse for models that share access to capital. The National Cooperative Business Association is a home for co-ops that have been around forever. The Bank of North Dakota is the only state-owned bank in America and it's been successful for almost a century in providing capital to private enterprise. Many of us have seen NCUA's credit unions in our communities. Entrepreneurs who sell their companies to their workers' own ESOPs can reap very attractive tax benefits. Real estate investors can use land trusts to limit liability and expand their options. The Mondragon Corporation is an example of how a cooperative ownership structure can adapt to a complex enterprise. The University of Wisconsin Center for Cooperatives studies, well, what else but co-ops. The Hub is a global network-cum-movement for microenterprises with a Bay Area presence. B-corporations are not-for-profit corporations that are chartered to serve a public interest. CiviCRM is an open-source platform for fundraising and contact management; I regret that I missed CiviCon 2013. I also regret that I'm missing the Public Banking Institute's Public Banking 2013 conference this weekend, but I've already got plenty to do.
Some of these models may seem a bit touchy-feely and environmentally green for die-hard free market fans but I hope they get over that knee-jerk reaction. I'd like to see an ecosystem of these types of grass-roots financing and organizing tools grow up as alternatives to the unstable model of TBTF megabanks that are wrecking the economy. There's enough room for profit in these enterprise structures for conservatives to like. The New America Foundation's Asset Building Program sure looks a lot like George W. Bush's call for an "ownership society."
The hodge-podge list of tools above begs a return to the author's question about what we must do now. I got a chance to ask a question of my own when I asked Mr. Alperovitz how the crowdfunding phenomenon can contribute to the growth of these concepts. He was optimistic about the potential of crowdfunding but didn't have specific data on hand. There's my window of entrepreneurial opportunity. I'll get specific right now.
B-corps are already using crowdfunding platforms like Kickstarter and Indiegogo to raise donations. Once FINRA finally completes its SEC-mandated certification of crowdfunding portals for JOBS Act compliance, they can raise equity capital. I think public banks operating in each of the fifty states could operate their own crowdfunding portals. Anyone who wants to start a co-op or credit union could step on up and launch fundraising from the public bank's portal. Companies that sponsor ESOPs could borrow directly from the public banks so the ESOP can buy the company's shares. REITs that organize as land trusts could use the public bank for 1031 exchanges and trust services. Makers, here's your chance to grow new organizations making brand new things.
The ecosystem I just described above will probably require legal changes that will enable public banks and crowdfunding portals to work together in the ways I've imagined. State governments can perform their traditional role as public policy laboratories by experimenting with different forms of governance for this co-op ecosystem. Resilient communities will need a myriad of management structures and funding mechanisms. Entrepreneurs should educate policymakers on how to make this happen. That is what we must do, answering the question above.
Tuesday, October 19, 2010
Desktop Manufacturing: The Long Poles In The Tent
There's revolution going on and it's headed straight for your desktop. It's the desktop manufacturing revolution and it promises to bring just as much upheaval as the Industrial Revolution and Information Age have wrought.
I'm very interested in this development. There's a lot of excitement in the blogosphere about the 3D printers that will enable every wanna-be backyard tinkerer and reality hacker to make their own machine tools. I'm much more interested in what military planners might call the "long poles in the tent," those resources and building blocks without which this maker revolution would be impossible. I'll use my imagination.
The 3D printers themselves. It's impossible to get this party started without these all-purpose design and fabrication devices. Where do you get them? Who's going to make them? Will established industries try to outlaw them or pay their captive lawmakers to tax and regulate them out of reach of your local hackerspace or resilient community? If they break, is someone in your neo-tribe qualified to repair them? The RepRap Project seems to have the inside track on solving this problem.
The raw materials. Where do we find the toner for these printers? Right now even the most advanced 3D printers can only handle plastic polymers and some metal. Making your own complex, precision-controlled devices will require feedstock that's a lot more diverse.
