There is a literal Higher Power governing our world economy. It is the Laws of Physics.

– Gail Tverberg

(Perennial OregonPEN favorite Gail Tverberg — “Gail the Actuary” — kindly allowed republication of this fascinating essay on the strengths and weaknesses of myths that, in large part, create what we call “culture.” We are increasingly aware, thanks to careful work done by behavioral scientists, the ones who study what we actually do, rather than what we tell others we do or what we tell ourselves that we do — Daniel Kahneman, Jonathan Haidt, to name just two popular ones — that we mostly pay lip service to rationality while holding fast to the beliefs that reinforce and affirm our own understanding of our “place” in society, our sense of what we deserve from the universe, as if that mattered. As times get increasingly difficult, and the fraying and fragmentation of modernity accelerates, and the belief that physical and environmental limits are irrelevant becomes impossible to maintain, the people of Oregon and the rest of America will experience great stress, as our inability to maintain the giant skyscraper of complexity pulls against our profound emotional attachment to the myth of unidirectional progress and material advancement. Historian Barbara Tuchman’s book “A Distant Mirror: The Calamitous 14th Century” seems increasingly relevant today.)

History says that if there are not enough resources to go around, we can expect increasing wage and wealth disparity.

Most of us are familiar with the Politically Correct (PC) World View. William Deresiewicz describes the view, which he calls the “religion of success,” as follows:

There is a right way to think and a right way to talk, and also a right set of things to think and talk about. Secularism is taken for granted. Environmentalism is a sacred cause. Issues of identity—principally the holy trinity of race, gender, and sexuality—occupy the center of concern.

There are other beliefs that go with this religion of success:

  • Wind and solar will save us.
  • Electric cars will make transportation possible indefinitely.
  • Our world leaders are all powerful.
  • Science has all of the answers.

To me, this story is pretty much equivalent to the article, “Earth Is Flat and Infinite, According to Paid Experts,” by Chris Hume in Funny Times. While the story is popular, it is just plain silly.

In this post, I explain why many popular understandings are just plain wrong. I cover many controversial topics, including environmentalism, peer-reviewed literature, climate change models, and religion. I expect that the analysis will surprise almost everyone.

Myth 1: If there is a problem with the lack of any resource, including oil, it will manifest itself with high prices.

As we reach limits of oil or any finite resource, the problem we encounter is an allocation problem. 

What happens if economy stops growing

Figure 1. Two views of future economic growth. Created by author.

As long as the quantity of resources we can extract from the ground keeps rising faster than population, there is no problem with limits. The tiny wedge that each person might get from these growing resources represents more of that resource, on average. Citizens can reasonably expect that future pension promises will be paid from the growing resources. They can also expect that, in the future, the shares of stock and the bonds that they own can be redeemed for actual goods and services.

If the quantity of resources starts to shrink, the problem we have is almost a “musical chairs” type of problem.

Figure 2. Circle of chairs arranged for game of musical chairs. Source

In each round of a musical chairs game, one chair is removed from the circle. The players in the game must walk around the outside of the circle. When the music stops, all of the players scramble for the remaining chairs. Someone gets left out.

The players in today’s economic system include

  • High paid (or elite) workers
  • Low paid (or non-elite) workers
  • Businesses
  • Governments
  • Owners of assets (such as stocks, bonds, land, buildings) who want to sell them and exchange them for today’s goods and services

If there is a shortage of a resource, the standard belief is that prices will rise and either more of the resource will be found, or substitution will take place. Substitution only works in some cases: it is hard to think of a substitute for fresh water. It is often possible to substitute one energy product for another. Overall, however, there is no substitute for energy. If we want to heat a substance to produce a chemical reaction, we need energy. If we want to move an object from place to place, we need energy. If we want to desalinate water to produce more fresh water, this also takes energy.

The world economy is a self-organized networked system. The networked system includes businesses, governments, and workers, plus many types of energy, including human energy. Workers play a double role because they are also consumers. The way goods and services are allocated is determined by “market forces.” In fact, the way these market forces act is determined by the laws of physics. These market forces determine which of the players will get squeezed out if there is not enough to go around.

Non-elite workers play a pivotal role in this system because their number is so large. These people are the chief customers for goods, such as homes, food, clothing, and transportation services. They also play a major role in paying taxes, and in receiving government services.

History says that if there are not enough resources to go around, we can expect increasing wage and wealth disparity.

This happens because increased use of technology and more specialization are workarounds for many kinds of problems. As an economy increasingly relies on technology, the owners and managers of the technology start receiving higher wages, leaving less for the workers without special skills. The owners and managers also tend to receive income from other sources, such as interest, dividends, capital gains, and rents.

When there are not enough resources to go around, the temptation is to use technology to replace workers, because this reduces costs. Of course, a robot does not need to buy food or a car. Such an approach tends to push commodity prices down, rather than up. This happens because fewer workers are employed; in total they can afford fewer goods. A similar downward push on commodity prices occurs if wages of non-elite workers stagnate or fall.

If wages of non-elite workers are lower, governments find themselves in increasing difficulty because they cannot collect enough taxes for all of the services that they are asked to provide. History shows that governments often collapse in such situations. Major defaults on debt are another likely outcome (Figure 3). Pension holders are another category of recipients who are likely to be “left out” when the game of musical chairs stops.

Figure 3 – Created by Author.

The laws of physics strongly suggest that if we are reaching limits of this type, the economy will collapse. We know that this happened to many early economies. More recently, we have witnessed partial collapses, such as the Depression of the 1930s. The Depression occurred when the price of food dropped because mechanization eliminated a significant share of human hand-labor. While this change reduced the price of food, it also had an adverse impact on the buying-power of those whose jobs were eliminated.

The collapse of the Soviet Union is another example of a partial collapse. This collapse occurred as a follow-on to the low oil prices of the 1980s. The Soviet Union was an oil exporter that was affected by low oil prices. It could continue to produce for a while, but eventually (1991) financial problems caught up with it, and the central government collapsed.

Figure 4. Oil consumption, production, and inflation-adjusted price, all from BP Statistical Review of World Energy, 2015.

Low prices are often a sign of lack of affordability. Today’s oil, coal, and natural gas prices tend to be too low for today’s producers. Low energy prices are deceptive because their initial impact on the economy seems to be favorable. The catch is that after a time, the shortfall in funds for reinvestment catches up, and production collapses. The resulting collapse of the economy may look like a financial collapse or a governmental collapse.

Oil prices have been low since late 2014. We do not know how long low prices can continue before collapse. The length of time since oil prices have collapsed is now three years; we should be concerned.

Myth 2. (Related to Myth 1) If we wait long enough, renewables will become affordable.

The fact that wage disparity grows as we approach limits means that prices can’t be expected to rise as we approach limits. Instead, prices tend to fall as an increasing number of would-be buyers are frozen out of the market. If in fact energy prices could rise much higher, there would be huge amounts of oil, coal and gas that could be extracted.

Figure 5. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much oil can be produced at various price levels, according to IEA models.

There seems to be a maximum affordable price for any commodity. This maximum affordable price depends to a significant extent on the wages of non-elite workers. If the wages of non-elite workers fall (for example, because of mechanization or globalization), the maximum affordable price may even fall.

Myth 3. (Related to Myths 1 and 2) A glut of oil indicates that oil limits are far away. 

A glut of oil means that too many people around the world are being “frozen out” of buying goods and services that depend on oil, because of low wages or a lack of job. It is a physics problem, related to ice being formed when the temperature is too cold. We know that this kind of thing regularly happens in collapses and partial collapses. During the Depression of the 1930s, food was being destroyed for lack of buyers. It is not an indication that limits are far away; it is an indication that limits are close at hand. The system can no longer balance itself correctly.

Myth 4: Wind and solar can save us.

The amount of energy (other than direct food intake) that humans require is vastly higher than most people suppose. Other animals and plants can live on the food that they eat or the energy that they produce using sunlight and water. Humans deviated from this simple pattern long ago–over 1 million years ago.

Unfortunately, our bodies are now adapted to the use of supplemental energy in addition to food. The use of fire allowed humans to develop differently than other primates. Using fire to cook some of our food helped in many ways. It freed up time that would otherwise be spent chewing, providing time that could be used for tool making and other crafts. It allowed teeth, jaws and digestive systems to be smaller. The reduced energy needed for maintaining the digestive system allowed the brain to become bigger. It allowed humans to live in parts of the world where they are not physically adapted to living.

In fact, back at the time of hunter-gatherers, humans already seemed to need three times as much energy total as a correspondingly sized primate, if we count burned biomass in addition to direct food energy.

Figure 6 – Created by author.

“Watts per Capita” is a measure of the rate at which energy is consumed. Even back in hunter-gatherer days, humans behaved differently than similar-sized primates would be expected to behave. Without considering supplemental energy, an animal-like human is like an always-on 100-watt bulb. With the use of supplemental energy from burned biomass and other sources, even in hunter-gatherer times, the energy used was equivalent to that of an always-on 300-watt bulb.

How does the amount of energy produced by today’s wind turbines and solar panels compare to the energy used by hunter-gatherers? Let’s compare today’s wind and solar output to the 200 watts of supplemental energy needed to maintain our human existence back in hunter-gatherer times (difference between 300 watts per hour and 100 watts per hour). This assumes that if we were to go back to hunting and gathering, we could somehow collect food for everyone, to cover the first 100 watts per hour. All we would need to do is provide enough supplemental energy for cooking, heating, and other very basic needs, so we would not have to deforest the land.

