En Mexico: Cash, Entrepreneurship, and Jobs

One of the things that adds to the unique economy in San Agustinillo is it’s cash economy. And, there are no cash machines in San Agustinillo. Nada. Cero. The closest machines are up the hill in Mazunte about a 15 walk away. Imagine a world where your cards are simply meaningless. No value. Useless other than noisemakers in your bike spokes. And your phone. No help there either. What would you do? How would that change your life? The cash only economy promotes the sell, sell, sell nature of the place. It’s an entrepreneurs paradise.

I was ok on cash. Remember things are cheap and I loaded up on pesos. But, one never knows. So while I was in Mazunte I figured I’d better stock up on pesos. Better to have some in reserve. I found one machine, but it was out of service.

“Donde esta otro?” I asked.

“Alla,” the security guard said pointing down the street.

So I went. The line looked long. It was about 86 degrees give or take. But having some pesos now would save a lot of hassle later. So I got in line.

It was hot. Really hot. And the line wasn’t moving. The line stretched out in front of a pizza that had slices baking in the sun. Not very appetizing at the moment. But maybe he had a bottle of water.

“Tienes agua?” I asked.

“Si, agua de fruta,” he answered.

“No, tienes una botella de agua?” I asked.

“No tengo botellas de agua,” he said.

So no water. I waited. The line did not move.

As I stood in line I remembered I had some American cash. The heat was making me light headed. I started fanaticizing and doing math and Spanish in my head.

“Se vendes pesos?” I practiced, imagining talking to a store owner.

“Yo tengo dinero de Estados Unidos,” I thought I’d say. Maybe I’d hold up a wad of bills. Presidentes muertes.

I figured if I offered a good deal, maybe I could get 1000 pesos for $100. Was that right? It wasn’t getting any less hot. Was my math messed up?

Finally I calculated how long each transaction was taking inside the little closet with a glass door where the machine was. I started counting the seconds. I got up to about 180 when I counted the people in front of me; at least 20. Math. Three minutes times 20 is an hour. No gracias. So I left.

As I walked through the town I thought exchanging dollars for pesos on the street might be illegal or at least out of line. I imagined what if the shoe was on the other foot and someone offered me a wad of some currency in exchange for some dollars. It would be inconvenient. I’d have to go change the money into dollars and what rate would I get?

Then I thought of how a business could spring up around the lines. Fans? Water? Paying people to wait in line? Of course the people had no cash, so there would be risk. What if they got the water and took off. You could sell it for a lot, but how would you collect? The line water idea was the best one. I take your card and pass word and take 10 percent. Crazy? Wait for an hour and half in line and it doesn’t sound that bad.

The cash economy seems to inspire a lot of hustle around here. Nothing bad or nefarious, but an item that can be turned into cash has value. One starts looking around and figuring out how to make that transformation. Not having cash can be worse than waiting in line; what do people want that will make them give me some cash?

As I wrote before, one thing is a ride to the next town. Food. Clothes. I saw a guy walk up to a food vendor and make a sales pitch to her for some clothing. It was a good pitch. She considered it. But said, “No, gracias.” He was polite, smiled and moved on.

Why, I wonder, do the socialists and communists in Seattle advocate for higher wages. When I look at the economy here I don’t see many jobs, at least as they are construed in the US: an hourly wage. How can anyone who knows the writings of Karl Marx put price on exploitation. Remember, in Das Kapital, Marx lays out beautifully that the worker owns no property, thus she sells her labor. Meanwhile, the capitalist owns the means of production and exploits the worker’s labor. But the worker can live without the wage.

Here in Mexico, it’s true the traditional jobs are few. I needed the bathroom. I walked into a restaurant and got lost in the back. A young boy stopped me. He asked me some questions. Was I planning to eat here, he wondered when I said I need to use the facilities. Another question. I handed him 20 pesos. A win win solution.

Jobs are great, but they can be soul sucking. And the notion that one’s health care and livelihood is tied to people who own property and the means of production is depressing. In Mexico everyone scrambles to make a living. Have some property? Rent it out to campers and their tents for the jazz festival. Have an oven? Bake bread and sell it on the beach. Own a car? Give people rides.

Americans can seem kind of lazy by comparison. They expect a job. They want you to have a job. Councilmember Sawant and the City Council collude with the capitalists to be sure that your labor is sold for at least $15 an hour. That seems strange to me. And in Seattle, being an entrepreneur is getting more difficult.

