Ten years a blogger: Part 15, Holmes on housing capital

June 29, 2015 | Blogs, Capital markets, Cities, Essential posts, Evolution, Finance, Global news, Government, Holmes on housing, Mobile homes, Money, Slums, Theory, US News, Value chain | No comments 55 views

[Continued from yesterday’s Part 14 and the preceding Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, Part 12, and Part 13.]

By: David A. Smith

holmes_by_paget_1904

“The world is full of obvious things which nobody by any chance ever observes.”

Section 15. Sherlock Holmes on forms of housing capital

Perhaps the most important and personal use of the blog has been the platform it has given the world’s foremost affordable housing consultant.

Holmes was both the master analyst and also the master explainer, and in 2005 he made his debut:

holmes_006

You have been in housing finance, I perceive.”

Shortly thereafter, Holmes undertook his monograph on the multiple forms of capital, beginning with The four kinds of money (February, 2005):

All other things being equal, therefore, capital consumers want the most debt they can get — and lenders will provide it if and only if there is adequate equity behind them.  But this leads to a further affordability paradox: whichever form of money we take compromises deep affordability:

 

More debt means more debt service, which means higher rents up front.

More equity means investors who expects cash flow, which means rent increases over time.

Surely this is fascinating,” Watson interposed,

holmes_001

The great detective noted the impatient body language

“but why the lengthy disquisition, Holmes”?

 

holmes_002

Watson wondered, Were these new men soft capital sources?

For a simple two-part reason:

 

1. Deep affordability requires soft capital.

2. At scale, soft capital requires government.

From there, Holmes step by step enumerated the four types of money, starting with Soft debt: the Case of the Kindhearted Banker (April, 2005):

“Soft debt, Holmes?  What on earth do you mean?”

 

The great detective smiled.  “Debt that is not hard,” he said cryptically.

holmes_003

Watson chafed at the straight lines he was being given

soft_debt_definition

Soft equity: the Banker Street Irregulars (May, 2005):

soft_equity_definition

“Is there anything else to which you wish to direction my attention?” I asked.

“To the curious incident of the defaults in the tax credit program.”

“There have been almost no defaults in the tax credit program.”

“That,” said Sherlock Holmes, “was the curious incident.”

soft_equity_works

Hard debt: the Adventure of Archimedes’ Thumb (June, 2005):

“And in that lies the danger,” Holmes said, for as Archimedes and Michael Milken demonstrated, ‘Give me a line of credit long enough and I can buy the world.’”

archimedes_lever

“Now, all I need is a small down payment

“A loan is renting money,” Holmes began, with the satisfied rolling tones of a protagonist early in a story of which he is the hero. “I let you use my money for a discrete period of time. You tell me when you will return it (term of the loan), you pay me an agreed formula rent for the interval (interest), and you give me security (a mortgage) as proof of your good intentions.”

Hard equity: the Adventure of the Six Simoleons (August, 2005):

“I have observed,” said Watson, studying the Essential Posts, “that we have discussed soft equity, soft debt, and hard debt, but I infer that there remains yet one essential post on the four kinds of money.  Having eliminated the previously blogged, whatever remains must be the topic: I infer it is hard equity.”

holmes_004  

Watson knew that if four were involved, and three were addressed, only one could remain

 

“Capital, Watson!”  Holmes laid down his S notebook.  “You positively scintillate this morning.   Indeed, of all four kinds, hard equity is the most important.”

 

Hard equity, Holmes went on, is real cash contributed by an investor in the expectation of return — and unlike soft equity, whose return comes from non-property sources (i.e. government-authorized tax benefits), hard equity requires a hard economic return. 

 

Asked Watson, “Isn’t that the same as hard debt?”

 

“Not at all.  Lending is renting money — I let you use it for a while, then you give it back to me, plus a certain agreed rent (interest).  An equity investment is selling money.  You buy my money from me — I have no means of getting it back.  In exchange you give me a financial object — ownership in a venture.  So my investment decision is quite different.  When I lend, I look at your collateral — the security for my repayment.  When I invest — when I sell you my money for stock certificates or other pieces of paper — I have to bet on your venture.  I have to believe that the business will be worth more, and if I want to realize cash for my ownership, either it flows from the business’s profits, or I have to on-sell my shares to a greater fool who believes what I no longer do.” 

After he had completed these, Watson then challenged the Great Detective to explain Income subsidy: the Fifth Kind of Money (October, 2005):

Is subsidy a kind of money? “Subsidy is not a kind of money,” said Holmes, nettled, looking up from the agony column of the Financial Times, which he had been perusing with the silent glee of a short-selling contrarian.

“Doesn’t government pay out cash?” Watson asked innocently. As the straight man, he had few enough opportunities to score points on the Great Detective.

holmes_005

“Is this question real or rhetorical, Holmes?”

“Oh, rhetorical, certainly, I’m doing the lecturing here.”