Conveniently, BP gives the production of wind and solar in “terawatt hours.” If we take today’s world population of 7.5 billion, and multiply it by 24 hours a day, 365.25 days per year, and 200 watts, we come to needed energy of 13,149 terawatt hours per year. In 2016, the output of wind was 959.5 terawatt hours; the output of solar was 333.1 terawatt hours, or a total of 1,293 terawatt hours. Comparing the actual provided energy (1,293 tWh) to the required energy of 13,149 tWh, today’s wind and solar would provide only 9.8% of the supplemental energy needed to maintain a hunter-gatherer level of existence for today’s population. 

Of course, this is without considering how we would continue to create wind and solar electricity as hunter-gatherers, and how we would distribute such electricity. Needless to say, we would be nowhere near reproducing an agricultural level of existence for any large number of people, using only wind and solar. Even adding water power, the amount comes to only 40.4% of the added energy required for existence as hunter gatherers for today’s population.

Many people believe that wind and solar are ramping up rapidly. Starting from a base of zero, the annual percentage increases do appear to be large. But relative to the end point required to maintain any reasonable level of population, we are very far away. A recent lecture by Energy Professor Vaclav Smil is titled, “The Energy Revolution? More Like a Crawl.”

Myth 5. Evaluation methods such as “Energy Returned on Energy Invested” (EROI) and “Life Cycle Analyses (LCA)” indicate that wind and solar should be acceptable solutions. 

These approaches are concerned about how the energy used in creating a given device compares to the output of the device. The problem with these analyses is that, while we can measure “energy out” fairly well, we have a hard time determining total “energy in.” A large share of energy use comes from indirect sources, such as roads that are shared by many different users.

A particular problem occurs with intermittent resources, such as wind and solar. The EROI analyses available for wind and solar are based on analyses of these devices as stand-alone units (perhaps powering a desalination plant, on an intermittent basis). On this basis, they appear to be reasonably good choices as transition devices away from fossil fuels.

EROI analyses don’t handle the situation well when there is a need to add expensive infrastructure to compensate for the intermittency of wind and solar. This situation tends to happen when electricity is added to the grid in more than small quantities. One workaround for intermittency is adding batteries; another is overbuilding the intermittent devices, and using only the portion of intermittent electricity that comes at the time of day and time of year when it is needed. Another approach involves paying fossil fuel providers for maintaining extra capacity (needed both for rapid ramping and for the times of year when intermittent resources are inadequate).

Any of these workarounds is expensive and becomes more expensive, the larger the percentage of intermittent electricity that is added. Euan Mearns recently estimated that for a particular offshore wind farm, the cost would be six times as high, if battery backup sufficient to even out wind fluctuations in a single month were added. If the goal were to even out longer term fluctuations, the cost would no doubt be higher. It is difficult to model what workarounds would be needed for a truly 100% renewable system. The cost would no doubt be astronomical.

When an analysis such as EROI is prepared, there is a tendency to leave out any cost that varies with the application, because such a cost is difficult to estimate. My background is in actuarial work. In such a setting, the emphasis is always on completeness because after the fact, it will become very clear if the analyst left out any important insurance-related cost. In EROI and similar analyses, there is much less of a tieback to the real world, so an omission may never be noticed. In theory, EROIs are for multiple purposes, including ones where intermittency is not a problem. The EROI modeler is not expected to consider all cases.

Another way of viewing the issue is as a “quality” issue. EROI theory generally treats all types of energy as equivalent (including coal, oil, natural gas, intermittent electricity, and grid-quality electricity). From this perspective, there is no need to correct for differences in types of energy output. Thus, it makes perfect sense to publish EROI and LCA analyses that seem to indicate that wind and solar are great solutions, without any explanation regarding the likely high real-world cost associated with using them on the electric grid.

Myth 6. Peer reviewed articles give correct findings.

The real story is that peer reviewed articles need to be reviewed carefully by those who use them. There is a very significant chance that errors may have crept in. This can happen because of misinterpretation of prior peer reviewed articles, or because prior peer reviewed articles were based on “thinking of the day,” which was not quite correct, given what has been learned since the article was written. Or, as indicated by the example in Myth 5, the results of peer reviewed articles may be confusing to those who read them, in part because they are not written for any particular audience.

The way university research is divided up, researchers usually have a high level of specialized knowledge about one particular subject area. The real world situation with the world economy, as I mentioned in my discussion of Myth 1, is that the economy is a self-organized networked system. Everything affects everything else. The researcher, with his narrow background, doesn’t understand these interconnections. For example, energy researchers don’t generally understand economic feedback loops, so they tend to leave them out. Peer reviewers, who are looking for errors within the paper itself, are likely to miss important feedback loops as well.

To make matters worse, the publication process tends to favor results that suggest that there is no energy problem ahead. This bias can come through the peer review process. One author explained to me that he left out a certain point from a paper because he expected that some of his peer reviewers would come from the Green Community; he didn’t want to say anything that might offend such a reviewer.

This bias can also come directly from the publisher of academic books and articles. The publisher is in the business of selling books and journal articles; it does not want to upset potential buyers of its products. One publisher made it clear to me that its organization did not want any mention of problems that seem to be without a solution. The reader should be left with the impression that while there may be issues ahead, solutions are likely to be found.

In my opinion, any published research needs to be looked at very carefully. It is very difficult for an author to move much beyond the general level of understanding of his audience and of likely reviewers. There are financial incentives for authors to produce PC reports, and for publishers to publish them. In many cases, articles from blogs may be better resources than academic articles because blog authors are under less pressure to write PC reports.

Myth 7. Climate models give a good estimate of what we can expect in the future.

One point that both Peak Oilers and the IEA missed is that the world economy doesn’t really have the ability to cut back on the use of fossil fuels significantly, without the world economy collapsing.

There is no doubt that climate is changing. But is all of the hysteria about climate change really the correct story?

Our economy, and in fact the Earth and all of its ecosystems, are self-organized networked systems. We are reaching limits in many areas at once, including energy, fresh water, the number of fish that can be extracted each year from oceans, and metal ore extraction. Physical limits are likely to lead to financial problems, as indicated in Figure 3. The climate change modelers have chosen to leave all of these issues out of their models, instead assuming that the economy can continue to grow as usual until 2100. Leaving out these other issues clearly can be expected to overstate the impact of climate change.

The International Energy Agency is very influential with respect to which energy issues are considered. Between 1998 and 2000, it did a major flip-flop in the importance of energy limits. The IEA’s 1998 World Energy Outlook devotes many pages to discussing the possibility of inadequate oil supplies in the future. In fact, near the beginning, the report says,

Our analysis of the current evidence suggests that world oil production from conventional sources could peak during the period 2010 to 2020.

The same report also mentions Climate Change considerations, but devotes many fewer pages to these concerns. The Kyoto Conference had taken place in 1997, and the topic was becoming more widely discussed.

In 1999, the IEA did not publish World Energy Outlook. When the IEA published the World Energy Outlook for 2000, the report suddenly focused only on Climate Change, with no mention of Peak Oil. The USGS World Petroleum Assessment 2000 had recently been published. It could be used to justify at least somewhat higher future oil production.

I will be the first to admit that the “Peak Oil” story is not really right. It is a halfway story, based on a partial understanding of the role physics plays in energy limits. Oil supply does not “run out.” Peak Oilers also did not understand that physics governs how markets work–whether prices rise or fall, or oscillate. If there is not enough to go around, some of the would-be buyers will be frozen out. But Climate Change, as our sole problem, or even as our major problem, is not the right story, either. It is another halfway story.

One point that both Peak Oilers and the IEA missed is that the world economy doesn’t really have the ability to cut back on the use of fossil fuels significantly, without the world economy collapsing. Thus, the IEA’s recommendations regarding moving away from fossil fuels cannot work. (Shifting energy use among countries is fairly easy, however, making individual country CO2 reductions appear more beneficial than they really are.) The IEA would be better off talking about non-fuel changes that might reduce CO2, such as eating vegetarian food, eliminating flooded rice paddies, and having smaller families. Of course, these are not really issues that the International Energy Association is concerned about.

The unfortunate truth is that on any difficult, interdisciplinary subject, we really don’t have a way of making a leap from lack of knowledge of a subject, to full knowledge of a subject, without a number of separate, partially wrong, steps. The IPCC climate studies and EROI analyses both fall in this category, as do Peak Oil reports.

The progress I have made on figuring out the energy limits story would not have been possible without the work of many other people, including those doing work on studying Peak Oil and those studying EROI. I have also received a lot of “tips” from readers of OurFiniteWorld.com regarding additional topics I should investigate. Even with all of this help, I am sure that my version of the truth is not quite right. We all keep learning as we go along.

There may indeed be details of this particular climate model that are not correct, although this is out of my area of expertise. For example, the historical temperatures used by researchers seem to need a lot of adjustment to be usable. Some people argue that the historical record has been adjusted to make the historical record fit the particular model used.

There is also the issue of truing up the indications to where we are now. I mentioned the problem earlier of EROI indications not having any real world tie; climate model indications are not quite as bad, but they also seem not to be well tied to what is actually happening.

Myth 8. We don’t need religion; our leaders are all knowing and all powerful.

We are fighting a battle against the laws of physics. Expecting our leaders to win in the battle against the laws of physics is expecting a huge amount. Some of the actions of our leaders seem extraordinarily stupid. For example, if falling interest rates have postponed peak oil, then proposing to raise interest rates, when we have not fixed the underlying oil depletion problem, seems very ill-advised.