To me, looking at the beach, it seems to me that universal health care and a guaranteed basic income could give people the safety net they need to hustle and innovate rather than join the direct deposit culture. People here work hard. So do many Americans who own small business. We should reward and encourage that rather than have elected officials negotiate the price of our labor.

New Video: Landlords are Human Beings, Small Business Owners

Watch and share this great video.

One of the reasons people blame and bash landlords is the myth that property management is largely done by corporations. Most landlords are just like anyone else, trying to make a living providing places for people to live.

En Mexico: We Have Lots to Learn from the Rest of the World

I’ve been the subject of much affection on the internet. Just the other day someone confused me with Richard Cranium! I don’t mind ad hominem attacks or clever sobriquets, but if the name is just wrong, I have to fix it. One of the most stubborn epithets attaches to me that is wrong is libertarian. But my time in Mexico is leading me to believe maybe I’m wrong. Perhaps rules of any kind are the enemy. Or maybe we have a lot to learn from San Agustinillo.

My trip to Mexico began at 10PM in the Seattle airport with a change of planes in Mexico City. Then I managed to avoid a long scheduled layover and caught an earlier flight to Huatulco. From there, it was a wending hour long ride toward the coast and the small village of San Agustinillo.

Before I left Huatulco, I was advised to get as many pesos as possible; San Agustinillo is an all cash economy. There are few cash machines and nobody uses cards. I was glad I got the advice and took it, because the town we passed through just up the road was hosting a jazz festival; the lines at the cash machines were down the block.

There is only one, narrow road through San Agustinillo, a town about five blocks long with a beach on one side and a slight hill sloping up the other. To the north is Mazunte, a slightly bigger town and the location of the jazz festival and about a 15 minute walk.

Two things I’ve noted. Prices are low and innovation and entrepreneurship is high. Breakfast on my second day, huevos rancheros, an americano, and a bottle of water; total price 105 pesos or about 5 American dollars. I typically pay $4 for an americano with an extra shot at home.

Also, there is lots of selling and buying. On the beach one is occasionally approached by someone selling something; sweet bread (pan dulce or just “pan”), jewelry, other food items, or clothing.

Now I can hear an angry, white, American voice in my head saying, “These are among the poorest people in the world. Of course they’re selling. What else can they do? There’s no jobs. Sad!”

I’m not convinced. Someone in the States is reading some New York Times article packed with statistics about how the rest of the world is suffering. It’s called American Exceptionalism and it is a stubborn disease with no known cure other than travel and real world experience. The most common symptom is assuming everyone else in the world wants what we have quantitively (more wealth) and qualitatively (a nice, safe job).

Leftist exceptionalism sees swarms of dark poor people yearning to be like us; what characterizes it is it’s assumption that we, or more accurately white, male republicans and he corporations they run, are responsible for the suffering of the masses. Right leaning exceptionalism tends to see the source of the masses suffering as home grown, things like misgovernment and over population.

Here’s a thought: maybe the rest of the world isn’t as miserable as some of us think. And another thought: They do capitalism far better than we do.

Here’s the case of the ironically named Collectivo, a pick up truck with little shack like structure on the bed that works as part of the local transportation system.

I haven’t deeply studied the Collectivo but such an operation would be strictly prohibited in the United States. One can only imagine the pears that would be clutched in Seattle if a guy put a shed on the bed of a truck, a couple of benches on either side, and some rails to hang off the back. Dios mio! Add to that picture that it’s a cash business and there appear to be no unions involved. I’ve checked, but the sense is that there is some regulation to the trucks and the taxi cabs that pick up people as they go, cramming as many as seven people in a car.

This improvisation is driven by the need for low cost transport between towns, and it appears very competitive and efficient. I asked a local how many people have been killed in accidents. None. One person fell off the back of the truck, but he had a heart attack.

How about the low prices?

I’m no economist and I have done zero formal research, but I’d say that it’s because labor is plentiful and there are plenty of jobs doing various things. There is also likely limited demand; it’s a hard place for tourists to get to. Taken together, scarce land but lots of labor and modest demand for services means prices are very low. The beer on the beach is cheap compared to the US but the proprietor runs the place themselves and probably has fewer regulations and codes to comply with.

Even at a $1.50 a bottle the owner makes $18 for 12 beers, and in Seattle a 12 pack at a grocery store sells for about $14.00. Even at that retail price, the sale clears about about $.30 a bottle. Not much, but remember everything is cheap here.