 “That is,” Holmes hastily amended, “subsidy is not money in the sense we have previously used — unlike the four kinds of money, it is not a capital source for property development or acquisitions. But as it is indeed a form of cash paid out” — he refolded the paper and set it down — “we need to see it in its proper context.” He paused significantly, looking at the ceiling where giant fingers appeared to be drumming on the roof with a finishing thumb flourish for the space bar.

Nor was Holmes done with his work:

[Continued tomorrow in Part 16.]

 

Month in Review: May, 2015

June 26, 2015 | Blogs, Boston, CalPERS, England, Essential posts, Month in review, Municipal bankruptcy, NIMBY, Parking, Stockton, United Kingdom, Workforce housing, Zaatari | No comments 157 views

By: David A. Smith

There’s never a straight man in Monty Python — even if one character appears relatively sane, that illusion will shortly be upended. 

upended

Too much bull?

Similarly, voters in England who might reject the Monster Raving Loony Party could have hoped that among the remainder – Conservatives, Labour, Liberal Democrats – there might be found at least one Sensible Party, could have been forgiven for concluding that the entire nation had gone completely gaga:

election_night_special

And it could be the first result of the evening …

At least, so it clearly seemed from an examination of their respective housing phantasms, as I explored in Speaking on behalf of the NIMBY party: Part 1, Hugely popular but widely blamed:

The shorter the election cycle, the dumber the political vaporware, and as the United Kingdom barrels down toward the most confusing and hard-to-predict election for many decades, the buffoonery is rising to a silly crescendo.

cameron_despicable

“The truth is he [Miliband] is weak and despicable.”

miliband_feeble

“When did he [Cameron] lose his nerve?  These are pathetic, feeble excuses.”

The parties all agree that Britain has a huge housing problem, it’s the other parties’ fault, and it’s too late to do anything with their suddenly-discovered brilliant ideas until after they are elected.  To illustrate three divergent perspective, here are three equally opinionated (“we’ll report the right opinions, then give you the facts to support them”) stories:

Opinionated sources used in this post

(font colored in rough approximation of party affiliation)

Financial Times (February 12, 2015; by Jim Pickard and Kate Allen, tory blue)

BBC (April 14, 2015; by Robert Peston, Lib Dem orange)

Financial Times (April 26, 2015; by Judith Evans and James Pickford, Labour red)

Spoiler alert: None of these proposals show any awareness of the UK’s housing ecosystem.

uk_ecosystem_in_brief

Distorted as little as possible

Nor did the silliness stop with the Tories, as I showed in the ensuing Part 2, a genuinely stupid idea, Part 3, The fundamental problem is one of supply, Part 4, Not motivated by electoral considerations?, and Part 5, A lack of understanding of the economics:

Meanwhile, so-called “rogue landlords” whose properties fall below basic standards would face tax relief cuts.

I’m all for rigorous enforcement of building code standards, and for pressuring slumlords until they get out of the business, but that won’t do anything to improve supply.

Mr Miliband defended the policy on Sunday with reference to Ireland, where rents can be reviewed only once a year and cannot exceed the market rate.

After a six-month probationary period, Irish landlords cannot end a tenancy, except for certain specified reasons, until four years have passed.

“In 2004 they introduced this system and it has worked. There are more people renting in the private sector in Ireland than there were 11 years ago. This is the right policy,” Mr Miliband said.

Do you remember the EU’s Irish cramdown, Mr. Miliband? 

ed_miliband_resigns

I’m too busy trying to forget my own election

Silliness, to be sure, is not solely the province of the English – nor is blinkered philistine pig-ignorance (to quote John Cleese as an architect) restricted to the English upper classes.

Mr Wiggin Monty Python architects sketch

“Um, are you proposing to slaughter our tenants?”

[Puzzled pause]  “Does that … not fit in with your plans?”

In fact, such shortsightedness flourishes in tony Marin County, as George Lucas found repeatedly over more than a decade before he used the dark side of zoning, as chronicled in May the (work) force be with you: Part 1, Resurrected a defunct homeowners’ associations, Part 2, Facing death by delay, and Part 3, Fearful bigots oppose extraordinary gift:

As established in yesterday’s Part 2, George Lucas’s ‘neighbors’ (term used in its geographical sense, not in any sense of sociability) had thwarted his original plans to develop a sophisticated and jobs-creating film studio on his property, and then exhausted his second possibility, affordable housing using the available programmatic series, and they thought they had won –

ewok_stole_bike

– only to be outfoxed by Mr. Lucas using the dark side of his wealth, and proposing (gasp!) to use his own money entirely and to build only what he needed no further permission to build (double gasp!).

reverse_incumbency_question

Let’s apply the reverse-incumbency principle:

What if Marin already had 224 apartments of workforce family housing and elderly housing, located on land owned by Mr. Lucas, and Mr. Lucas declined to renew the at-will arrangement, and instead proposed that PEP Housing do as Mr. Jobs’ neighbors wanted him to do, cart up the buildings and relocate them elsewhere, so that he could restore those 52 acres to their natural, pre-development state?