The minor components. This flows from the raw materials problem. If your printer relies on a high-temperature laser to solder elements together, can those minor components be manufactured in the same way as a bulkier item that requires only simple polymers? This is relevant for those tiny components that have very special structures or require rare earth elements.
Alloys and metallurgy. How will a 3D printer combine two or more materials in a way that's more efficient than modern smelting? This is relevant for manufacturing products that must perform in extreme conditions of temperature and atmospheric pressure to exacting tolerances (like aircraft engine parts).
We're just at the beginning of this adventure and I don't have the answers. Looking for those answers is what makes this so much fun.
I'm very interested in this development. There's a lot of excitement in the blogosphere about the 3D printers that will enable every wanna-be backyard tinkerer and reality hacker to make their own machine tools. I'm much more interested in what military planners might call the "long poles in the tent," those resources and building blocks without which this maker revolution would be impossible. I'll use my imagination.
The 3D printers themselves. It's impossible to get this party started without these all-purpose design and fabrication devices. Where do you get them? Who's going to make them? Will established industries try to outlaw them or pay their captive lawmakers to tax and regulate them out of reach of your local hackerspace or resilient community? If they break, is someone in your neo-tribe qualified to repair them? The RepRap Project seems to have the inside track on solving this problem.
The raw materials. Where do we find the toner for these printers? Right now even the most advanced 3D printers can only handle plastic polymers and some metal. Making your own complex, precision-controlled devices will require feedstock that's a lot more diverse.
The minor components. This flows from the raw materials problem. If your printer relies on a high-temperature laser to solder elements together, can those minor components be manufactured in the same way as a bulkier item that requires only simple polymers? This is relevant for those tiny components that have very special structures or require rare earth elements.
Alloys and metallurgy. How will a 3D printer combine two or more materials in a way that's more efficient than modern smelting? This is relevant for manufacturing products that must perform in extreme conditions of temperature and atmospheric pressure to exacting tolerances (like aircraft engine parts).
We're just at the beginning of this adventure and I don't have the answers. Looking for those answers is what makes this so much fun.
Friday, August 20, 2010
Youth And Innovation In The City
My loyal readers (yeah, all three of them) could have found me imbibing at a happy hour in my attorney friend's workspace tonight. Props to Adam Bier of bierLegal for being a generous host and mixologist. I was probably one of the senior citizens there at the ripe old age of 37, but one of the attractions of private happy hours is the proximity to the flower of youth without music that destroys your ears. Youngsters have so much spunk and feistiness, ya know? I never had it but I'm probably a late bloomer . . . or perhaps a reverse bloomer a la Benjamin Button. Nah, scratch that second option. I'm definitely getting grayer.
The youngsters at the shindig weren't gray yet. One was a social entrepreneur who had raised money for a relief project in Cambodia (I think, my memory's hazy as I was in the middle of a nectarine cocktail). Another guy owned a bicycle repair business and had a retired investment banker as a mentor. One gal was hosting comedy performances in her home and was planning to exhibit experimental films.
None of them needed bailouts or stimulus money to get these projects going. They just scraped some resources together, found a niche, and launched. That's the kind of thinking that built America into what it was before the entitlement mentality made it prematurely senile. It's the kind of phenomenon that will eventually get us out of Great Depression 2.0 once we realize that entrepreneurship is the only thing left to try once all of the wasted stimulus money is gone.
This is why I won't live anywhere besides San Francisco. Urban collectives like Noisebridge are hacking their way into future technologies while soccer moms worry about whether their Social Security checks will cover their SUVs' hydrocarbon fuel bill (hint: they won't). Creative spaces like ARK221 are spawning artists and filmmakers while Hollywood shovels the same formulaic baloney onto Joe Six Pack's plate.
Count on San Franciscans to show the world how technology and culture are done. The kids are all right. :-)
The youngsters at the shindig weren't gray yet. One was a social entrepreneur who had raised money for a relief project in Cambodia (I think, my memory's hazy as I was in the middle of a nectarine cocktail). Another guy owned a bicycle repair business and had a retired investment banker as a mentor. One gal was hosting comedy performances in her home and was planning to exhibit experimental films.
