Category Archives: U.S. Economy

N.I.M.B.Y.

Communities in Fairfax County have earned the “Not In My Back Yard” label. A county proposal to facilitate—through rezoning or a special exception process—the building of residential studio housing for low-income earners in nearly all types of zoning in the county has elicited controversy. That low-density suburban residential areas are included in the proposed zoning ordinance is the source of much of the contention.

The goal of the zoning change is enabling construction of buildings of studio or efficiency apartments only for rent by those with low incomes. It is an attempt to address the long-term countywide need to “enable a pool of mixed labour” against a scarcity of affordable housing for low-income people.

The root of the problem is that commercial developers have erected little housing for lower-income groups in the county. Fairfax County, it should be noted, has the second highest median household income of any local U.S. jurisdiction, after its neighbor Loudoun County. So this county initiative is an attempt to fill a perceived gap in the housing pool, one that the market hasn’t provided. Seven different lots around the county are currently being suggested as possible locations for such housing.

At least 80 percent of the units in such buildings are envisaged to be rent-controlled. The target market would be folk earning less than 60 percent of area median income, namely less than around $45,000 per annum for a single-person household. The other 20 percent could be for higher income levels and the rent would not be controlled. The aim is to attract lower-income earners such as nurses, first-year teachers, and non-teaching staff at local schools such as cafeteria workers. Targeted tenants are also those “just starting out”, like recent college graduates.

Such housing could potentially also be a stepping stone for those presently homeless. This type of single-room housing, coupled with support services like job counseling and substance abuse or mental health treatment, has been shown to help the homeless transition into durable living arrangements.

The zoning amendment permits up to 75 units per lot, while individual units can be no larger than 500 square feet. Although intended for single occupancy, each unit could accommodate up to three people, including two children. Each unit has to include a kitchen and a bathroom, and be allocated at least one parking bay. One washer and dryer has to be available per ten units—if these amenities are not included in the individual units. Additionally, there has to be either a resident or on-site manager, or off-site management that the county’s Board of Supervisors approved.

The owner of property where such a building is being considered for construction would have to appear in public hearings before both the Planning Commission and the Board of Supervisors to have a special exception granted to current zoning. In this process, consideration would be given to: compatibility with the neighbouring area, as well as location by a major thoroughfare to ensure the likely availability of public transport options. Adding yet other criteria for consideration, such as pedestrian access to shopping and other services, is still under discussion. Also still being debated is whether or not to allow the conversion of single-family homes into apartments, and the effect of such a decision on illegal boarding houses.

In recent weeks, I have attended two public meetings on the residential studio issue: the McLean Community Association hosted the first; the second was a Fairfax County Planning Commission hearing on the proposed amendment. I learnt much at both meetings and came away with some strong impressions.

The vocal and noisy majority of attendees at both gatherings were firm opponents of the proposed zoning ordinance amendment to encourage construction of low-income housing.

There is merit to homeowners’ unhappiness that this type of housing is being contemplated for low-density, single-family-home residential neighbourhoods. Typically, exceptions to present zoning limits in such neighbourhoods are granted for entities benefitting the general community, such as petrol or “gas” stations, churches, preschools, assisted living facilities, and so on. Supervisor John Foust, who was sitting in the audience at the first meeting, agreed that residential studio units made more sense in higher-density areas, saying, “this is a good product in the right zoning category, but I don’t think it’s the right product for low-density residential”.

The other worthy point is that no market research or feasibility studies have been conducted to test the county’s vision—apart from a George Mason University study published in 2006 at the height of the housing bubble and before the 2008 crash in the housing market. Would, for example, young professionals “starting out” even be interested in such studio accommodation? Might there not be more interest in one-bedroom apartments? Also, how would young professionals feel about living in buildings with many lower-income tenants, including formerly homeless individuals? All of these questions should be researched. The county is perhaps trying to target too many different types of tenants with one product. And, however well intentioned, it is not clear that there is market demand for this type of housing.

But these aspects seemed to be only a small part of the public’s negative reaction to the potential zoning change. There appeared to be an overall perception of buildings with such units and tenants leading to reduced property prices and a diminished quality of life for those currently living in areas where they might be located. Concerns were raised about the impact on already overcrowded schools and already acute traffic congestion; the perceived lack of enforcement of present occupancy restrictions; and fear of spikes in vandalism, crime, and general lawlessness around such multi-family, low-income dwellings. At the second gathering, a former owner of buildings in the District of Columbia, spoke—to loud applause—about the “negative synergy” that develops around buildings with a “preponderance of low-income people”.