The neighbors would crucify him.

han_solo_frozen

Give us back our workforce housing

Although NIMBYism may beat in the hearts of all of us, it erupts visibly most often in the strongest markets, which can afford to spray development repellant about liberally (as it were), versus towns whose economy is noisily wheezing, like bankrupt Stockton, CA, will do anything to bring in new investment, as covered in Folly or catalyst? Part 1, “I bought strong locks”, Part 2, “With bankruptcy being over”, and Part 3, “Something Downtown Stockton can be proud of”:

As we saw yesterday, arresting Stockton’s economic decline became possible only with bankruptcy and its slashing of liabilities, which made the city once again creditworthy and which also enabled it to rejoin the community of municipal entities reinvesting in their downtowns.  But to correct that neglect, and reanimate the hollow urban core, requires the first property re-entering the market to be financially and visually reinforced, so that both bankers and neighbors would be swiftly convinced it would work:

[Extensive snip]

“It won’t be an old hotel converted to (single-room occupancy). It’s going to be something downtown Stockton can be proud of. It’s a catalyst.”

Change is being catalyzed in downtown Stockton, as reported three weeks later in the Stockton Record (March 30, 2015; Kelly green font):

cal_weber_fencing

Raymond Cavazos, left, and Samuel Mora put up fencing as work begins for construction and renovation at the site of what will be the Cal Weber 40 affordable housing development at California Street and Weber Avenue in downtown Stockton.

Construction is work, and that means jobs.

Because Stockton went into bankruptcy (and has now just emerged), that city’s future is headed upward, unlike that of the pre-bankruptcy Windy City, where we may have seen the fall of Chicago’s first domino:

Scarcely had I finished posting Chicago’s pre-obituary (A tale of two cities, Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, and Part 12) than the first domino fell, as reported in the Chicago Tribune (May 8, 2015), with its echo event four days later Chicago Tribune (May 12, 2015; brick red font):

The Illinois Supreme Court’s decision to toss out the state’s pension reform law dealt a triple blow to Mayor Rahm Emanuel’s difficult task of shoring up Chicago’s shaky finances.

It’s not a triple blow, it’s a single blow with three consequences:

Moody’s said Chicago’s rating could be cut if Illinois courts find pension reform laws enacted to shore up the state’s financially ailing pension system and for two of Chicago’s retirement systems are unconstitutional.

‘Could be,’ in this context, is a euphemism for ‘your darned right it would be.’

heisenberg_youre_god_damn_right

No uncertainty here Heisenberg, just principle: “You’re God-damned right we’re cutting the rating”

Four days later, the rating was cut.

With jobs come people, with people come cars, and with cars comes the pricing of street-sleeping vehicles, which means that once Out of the parking, endlessly circling: Part 1, It’s yours for a couple of days, Part 2, An hour to find a space, and Part 3, Going through all the drama:

Out of the parking endlessly circling,

Walt Whitman (paraphrased)

walt_whitman_28

I sing the auto electric

As we humans are easily enslaved by our metal overlords, we gradually internalize our masters’ needs – their room for living space, their restless urge to roam, and their need for curbside access, as reported unsympathetically in the Boston Globe (January 20, 2015):

Jenny Wahoske, a 35-year-old executive assistant who shares a car with her partner, has to be strategic to snag a parking space near her South End condo.

Legally, no one owns the street, except in snow emergencies, where Mayor Walsh imbued a common-law rule with judicial force:

south_end_bans_spot_savers

Banned in Boston?

Finally, during May I posted four more parts of the mega-post Ten years a blogger, covering my discoveries and tentative findings about housing’s impact on and because of evolution in technology, cities, land, jobs, in Ten years a blogger: Part 11, Evolving building technology, Part 12, Housing and cities, Part 13, Housing and urban land uses, and Part 14, Housing and mobility:

All this thinking about spontaneous communities and how cities grow culminated in a rationally angry post about Zaatari, the instant unloved city (July, 2013), which became a course of research leading to a book, available for free download, that curated the state of Zaatari, even as Syria collapsed into a microcosm of the warlord state of barbarity.

zaatari_book_cover

Eull e-book downloadable here

The essential role of housing as continuous nutrient for and renewal of cities are unearthed in this Top-25 post (April 21, 2011) Economic nitrogen fixing: Part 1, import and recycle nutrients

Urbanization’s side effects: Part 4, I hope so, anyway

June 25, 2015 | Air pollution, Delhi, Evolution, Global news, Housing, India, Infrastructure, Markets, Slums, Traffic, Urbanization, Water and sanitation | No comments 83 views

[Continued from yesterday’s Part 3 and the preceding Part 1 and Part 2.]