None of them needed bailouts or stimulus money to get these projects going. They just scraped some resources together, found a niche, and launched. That's the kind of thinking that built America into what it was before the entitlement mentality made it prematurely senile. It's the kind of phenomenon that will eventually get us out of Great Depression 2.0 once we realize that entrepreneurship is the only thing left to try once all of the wasted stimulus money is gone.
This is why I won't live anywhere besides San Francisco. Urban collectives like Noisebridge are hacking their way into future technologies while soccer moms worry about whether their Social Security checks will cover their SUVs' hydrocarbon fuel bill (hint: they won't). Creative spaces like ARK221 are spawning artists and filmmakers while Hollywood shovels the same formulaic baloney onto Joe Six Pack's plate.
Count on San Franciscans to show the world how technology and culture are done. The kids are all right. :-)
Friday, April 02, 2010
Grandma's Moving In With You
Attention Generation X! Clear out whatever spare room you may have been using for storage, video games, your meth lab, whatever. Your parents - the Baby Boomers who didn't save for retirement - are moving in with you:
The Pew Research Center misses a couple of points. Seniors aren't able to stretch their Social Security checks as far as they used to because the government's CPI numbers deliberately understate inflation. Young men and women are marrying later because a single paycheck isn't enough to raise a family. Aside from these minor things, the report tells us something very important about American society in the 21st Century. Mobility and generational independence were temporary phenomena, abetted by cheap energy and several decades of indebtedness. Family life in the 21st Century will increasingly resemble its precursor in the 19th Century.
Can we tease some investment ideas out of these findings? I'd be very reluctant to invest in retirement communities, especially those in remote or resort-like locales. Boomers moving back with their kids won't be throwing down $500k plus annual homeowner association fees to retire to some gated geezerville with indoor water aerobics. I'd also be reluctant to invest in businesses related to child care or elder care (except for specialized medical services, you know, hospices and the like). Why pay for day care when Granny and Gramps are home all day with nowhere else to go? And why pay for elder care when your teenagers are around? It's not like your teens will have anywhere to go after school since you won't be able to afford cars or cell phones for them anymore. The kids shouldn't worry about looking foolish with their peers if every teen on the block has to stay home on Friday to give Granny her meds.
I'm free of both kids and debts. Don't congratulate me just yet, as I have another three decades or so to figure out a way to sustain myself in my old age.
The multi-generational American family household is staging a comeback -- driven in part by the job losses and home foreclosures of recent years but more so by demographic changes that have been gathering steam for decades.
The Pew Research Center misses a couple of points. Seniors aren't able to stretch their Social Security checks as far as they used to because the government's CPI numbers deliberately understate inflation. Young men and women are marrying later because a single paycheck isn't enough to raise a family. Aside from these minor things, the report tells us something very important about American society in the 21st Century. Mobility and generational independence were temporary phenomena, abetted by cheap energy and several decades of indebtedness. Family life in the 21st Century will increasingly resemble its precursor in the 19th Century.
Can we tease some investment ideas out of these findings? I'd be very reluctant to invest in retirement communities, especially those in remote or resort-like locales. Boomers moving back with their kids won't be throwing down $500k plus annual homeowner association fees to retire to some gated geezerville with indoor water aerobics. I'd also be reluctant to invest in businesses related to child care or elder care (except for specialized medical services, you know, hospices and the like). Why pay for day care when Granny and Gramps are home all day with nowhere else to go? And why pay for elder care when your teenagers are around? It's not like your teens will have anywhere to go after school since you won't be able to afford cars or cell phones for them anymore. The kids shouldn't worry about looking foolish with their peers if every teen on the block has to stay home on Friday to give Granny her meds.
I'm free of both kids and debts. Don't congratulate me just yet, as I have another three decades or so to figure out a way to sustain myself in my old age.
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