front porch economics

2008 is gone. now what?

consumer confidence is at an all time low. bailouts for the big guys and the little guys are taking on water. the new president is exciting - but how quickly can change come? we haven't seen the tip of the iceberg on retail failures. commercial foreclosures loom. sellers and buyers of real estate aren't on the same page, and may not even be in the same book. individual consumers don't have room for confidence they're so full of fear.

i hope that we find a way to pull together in this scary time. i happen to be a real estate guy so i have a tendency to think in those terms. i'm also an amateur historian. as i sat and self-medicated with a pint a couple of nights ago with a friend, we talked about how important it will be to look backwards to understand what we may confront ahead of us. is it a recession? is it a depression? is it a Depression?

in order to gain context we must look to the recessions of the past to understand what we can do, and postulate what we should do. economists (http://www.nber.org/cycles/) explain that we have experienced 32 periods of economic contraction that qualify as recessions. of those in the 20th century, the Great Depression included 43 months of contraction. but, in the 10 cycles between 1945 and today, the average contraction was 10 months and the average expansion was 57 months.

but this one feels different than the oil shock, or the early 80's, or the tech bubble. so i think we need to look back farther. and i'm not really interested in the technical definition or even the impact on personal finance. i'm much more interested in how the recessionary environment impacts and changes the way people live together. the impact can be profound.

urban decay really started in the Great Depression. in the many decades prior, american cities thrived. they grew at incredible rates and culture flourished. lack of universally available effective personal transportation kept people close to the city and close together. granted, the spread between the haves and have nots was increasing, but infrastructure was built, development boomed and cities developed distinct communities and identities.

when the bottom fell out of the country's economic foundation, investment dollars disappeared. infrastructure went into an endless cycle of deferred maintenance. as FDR worked to pull us out of the despair, the country concentrated on building new kinds of infrastructure. the freeway was the great new way - forming the circulatory system for the country.

the freeway was originally envisioned as a tool to bring people TO the cities. a way to get goods to market more efficiently. a way to help regenerate a declining urban population. but it acted in just the reverse. that's not to say it wasn't a successful innovation. it did boost circulation and facilitated the delivery of goods by truck instead of the more cumbersome rail. but it also made it easy for folks to live outside of the cities. it spawned suburbia.

one of the scarier images i have in my head is the classic shot of 10 identical looking little boys bouncing identical balls in front of identical houses on a homogeneous street while their fathers pull away to work in identical cars. gives me goosebumps. i just feel like that life is all wrong.

but the suburbs became the american ideal. it was a way for people (mostly white people) to escape the evils of the city and to surround themselves with extremely similar people. it worked because people were largely afraid of the world. the cold war was real, and so was the nuclear threat. the cities became increasingly uncomfortable as the money left. the Great Depression was still in the collective memory.

but in many ways, the suburbs lacked critical community essence. cul de sac neighborhoods developed and filled quickly. as it turns out, many of those neighborhoods worked only when they were filled with a homogeneous group: when the neighborhood was FULL of kids. we are only realizing the problem now. as the original population filters out of those neighborhoods, and the community becomes more naturally diverse, those cul de sacs lose much of their value. where before they created low traffic environments with lots of back yards - the perfect stomping grounds for rampaging herds of kick the canners - they now isolate their inhabitants from each other and the rest of the world. Indeed, many of those disenchanted baby boomers have been fueling the urban renaissance that is threatened today.

in many respects, the suburbs reflected an american transformation from the front porch to the back patio. not only is that true architecturally, but also it is true emotionally. i believe this sea change profoundly impacted us to the negative.

the front porch is an openly social place. the casual passerby, the neighbor and friends all can stop by and engage. it offers a vantage point from which to view the outside world, and it offers outsiders a glimpse in. the house is alive.

the back patio is social and warm and private. there are no casual passersby. there's no view to the outside world (especially with a six foot privacy fence). there's no opportunity for engagement with a broader community. the house isn't vital to the rest of the world.

it is true that for the folks congregating in the there and now both porch and patio serve their purpose well. Laughing, talking, drinking, cooking out - all find a natural home on porch or patio. The problem is that the patio isn't weaved into a broader community. It's like talking to yourself outloud. Other people may hear, but they can't join in.

The front porch, though, helps define the community context. You can't help but see your neighbors regularly. There's more interaction. I believe social interaction leads to social knowledge which leads to social responsibility. In other words, the more we interact with the world around us, the more responsible we feel for it. It's one thing if your neighbor loses his job, it's another entirely if John loses his job, and you know Jane just had surgery and their 14-year-old daughter Jenny is having a tough time at school.

back to the point - is this a recession or a depression and what is next for us? ronald reagan famously quipped that "it's a recession when your neighbor loses his job and a depression when you lose yours." when it's john, you feel it more than if it's a nameless neighbor in a generic house down the cul de sac. when you know your neighbor, you might keep your job but still feel the deeper pain of a recession.

here's what i hope: this time around, we stop turning our backs to our neighbors. we recognize that while the strength of individual effort has come to define america's greatness, it is the mutual benefit of cooperative efforts that make us able to persevere. most simply, we are stronger together than we are apart.

the economy is like an ENORMOUS ship. it takes profound energy to shift its course. we can't attack it individually and expect to make a difference. but together we can improve our own lot. consumer confidence is a funny thing. i believe that consumer confidence leads the economy and not the other way. so let's not fix the economiy. let's work on our confidence.

now, that means we should engage more with the world outside our front door. we need to get out on the front porch. know your neighbors. if they are suffering, help how you can. gather together more. shop locally whenever you can. consume smartly. think green. be compassionate.

in short, the better we can make our own communities feel, the more confident we'll individually become. there's a lot of power in that confidence. and, that power is free. what better price is there to pay in a depression?