By: David A. Smith

Recommended treatment: Topical ointments of in-situ slum upgrading; anti-corruption boosters via self-help groups at regular intervals; regular political exercise via free and fair elections; fairly compensated expropriation with strong judicial scaffolding.

As presented in a personal and moving New York Times (May 29, 2015) story by Gardiner Harris, who moved his family back from Delhi to Washington because he could no longer bear the stress of worrying about the effect of Delhi’s air on his son’s asthma, to stay in a polluted rapidly urbanized city is to put one’s family at risk. 

01_delhi_boy_mask

Is this how you want me to grow up?

To leave is an understandable option for the very few but impossible for the very very many.  Is there no other choice?

Not for an individual family, perhaps; the scale is huge, the challenges are many, and many families are not positioned to make a difference.  But for the totality of Delhi’s and India’s leadership, there is a third choice.

6. The only way out is forward, upward, urban-ward

While in the abstract the choices are cocoon, improve, or leave, cocooning in fact never works – at least, not in the twenty-first century, because the scale of human urbanism is so much larger than it has ever been before.  When twenty million people live in a conurbation – and we have perhaps ten such deca-megacities – that is so much air breathed, water drunk, effluent passed, that without metropolitan-wide infrastructure it cannot be successfully expelled, scrubbed, flushed, greened.  Scale forces technology and technology forces governance:

delhi_metro_rail_construction

Green in the future? Delhi metro rail under construction

We live in a four-year-old, five-story apartment building that my wife chose because its relatively new windows could help shut out Delhi’s appalling nighttime air. Its cookie-cutter design — by the same developer who built dozens of others in the neighborhood — gave us confidence that things would function, by no means assured for new construction here.

I have had multiple reports that in India residential development is distrusted because so much construction is slipshod.  Contractors aren’t certified, post-completion warranties are in their infancy, building permits and buildings codes can be fiddled or baksheeshed away.  Latent defects not only exist, they swiftly manifest:

About six months after we moved in, one of our neighbors reported that her tap water suddenly smelled like sewage. Then the smell hit another neighbor and another. It turned out that the developer had dug open channels for sewage that had gradually seeped into each apartment’s buried water tank.


ragpicker_delhi_water

Ragpicker trawling the Yamuna in Delhi

In the US and Western Europe, the concept of general contractor is well developed; they are bonded, some percentage of both payment and performance, and they in turn use bonded or otherwise proven and verifiable subcontractors.  In India, such is the pace of construction and urbanization that many can enter the field without necessarily being of the best quality – and they, in turn, will hire hundreds of workers.  That chain of command, inspection, and verification invites leakage … both financial and, well, liquid.

When we pulled up the floor tiles on the ground floor, brown sludge seemed to be everywhere.

I think many of us have had nightmares of that sort, the water rising as we are helplessly pinned.

das_boot_flooded

How did I get into this mess?

I was in the shower when this sewage mixture arrived in our apartment. Sounds horrible, but I shrugged and toweled off because that smell is such a frequent presence here.

What can’t be cured, must be endured.

piers_plowman

Piers Plowman, the peasant philosopher of 1377

The list of health threats sounds harrowing when considered together, but life goes on and can be quite nice here. Our apartment building eventually installed aboveground water tanks. My children’s school and travel in the region are terrific, and many expats are far more influential here than they would be in their home countries.


Everything’s a mix.  Urbanizing cities are incredibly lively – and our capacity to look on the bright side of life is legendary.

always_look_on_bright_side

Always look on the bright side of life

Delhi’s story isn’t new; the same thing happened in London and Manchester between roughly 1850 and 1895. 

london_smoke_makers

Peppered moths in London and Manchester, which had predominantly been light-gray, gave way to black ones, because (adapted from Wikipedia’s summary):

Peppered Moth

Great camouflage …

black_gray_peppered

… until the soot arrives

Before the Industrial Revolution, the black peppered moth was rare.  R.S. Edleston observed the light-bodied moths were able to blend in with the light-colored lichens and tree bark, and the less common black moth was more likely to be eaten by birds, and the dark moths numbered about 1 in 10,000.

widnes_smoke

Dark satanic mills

During the early decades of the Industrial Revolution in England, soot from the new coal-burning factories darkened surfaces and sulfur dioxide emissions killed light-bodied lichens, so birds could now pick off light-colored moths.  By 1895, 98% of the Manchester moths were dark, a phenomenon dubbed “industrial melanism“.

gray_and_black

Too bad about the charcoal, gray

In 1878, entomologist Albert Brydges Farn brought this to Darwin’s attention, documenting dark moths in peat in New Forest, brown moths on clay and red soil in Herefordshire, and white moths on chalk cliffs in Lewes, as a possible example of “survival of the fittest”.

victorian_smog

Not only is the air unhealthy, what’s on the cart?

Today, the moths in London have reverted to gray.