Maybe there is some dynamic I’m not aware of that keeps people trapped in this tiny coastal town working for as little as $2250 pesos for a seven day week — the pay of a security guard I heard about. Perhaps everyone here would rather live in a frigid coastal city up north, with wet feet caused by rain not salt water, and ride in very safe buses with well paid drivers that would deliver them to a job paying $22.50 (about $17,000 pesos a week, almost 10 times what the security guard makes) an hour in a cube in building downtown.

There is absolutely no doubt that this is a poorer country. But that doesn’t mean the people are miserable. Nor is their success at meeting local needs the basis for ignoring imbalances in the world economy; would the cynical dweller earning $22.50 an hour immigrate illegally to a foreign country where she doesn’t speak the language and would face racism and harassment for $200 an doing the same job? Not unlikely.

But we can learn that relative poverty does not necessarily mean misery, and fewer rules and fewer taxes (taxes are hard to collect on cash transactions) mean poorer people can get into the economy must faster and make a living building their own solutions to local problems. From the perspective of small business, compared to Mexico, the United States seems like an oligarchy controlled by people with lots of money and a government that has rules and taxes that keep small players out.

JLARC: “Why is Housing So Expensive?”

Life is full of surprises. I was on a last minute trip to New Orleans when I found out that Governor Inslee had vetoed a budget proviso we had requested in the state budget. Senator Braun was our champion on this request. The proviso would have allocated $500,000 to study housing costs and compare non-profit costs with market rate costs. I was not happy. I sent a pretty stern message to Inslee’s staff person and wrote an angry post at Forbes, comparing Inslee to Nixon. The point of the proviso was to shine a light on the big cost of subsidized non-profit housing. The reason why Mandatory Inclusionary Zoning (MIZ) was proposed, was to shift money from the market into the coffers of non-profit housing producers. Why? Because their business model is wasteful; when market rate producer costs go up, they raise prices and when the same costs go up for non-profits, they ask for more money. The good news is that in spite of the veto, the Joint Legislative Audit and Review Committee (JLARC) are doing the study anyway. Here’s the proviso we wrote:

NEW SECTION. Sec. 103 Joint Legislative and Audit Review Committee

$500,000 of the general fund state appropriation for fiscal year 2018 is provided solely for an evaluation and comparison of the cost efficiency of market rate housing in Washington versus publicly subsidized housing projects intended to assist low-income households.

(a) The comparison will include, but not be limited to, a comparison of the costs of:

  1. Land acquisition;
  2. Preconstruction activities including development an design, environmental review, permitting, and other state and local review processes;
  3. Construction and rehabilitation,
  4. Capital and financing,
  5. Labor costs,
  6. Construction administrative costs include legal, contract and finance activities
  7. On-going maintenance and operating of the housing constructed, and

(b) The comparison will include a review of the department of commerce housing root cause analysis due to the governor on June 1, 2018 Included in the review will be a consideration of geographic and regional factors affecting costs. The report will include a recommendation for a publically available and easy to read sources and label for each publicly subsidized housing project. For purposes of the evaluation and comparison, publicly subsidized housing project means housing that is funded, in whole or in part, by state, local or federal funds or financing programs to assist low-income households.

(c) The evaluation must solicit input from interested housing stakeholder, including representatives from the Washington state affordable housing advisory board, the department of commerce, the Washington state housing finance commission, representatives from the private rental housing industry, housing authorities, community action agencies, local governments, and nonprofit and for-profit housing developers.

(d) The evaluation and comparison is due to the legislature by December 31, 2018.

I met with the team from JLARC. I went the same day they asked. I am sure they must think I am crazy. But they at least looked interested as I described the whole story about how our efforts to support cities as sustainable solutions to climate change and a myriad of other resource issues got waylaid on the “affordability” issue. They even took notes. And these people are way, way smarter than me. I don’t want to raise expectations, but the folks at JLARC seem truly committed to finding answers. I feel relieved. There are some smart people to help answer the question, “Is non-profit affordable housing more expensive than market rate? Why?”

I think this is a big win for the whole discourse, and I told the JLARC team this. If we had solid data and numbers we could have a argument on the politics. Right now, we’re arguing over terrible measures of affordability (i.e. 30 percent of monthly income spent on housing means it is affordable), and trying to solve a “crisis” with no quantitative measure of when it started and when we know it has ended. I told the JLARC team that the solutions are going to be decided by a political process, but that process would be much better informed by their work.