Everything I have seen indicates that there is a literal Higher Power governing our world economy. It is the Laws of Physics that govern the world economy. The Laws of Physics affect the world economy in many ways. The economy is a dissipative structure. Energy inputs allow the economy to remain in an “out of equilibrium state” (that is, in a growing state), for a very long period.

Eventually the ability of any economy to grow must come to an end. The problem is that it requires increasing amounts of energy to fight the growing “entropy” (higher energy cost of extraction, need for growing debt, and rising pollution levels) of the system. The economy must come to an end, just as the lives of individual plants and animals (which are also dissipative structures) must come to an end.

People throughout the ages have been in awe of how this system that provides growth works. We get energy from the sun. This solar energy helps grow our food. It allows the physical growth of humans. It allows the growth of ecosystems and of economies. Humans, ecosystems, and economies seem permanent, but eventually they all must collapse. In physics terms, they are all dissipative structures.

Humans have been in awe of the self-organizing property permitted by flows of energy for as long as humans have had the ability to think abstract thoughts. These flows allow a newly created whole to be greater than the sum of their parts. For example, babies start from a small beginning and mature into adults. Musical notes go together to form recognizable melodies. Physical movements go together to form dances. Awe for this phenomenon seems to be one of the origins of religion.

Another reason for religions is a need for hierarchical structure within an economy. We know that animal groups very often have “pecking orders.” Adding a god provides a convenient way of adding a “top level” to the pecking order. Of course, if leaders can convince members of the group that they are all knowing and that science can provide all of the answers, then the top level provided by religion is not needed.

A third reason for religions is to help align the thoughts of members in a particular way. Most of us are aware of the power of magnetized materials.

To some extent, the same power exists when the belief systems of groups of people can be aligned in the same direction. For example, teachers find it much easier to teach large groups of students, if parents have emphasized the importance of school and the need for respect for teachers. A military leader can attack another country, if soldiers follow orders. A group of generally uncivilized people can learn the benefit of working with others, if proper instruction is given.

What has been astounding to me, as I have looked into the situation, is that the scientific evidence seems to point in the direction of a literal Higher Power governing our Universe. It is not clear whether this higher power is the Laws of Physics, or whether it is some outside “God” that created the Laws of Physics.

In the past, many researchers assumed that the Universe was a closed energy system, irreversibly headed toward a cold, dark end. Recent research indicates that the Universe is ever-expanding, and in fact, seems to be expanding at an accelerating rate. While individual dissipative structures are constantly encountering more and more entropy, the universe as a whole is perhaps expanding rapidly enough to “outrun” growing entropy. Thus, it can behave as an always-open system. This always-open energy system allows many types of objects to self-organize and grow, at least for a time. These objects behave as dissipative structures, each having a beginning and an end.

We really don’t know whether the Universe had a beginning. Some research suggests that it did not. Others believe it began with a Big Bang.

Within the Universe, the earth seems extremely unusual. In fact, it is not clear that there is any other planet that has exactly the right conditions for complex life. A recent American Scientist article discusses this issue. The book Rare Earth: Why Complex Life Is Uncommon in the Universe points out the huge number of coincidences that were necessary for complex life to form and flourish.

Within the Earth, and perhaps within the Universe as a whole, human economies are the most energy-dense form of structure found.

Figure 8. Image similar to ones shown in Eric Chaisson’s 2001 book, Cosmic Evolution: The Rise of Complexity in Nature.

Thus, in some sense, we humans and our economies may, in some sense, represent the current upper bound on development in the Universe.

We humans live on Earth. It is easy for us to think that our primary purpose in life is to care for and protect the Earth. Unfortunately, with our need for supplemental energy, this is not possible. Even at an early date, our need for resources exceeded what was sustainable. Joshua (in Joshua 17:14-18 relating to the period around 1400 BCE) instructs the tribes of Joseph to clear the trees from the hill country to have enough land for his tribe. This practice was clearly unsustainable; it would lead to erosion of the soil on hilltops. Even at that early date, high population and the need for resources to provide for this high population was conflicting with earth’s sustainability.

If our God is either the Laws of Physics, or some force giving rise to the Laws of Physics, then our God is really the God of the Universe. The limitations of the current Earth are no problem. God (or the Laws of Physics) could create a new Earth, or 1 million new Earths, if He chose to. Thus, from God’s point of view, it is not clear that there is any point to today’s environmentalism. There is a need not to poison ourselves, but “saving the earth” for other species after humans, or for a new set of humans who somehow will use much less energy, doesn’t make much sense. Humans can’t use much less energy; even if we could, our energy use would always be on an upward slope, headed to precisely where we are now.

There are many things that we can’t know for certain. Does this God want/expect us to worship him? Does this God plan an afterlife for some or all of the humans on Earth today? Obviously, if God (or the Laws of Physics) could create the Earth, God could also create other structures as well–possibly a “Heaven.” It is not clear to me that any one of today’s religions has a monopoly on insights regarding what is expected. A person might argue that we need not worry about religion at all, except for the fellowship it provides and the insights it offers regarding how early people coped with their difficulties.

Myth 9. The texts of religious groups around the world are literally true.

The texts of religious groups are true in the same sense that peer reviewed scientific literature is true. They represent, more or less, the best thinking of the day on a particular subject. This certainly does not mean that they are literally true.

We need to read religious texts in the context that they were written. In the earliest days, religious texts represented stories that people passed down from one generation to the next. These stories represented insights that these early people had gained. No one at that time was too concerned about authorship. If a story says, “God said,” it could also mean, “We think that this is something that God might have said.”

Literary styles were very different, back in an era before people pretended to have scientific knowledge. People created stories illustrating some aspect of a particular phenomenon. These stories were not supposed to fully describe what happened. This is why Genesis features two different creation stories.

The Bible makes liberal use of hyperbole and exaggeration. It is hard for people who are not familiar with the original language to understand how stories were intended to be interpreted. Is the concept of Hell added, primarily to provide a contrast to Heaven? In the Old Testament, the number of words in the ancient Hebrew language is much smaller than in today’s languages. This, by itself, makes direct translation difficult.

The earliest religious stories explained how God was perceived at that time. As people became more settled, their views changed. People were getting more “civilized.” Population densities were rising. The best beliefs in an early period may not have had relevance for a later period. This is why most religions have had reformers. Sometimes new writings are added. At other times, the way the writings are interpreted changes. This is why there seems to be a bizarre progression of stories from the Old Testament to the New Testament; new stories needed to be added to supplement and replace old ways of thinking.

Some of the things that early people discovered have not been understood by environmentalists. Genesis 1:28 says,

God blessed them and said to them, “Be fruitful and increase in number; fill the earth and subdue it. Rule over the fish in the sea and the birds in the sky and over every living creature that moves on the ground.”

The early people had figured out that humans were indeed different from other animals and plants. Their use of supplemental energy gave them power over other creatures. Their numbers could (and indeed, did) increase. Early authors were documenting how the world really worked. We later humans have been too blind to see the real situation. It is more pleasant for us to think that somehow we are just like other animals, except perhaps smarter and more in control. With our greater knowledge, we could somehow have avoided an increase in our numbers, if we had only planned better. The laws of physics say this cannot happen; our higher energy use dictates who will win the battle for resources.

The early religious stories were not too different from Peak Oil and Climate Change. They were sort of right. They gave partial insight. They were the best the authors could do at the time.

The ancient religious documents could not tell the whole story at once. New groups would gradually add more insights to the developing story, providing a better understanding of what was truly important for people living in a later period.

Conclusion

In practice, people need a religion or a religion-substitute. People need a basic set of beliefs with which to order their lives.

Our leaders today have proposed the Religion of Success, with its belief in Science, and the power of today’s leaders, as the new religion. This religion has appeal, because it denies the limits we are up against. Life will continue, as if we lived on a flat earth with unlimited resources. This story is pleasant, but unfortunately not true.

Donald Trump, with his version of conservatism, presents another religion. This religion seems to be focused on justifying the allocation of wealth away from the poor, toward the rich, through tax breaks for corporations and the wealthy. This is part of the process of “freezing out” the poor people of the world, when there are not enough resources to go around.

It is hard for me to support Trumpism, even though I recognize that in the animal world, the expected outcome when there are not enough resources to go around is “survival of the best-adapted.” If our concern is leaving energy resources in the ground for future generations, transferring buying power from the poor to the rich is a way of collapsing the economy quickly, while considerable resources remain in the ground. The fact that wealthy people are favored ensures that at least some people will survive.

China and Japan both have what are close to state religions, created by their leaders. School children learn stories regarding what is important, based on what state leaders tell them. In Japan, school children visit religious sites, and learn the proper religious observances. They also learn rules about what is expected of them–always be polite; respect those in charge; don’t eat food on the street; never leave any food wrappers on the ground. In many ways, these religions are probably not too different from today’s Religion of Success.

I personally am not in favor of religions that originate from political groups. I would prefer the “old fashioned” religions based on ancient documents from one or another of the world’s religions. We are clearly facing a difficult time ahead. Perhaps early people had insights regarding how to deal with troubled times. Admittedly, we don’t know for certain that heaven can be in our future. But when things look bleak, it is helpful to see the possibility of a reasonable outcome.

Furthermore, religious groups offer the possibility of finding a group of like-minded individuals to make friends with. We need all of the support we can get as we go through troubled times.

What is Blight?

(Another OregonPEN favorite, Rachel Quednau of StrongTowns.org provides a piece on something that will be an increasingly pressing question in Oregon and America in years to come, as the myth of progress fails.