Though Sherlock Holmes called London’s extreme atmospheric soup fog, it was in fact smog , and the London smog was lethal in more ways than one:

“In a fog, the air is hardly fit for breathing; it is grey-yellow, of a deep orange, and even black at the same time, it is moist, thick, full of bad smells, and choking.”

“The fog was denser than ever,— very black, indeed, more like a distillation of mud than anything else; the ghost of mud …”

‘Sometimes it is of a bottle green colour; but if the barometer rises, it will either totally disappear or change into a white mist. At other times it is of pea-soup yellow …’

The above is from Dirty Old London: The Victorian Fight Against Filth.

The consequences of a bad fog were potentially lethal. Traffic accidents were commonplace and walking even the most well-trodden path along a canal or dock-side was terribly hazardous.  On one awful night in 1873, the Poplar coroner was obliged to conduct hearings on the deaths of seven different men who had fallen into the West India Docks. Robberies, meanwhile, multiplied – from theft in the street, to ‘smash and grabs’ from shop windows. Deaths from bronchial complaints doubled.

It’s not implausible to lay Jack the Ripper’s success at killing and then disappearing to the smog in which the Ripper was able to hide:

jack_ripper_fog

I’ll just vanish

The extent of the damage Delhi is doing to our children can only be guessed, he said. Several medical ethicists said it would be impossible to get approval for a clinical trial to send a group of children to Delhi to monitor their health. “Not a chance,” said Adil E. Shamoo, editor in chief of Accountability in Research and a bioethicist at the University of Maryland School of Medicine. “It’s O.K. to survey people already there, but moving children into harm’s way? No.”

shamoo

Drawing the line at exposing children to Delhi

We don’t consciously use children as guinea pigs, but Delhi subconsciously uses poor children as guinea pigs.

These and other experts told me that reduced lung capacity in adults is a highly accurate predictor of early death and disability — perhaps more than elevated blood pressure or cholesterol. So by permanently damaging their lungs in Delhi, our children may not live as long.

And then there are nascent areas of research suggesting that pollution can lower children’s I.Q., hurt their test scores and increase the risks of autism, epilepsy, diabetes and even adult-onset diseases like multiple sclerosis.

I believe it all.

And here lies the great unvoiced truth about the Western campaign for a sustainable planet: Forget about California lawns; forget about jet planes; forget about Priuses.  If we are serious about climate change, if we want to do something that will move the needle in a big way, instead of chastising the West, figure out how to provide development support for India.

                         

delhi_thinker_smog

What then must we do?

There is a growing expatriate literature, mostly out of China, describing the horrors of air pollution, the dangers to children and the increasingly desperate measures taken for protection. These accounts mostly end with the writers deciding to remain despite the horrors.

Not this one. We are moving back to Washington this week.

We can never expect the Indians who live in Delhi to return to the countryside.  We cannot ask them to stay non-industrialized and poor for our sake.  We cannot ask them to follow Scrooge’s bitter advice of dying soon to decrease the surplus population. 

The boys are excited. Aden, 12, wants a skateboard and bicycle, accouterments of freedom in a place he is allowed to wander by himself. His younger brother’s wish may be harder to realize.

“My asthma will go away,” Bram said recently. “I hope so, anyway.”

Humans are resilient, we are enterprising, and we are optimists.  Bollywood has become a multi-billion-dollar global industry by delivering stories of struggle, aspiration, love, triumph, and happy endings. 

bollywood_wedding_dance

To the future!

It’s up to us to write that story.

delhi_at_dawn

Fog, smog, and sunshine: Delhi at dawn

Urbanization’s side effects: Part 3, Irreversible lung damage from poisoned air

June 24, 2015 | Air pollution, Delhi, Evolution, Global news, Housing, India, Infrastructure, Markets, Slums, Traffic, Urbanization, Water and sanitation | No comments 136 views

[Continued from yesterday’s Part 2 and the preceding Part 1.]

By: David A. Smith

Symptoms: Air pollution, water pollution, painful crime nodes; traffic jams; periodic rashes of civil disturbance; splotches of substandard housing; construction cranes; prevalence of kickbacks.

So unhealthy is the Delhi environment – especially the water and the air – that, as we saw yesterday, using Gardiner Harris’s essay on the noble science of self-justification in The New York Times (May 29, 2015), those who live in Delhi by economic choice take expensive steps to insulate themselves, as much as they can, from its environment, with ‘private’ (simply meaning, paid at market price) hospitals and the world’s most expensive ‘bungalows’.

lbz_bungalow

It’s just a bungalow but it’s home to us

lbz_boundaries

Exclusive by zoning and minimum lot size

But those people are in the tiny minority, the 1%’s 1% as it were, and for the 99.99% of are the others, consequences are more severe.

Population. Pollution. Overcrowding. Rush hour traffic jam on Chandni Chowk, the main throughfare of Old Delhi, leading up to the walls of the Red Fort.

