a schmuck visionary, a drifting nation

In a column in 2005 which, rather prematurely, announced the end of the Housing Bubble, Paul Krugman made an analysis of the form of the bubble – a form that puzzled me, at least.

“When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.

In Flatland, which occupies the middle of the country, it's easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don't really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can't even get started.

But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions - hence "zoned" - makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.
And Zoned Zone housing prices, which have risen much faster than the national average, clearly point to a bubble.”

It wasn’t until 2005 that the inner Austin boom got started. This boom consists of building large multistory structures downtown, which are divided into condos, and sold off, theoretically, from 400 up. I have watched this happen with an open mouth, I must admit, since we are in Texas. Texas is flat land’s flat land. To get a house for 185, here, you simply have to go south far enough. This is not a secret, known to a few real estate columbuses – South Austin looks like, well, Dekalb county in Georgia, or Mecklenburg County in North Carolina, or any number of Southern metro areas, where you can see, from a plane’s eye view, similar housing units for human units stretch out for miles and miles. These particular human units, if you keep watching, often, oddly enough, sortie out of their housing units early, early in the morning, get into their little car units, and drive far north, queuing behind each other to get off on exits that will lead them to their office units. You can watch and watch, but you won’t see a lot of car unit to business unit activity downtown. There are a lot of offices downtown, and there are, always, the state employees, but – as is the way with land and living in these here states – the new towers along fifth street are not being built so that state employees can walk to their office units.

But they are being, relentlessly, built. And sold. All of which has made me rub my eyes, for either I am simply so out of the loop I can’t recognize progress when it hits me on my big nose, or… these highly expensive condos are being sold to people who are going to be working either in the North or the South. They are trading the boring housing unit lifestyle for the highly expensive inner city life style, meaning – they have views of the capital, and can go to many a fine club or bar. All of which indicates that these units are being sold to a younger crowd. Which further indicates, to me, that Austin is imitating zone land without being in zone land. And that, if I’m not mistaken, is an illusion, which will surely tug at those unit when the first buyers try to sell them.

However, the city’s bet is that the illusion, having become reality to the extent that the towers do surely exist, will keep generating reality for the next generation of buyers. I don’t see it – I don’t see how an imaginary zone will compete, in the long run, with the South and the more expensive but still less expensive than downtown North. This is why, in real estate terms, I am not a visionary. Instead, I’m a schmuck visionary.

The odd thing is that, from an environmental point of view, it is surely a good idea to pile people one on top of the other even in Austin. The collapse of housing, as one can tell by a glance at a map showing where the subprime properties are being repossessed and housing starts have collapsed, show two of the most environmentally stressed areas in the country, California and Florida, in the red zone. That stress is starting to pop up in odd ways – the suburbs of Atlanta, where my brothers and sister live, are experiencing a Western style drought that astonishes me. Nobody, in the Dekalb county of my youth, would take Atlanta as a place that would ever, ever have serious water problems.

But Georgia’s problems pale before what is happening in the West. If you are a water freak, John Gertner’s The Future is drying up in the NYT Sunday Magazine should make you orgasmatic.

Water freaks are a rare and selective band. Joan Dideon is one. The underappreciated Charles Bowdon is one. The key book, the book water freaks turned to as others turn to the Gospel, Freud, or Zizek is Marc Reisner’s Cadillac Desert Reisner, after writing it, abjured some of the ‘extremist’ views in it – but I still stick up for all of them. Water and its diversion made the West, of course – that land of Ronnie Reagan individualism was created by the most State concentrated project ever attempted by the Federal Government. It is, in a sense, a perfect example of what Karl Polanyi said about laissez faire economics – the laissez faire economy was planned, increment by increment, by the state. Of course, the beneficiaries then made up a heroic myth, advanced by such mythographers as Hayek and Von Mises and, on a vulgar level, Ayn Rand that substituted various Hercules for the state – building corporation headquarters, in Rand’s version, rather than the Hoover Dam, as in reality.

But creating the West in order to launch an economy based, as Polanyi says, on a fictitious commodity – land – was a more hazardous procedure than any of the original architects knew. Gertner’s understated point is pretty simple: everything points to the fact that the West as we have known it up to the 1970s is a West with water that won’t be there anymore in a pretty brief period of time. So, while the demographers claim that, given current trends, Arizona, Utah, Colorado, New Mexico, Nevada and California might have as much as one hundred million more inhabitants over the next fifty years, the water that those human units need to function won’t be there.

I like the fact that Gertner begins with a threat that has been oddly put in the let’s not think about this category by the global warming denialists:

“Last May, for instance, Steven Chu, a Nobel laureate and the director of the Lawrence Berkeley National Laboratory, one of the United States government’s pre-eminent research facilities, remarked that diminished supplies of fresh water might prove a far more serious problem than slowly rising seas. When I met with Chu last summer in Berkeley, the snowpack in the Sierra Nevada, which provides most of the water for Northern California, was at its lowest level in 20 years. Chu noted that even the most optimistic climate models for the second half of this century suggest that 30 to 70 percent of the snowpack will disappear. “There’s a two-thirds chance there will be a disaster,” Chu said, “and that’s in the best scenario.”

What Chu says about the snowpack in the Sierra Nevada goes double for the snowpack in the Himalayas. There, we are talking about a water feed that irrigates a billion or so people, in China, India, Burma, Pakistan, etc. You will notice that China and India are producing enough pollution by themselves to significantly erode that water source. And that the industries that they are promoting are heavy water users. Hmm. Like the towers of 5th street, it seems that a bet is being made on the future that depends on an unlikely combination of lucky circumstances.