— Rachel Quednau

Johnny Sanphillipo

There’s a word you’ll hear again and again if you spend time following local politics—especially if you live in a town that is (like most American towns) faced with economic challenges and residents living in poverty. That word is blight.

Here’s a sampling of news articles from the past couple months that employ this word:

Blighted properties have been present in Lafayette for decades. There are abandoned, unused homes that collect no taxes all throughout the parish.” – KLFY News

“Aldermen are recommending that the [Rockford] City Council approve bids worth $206,445 to demolish 29 vacant and abandoned homes. Approval will bring the city that much closer to its goal of removing 100 blighted properties a year, said Mayor Tom McNamara on Monday. […] “But we still have hundreds of properties that have been ranked as blighted in our neighborhoods, so we still have a lot of work to do to decrease blight and increase home ownership,” McNamara said.” – Rockford Register Star

“”These blighted properties make the whole area look bad. If we can get these blighted properties taken care of, even if it’s a few at a time quicker than we were before, I think we’ll see re-development quicker than we have in the past,” said [Waveland Mayor Mike] Smith.” – WLOX News

“Governor John Carney on Thursday signed into law House Bills 187 and 188, bipartisan legislation that give new tools to local governments to fight neighborhood blight and combat vacant or abandoned homes.” – Delaware.gov

“[Detroit Mayor Mike] Duggan thinks that at the current pace of demolitions he can clear the city’s long-standing blight within five years. Detroit would emerge smaller, but no longer a byword for decline.” – The Economist

The thrust of these sorts of articles and the initiatives they cover is that vacant, crumbling and/or abandoned properties are harmful eyesores that must be eliminated in order for cities to move forward. Demolishing “blighted” properties will make neighborhoods more attractive and might increase home ownership and encourage reinvestment. Vacant buildings can attract criminal activity like drug use. They sometimes pose safety hazards. Getting rid of them is overwhelmingly framed as positive by local governments that often leverage hundreds of thousands or even millions of dollars to do demolition work (often through state or federal grants).

And yet, there’s something darker that lurks beneath the surface when we talk about “blight.” The word completely disregards the past of a place. When you label something blight, you utterly negate any purpose it may have had and any hope of saving it. It is mere garbage to be discarded.

And it’s not just individual buildings that are labeled as such. Whole blocks and neighborhoods can receive this designation, either officially or by association. Once the label has been applied, it can be a natural progression to start thinking that the people, businesses and institutions that are still alive in these neighborhoods are also blight.

Empty lots in Milwaukee. (Source: Google Maps)

Empty lots in Milwaukee. (Source: Google Maps)

What We Lose

I was at a friend’s parents’ house in Milwaukee for a fundraiser recently. Their neighborhood is in one of the poorer parts of our city and as we pulled up to the house, the amount of empty lots on the block was striking; the street looked like a mouth with half its teeth missing. In a way, there was a peaceful pleasantness about it. The lots had been filled over with grass by now and they sat empty, as if this quiet neighborhood was dotted with dozens of mini-parks. Yet these lots were mostly marked by signs that said “City Property,” “Keep off grass,” and “No Trespassing,” making them a far cry from welcoming public parks.

Are these empty, off-limits spaces better than crumbling homes where drug dealers congregate? Many of the residents around them undoubtedly feel that way and surely the city does too. The grassy lots communicate a message of opportunity—fill this space—rather than a message of decay and disrepair that would likely send a potential developer running in the opposite direction, afraid to tackle mold, sinking foundations and the inevitable rats, cockroaches and other pests.

I wasn’t there to see the houses in this neighborhood before they were torn down and I’m not an architect, so I can’t say whether they were lovely representations of historic architecture, or whether they could have been rehabilitated easily and brought back up to a habitable condition.

I do know, however, that the very organization that my friend was hosting a fundraiser for is also in the process of looking for a building to house its future operations, and that the organizers have been looking into vacant commercial properties, feeling hopeful that these present an excellent opportunity to put in sweat equity in exchange for affordable office space. For a scrappy start-up like this, building from scratch would be financially impossible. Outright demolition of unused or abandoned properties takes that option off the table.

I can also say for certain that these demolition sites were once home to families—mothers, fathers, sisters, brothers, aunts, uncles, cousins, grandparents—many of them for decades before they reached the point of being called “blight” and demolished.

As Addison Del Mastro wrote last week on our site, “Our society has developed mourning rituals for people; we have not developed them for buildings.”

The Line Between Destruction and Preservation

What makes one building worth saving and another worth destroying? Of course, there are many technical definitions of what qualifies as historic architecture and merits a designation and the funding that can come with it, but often I think the line between destruction and preservation is simply drawn by people who rally around a building. An old, abandoned home in a popular neighborhood is likely to get either snatched up by a developer and replaced, or vehemently defended by the local historic preservation commission that fights to keep it safe and leverages funding to rehabilitate it. On the other hand, an abandoned home in a low-income neighborhood seems more likely to simply be labeled “blight” and marked for demolition without a second thought.

Combine this with the fact that many abandoned, crumbling homes were formerly rental properties with landlords that may live far away and it’s unsurprising that no one shows up to rally around an old condemned house. As Kea Wilson documented in August, slumlords can easily take advantage of cheap properties, then let them fall into disrepair without suffering any serious consequences.

A shift in perspective can change our opinion on what is “blight” and what is salvageable. In Strong Towns’ Curbside Chat presentation, Chuck Marohn compares two blocks in his hometown (see the video on the right), one of which he labels “Shiny and New” because it’s home to a recently constructed Taco John’s restaurant with accoutrements like native plant landscaping and a freshly paved parking lot.

Chuck labels the other block, which holds decades’ old small retail buildings and neglected sidewalks, “Old and Blighted.” This isn’t because he feels that the block should be torn down; quite the opposite. In the Curbside Chat, he makes a compelling case, showing that the “Old and Blighted” block is performing far better on the tax rolls than the Taco John’s block and should be enhanced and supported. Yet he labels the small retail block “Old and Blighted” because that is how most people in his town see it: a street that looks crappy and deserves to be destroyed.

If you’ve ever attended a Curbside Chat, you know that at this point in the presentation, Chuck asks the audience, “What would you do to spruce up this Old and Blighted block and give it a better future?” A slew of answers are always shared: “Repaint the storefronts.” “Add some benches.” “Plant trees and flowers.” Within a minute or two, the room has brainstormed a dozen ideas for improving the street, all of which together would probably cost less than the signage outside the Taco John. In that moment, the street has gone from “blighted” to “awash in possibilities.”

Of course, a truly dilapidated building like some of the ones that have been demolished in my city will require more than flowers and paint to make it habitable again. And in an already neglected, poor neighborhood, the amount of investment needed to bring that building back up to code is unlikely to materialize. Still, slapping on the “blighted” label seems likely to hasten its destruction rather than providing an opportunity for rehabilitation. It also seems more likely that an resultant redevelopment on the lot will come from a deep-pocketed developer who can afford to construct an entire home from scratch, than from a small-scale, low-income resident of the neighborhood who sees a shot at homeownership built on sweat equity in a rehabilitation opportunity.

What to do About “Blight”

It would be naive to say that every property has a rosy future where it can be renovated and restored, though. Maybe we can think of demolition as one way of moving developments along the line of incremental growth, except instead of a single family home becoming a duplex, it’s a single family home being returned to its original, “before” state—a mere plot of land. One of our core Strong Towns principles is: “Land is the base resource from which community prosperity is built and sustained. It must not be squandered.” If a home sits empty and unproductive for years, that is a squandering of land (albeit on a much smaller scale than the parking lots that squander miles of land in our communities).

Source: Johnny Sanphillippo

Source: Johnny Sanphillippo

Home demolition programs are, by and large, a better solution than letting properties continue to sit vacant, even if they are the easy way outThe Economist reports, “The demolition of a blighted property increases the value of a home 500 feet away by 4.2%, according to one study.” By removing a crumbling home, we make way for something new to appear, whether in the form of a temporary park space or community garden, or a more long-term investment like a new house. We also remove the risk and danger that a deteriorating home creates.

But there is still a loss. It would be helpful to see that loss more thoroughly acknowledged by those who speak about “blight” and a more concerted effort to rehabilitate before destroying.

The label of “blight” is a damaging shortcut. Rather than wholesale referring to buildings and blocks as blighted and calling for their removal, could we instead say, “This building has a damaged foundation that needs to be repaired” or “This structure should be updated” or “This home needs a new owner who will take better care of it”?

A reorientation toward home rehabilitation instead of demolition would, of course, require more funding and more people interested in living in these homes. But in a city like mine that struggles with high rates of homelessness, I think a rehabilitation and housing subsidy would be worthwhile. (After all, in a large-scale study of homelessness solutions, permanent housing subsidy was the most effective method of keeping people out of homelessness).

Cities are complex organisms. We should look at each house as its own entity and decide the best possible future for it, listening to the people who live around it.

Above all, we must use caution in our employment of the word “blight” to ensure that it is not a label that also transfers onto the people who live, work and worship in the neighborhoods dotted with condemned homes. We build strong towns, not by giving up on our neighborhoods, but by lifting up our neighborhoods.