The Way Back Machine: An Election and the End of Neighborhood Planning

This is part of a series looking back at 20 years of land use, planning, and housing policy history leading up to the state we’re in today. Last I covered my thoughts about why neighborhood planning was a good idea.  Apologies for the many, many names and stories I can’t mention and for anything I got wrong or misremembered. Later, I might go back and do more deep research on all this including interviews and more. 

I started working at the City in the spring of 1999 and the other 5 Neighborhood Development Managers (NDMs) started over the following months. Neighborhood plans were also going to the full City Council for final acceptance and approval. There was a lot of work being done to shift our footing from planning to plan implementation. Starting that fall there would be a number of shocks to the local political landscape that would imperil and then end the implementation process.

Paul Schell and Charlie Chong

It’s worth looking at the 1997 election because it was a contest between a classic Seattle insider and developer (yes, a developer!), Paul Schell and the ultimate outsider and opponent of the Comprehensive Plan and urban village strategy, Charlie Chong. Chong was elected to the City Council in 1996 in a special election to replace Tom Weeks who resigned suddenly late in the year. It’s pretty clear that Chong won because it was a high turnout election year with lots of voters that didn’t typically vote in city elections. And Chong had run before.

Chong rankled his colleagues and decided to gamble and run for the big job. Oddly, thinking back on it now, I was Peter Steinbrueck’s campaign manager that year. Steinbrueck had decided, initially, to run for Mayor. Some musical chairs, though, meant that there was an open Council seat, and he switched. Richard Conlin and Nick Licata were also running in for two different seats. In the end, all three of them got elected with a sense that they were more pro-neighborhood than downtown.

Schell handily defeated Chong, however. As has often been the case, voters sort of sent a mixed message. They elected a developer but also three activists to the Council who had run against downtown.

But by 1999, Schell had emerged very much as the Mayor of neighborhood plan implementation, giving lots of political backing to the effort and real authority to the NDMs. I always got the attention of Department staff and phone calls were returned fast. Schell made it clear that neighborhood planning was a big priority and we were given lots of encouragement to find ways around the bureaucratic nonsense that often plagues City Hall. Even Charlie Chong worked with me on a proposal to replace off street parking backed by Schell. We did have our struggles, but Schell was the real deal.

The WTO, New Years Eve, Mardi Gras, and Missed Opportunities

In late 1999, the World Trade Organization (WTO) was set to have a big meeting in Seattle. I didn’t think much of it at the time. I recalled the Asian Pacific Economic Cooperation (APEC) summit in 1993 and I figured it would be more or less the same. I imagined some traffic and a few protesters and some limos flying by and it would all be over. No big deal. I guess everyone else thought that too.

What a mess. The WTO ended up being called The Battle in Seattle, and the rhetoric wasn’t too far off from what we hear today. There was lots of hysterical ranting about capitalism and exploitation. But nobody expected the size of the protests and mess it created downtown. Ordinary people in Seattle trying to get to work and back home were appalled at the violence and the disruption. They blamed Paul Schell.

Not too long after that mess, a guy was picked up with the makings of a bomb in his trunk and the worry was he was planning an attack on the annual New Year’s Eve celebration at the Space Needle. This wasn’t any New Year’s Eve – it was the millennium. Fresh off the shock of the cities total lack of preparation for the WTO mess, Schell canceled the celebration out of an abundance of caution. This was, in retrospect, a really good idea given the events. But Schell was blamed again. He was on the defensive and was quoted in the Sunday Times, on the front page saying, “I am not a wuss! Jesus.

Meanwhile, Schell hadn’t done anything to get a campaign organized and other politicians smelled blood in the water. I’ll never forget the Mayor’s retreat at Sleeping Lady in January of that year. I had a chance to spend some time with the Mayor. I was going to stay in his house in the south of France – Schell was often mocked for his taste and his apartment in France, but his love of travel and hospitality were some of the many reasons I liked the guy so much. Schell and I talked about France and traveling and I asked him about running again. He still wasn’t committing. It was frustrating. I encouraged him to move faster.

Later I wrote a long memo to him that I never sent. I felt like the Mayor wasn’t being served well by his political advisors and staff. There was so much good he was doing. I asked, specifically, that we start to encourage more intelligent leverage of ribbon cuttings of neighborhood planning projects, school and library projects Schell had championed, and getting him doing more retail politics. His staff seemed self absorbed and unconcerned about the political crisis that was deepening around him.