“One day last June, an environmental engineer named Bradley Udall appeared before a Senate subcommittee that was seeking to understand how severe the country’s fresh-water problems might become in an era of global warming…

The importance of the water there was essentially what Udall came to talk about. A report by the National Academies on the Colorado River basin had recently concluded that the combination of limited Colorado River water supplies, increasing demands, warmer temperatures and the prospect of recurrent droughts “point to a future in which the potential for conflict” among those who use the river will be ever-present. Over the past few decades, the driest states in the United States have become some of our fastest-growing; meanwhile, an ongoing drought has brought the flow of the Colorado to its lowest levels since measurements at Lee’s Ferry began 85 years ago. At the Senate hearing, Udall stated that the Colorado River basin is already two degrees warmer than it was in 1976 and that it is foolhardy to imagine that the next 50 years will resemble the last 50. Lake Mead, the enormous reservoir in Arizona and Nevada that supplies nearly all the water for Las Vegas, is half-empty, and statistical models indicate that it will never be full again. “As we move forward,” Udall told his audience, “all water-management actions based on ‘normal’ as defined by the 20th century will increasingly turn out to be bad bets.”

Bad bets, bad bets. In the bubble to bubble economy, everything is built on the proposition that even bad bets, for a time, are good ones. Now, when I cast a baleful glare on the towers of 5th street, doing my best to imitate Jonah’s view of Ninevah, I tend to emphasize the foolish and greedy nature of the bad bets in an architectural style that will age badly that I see rising before me. Yet, there is a part of me that is thrilled. The U.S. has taken bad bets and made them go good through sheer force of will before. Gertner’s article is a reportorial tour among water managers of Western cities, and you have to be in awe of these people. The hero of the piece is Peter Binney, the water manager of a town I admit to never having heard of - Aurora, Colorado. Well, Aurora is the 60th biggest city in the U.S., and it is watered through a series of Byzantine series of contracts, as per usual in the West. Binney came up with a rather brilliant idea which consists in getting the good householders of Aurora to drink their own pee. We all drink somebody’s pee, but Aurora is going to capture the wastewater it dumps in the South Platte and recycle it. Exciting, eh? Somehow, this pushes against the second law of thermodynamics, but it is a friendly tickle. Enough will evaporate and escape, and enough new water from precipitation and ground water will join the Aurora water supply so that the good folks won’t literally be locked in a closed system, one that has to be bad for the kidneys.

How odd it is, when you think about it, that the true and mindblowing changes that the U.S. is going to have to face have been systematically not faced, not even thought about, for the last six years. Drift, drift drift.


roger said…
And so, North, talking about California water shortfalls - what are you making of these amazing fires?
roger said…
North? North? I hope everything is all right with you, from the fire perspective. Take care of yourself.
northanger said…
i'm okay! but i have to drive to LA tomorrow & i'm hoping traffic won't be too snarly. hey, Dumbledore's Gay! (i tell you, i love that woman) California's going to borrow his Deluminator.
Scruggs said…
Water refugees, Roger! yuppie water refugees with expensive hunting rifles and fancy Italian shotguns. They're all driving gas electric hybrids -- caravans of them, hordes, a multitude of people who have what it takes to get jobs with free market government contractors. They're looking for opportunities to loot and to get good deals on subprime meltdown repo land with wells. I see their nannies drop the kids off at the strip mall dojo, where the little fuckers practice on foam rubber dummies. They're attending meetings and discussing people. They write letters and make their views known. They have carefully controlled temper tantrums when the grocery store runs out of soy milk.

Those are the people who will thrive. They're going to hire the stupidest and most servile wingnuts to be enviro-snitches and enviro-rent a cops.
P.M.Lawrence said…
What, no mention of the Oglala Aquifer?
roger said…
Mr. Scruggs, let not the sins of the fathers touch the dojo practicing children!

The odd thing is that Austin's downtown towers do make environmental sense. It takes the massive residential stress of the Barton Creek watershed - although I suppose that battle is nearly lost, with all the shopping malls and houses that have been built to leak and runoff directly into Barton Creek. One of the ironies of the Austin bubble - or at least my supposition that it is a bubble - is that affordable downtown condos really is a good idea. It was a good enough idea to sell to the City Council - and then of course it was tossed out, and the condos went from 175 thou to 400 to 500.

90 percent of the water of the Colorado River states - which, Mr. Lawrence, are West of those dependent on the Ogalala, unless Eastern Colorado feeds on the Ogalala - seems to be pledged to agriculture. And that will be where the battle starts. What began in ranching will end, seemingly, in endless lawsuits to get rid of ranching.

By the way, I don't really see the West in terms of villainy, except of course for the exterminationist past - I see it in terms of heroism. The Coulee Dam, the Hoover, Lake Mead - all those massive New Deal Projects which Woody Guthrie sang approvingly of. I've lived in Texas long enough to understand the land hunger. Go to west Travis County and you can see country, still, spreading out under the vast sky, and there is definitely an atavistic part of me that says, this is worth fighting for. Grab it, hold onto it.

- Another minor irony is that if the weather pattern changes, Austin and Central Texas might be the benificiary. We'll get the water formerly dropping over Boulder or Provo.
P.M.Lawrence said…
Oh, I know where the Oglala aquifer is - I linked to it, after all - I was just surprised that such a wide ranging discussion hadn't brought out the water management issues there too, as context for comparison if nothing else.