Testimony of the U.S. Public Interest Research Group

Edmund Mierzwinski, Consumer Program Director

Concerning Errors In Credit Reports, The Rise of Identity Theft and the Need to Restore States’ Rights to Protect Their Citizens

at a Hearing Entitled:

The Fair Credit Reporting Act (FCRA):

How It Functions For Consumers and the Economy

Before the Subcommittee on Financial Institutions,

U.S. House of Representatives,
Honorable Spencer Bachus, Chair

4 June 2003

Chairman Bachus, Representative Sanders, members of the subcommittee. On behalf of the non- profit, non-partisan state-based Public Interest Research Groups, U.S. PIRG is pleased to offer you this testimony on the impact of the Fair Credit Reporting Act (FCRA), and its temporary 1996 partial preemption provision, on consumers and the credit system.

Summary

We appreciate the opportunity to provide our views. By way of introduction, since 1989, when Congress began review of the adequacy of the 1970 FCRA, U.S. PIRG and the state PIRGs have been active participants in the reform process and have conducted research and advocacy projects on issues ranging from credit reporting accuracy to identity theft.

I want to say at the outset that the FCRA is an important consumer protection and privacy law. It plays a critical role in helping consumers obtain opportunities in the marketplace. Yet, despite the 1996 attempts to update the law to improve it, the law still suffers from numerous problems, including a lack of agency enforcement, limits on private enforcement, an utter disdain for compliance by many creditors that furnish information to credit bureaus, the failure by the consumer reporting industry to maintain adequate accuracy standards, and the disconnect in the credit granting process that has led to the identity theft epidemic.

 

Although it is not these problems that first brought the FCRA to your attention this year, I hope to work with you on solutions to them. Errors in credit reports have profound effects on consumer economic opportunities. Identity theft is rampant in our society and only getting worse. Positive changes to the FCRA, including reinstatement of states’ rights, can mitigate these problems without causing the dire consequences threatened by industry lobbyists.

 

Our complex national credit system, which relies on interrelationships between and among furnishers of information (creditors), consumer reporting agencies (credit bureaus) and numerous other information providers, secondary market players and, finally, consumers, was not created by the temporary 1996 preemption compromise to the FCRA and will not be destroyed by letting it expire.

 

This year, financial industry lobbyists have come to Congress urging you to extend that temporary preemption provision. Instead, we strongly recommend that you let the preemption expire, as Congress clearly intended in 1996. Letting the preemption expire will fully restore the FCRA’s original 1970 provision making federal law a floor and allowing states to protect their citizens better. The FCRA worked well before 1996, as the testimony of the Vermont Attorney General’s office and other consumer witnesses has made clear today.

 

We commend you for rejecting industry’s request to simply and quickly extend preemption without debate. Instead you have convened this important series of fact-finding hearings to help you determine how to “put the FAIR back in Fair Credit Reporting.”

 

Industry’s lobbying campaign urging you to simply extend the temporary preemption is merely an attempt to preserve the unacceptable status quo.

 

— Is a status quo that has led to an increasing number of identity theft complaints in each of the past three years, with identity theft complaints leading all consumer complaints to the Federal Trade Commission (FTC) in 2000, 2001 and 2002 and doubling in 2002, a status quo worth preserving?

— And is a status quo that leaves many consumers paying too much for credit, or being denied credit, jobs, insurance, an apartment or a home or even the right to cash a check, use a debit card or open a bank account worth preserving?

— And is a status quo that has allowed some of the largest financial industry players to intentionally misrepresent consumer credit data — so that their customer’s credit scores will be artificially deflated and they become captive consumers who cannot shop around — worth preserving? Further, I urge the committee to ask: Is this industry chicanery a factor causing some consumers to have their credit card rates re-priced to 25% APR penalty rates when their credit scores are calculated during FCRA-allowed account reviews, as the New York Times suggested in a front page story last week?1

— And is a status quo that results in consumers being burdened by excessive credit card debt, fueled by a system that has resulted in 5 billion credit card solicitations mailed each year, without adequate disclosure of a weak, overly complex opt-out right, worth preserving?

— And is a status quo where consumers still face what we called in 1992 “the nightmare on credit street,” where creditors and credit bureaus blame each other and ultimately don’t fix errors because neither faces adequate liability, worth preserving?

 

Of course not. We believe that after this commendable series of fact-finding hearings is completed, you will agree with consumer groups, privacy advocates and state attorneys general that the act needs a major overhaul. But your significant challenge is to see through the industry’s increasingly transparent strategy of denying all problems yet agreeing, while kicking and screaming, to accept modest, token improvements as long as it ultimately gets what it wants—extension of the state preemption.

 

Your challenge is to reject industry’s facile, well-funded propaganda campaign and require industry to make a strong business case why the several states should continue to be denied the right to enact stronger laws in the future. So far, they’ve shown nothing to convince any reasonable participant in the process that the status quo is worth preserving.

 

Instead of relying on facts, the industry’s slick campaign is based on deceptive, but repetitive, use of the terms “reauthorization,” “free flow of information” and “uniformity.”

 

  •  First, industry lobbyists and advertisements repeat incessantly that the “FCRA itself must be re-authorized,” as if this optional Congressional action were somehow a mandatory reauthorization of a law that faces a Congressional sunset. But industry’s argument is false on face. Only the temporary, partial, preemption expires, not the underlying FCRA. If Congress does nothing, the FCRA remains in force.

 

  •  Second, industry argues that we have uniform credit laws, allegedly thanks to the 1996 temporary FCRA preemption. Actually, the preemption froze certain aspects of state laws in 1996, but several state laws were grandfathered in after those states enacted FCRA reforms quickly – while Congress stalled despite numerous complaints of credit reporting errors. These states – including the biggest state, California, as well as Massachusetts and Vermont – maintain stronger, non-uniform laws than the rest of the country. These states have not been balkanized; their citizens have not been deprived of economic opportunity. Law professor Joel Reidenberg, in testimony before this committee last month, provided record evidence that the opposite may be true: California, Massachusetts and Vermont citizens appear better off, not worse off, despite their stronger FCRA laws.
  • Third, industry argues that stronger state laws threaten the free flow of Industry goes on to threaten that enactment of stronger state laws will cause companies to drop from the credit reporting system, decreasing its value for all participants. Actually, according to recent studies by both the Federal Reserve Board and the Consumer Federation of America and the National Credit Reporting Association,2 many banks and other creditors are already intentionally decreasing the value of the free flow of information in the credit reporting system and hurting their consumer customers by failing to completely report their customer’s positive credit records, in a purposeful and successful, if facile, effort to deflate their credit scores and prevent them from taking advantage of credit opportunities.

 

  • Finally, industry lobbyists and ads allege that the temporary 1996 FCRA preemption provision is the engine that drives our economic trains. We had a national credit reporting system before 1996 and it worked Industry’s claim that eliminating the temporary 1996 FCRA preemption provision will jeopardize that system is without foundation.

1. The states are our best hope for reform, not a threat:

 

Best Solutions Coming From The States: For the last eight years the Congress has done nothing substantive to address the growing problems of identity theft other than to criminalize it. Criminalization hasn’t worked, yet industry has stymied Congress from enacting bills such as the proposal by Reps. Hooley and LaTourette and others to improve the situation.

 

To fill this gap, the best solutions to identity theft and credit reporting errors – those solutions being adopted nationwide by industry on an allegedly “voluntary” basis or being considered by the Congress – come from the several states, acting in areas of the FCRA where their rights were not curtailed. Restoration of their full rights to act will not result in balkanization of our financial laws; instead, it will result in even more rapid nationwide improvements to the serious problems consumers face when their identities are stolen or their credit records are garbled.

 

We generally agree with industry that a uniform national law would be the most efficient, provided it is adequate. But the best way to get to adequate uniformity is to retain states’ rights. Congress has not demonstrated a propensity for enacting uniform consumer protection laws that are adequate, except when driven by the threat of state actions. Taking away states’ rights will result in enactment of a weak federal law that won’t protect consumers. It won’t even preserve what industry refers to as the “free flow of information,” which is already under assault by some of the biggest banks. If Congress fails to solve the problem, or new problems arise, the states can act more quickly to resolve the problem and provide a template for additional federal action by the Congress.

 

Retaining states’ right to enact stronger laws is the best way to guarantee an eventual strong uniform federal law. The states are rational actors; they will not act to balkanize our financial system. Instead, they will respond to new threats with new and innovative ideas, which will be eventually be adopted by other states. The notion of 50 different, conflicting laws is absurd and not even worth debate.

 

In the area of consumer protection, without ideas from the states, typically the only way the inertia of Congress is ever overcome is by a stark crisis – such as Enron. Remember, the Enron fiasco wasn’t even enough to guarantee passage of last year’s Sarbanes-Oxley corporate reforms—we had to wait for Worldcom.

 

From a public policy point of view, it makes more sense to allow the states to partner with the Congress in developing adequate uniform laws, than to wait for another Enron-Worldcom crisis.

 

In areas where the states are not preempted, the states have been leaders. States are currently allowed to act in several areas, including: to restrict the uses of credit reports (such as ban insurance uses of credit scoring); to lower the price of or require free credit reports on request; to impose minimum statutory damage penalties for violations; to fight identity theft. This spring, Visa prominently announced it would “voluntarily” truncate credit card numbers on receipts to stop credit card fraud. Voluntary decision? Not really. Ohio and California had already enacted and were implementing laws requiring this action. Several other states are in the process of enacting such a law. Now that Visa has complied nationally with several state laws, we expect this proposal – which came from the states, to be quickly enacted in Congress.

 

U.S. PIRG: Examples of Some State Consumer Credit and Identity Theft Laws3 Arrest, Conviction, and Bankruptcy Records.