Population. Pollution. Overcrowding. Rush hour traffic jam on Chandni Chowk, the main throughfare of Old Delhi, leading up to the walls of the Red Fort.

Rush hour on Chandni Chowk, Old Delhi’s major thoroughfare

4. Overcrowding and unhealthy cities impair society’s growth

[Two years ago, we nearly left but we stayed], or at least I decided that. My wife seriously considered flying home immediately, and at the end of a summer visit to the United States with the kids months later, sobbed for hours on the return flight to Delhi.

Mr. Harris’s story produced some Twitter-trash-talk (at the moment, Twitter only empowers the intemperate) about his ‘first-world problems,’ yet that is absurdly unfair – Mr. Harris has those choices, and he’s every bit as entitled to make the best choices for his family as if he were poor.

Over the last year, often over chai and samosas at local dhabas or whiskey and chicken tikka at glittering embassy parties, we have obsessively discussed whether we are pursuing our careers at our children’s expense.

dhaba_in_delhi

Enjoy your samosas, let Ganesha bless your enterprises

First-world problem though that may be, it’s a first-worlder who faces it, and the first-worlder has an option to withdraw – an option, I believe, that would be back for the emerging world.

After our second year here, Bram seemed fine. His earlier difficulties, though, led me to call some leading air pollution experts. The conversations were sobering.

“Knowing that I was putting my kids in a place that compromised their health for their lifetimes would be very difficult given all of the scientific evidence,” said W. James Gauderman, a professor of preventive medicine at the University of Southern California.

If sex drives human reproduction, parenthood drives human achievement; what we build, we build for our children more than for ourselves.  Should Mr. Harris work in Delhi, doing something that may abstractly help hundreds or thousands or even millions of poor children like his son, or should he return to America, and help his own child?  “Don’t judge a man until you’ve walked two moons in his moccasins,” my father would quote, channeling the Indian blood that he believed or fancied to believe that we smiths had in ourselves. Benefit the world, or benefit your family: how do you choose?

james_gauderman

Gauderman yearns to have everybody breathe free

Gauderman is the co-author of a landmark 2004 study showing that children raised in parts of Los Angeles — where pollution levels are a fraction of Delhi’s — face significant and probably permanent losses of lung function.

We know, as a matter of biological fact, that sickness makes you stupid.  We know that childhood poverty damages your mind.  We know the children of poor-to-rich-country immigrants grow up taller, stronger, healthier than their parents did.  We know, in short, that overcrowding and slums damage human beings. 

Even children who move to less polluted places during childhood never seem to entirely recover from earlier high pollution exposures, another study found.

We thus have a duty, insofar as we can, to help other people, neighborhoods, cities, countries, through the transitional; phase of urban slums and into an urban adulthood of healthy cities.

And children are by no means the only ones harmed. Many adults suffer near-constant headaches, sore throats, coughs and fatigue. Arvind Kejriwal, Delhi’s chief minister, had to leave the city for 10 days in March to cure a chronic cough.

arvind_kejriwal

Even Delhi’s chief minister had to escape Delhi to recover

As I said when this post began, after only 2 ½ weeks in India, the Boss and I got horribly sick – and it was so bad that even today, five years later, she isn’t quite ready to go back.

0679_queens_cenotaph_100209_sm

Though she was enraptured by the Queens’ Cenotaphs

5. The public sector catches up only when the middle class is drowning in soot and filth and disease and crime

Framing this way isn’t judgmental or moralistic, just the utterly amoral Law of Economic Gravity.  Because there ain’t no such thing as free infrastructure, the up-front cost of its establishment or expansion has to be paid for somehow – and in a pure-market context, the infrastructure stops at the equilibrium boundary where those being added to the grid cannot pay enough to make extending it worthwhile.  When this happens, as we’ve seen, the result is a slumprivate investment outrunning public infrastructure.  But the slum produces negative externalities, which the very poor tolerate because they have no practical choice if they wish to remain in the city – and they desperately wish to remain in the city because they believe, quite correctly, that this is the right strategy for parents who love their children. 

These perils sicken, disable and kill millions in India annually, making for one of the worst public health disasters in the world. Delhi, we discovered, is quietly suffering from a dire pediatric respiratory crisis, with a recent study showing that nearly half of the city’s 4.4 million schoolchildren have irreversible lung damage from the poisonous air.

delhi_pedestrian_flyover_150601

You have to breathe, don’t you?

The rich (or the government, which in economic terms is always funded mainly by the rich) can change these infrastructure economics only by ‘buying down’ the cost of that infrastructure, by making capital payments that they do not expect to recover directly – this means either charity, imperial beneficence (Augustus Caesar ran free water through Rome), or the ‘pooled involuntary charity’ known as taxes.  The middle class will make this pooled involuntary charitable contribution only if in doing so it gains some non-monetary benefit from it – urban stability, say, or air that doesn’t harm rich children as well as poor ones.