A courageous woman stood up to address all near the meeting’s conclusion, knowing her opinion was in the minority. She was appalled at the tenor of people’s comments. She warned, very emotionally, about the slippery slope shown by history of thinking about fellow humans as being the “other”. It is hard to disagree with her heartfelt statement, but most present apparently did.

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“How am I doin’?”

Americans are obsessed with performance measures and evaluation. Giving and receiving feedback is a vital component of today’s competitive, meritocratic America. It is, of course, also essential in a services-oriented economy. The quality of an experience with a company, at a restaurant, or in a shop is critical to the success of that enterprise. All hope for a positive, affirming experience—especially one that is then commended to others.

In some countries, concern about the quality of an experience or engagement is nonexistent. In others, like Japan, excellence is assumed. In the United States, concern about performance is persistent.

A simple verbal exchange with a cashier at a shop often results in the person, for example, mentioning their name, circling a website or phone number printed at the bottom of the receipt, and requesting that one connects with that site or calls the number to volunteer information about one’s experience that day. This person would also note that a discount or some other kind of financial incentive would be made available if one did this.

Interaction with cashiers or others in retail that result in this patterned behaviour can make one cynical. People here are hyper aware of being perceived as friendly, even though it is obvious when interaction is disingenuous “sales speak”. I always cringe at the rhetorical, pro forma “Did you find everything you were looking for today?” or “Do you need help out to your car?”

When we moved to Washington nearly three years ago, acquiring a car was an early necessity. A visit to a dealership that carried the car in which we were interested turned out to be rather efficient. The car salesman appeared incredibly happy at the quick, seemingly effortless sale. Upon our leaving, he noted we would be asked later about our experience with him and he hoped our response would be favourable. A couple of weeks later, we received two requests for an evaluation of our experience. One was a phone call, the other a written survey, and I responded to both. I was amazed when the salesman called not once, but twice, to check whether I had responded. He was desperate to get his commission or bonus.

An experience last weekend partly motivated this blog post. I needed to make an airline reservation, was unable to get the job done through the airline’s website, and hence called the company’s toll-free customer service number. The usual long series of automated questions had to be answered, the last of which was whether I would be willing to answer a customer survey after speaking to an agent. I heartlessly answered “no”. And then waited for an agent to come on the call. And waited. And waited. After fifty minutes of holding, I put down the phone in utter disgust. A couple of days later, I endured the whole rigmarole again, only this time I answered that I would be willing to respond to a survey. Guess what: an agent answered my call within eight minutes! Was this a coincidence? I don’t think so.

The American education system also reflects this obsession with evaluation. Indeed, many complain that the testing craze has gone too far. It’s “SOL” time now for many school-going children across America. These “standards of learning” tests assess core competencies and are fundamental to all evaluations of students, teachers, and schools. How well students do in these subject-based, state-wide tests has a significant bearing on teacher evaluations. Student performance in these tests also affects states’ assessment of schools. The federal government too considers these test outcomes in rewarding schools and states with federal money as part of President Obama’s “Race to the Top” initiative.

Belief in key performance indicators (KPI), feedback loops, and accountability permeates American society. Compensation is then based on the data.

Wall Street is the epitome and distorted extreme of this data-driven society, where quarterly reviews and results are the only name of the game.

The ultimate assessment tool in American culture is, of course, its electoral system, while the Constitution itself enshrines a balance of power between government functions.

Overall, the performance-driven and results-oriented culture of America is invigorating—even if the constant requests for assessment can be irritating and draining. The compulsion here to quantify so much interaction is also of concern though. Sometimes there seems too much emphasis on quantifying and meeting targets, as apposed to the quality and depth of encounters. One could also ask whether the right things are being quantified. And isn’t the system too often being gamed? Are the unaware and uneducated able to participate?

And yet a results-based culture is probably “the worst form for [society] except for all the others that have been tried”—with apologies to Winston Churchill.

Absolutism in America

There is a disconnect between political elites’ stark rhetorical excesses and extremism and the practical, common sense civility with which most Americans go about their every-day lives. Only absolutist positions seem possible in today’s shrill war of words on the campaign trail. And these seem far removed from the sensible practicality of the majority of Americans.

Yes, Americans are notoriously politically polarized at present, with folk splitting into “blue” and “red” points of view and states. But these acknowledged deep partisan divides are not apparent in their daily engagement with each other. People’s typical every-day behaviour suggests civility, decency, and moderation—despite political differences and the profound economic strains under which too many are living.