Kentucky: CRAs may not maintain information concerning criminal charges unless the charge results in a conviction. Ky. Rev. Stat. Ann. § 431.350.

Massachusetts: CRAs may not maintain arrest records more than seven years old. Mass. Gen. Laws Ann. Ch. 93 § 53.

New Mexico, Kansas, and Montana: Criminal data must be purged from the report after seven years, bankruptcies must be purged after 14. N.M. Stat. Ann. § 56-3-1; Kan. Stat. Ann. §§ 50-701 to 50-722; Mont. Code Ann. §§ 31-3-101 to 31-3-153.

Cost of Reports.

Georgia: Individuals are entitled to two free credit reports from each national credit reporting agency. Ga. Code Ann. § 10-1-392.

Colorado, Maryland, Massachusetts, New Jersey, and Vermont: Individuals are entitled to a free credit report once a year. Col. Rev. Stat. 12-14.3-101; Md. Comm. Law Code Ann. § 14- 1209; Mass. Gen. Laws Ann. Ch. 93; N.J. Stat. Ann. 56:11-29; Vt. Stat. Ann 2480b.

Connecticut: Credit reports are $5. Conn. Gen. Stat. Ann. § 36a-699a. Minnesota: Caps the cost of credit reports at $8.

Credit Scores.

California: CRAs must furnish credit scores to individuals for a reasonable fee. Cal. Civil Code 1785.10.

Colorado: Businesses using credit scores for underwriting must provide notice to the consumer. Colo. Rev. Stat. §§ 12-14.3-101-12.14.3-109.

Connecticut: Consumers must receive report within five days of receipt of the request; report must include all information in the file, including any credit score. Conn. Gen. Stat. §§ 36a-695 to 36a-699e.

Idaho: Prohibits insurers from raising rates, denying coverage, or canceling a policy primarily based on a credit rating or credit history. Idaho Code § 41-1843.

Vermont: Credit scores or predictors must be provided to the individual with the report. Vt. Stat. Ann. Tit. 9.

Duties on Users of Reports.

California: Individuals may receive a free copy of their credit report when it is requested by an employer. Cal. Civil Code 1785.20.5.

Utah: Credit grantors must notify consumers when negative information is furnished to a CRA. Utah Code Ann. 70C-7-107.

Investigative Consumer Reports.

Arizona: Sources of investigative consumer reports must be furnished to the individual upon request.

(2)  How The Preemption Provisions Have Made Matters Worse For Consumers

In 1996, Congress preempted states from acting in several areas of the FCRA, for 8 years, although it grandfathered in several stronger state laws and rejected complete uniformity. In each of these areas, consumer protection or privacy has suffered.

(a)  Preemption of Affiliate Sharing

The 1996 amendments created a new exception to the definition of credit report for the sharing of information among corporate affiliates. The intent of Congress was narrow: it was to ensure that basic affiliate sharing by a company did not trigger the responsibilities of a credit bureau.

Much of the debate over financial privacy has been over opt-in and opt-out. Yet, many observers are unaware that the primary protection of Gramm-Leach-Bliley is provided by notice. Unlike the Fair Credit Reporting Act, which is based broadly on the Fair Information Practices, GLB is largely a notice statute. Notice is not enough. Consumers need the right to choose, the right to review their views and dispute errors all the other protections provided by the FIPs.

Under GLB, most sharing, including sharing of experience and transaction information with both affiliates and third parties providing joint marketing services, is under a no-opt regime.

Consumers do not have the right to opt-out except in the circumstance of sharing with other third parties, primarily telemarketers selling non-financial services. Even Congressional Research Service reports have misunderstood the limited opt-out provisions of GLB4. Industry documents and materials claim the debate is over opt-out or opt-in. Actually, the vast bulk of industry has yet to agree that opt-outs are acceptable—they are actually for no-opt.

The failure of the GLBA to require any form of consumer consent for the vast majority of information sharing transactions affected is one example of how GLBA – unlike the FCRA — fails to meet the Fair Information Practices 5.

Problem: Industry has used confusion between the preemptive effect of this narrow exception and a contrasting pro-state’s rights provision of the 1999 Gramm-Leach-Bliley Financial Services Modernization Act to chill efforts to enact stronger state and local financial privacy laws. If industry’s interpretation were true, then the clear states’ rights provision of GLB would have no meaning. Nevertheless, industry has mounted a fierce lobbying campaign against stronger state financial privacy laws and has sued to overturn local financial privacy ordinances in San Mateo and Daly City, California. Expiration of the preemption will help, but the Congress could also clarify that the only effect of the FCRA affiliate sharing exception and its relationship to GLB is to prevent affiliate sharing from triggering the duties of credit bureaus, not to stymie state efforts to improve financial privacy.

  • Preemption of all matters related to pre-screened credit card solicitations Industry mails 5 billion credit card solicitations each year. Pre-screened mailings are generated from credit reports. These mailings contribute to massive credit card debt that may lead to financial problems or even Pre-screened solicitations are also easy prey for identity thieves who steal your mail. Privacy protections provided are weak at best.

Problems:

  • The 1996 amendments defined a so-called “firm offer of credit” not as a pre-approval to get credit, only pre-approval to receive an Companies are allowed to review, or “post-screen,” an applicant’s credit report again and reject them for the prominently advertised “low-APR, high credit limit” card and make a less-favorable bait-and-switch offer following the post-screen, without giving consumers an adverse action notice.

 

  • In return for this codification of an existing 1991 Federal Financial Institutions Examination Council (FFIEC) rule allowing the so-called firm offer of credit, Congress in 1996 added a modest opt-out privacy right to the FCRA, but failed to require any disclosure rules. The FCRA opt-out has no prominence or express language Here is a typical sentence from the middle of a long paragraph of a small print disclosure on the back of one of the pages in a credit card solicitation.

“You have the right to prohibit information contained in your credit file with any credit bureau from being used in connection with any credit transaction that you do not initiate.”

That sentence, in case you were wondering, gives you the right to opt-out of, or say no, to the “privilege” of having your credit report used to generate your share of 5 billion credit card solicitations mailed annually. An actual size copy of the full disclosure is reproduced here. The entire page it appears on consists of similar condensed print describing rights and disclaimers.

  • Problems With The Opt-Out Process: The Congress in 1996 required the credit bureaus to establish a 1-telephone number shared opt-out system. Note that the disclosure goes on to first offer you the names and addresses of each credit bureau, despite the shared 1-call opt-out The phone number eventually follows the list of addresses. It gets worse.

At the behest of the Direct Marketing Association and creditors, the Congress made the opt-out more complex than even this. Congress established a two-tiered opt-out. If you opt-out by phone, your opt-out is only good for two years. How does the joint 1-call opt-out system handle this?

Poorly, and to the advantage of the bureaus. Your first choice, “option 1” is only a two year opt- out. If you select that immediately, you don’t even hear about “Option 2,” the permanent opt-out. If you do manage to get to “Option 2,” the permanent opt-out, it takes your information, then tells you that you must wait and receive a “notice of election” in the mail, sign it and return it.

So a consumer who desires to exercise a permanent opt-out right must first decipher an unintelligible, hidden notice, then make a telephone call, push a number of buttons, provide his   or her Social Security Number (many consumers hang up at this point thinking the phone number is a scam to steal identities), wait to receive a form in the mail and remember to return it. This is consumer protection?

  • Pre-screening opt-out doesn’t block affiliate-related credit card marketing: Worse, the pre- screening opt-out doesn’t stop the flow of credit card solicitations, it only slows it down. Now, many retailers, airlines, organizations and others routinely send credit card solicitations to their customers. Yet, these offers are based on affiliate sharing — under the Gramm-Leach-Bliley Act, not the FCRA. No credit report was used for pre-screening, so no opt-out is provided on the Under Gramm-Leach-Bliley, affiliate sharing of “experience and transaction” information is subject to a no-opt rule. The FCRA opt-out does not apply, nor does the limited GLB opt out. Congress should create a “no credit card offers” list and apply the 1-call opt-out to all credit card solicitations not only pre-screened solicitations.

(c)  Preemption of furnisher duties has limited consumer rights to enforce act

The 1996 amendments, for the first time, imposed modest duties on banks, department stores and other creditors that “furnish” information to credit bureaus to avoid making errors. The duties are very weak and the threat of liability modest. In fact, Congress prohibited consumers from suing furnishers for failing to comply with what were called in 1996 “front-end” accuracy requirements (Section 623(a)) and limited the section’s enforcement to agencies. Congress only gave consumers a private right of action to enforce Section 623(b)’s “back-end” responsibilities, which require a furnisher to comply with reinvestigations and avoid reinsertion of false information after being notified.

Even worse, as the National Association of Consumer Advocates will testify today, after a federal court misinterpreted the 1996 FCRA amendments, it took several years to develop new case law correcting the lower courts and reinstating the clearly intended private right of action for Section 623(a) violations. Notably, the FTC filed a friend of the court brief on behalf of consumer Toby Nelson that was widely cited in the Ninth Circuit’s decision reinstating the private right of action against furnishers.

As counsel for the FTC observed, there are involved in any credit transaction only the consumer, the CRAs, the user of the credit reports and the furnishers of the credit information. As consumers would not be made subject to suit by consumers, and as CRAs and users were already suable, who else except furnishers could Congress have had in mind when it introduced” any person” into the statute? Where, other than under 1681s- 2(b) [623(b)] would furnishers be suable by consumers? In oral argument, counsel for Chase conceded that Chase had no answers to these questions. We cannot suppose that Congress made an amendment without a purpose.

