Dana Blankenhorn

The Apartment Crisis

I wrote about the housing crisis” last year. My focus was on the tax law. It needs to discourage private equity from buying up houses, and encourage home ownership.

But there’s a second element at work. It’s demographic. Millennials, like my kids, aren’t marrying. If they’re marrying, they’re not having kids. They want small apartments near where they work. Most of them work in cities, where it’s very expensive to build.

Developers, united with young renters, are trying to increase density by block-busting urban homeowners. That’s what a lot of the current “affordable housing” debate is about. I saw it in the 1960s, when it was a racial divide. It’s ugly and leads to crime.

The good news is that apartment construction is already increasing. It is now near the level it was in 1972, just before the first oil crisis. If interest rates moderate even a little, the industry will blow past that number. 

I’m no NIMBY. Planned density can work. But rather than giving developers open season to wreck home values in the name of “15 minute neighborhoods," destroying the tree canopy, start with “30-minute cities," so that the infrastructure keeps up with the demand.

YIMBY vs. NIMBY

There’s a growing movement of renters, working in conjunction with real estate developers, aiming to blockbust urban neighborhoods.

It’s called Yes In My Back Yard (YIMBY). It creates political support for developers in the name of “affordable housing.” It calls homeowners NIMBYs (for Not In My Back Yard) and denigrates their concerns. It’s a great way for developers to make money and it’s splitting cities apart.

If you’re renting this isn’t your backyard. Renters have no stake in the future of the places they rent. Owners do. Neighborhoods of renters are less stable than those where owners occupy houses. The owners of rental housing often resist repairs, and those who live in rental housing don’t take up that slack. It’s the difference between the chicken and the pig at breakfast time. A renter may be interested. An owner is committed.

Why Clouds Will Win the Streaming Wars

Since long before the streaming crash began, I predicted its Big Three would end up being Apple, Google, and Amazon.Com.

Not Netflix. Not Disney. Not Comcast or Paramount or Warner Brothers.

The Cloud Czars.

As usual, I was early to the story. But it has long been clear that, when push comes to shove in streaming, money talks. The coming result was easy for me to see and the story was easy to do.

Of the three Cloud Czars, Amazon is the best-positioned. They have the front-end technology with the Fire Stick, which has one-third of the U.S. market. They have Prime Video, which becomes a huge value if you use the Amazon store. They can re-sell every other streamer’s stuff and make money. They’re also global, something only Netflix and Disney among their competitors can lay claim to.

The Why of the Guns

Guns have replaced drugs as the tool of systemic racism.

When I was young drugs were effective at this. Push drugs on young black people who are unemployed and feeling hopeless. Arrest the black people doing the drugs. Toss them in jail and they’re not only slaves (for the duration of their sentence) but non-voters for life.

It worked.

But as white folk started getting sentenced, and as black families learned better, you needed a new mechanism.

Lax gun laws are the mechanism.

The Other Arms Race

We talk a lot about guns in the US, without doing anything about them.

But there’s another, even more dangerous arms race, going on.

It involves cars.

It’s not just that there are too many of them. They’re too damned big. Spending $60,000 for a pick-up that will never see a trailer hitch, or an SUV higher than an elephant’s eye, is stupid. Especially since these cars are sitting, unused, 90% of the time.

People buy giant cars for the same reason they buy guns. They make you feel safe. They buy as much car as they can afford, like these things are houses.

Business Needs Consensus

I have long believed historians misread the Progressive Era.

They see it as a victory for liberal values.

I read it as a victory for business. Which isn’t necessarily a different thing.

Fact is, the business of America is business. America has always been led by a dominant industry. Farming, then cotton, then railroads, then infrastructure, manufacturing, oil, and now technology.

Power flows to the highest-value industry and, when that is supplanted, flows away from it. Just as cotton lost to the railroads in the Civil War, I believe railroads lost to infrastructure in the Progressive Era.

What the great inventions of the late 19^th century – electricity, telephony, and the automobile – required for mass adoption was scaled, organized infrastructure. Having two or more electric utilities, two or more phone companies, or (God forbid) two or more private road networks made no sense. What Wall Street saw in the 1890s was that monopolies created efficiency.

But the monopolies would need the approval of government. The price of government approval, in a democracy, would be regulation, and some means of control over the result.

The New Class Struggle

One of the biggest stories of 2022 is the discovery of a new class struggle, happening right under our noses.

It’s the product of our technology society. It’s between those who own this society and those who “merely” manage it.

When I was focusing my work on American political history, starting in 2006 with the launch of this blog, I assumed technology would lead us toward equity.

That’s because technology runs on human capital. Talent is the gating factor to growth. Not land, not people. Talent.

What does it take to nurture talent? You have to set a wide net, because it can come from anywhere. You have to educate everyone, because anyone could be great, and anyone who’s even good provides value. You can’t care where talent comes from, the color of its skin or the way its heart works or something called “disability.” Let talent find the ability it has, and exploit that.

Let people be free and make them comfortable. That’s the best way to raise children. It’s also the route to economic growth and saving the planet.

Is This The End of Crypto?

I wrote about cryptocurrency a lot, late in the last decade.

I finally decided it was trash.

There’s no there, there. I can find no blockchain applications superior to what you can do in other ways. Bitcoin and Ethereum claim they’re better than other coins, but the market remains crooked and opaque.

All this came crowding in this week when FTX collapsed. FTX was the creation of a 20-something (now 30) named Sam Bankman-Fried, whom my son now calls Bank Man Fried, as in French fries.

Wall Street Revolt

What’s most distinguishing about the 2022 economy is how capital is taking the hit.

We all know about the bear market in stocks, down over 20% from their peak. Bond investors are also down over 15%. Real estate is rolling over. This is where capital gets its money.

Meanwhile, ordinary Americans are doing OK. It’s true that inflation is outpacing wage gains, but there are wage gains. Jobs remain plentiful. Last year’s stimulus was mainly aimed at firming incomes. More relief is coming from the Inflation Reduction Act.

This has created pure fury on Wall Street. I follow financial Twitter for my job, and the anger is palpable. Investors are predicting the imminent downfall of the whole economy. They’re demanding that the poor pay the penalty for their mistakes with money. They really can’t get their heads around the current situation.

The Next Health Crisis

Drug companies keep pushing America toward its next health care crisis.

Biogen is the primary offender. Last year they delivered an Alzheimer’s drug called Aduhelm, pricing it at $56,000/year. If Aduhelm cured Alzheimer’s, a high price would be justified. But it doesn’t. It isn’t even proven to reduce symptoms.

Now they’re back, with a new medicine mainly developed by Eisai, the Japanese company that developed Aduhelm. This claims to improve cognition about 20% in people with early signs of the disease. That’s good. But it’s nowhere near a cure. There is every indication Biogen will demand a huge price on this medicine too.

There are two problems here, one business and one scientific.