Every utterance from politicians is, of course, fair game in democracies, particularly at election time and for those topping the tickets. So it should be. But the rhetoric in this year’s election season is especially vitriolic and nasty in tone, particularly this far from actual voting.

Take the current debate on whether individualism or communalism is more determining of success in America. The initial fodder for the present outburst in this longstanding dualism in Americans was President Barack Obama’s July 13 remarks in Roanoke, Virginia, in which he implied that entrepreneurial success was due, in part, to government’s role, rather than individual initiative.

Republican operatives have seized on two sentences from this speech and are milking them as much as possible in negative “attack” advertisements. Obama said: “If you’ve got a business—you didn’t build that. Somebody else made that happen.” On their own, these two sentences are certainly provocative, but the context of these statements is necessary to understand what Obama meant:

“They know they didn’t—look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there.

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

“The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.“

In context, the comments are less incendiary and not disagreeable. No one is an island, no one lives or succeeds in a vacuum, and no one who has succeeded achieved this alone. Behind any person or company’s success lie the contributions of others, including the government. Of course individual drive, ambition, determination, and luck are needed for particular success, but this is true in any field of endeavour, not only in creating a successful business. It seems ridiculous to even expand on these truisms. But such is the absurdity and absolutism of present U.S. political discourse that even the obvious needs to be said.

This past week, again in Roanoke, Congressman Paul Ryan, Mitt Romney’s selected vice presidential running mate, declared, “The president makes these comments that reveal his mindset…He believes in a government-centered society and a government-driven economy. And that doesn’t work. It never has worked…Look at what it’s doing to Europe.” He continued, “We have a person in Mitt Romney who knows through experience the challenge that businesses face, how job creation works, that the engine of opportunity, the nucleus of our economy is not government, but the successful small business, the entrepreneurs, the people of this country.”

An enormous sign stating, “We Did Build It!” was displayed behind Ryan as he spoke.  The local small-business owner who introduced him at the rally had earlier refused a visit from and photo opportunity with Vice President Joe Biden due to differences with the Obama campaign.

There are profound philosophical differences between the two campaigns. And these two speeches underscore longstanding, competing solutions to today’s challenges. Obama sees the public and private sectors working together as offering solutions, whereas Romney/Ryan stress the individual and the market as the sources for solutions. In Obama’s communitarian vision, the government helps “level the playing field” and helps support the vulnerable and less successful. Romney and Ryan see a diminished role for government, with greater individual responsibility and greater reliance on market mechanisms. And tax policy is the battleground. Obama recommends raising taxes on the wealthiest Americans to raise government revenue, whereas Romney/Ryan want to extend the Bush tax cuts and indeed slash taxes further to reduce the size and scope of government.

This is an old fissure in American politics and society, and it represents a profound choice for Americans at this sensitive economic juncture. Economic recovery is tentative, while socio-economic inequality is growing. Both campaigns offer vastly different platforms on how to deal with well-recognized problems. We’ll learn on November 6 which vision appeals to most Americans.

 

Fund it, build it, get on with it

Connecting Dulles International Airport, Washington D.C.’s primary international air hub, to the city’s subway system is a goal that has, until recently, received near unanimous support. A project that was perceived as essential for the region’s economy, transportation, and functionality is now mired in partisan dithering, posturing, and shenanigans. Which all seems rather absurd when there is basic agreement on the need for the project.

The lack of a convenient mass transit link from the main international airport to downtown in a city of Washington’s undeniable national and international relevance and stature is, in truth, incredible. When Dulles Airport was constructed in the 1970s, easy passenger access to the Metro was always intentioned. Only in recent years though has the plan really gathered steam.

But now the funding for this patently necessary project has become captive to acrimonious state and local politics. The lack of bipartisanship at the federal level is mirrored at the state level, and the state of Virginia is no exception.

Virginia looms large in presidential politics. A conservative leaning state, it is one of the key “swing” states that could determine this year’s presidential race. In 2008, it voted for President Barack Obama; in 2012, the Obama campaign hopes the state will again vote his way. The southern part of the state is more rural and conservative. The northern part, encompassing Washington D.C. suburbs, is more urban, liberal, and heavily congested, with other liberal pockets around university towns such as Charlottesville and Williamsburg.