9th Circuit U.S. Court of Appeals, opinion, 1 March 2002, Nelson vs. Chase Manhattan Mortgage 6

State and federal laws pertaining to furnishers of consumer credit information differ in two respects: liability standards and remedies. Overall, the state laws in California and Massachusetts, which were grandfathered in, are stronger than the federal FCRA. Law professor Joel Reidenberg, in testimony before this committee last month, provided record evidence that the opposite may be true: California, Massachusetts and Vermont citizens appear better off, not worse off, despite their stronger FCRA laws 7.

The FCRA imposes a standard of actual knowledge or purposeful avoidance of knowledge on furnishers of credit information. It states: “Furnishers of consumer credit information must not give information if they know or consciously avoid knowing that it is inaccurate.” FCRA 623(a)(1)(A). Conversely, the two state laws’ liability standards are broader in scope and more pro-consumer. California imposes an actual as well as a constructive knowledge liability standard, meaning that regardless of whether the furnisher actually does not know the consumer’s information is inaccurate, the furnisher had a duty to know. Cal. Civ. Code 1785.25(a). In Massachusetts, a fact finder will look at whether the furnisher had either actual knowledge of the inaccuracy or, once again, whether he should have known. This is done by employing a reasonable person standard. ALM GL Ch. 93, s. 54(A).

As for remedies, the FCRA provides only an administrative cause of action against furnishers who violate section 623(a); and thus consumers are left with a private cause of action only under 623(b). FCRA 623(c). Such a limit on remedies does not exist under the stronger state laws. In Massachusetts and California, a private remedy is triggered upon a dispute – similar to the FCRA – however an all-encompassing subsection in both state laws provides that all furnishers who fail to comply with the entire section (not just a certain part of the section) are liable.

The difficulty in suing either credit bureaus or creditors places a fundamental role in their lackadaisical attitude toward accuracy and consumer protection.

(D) Preemption of all notices, all timetables

All notices of consumer rights under the FCRA are also subject to preemption as are all timetables for reinvestigation of errors. All timetables for removing negative information (usually 7 years) from reports are also preempted.

Problem: The FCRA’s rights notices are inadequate. The FCRA’s reinvestigation timetables are too long. The FCRA’s obsolescence periods do not reflect risk properly—minor delinquencies should remain on credit reports for shorter times. States have been prevented from acting in all these areas.

(3)  The Continuing Problem of Inaccurate Credit Reports

The 1996 amendments included several provisions to improve the accuracy of credit reports. Among the key changes were the following:

First, furnishers were subjected to modest new duties and limited liability.

Second, the CRAs were required to develop a joint error notification system to prevent the recurrence of errors.

Third, the CRAs were required to have adequate staffing to handle consumer complaints.

Fourth, users were required to tell consumers that they had a right to a free credit report following denial, circumstances when free reports were available were expanded slightly and CRAs were required to provide consumers with a detailed description of their rights.

Fifth, a series of small changes were made, including a clarification that the 7-year period for dropping obsolete information could not be re-started when debts were sold and that accounts closed in good standing must be coded so that they could not be interpreted as negative items in credit scores.

By and large, the changes haven’t worked, because they haven’t been enforced by the FTC8 or other agencies, such as the OCC, that regulate furnishers. Further, as the testimony of the National Association of Consumer Advocates and the National Consumer Law Center points out today, it is difficult for a consumer to privately enforce the FCRA. Absent the threat of significant damages for violations, the credit bureaus and furnishers treat mistakes and identity theft as merely a cost of business, rather than a problem.

(4)  Are Credit Reports Accurate?

No. According to the most comprehensive study ever done, released in December 2002 by the Consumer Federation of America and the National Credit Reporting Association, credit scores calculated from credit reports obtained from each of the Big Three repositories show a wide disparity 9:

  • CFA/NCRA analyzed 502,623 credit files with scores from all three major credit reporting agencies – the largest sample ever examined. Every state and territory in the nation was represented.
  • Nearly one out of three files (29 percent) had a score discrepancy among the three reporting agencies of 50 points or more. Credit scores range from about 400 to about 800.
  • 4 percent of files had a discrepancy of 100 points or more.
  • The average discrepancy was 41 points (with a median discrepancy of 35 points).
  • Roughly eight million consumers – one in five of those who are at risk – are likely to be misclassified as sub-prime upon applying for a mortgage, based on the study’s review of credit files for errors and inconsistencies. A similar number are likely to benefit from errors in their reports. However, individual consumers do not benefit from system-wide averages and should not have to cope with a credit reporting system that functions as a lottery.
  • Misclassification into the subprime mortgage market can require a borrower to overpay by tens of thousands of dollars in interest payments on a typical mortgage. For example, over the life of a 30-year, $150,000 mortgage, a borrower who is incorrectly placed into a 84% subprime loan would pay $317,516.53 in interest, compared to $193,450.30 in interest payments if that borrower obtained a 6.56% prime loan – a difference of $124,066.23 in interest payments.

A credit score that is even a few points lower than it should be can have a negative impact on certain consumers, especially those on the border between the prime and subprime mortgage markets.10

The CFA and NCRA findings buttress the findings of a number of smaller studies conducted over the years by the state PIRGs and Consumers Union, publisher of Consumer Reports Magazine. These studies found significant error rates that could lead to denials in approximately one-third or more of the credit reports surveyed.

 

U.S. PIRG: Sources of Errors In Credit Reports
and Variances In Credit Scores
Systemic Errors Possibly In Violation of
FCRA’s Maximum Possible Accuracy Standard
Geographical discrepancies in affiliate coverage by repositories Different repositories may use different overlapping affiliates with differential coverage of local creditors and debt collectors.
Variances in reporting for national or local creditors One repositories may use monthly tapes from a large creditor; another may use quarterly tapes
Continued use of obsolete Metro tape format with known egregious flaws instead of Metro 2 upgrade Repositories have not required furnishers to uniformly upgrade to the more accurate Metro 2 format, resulting in numerous errors, especially false bankruptcy reporting.
Incomplete reporting by large creditors in effort to trick scoring systems and prevent customers from shopping around Some credit card companies do not report the full positive trade line on their good customers, especially subprime customers, deflating credit scores. Bank regulators have failed to adequately enforce.
Public Record data collection Repositories and their hirelings collect courthouse records and inadequately verify that the John Smith who filed bankruptcy is the John Smith where they insert the negative public record.
Failure to Adequately Match Demographic Information in Subscriber Report Requests With Information in Repository File Consumers cannot receive own report without providing 4-5 matching pieces of information. Subscribers, conversely, submit only 2 – name and Social Security Number. Subscriber reports are therefore much more prone to include information about someone else: called a “mis-merge” or “file variant.” Sloppy reliance on Social Security Numbers is the key that opens this door to identity theft.

 

James Williams of Consolidated Information Services, a New York area retail mortgage credit reporting agency, in 1991 analyzed 1500 reports from the three big bureaus and found errors in 43 percent of the files.

 

To our knowledge, only one study has ever been released by the Associated Credit Bureaus. According to news reports, its 1991 report, conducted by Arthur Andersen, claimed that “errors critical to the decision of granting credit” occurred in fewer than 1% of files.

  • The Real Threat To The Free Flow of Information Is The Failure By Furnishers To Report Completely

This spring, the Federal Reserve Board of Governors released a major study11 of credit reports. Among its key findings, based on a review of 248,000 credit reports held by one unnamed repository, was the following: fully 70% of consumers had at least one trade line account with incomplete information. The Fed finds this problematic.

A key measure used in credit evaluation—utilization—could not be correctly calculated for about one-third of the open revolving accounts in the sample because the creditor did not report the credit limit. About 70 percent of the consumers in the sample had a missing credit limit on one or more of their revolving accounts. If a credit limit for a credit account is not reported, credit evaluators must either ignore utilization (at least for accounts without limits) or use a substitute measure such as the highest-balance level.

The authors’ evaluation suggests that substituting the highest-balance level for the credit limit generally results in a higher estimate of credit utilization and probably a higher perceived level of credit risk for affected consumers. [Emphasis added] 12

 

Although industry witnesses will testify to a vast “free flow of information” driving our economy that should not be constrained, more and more firms are choosing to stifle the flow of information themselves — to maintain their current customers as captive customers. When a bank intentionally fails to report a consumer’s complete credit report information to a credit bureau, that consumer is unable to shop around for the best prices and other sellers are unable to market better prices to that consumer. Even the Comptroller of the Currency, Mr. Hawke, has condemned the practice.13 So has the FFIEC:

The Agencies are aware that over the last year some financial institutions have stopped reporting certain items of customer credit information to consumer reporting agencies (credit bureaus). Specifically, certain large credit card issuers are no longer reporting customer credit lines or high credit balances or both. In addition, some lenders, as a general practice, have not reported any loan information on subprime borrowers, including payment records. The Agencies have been advised that the lack of reporting is occurring primarily because of intense competition among lenders for customers.

The Agencies note that both financial institutions and their customers generally have been well served by the long-established, voluntary self-reporting mechanism in place within the industry.14

Yet, rather than enforcing the accuracy provisions of Section 623(a) of the FCRA and requiring furnishers regulated by FFIEC members to provide complete information, the FFIEC guidance merely urges members to take intentionally flawed trade lines into account in their risk analysis.