Bram spent the next five days at home, with my wife giving him heavy doses of inhaled steroids through a mask. He has a quiet sadness during these crises, perhaps because they force him to accept the idea that his health is more fragile than that of his brother or friends.

Before coming to Delhi, Bram had had a couple of breathing episodes that doctors assured us he would most likely outgrow. Now he has full-blown asthma and must take powerful daily medications.

Then self-interest becomes, shall we say, enlightened:

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It would be worth paying something for this to go away

Foreigners have lived in Delhi for centuries, of course, but the air and the mounting research into its effects have become so frightening that some feel it is unethical for those who have a choice to willingly raise children here.

Delhi was not always so unhealthy for children and other living things; the ill health arises from the intensity of urbanization – it’s a side effect of taking the economic-growth-hormone known as industrializing the city:

Similar discussions are doubtless underway in Beijing and other Asian megacities, but it is in Delhi — among the most populous, unsanitary and bacterially unsafe cities on earth — where the new calculus seems most urgent.

Indian commuters wait for a bus early on a polluted morning in New Delhi on January 31, 2013. Air Quality Index (AQI) pollution markers were at hazardous levels around the city. AFP PHOTO/ Prakash SINGH

Indian commuters wait for a bus early on a polluted morning in New Delhi on January 31, 2013. Air Quality Index (AQI) pollution markers were at hazardous levels around the city. AFP PHOTO/ Prakash SINGH

Double danger: Delhi bus in the smog

For three decades Meg Greenfield was a curious (thoughtful, sharp-eyed, steady, refined) editor of the Washington Post and Newsweek columnist, and upon her death she bequeathed Washington, a posthumous book of essays of political truth, in one chapter of which she described a politician’s children are a direct hot line to his or her emotional core

Ruth R. Faden, director of the Johns Hopkins Berman Institute of Bioethics, said children have a special claim to protection. “First, because they are so dependent on us for their well-being, and second because deprivations in childhood have such an outsize effect,” she said.

Greenfield observed that a politician’s children or grandchildren are a policy market signal that the elected official cannot block, cannot shut out, as in her book the senior Johnson Administration official whose position on the Vietnam War seeing his child arrested protesting the war.  Children have that red-phone to the brain.

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Your child is calling, and you have to take it

In the same way, slum dwellers have a direct line to politicians, if not through their formal channels then through their aggregate voice. 

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Money and structure flow down; voice flows up

The voice of the poor makes an end run around the neat hierarchical structures the government and the markets create; and the city’s effluent makes a similar end run.  The wind blows where it will.

Would he have developed asthma if we had stayed in the United States? Pediatric asthma is far more likely to start and worsen in polluted locales. The sidelines at kids’ soccer games here are littered with inhalers.

For the upper classes, the choices are:

1. Stay and cocoon yourself while under progressive environmental siege.

2. Emerge from your castle and clean the whole city – not just one’s immediate vicinity, the whole city.

3. Leave.

U.S. Treasury Secretary Timothy Geithner addresses students during his visit to the American Embassy School, his former elementary school, in New Delhi October 9, 2012. REUTERS/Mansi Thapliyal

U.S. Treasury Secretary Timothy Geithner addresses students during his visit to the American Embassy School, his former elementary school, in New Delhi October 9, 2012. REUTERS/Mansi Thapliyal

Former Treasury Secretary Tim Geithner, addressing students at the American Embassy School in Delhi, where he was a pupil

So many of our friends have decided to leave that the American Embassy School — this city’s great expat institution — is facing a steep drop in admissions next fall.

american_embassy_school_delhi

Plenty of fields for the kids to play

Emigration, or return to the developed-world haven, is feasible for the expatriate who’s living in an emerging city as a career-arc posting.

My pastor, who ministers to a largely expat parish here, told me he feared he would lose 60% of his congregants this summer.

Delhi‘s livability is much worse in summer than in winter; summer will be when the observant herd starts flying home.

delhi_from_air

Flying away, I leave the smog behind

[Continued tomorrow in Part 4.]

Urbanization’s side effects: Part 2, you should not raise children in Delhi

June 23, 2015 | Air pollution, Delhi, Evolution, Global news, Housing, India, Infrastructure, Markets, Slums, Traffic, Urbanization, Water and sanitation | No comments 165 views

[Continued from yesterday’s Part 1.]

By: David A. Smith

Side effects include: Overloaded infrastructure; proliferating informal settlements; emergence of alternate-power structures (cf. gangs); eruptions of verticality; dramatic adaptive reuse of existing structures; absentee landlords and rent-seekers; inter-tribal clashes.

As we saw yesterday, working from Gardiner Harris’s farewell to Delhi in The New York Times (May 29, 2015), Delhi can be dangerous for its traffic and its smog, and perhaps even more, its water.