At present, Virginians have voted into place office holders who are predominantly Republican, although its two senators in Congress are both Democrats. One of these Senate seats is up for grabs this November, with two former governors likely competing for it in one of the tightest, most expensive races this election. Present Republican Governor Robert F. McDonnell was widely considered a potential vice presidential running mate for probable Republican presidential nominee Mitt Romney. That was before he became embroiled in an off-putting conservative pander this past legislative session that tried to legislate a compulsory vaginal ultrasound procedure for those in Virginia considering an abortion. The legislation failed, even with both houses of the state legislature being Republican controlled.

Phase 2 of Dulles Rail, or extending Metro’s Silver Line from Reston, Virginia, to Dulles Airport is, in theory, to be funded with federal, state, and Fairfax and Loudoun County assistance, plus revenue from the Dulles Toll Road. The Metropolitan Washington Airports Authority (MWAA) is overseeing construction of the Silver Line, including the proposed extension to Dulles. Phase 1 is expected to be finished late in 2013, while construction of Phase 2 to Dulles should ideally commence early in 2013.

The most recent brouhaha stems from a labour requirement in the general contract for Phase 2. The MWAA supports this pro-union clause, whereas the state government and the all-Republican supervisory board in Loudoun County, the county in which Dulles is located and through which the Silver Line extension would primarily pass, do not. Virginia is a “right-to-work” state, so the state feels any pro-union labour preferences would violate state laws. The state even called a special legislative session specifically to outlaw any consideration of labour agreements in the awarding of contracts. The two-year Virginia state budget was revealed recently—without the inclusion of any funding for the Silver Line.

For the second time, U.S. Transportation Secretary Ray LaHood, the remaining Republican in Obama’s cabinet, has helped mediate between the various parties. Thanks to the Secretary’s involvement, it appears that the WMAA will possibly weaken the pro-union labour provision. This would presumably permit the state to release its promised contribution of $150 million for the project and Loudoun County to commit to supporting the project. Let’s hope this compromise really comes to pass so that bidding for Phase 2 can proceed.

Another issue that could delay the proceedings is a federal audit of the WMAA. The airports authority has been criticized for opaque decision-making, top-heavy management, and its estimates of escalated tolls on the Dulles Toll Road. A preliminary report on the audit should be available shortly. This audit will hopefully result in greater transparency, changes in WMAA’s funding formula, and better atmospherics.

Funding the Silver Line certainly shouldn’t come on the backs of those using the Dulles Toll Road. Steep tolling on a major highway—thereby forcing users onto secondary roads and worsening the traffic patterns that the tolled road was supposed to address—will sound painfully familiar to road users in Johannesburg, South Africa, who are grappling with similar, although different, issues.

Part of the pushback is from Virginians in the southern part of the state feeling they shouldn’t be subsidizing a huge transportation project in the north from which they derive no benefit. Northerners would retort that they provide most of Virginia’s tax base in the first place.

The real issue behind the new resistance to the project stems from Republicans not wanting to fall in with the broader Democratic narrative. They do not want to boost employment, foster economic growth, or create aggregate demand through building infrastructure. They do not want to help fund an investment that would have a multiplier effect on employment and growth in the region. They do not want to increase spending and provide stimulus. They do not want to support unionised labour.  They want to cut back on public spending and shrink budgets. Such is the politics of economic recovery in the state of Virginia—and the United States.

Update on June 7, 2012: The Washington Post reports that the MWAA voted to drop the pro-union provision in the Silver Line contract, thereby paving the way for Virginian Governor McDonnell to come through with the promised $150 million. Now will Loudoun County’s Board of Supervisors support the project too? Stay tuned.

Update on July 3, 2012: In a 5-4 vote this morning, Loudoun County’s Board of Supervisors agreed to Phase 2 of the Silver Line. Funding issues were resolved by an agreement to create special tax districts around prospective Metro stops in the county and to increase tolls on the Dulles Access Road. There is still a dream for some federal funding. But, without further delay, bids on Phase 2 can now be placed. Progress indeed.

Is Walmart evil?

Retail giant Walmart generates controversy wherever it goes. This is true within the United States—where expansion plans, for example, in Boston are being resisted—or abroad in countries like China, India, or South Africa. So when it was announced last year that Walmart was opening six new stores here in the District of Columbia, up from the four originally planned, the hullaballoo that followed tweaked my interest.

Rural and suburban America is saturated with Walmarts, so the Walmart strategy now is to grow in urban areas, often with smaller “Walmart Express” stores instead of the “big box” stores for which it is better known. The six stores in the District will be a mixture of these, with some stores being part of mixed-use commercial and residential developments.