Then there was Mardi Gras. In a weird twist, police sort of held back as Mardi Gras celebrations got more and more out of control. The police chief supposedly had his forces back away, worried about a repeat of the police violence people saw at WTO. A young man was attacked by a group of people in Pioneer Square; he ran and jumped over what he thought was a parapet and fell to his death. Meanwhile, the Mayor’s press secretary, when asked about the Mayor, said he was at home asleep. Jesus.

The Mayor was finally running for reelection, but by now it was feeling like it was too late. County Councilman Greg Nickels and City Attorney Mark Sidran were now running too, and as the summer wore on it looked worse and worse. A great story that ran in the Seattle P-I that summer probably told it best.

Schell said,

“I want to be the mayor that asks, ‘What can we do together?'”

He wanted to bring back a time when people pitched in to help others. Like his father, an Iowa Lutheran minister, he wanted to appeal to the better nature of people, though his pulpit would be at City Hall.

That idealism has attracted an intensely loyal group of followers. But idealism — and perhaps political naivete — may help make him the first incumbent mayor in 65 years to be dumped in the primary election.

And that’s exactly what happened. Schell became the first of a succession of Mayors that would go down to defeat trying to get reelected finishing third in the primary.

New Mayor, Old School Politics

Just like that, a decades long era of neighborhood planning and implementation was over. Voters just didn’t care. They wanted someone strong at the helm, and that’s what they got with Greg Nickels, a gifted career politician for whom everything was political. The first thing Nickels did to show who was boss was to fire much beloved Department of Neighborhoods Director Jim Diers. It made sense. The City had come to revolve around neighborhood plan implementation and it wasn’t Nickels’ creation. He could own it, or kill it. He killed it.

Then there as a bust in what was then called the dot com sector. Many of the web based business just couldn’t produce results and folded, wiping out a lot of invested cash in the stock market. Along with the 9/11 terrorist attacks, the economy was now officially in trouble. The survivors were Nickels and Amazon, but for most of Nickels years in office the city didn’t face a lot of issues with rampant growth. Potholes were filled, trains were getting built to run on time, and everyone knew exactly who was in charge. The freewheeling days of neighbors and departments working together to shape projects were over.

I’ve likened what Nickels did with neighborhood planning (by the way I left the City just before the election for Public Health Seattle King County to be a Regional Health Officer) to the way the Bush administration just disbanded the Iraqi army after the successful invasion of Iraq in 2003; those soldiers just wandered off in the desert with their guns and their deeply local and ethnic affiliations and later turned into an insurgent force.

Neighbors were the same. After a decade of planning and meeting and implementing, it was just done. Neighbors just melted back into the neighborhoods and their lawns and gardens. Sure, individual projects stirred up resistance but there was no longer a neighborhood movement to be reckoned with. Even Neighborhood Service Centers and their staff were given a back seat or left by the side of the road. City Hall and the 7th floor of the new City Hall building was where the power was. And with not a lot of growth, there wasn’t a lot to be worried about either. City Council struggled for relevance in the face of a very disciplined machine upstairs. Nickels didn’t have a big vision, but he got things done.

The Calm Before the Storm

In 2002 I ran a losing campaign for the Washington State Legislature based largely on creating a state income tax. I had worked for a decade to position myself for the run, but somewhere a long the way I lost my interest and my passion for it. Raising money was a hassle. People who I thought would be my biggest supporters shrugged. I loved debating, but I hated doorbelling. And my opponent was an unemployed techie who really needed a job. I had a great job with almost no commute. Why did I want to be a freshman state legislator again?

The following years I spent becoming the much-hated Tobacco Tsar, tasked with snuffing out smoking in King County. I learned a lot and didn’t much pay attention to City politics anymore. During those years, the war in Iraq seemed to occupy much discussion, as did the completion of light rail.

I did my job as Tobacco Tsar too well, and in May of 2007 I was abruptly dumped by King County. I wrote a letter to giant grocery store chains Safeway and QFC urging them to stop selling tobacco products in their stores. That along with hundreds of thousands we invested in local artists to counter smoking and tobacco sponsorships in the arts community was too much. I was essentially fired. I worked for a while that summer with Michael McGinn in his start up, The Great City Initiative, studied for a real estate license, and then went to work for Peter Steinbrueck at the City Council for his last months in office. It was an appropriate and ironic entry back into city politics.