2C. Water and sanitation.  While we breathe air and can filter it, water is even more important, because we must drink it, in volume, every day, and it has much greater ability to carry not just particles but also microbes:

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Rafting along the Yamuna River, Delhi

For much of the year, the Yamuna River would have almost no flow through Delhi if not for raw sewage. Add in the packs of stray dogs, monkeys and cattle even in urban areas, and fresh excretions are nearly ubiquitous. Insects alight on these excretions and then on people or their food, sickening them.

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Spectacular photos of Delhi by Nicolas Marino may be found here

Most piped water here is contaminated. Poor sanitation may be a crucial reason nearly half of India’s children are stunted.

It’s entirely possible that, polluted though Delhi’s water is, it is nevertheless not as bad as New York’s Gilded Age (say 1880) Lower East Side and London’s 1858 Great Stink probably topped our own pollution:

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“Father Thames introducing his offspring to the fair city of London”

The children are representative of diphtheria, scrofula and cholera.

London was filthy for many decades.  An 1831 cholera epidemic killed 6,500 people; an 1849 recurrence cost 14,100, and in 1854 about 10,700 died.  

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Monster Soup, commonly called Thames Water, being a correct representation of that precious stuff doled out to us

As Wikipedia summarizes it:

The scientist Michael Faraday described the situation in a letter to The Times in July 1855: shocked at the state of the Thames, he dropped pieces of white paper into the river to “test the degree of opacity”. His conclusion was that “Near the bridges the feculence rolled up in clouds so dense that they were visible at the surface, even in water of this kind. … The smell was very bad, and common to the whole of the water; it was the same as that which now comes up from the gully-holes in the streets; the whole river was for the time a real sewer.” 

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Faraday in 1861

The smell from the river was so bad that in 1857 the government poured chalk lime, chloride of lime and carbolic acid into the waterway to ease the stench.

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The Silent Highwayman, death in the river

Nor is the inflow the sole or even primary problem.  Hydrographically, people are flexible tubes through which we pour liquids, and what comes out of us is less clean, in terms of human hygiene, than what we bring into it.

It’s not just the air that inflicts harm. At least 600 million Indians, half the total population, defecate outdoors, and most of the effluent, even from toilets, is dumped untreated into rivers and streams.

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Indian gentleman squatting in the street, Bikaner

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Havelis (urban townhouses) in Bikaner, taken five minutes before the preceding photo

2D. Unrelenting pressure accumulates.  As we saw with the Chinese who moving their lungs and their money to Australia, there comes a moment when even the most ambitious executive decides he or she is a parent first, a worker second:

We nearly left two years ago.

It’s a question a parent asks, and asks, and asks again.  The question never really goes away.

3. The market responds top-down, with private infrastructure-plus enclaves

Though it may be impossible for even Prince Prospero to shield himself entirely from the world about him, those with money have more mobility and options, especially in crisis:

My wife called a friend, who recommended a private hospital miles away.

blk_memorial_hospital

BLK Memorial private hospital

Infrastructure and services emerge for the wealthy first; they can afford to protect themselves from the most proximate causes:

After Bram’s first hospitalization and his breathing stabilized, tests showed that he had lost half his lung function. On our doctor’s advice, we placed him on routine steroid therapy and decided that as long as his breathing did not worsen again, we could stay in Delhi.

The richer can also they stay in the dirty city, at the cost of continuing parental stress:

For most Indians, these are inescapable horrors. But there are thousands of others who have chosen to live here, including some trying to save the world, others hoping to describe it and still others intent on getting their own small piece of it.

It is an eclectic community of expatriates and millionaires, including car executives from Detroit, tech geeks from the Bay Area, cancer researchers from Maryland and diplomats from Dublin.

In fact, when it came time for the British Raj to make its capital, the British built an entire new city – New Delhi – close enough to old Delhi to connect to railways and the servant population, far enough west and north to be upwind and upstream.

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New Delhi, as designed by Lutyens

Starting in 1911, the British built a masterpiece of early New Urbanism,

E E Hall

E E Hall

Under construction

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Shortly after completion

(Note small vegetable farms at bottom of image)

Today that vision of gracious tropical living is preserved, amazingly, in the Lutyens Bungalow Zone, which may be the world’s most expensive residential neighborhood.

Suresh Nanda's 4 Prithviraj Road, in Lutyens' Bungalow Zone. -photo by Qamar Sibtain

Suresh Nanda’s 4 Prithviraj Road, in Lutyens’ Bungalow Zone.
-photo by Qamar Sibtain

Rs 600 crore ($110 million) for a two-acre home

lbz_prices

Built for the British, the LBZ is the neighborhood of India’s home-grown centimillionaires and billionaires, people who can insulate themselves with their own air-conditioned home, car, driver, and office.

Sarath Guttikunda, one of India’s top pollution researchers, who moved to Goa, on the west coast of India, to protect his two young children, was unequivocal: “If you have the option to live elsewhere, you should not raise children in Delhi.”

guttikunda

He took his kids out of Delhi

[Continued tomorrow in Part 3.]