The District of Columbia government welcomes the entry of Walmart into the city. Mayor Vincent Gray has spoken of approximately 1,800 jobs that will result from the new Walmart stores, about 600 construction jobs, and an estimated $15 million in new tax revenue. He says the new stores will help address the problem of food “deserts”, where communities are underserved with fresh food retail opportunities. Gray has particularly heralded his success in getting Walmart to open a store at Southeast D.C.’s Skyland Town Center, a predominantly African-American neighbourhood with high unemployment in Ward 7, which he represents on the city council.

In response to criticisms of its plans for the District, Walmart has agreed on a “community partnership initiative”, whereby it will, for example:

  • Try to use local small and minority-owned business enterprises and subcontractors for construction and for goods and services within the stores.
  • Create and fund a work force development program that provides educational job training for D.C. residents.
  • Fill most of the available positions with D.C. residents.
  • Offer accessible hiring centers, hold job fairs, and work with community organizations to provide pre-employment workshops.
  • Provide competitive market salaries compared to its competitors, including those that are unionized (famously, Walmart does not allow its U.S. employees to organize).
  • Not sell guns or ammunition in its D.C. stores.
  • Offer bike racks and bike-sharing stations.

Critics say this agreement is not legally binding, the community wasn’t consulted on its provisions, and that Walmart’s implementation is dependent on business conditions.

In the case of the Skyland location, there is an additional dimension to be addressed: A covenant from the 1990s between the city and Safeway, the grocery chain that operates a store at Skyland, in terms of which a competitor is prevented from operating and selling groceries there. The city and Safeway are presently negotiating a resolution to this issue.

When one visits the Skyland Safeway—lettering across the store proudly notes “Serving the District of Columbia since 1928”—it is patently clear why Safeway would not welcome Walmart to the neighbourhood. Its monopoly has made it complacent. It has not invested in this particular store; indeed, the facility is in dire need of updating. The District’s Safeways had fun monikers in the past: the “Spanish Safeway” in Adams Morgan (for its Hispanic clientele); the “Soviet Safeway” close to Dupont Circle (for the long lines at the tills); and the “Social Safeway” in Georgetown (a gregarious place to shop and a place to “be seen”). The Skyland Safeway could be called the “Sad Safeway”.

Critics of Walmart point to features of its business model: Its intolerance of unions in its workforce in the United States (although it allows employees, for example, in China and South Africa to organize); much-debated discriminatory practices toward female employees; low wages and minimal benefits for its staff; deliberate undercutting of competitors’ prices; and the displacement or elimination of existing local businesses that inevitably follows in its wake.

First Lady Michelle Obama picked up substantial flak last year when, as part of her “Let’s Move” campaign against childhood obesity, she endorsed Walmart for making healthier fresh food choices available in communities previously denied such options. I’m totally with Mrs. Obama on this. Apart from the “Sad Safeway”, the Skyland area has “Murry’s Family of Fine Foods”, a grocer with a limited choice of fresh produce and bread, but lots of soda, chips and other snacks, and canned and frozen foods. And then there’s a CVS/pharmacy, some banks, lots of shoe shops, wig shops and beauty parlours, car repair shops, a petrol station, a couple of liquor stores, a boarded-up Laundromat, and, of course, the ubiquitous array of fast food chains. Bring on Walmart with its selection of fresh produce, a deli, and bakery!

Despite misgivings about Walmart, if I were a resident of Anacostia, I would hail its arrival in the area. Walmart will boost the neighbourhood and signal its rebirth. It will herald a new era of development, job opportunities, and consumer choices. Yes, many of the jobs on offer will be low paying and low in skill requirements. However, a job is better than no job. And if you are determined, an initial job there could be the first in a succession of increasingly demanding positions, within Walmart or without.

It’s easy to be critical of Walmart and its business model, but, if not Walmart, then who will come in and invest in neglected parts of the District? So, albeit with misgivings, I thank Walmart for planning to come to the District, and creating new options, choices, and possibilities for local residents and consumers. May other retailers follow in its footsteps to these neighbourhoods.

Update on August 6, 2012: A fascinating article in the Washington Post taught me about an innovative way to facilitate the purchasing of more expensive fresh produce from a farmer’s market in Ward 8, an economically depressed part of the District. And First Lady Michelle Obama continues urging Americans to eat more healthily, especially fresh foods. Her book, American Grown, on gardening at the White House, is generating praise, criticism, and certainly discussion.