Accordingly, financial institutions that rely on credit bureau information as a tool in their underwriting and account management functions, whether manual or automated, should have processes in place to effectively identify and compensate for missing data in credit bureau reports and models.15

So, it is clear that the gravest threats to the FCRA and its role in preserving the free flow of information that affects our credit system and economy come not from state actions, but from changing industry practices designed to limit the act’s applicability or coverage. Companies are “gaming” the so-called free flow of information, to create a captive customer base and prevent their own customers from shopping around.

(6)  Does The Credit Reporting System Prevent Identity Theft? No

1996-2002: The Age of Identity Theft: From 1989 through 1996, while Congress considered the strengthening of the FCRA, identity theft was not a significant issue in the debate. While it turns out that the problem was growing, the industry had been keeping it quiet and absorbing the costs of fraud without providing Congress or the FTC with significant information. In 1996, the state PIRGs released the first national report on the problem, “The Consumer X-Files,” documenting the cases of several identity theft victims and attempting to quantify the problem.

In 1997, the state PIRGs released a follow-up, “Return To The Consumer X-Files 16”. In 2000, the state PIRGs and Privacy Rights Clearinghouse released a detailed survey of identity theft victims, “Nowhere To Turn17.” In 2003, CALPIRG released the first analysis of police officer views on identity theft, “Policing Privacy18.” It found that police share consumer groups’ views that creditor practices must be reined in to stop identity theft.

In 1997, victim Bob Hartle pushed state legislation through the Arizona legislature criminalizing identity theft. Hartle urged Senator Jon Kyl (R-AZ) and Rep. John Shadegg (R-AZ) to enact similar legislation federally in 1998. The proposal was backed by PIRG and other consumer groups, by the Secret Service and police associations, and embraced by the industry. But criminalization of identity theft, also adopted by nearly every state, hasn’t solved the problem.

The FTC has recently reported that identity theft was the leading complaint to the agency for the years 2000, 2001 and 2002. The number of cases doubled in 2002, according to the FTC. Based on figures reported to the GAO by the credit bureaus themselves, identity theft may strike as many as 500,000-700,000 consumers annually.

First, identity theft is a fast growing crime and criminalization is only part of the solution. Identity theft criminalization does not appear to have slowed the growth of identity theft. Creditors (banks, mortgage companies, department stores, etc) and credit bureaus (Experian, Equifax and Trans Union) must improve both their credit granting practices – to reduce the incidence of identity theft — and their treatment of identity theft victims – to make it easier for these victims to clear their good names and re-enter the financial world. Legislation is necessary to coerce these recalcitrant firms, which generally consider a “few” mistakes and a few lawsuit settlements the cost of doing business while they ignore the real costs, both tangible and intangible, to victims. Unless banks, department stores and credit bureaus are forced by law to help prevent identity theft, they will continue in their sloppy credit-granting practices, they will continue to dismiss the problem of identity theft with their public relations campaigns19 and they will continue to reject the massive impact identity theft has on its consumer victims.

Second, misuse, over-use and easy access to Social Security Numbers helps drive the identity theft epidemic. Fundamentally, this nation needs to wean the private sector of its over-reliance on Social Security Numbers (SSN) as unique identifiers and database keys. Creditors issue credit based on a match between an applicant’s SSN and a credit bureau SSN, with no additional verification in many cases that the applicant is actually the consumer whose credit bureau file is accessed.

Types of Identity Theft: Experts divide financial identity theft into two main categories. “True name” fraud occurs when someone uses pieces of a consumer’s personal identifying information, usually a Social Security number (SSN), to open new accounts in his or her name. Thieves can obtain this information in a variety of ways, from going through a consumer’s garbage looking for financial receipts with account numbers and SSNs, to obtaining SSNs in the workplace, to hacking into computer Internet sites, or buying SSNs online.

“Account takeover” occurs when thieves gain access to a person’s existing accounts and make fraudulent charges. Regardless of the types of fraud committed or the amount of money taken fraudulently, victims indicate that stress, emotional trauma, time lost, and damaged credit reputation — not the financial aspect of the fraud — are the most difficult problems they face. One victim from Nevada explained to us, “this is an extremely excruciating and violating experience, and clearly the most difficult obstacle I have ever dealt with.”

(7)  Results of the PIRG/Privacy Rights Clearinghouse Survey of Identity Theft Victims

In the spring of 2000, CALPIRG and Privacy Rights Clearinghouse sent surveys to victims who had recently contact our offices, and published a report based on the findings, entitled “Nowhere To Turn: Victims Speak Out on Identity Theft.20” The report followed up on CALPIRG’s groundbreaking identity theft reports21 released in 1996 and 1997, and on the pioneering work of the Privacy Rights Clearinghouse in assisting victims and drawing attention to their plight. Both organizations have also worked with victims to find ways that they can help themselves, because until the Federal Trade Commission established its clearinghouse, there was no government agency that made identity theft solutions its priority.22

The data pinpoint the failure of law enforcement, government, and the credit industry to address the root causes of identity theft. By not changing their procedures, these stakeholders have both helped perpetuate identity theft and have made it difficult for victims to resolve their cases expeditiously. Although each identity theft case is different, we have been able to identify patterns and trends in the victims’ responses. The survey data also verify that the stories in the news on identity theft are not extreme cases in which an unlucky victim has had an unusually bad experience. As one victim from California stated, “It was as terrible as all the books and articles say it is.”

Forty-five percent (45%) of the victims consider their cases to be solved; and it took them an average of nearly two years, or 23 months, to resolve them. Victims (55%) in the survey whose cases were open, or unsolved, reported that their cases have already been open an average of 44 months, or almost 4 years.

Three-fourths, or 76%, of respondents were victims of “true name fraud.” Victims reported that thieves opened an average of six new fraudulent accounts; the number ranged from 1 to 30 new accounts.

 

The average total fraudulent charges made on the new and existing accounts of those surveyed was $18,000, with reported charges ranging from $250 up to $200,000. The most common amount of fraudulent charges reported was $6,000.

Victims spent an average of 175 hours actively trying to resolve the problems caused by their identity theft. Seven respondents estimated that they spent between 500 and 1500 hours on the problem.

Victims reported spending between $30 and $2,000 on costs related to their identity theft, not including lawyers’ fees. The average loss was $808, but most victims estimated spending around $100 in out-of-pocket costs.

Victims most frequently reported discovering their identity theft in two ways: denial of either credit or a loan due to a negative credit report caused by the fraudulent accounts (30%) and contact by a creditor or debt collection agency demanding payment (29%).

Victims surveyed reported learning about the theft an average of 14 months after it occurred, and in one case it took 10 years to find out.

In one-third (32%) of the cases, victims had no idea how the identity theft had happened. Forty- four percent (44%) of all the victims had an idea how it could have happened, but did not know who the thief was. But in 17% of the cases, someone the victim knew — either a relative, business associate, or other acquaintance — stole his or her identity.

Despite the placement of a fraud alert on a victim’s credit report, almost half (46%) of the respondents’ financial fraud recurred on each credit report.23

All but one of the respondents contacted the police about their cases, and 76% of those felt that the police were unhelpful. Law enforcement agents issued a police report less than three-fourths of the time, and assigned a detective to the victims’ cases less than half of the time. Despite the high rate of dissatisfaction with law enforcement assistance, 21% of the victims reported that their identity thieves had been arrested, often on unrelated charges.

Thirty-nine percent (39%) of the victims reported contacting the postal inspector about their cases, and only 28% (7 out of 25) of those respondents found the post office helpful. Only four of the respondents reported that the postal inspector placed a statement of fraud on their name and address.

Forty-five percent (45%) of the respondents reported that their cases involved their drivers’ licenses. For example, the license had been stolen and used as identification, or the thief had obtained a license with his or her picture but containing the victim’s information. Fifty-six percent (56%) of the respondents contacted the Department of Motor Vehicles, and only 35% of those found the DMV helpful.

Forty-nine percent (49%) of the respondents contacted an attorney to help solve their cases. Forty-four percent (44%) of those people found their attorney to be somewhat helpful. Many consumers contacted attorneys at public interest law firms and received advice for free.

Attorneys’ fees ranged from $800 to $40,000.

Respondents reported that the most common problem stemming from their identity theft was lost time (78% of consumers identified this problem). Forty-two percent (42%) of consumers reported long-term negative impacts on their credit reports, and 36% reported having been denied credit or a loan due to the fraud. Twelve percent (12%) of the respondents noted as a related problem that there was a criminal investigation of them or a warrant issued for their arrest due to the identity theft.

Financial Identity Theft Only Part of the Problem: Increasingly, thieves are also committing other crimes using the names generated from identity fraud. According to the survey, thieves committed various other types of fraud with the respondents’ information, including renting apartments, establishing phone service, obtaining employment, failing to pay taxes, and subscribing to online porn sites. In 15% of the cases, the thief actually committed a crime and provided the victim’s information when he or she was arrested. A growing problem for victims is that thieves who have rented apartments or purchased homes using fraudulent identities are filing for bankruptcy in the victim’s name, with the intention of seeking a mandatory stay against eviction or foreclosure. The false public record bankruptcies are difficult for victims to remove.

(8)  Solution: Improve the FCRA 

In addition to allowing state preemption to sunset, PIRG’s key recommendations to prevent identity theft and credit reporting errors are the following: (1) Require credit bureaus to provide free credit reports annually on request, as six states already do (Colorado, Georgia, Massachusetts, Maryland, New Jersey, Vermont). Add disclosure of credit scores to credit reports and ban insurance uses of credit scoring. (2) Provide victims, as well as other consumers, with the right to block access to their credit reports. (3) Require matching of at least four points of identity, such as exact name and exact address, date of birth, account number and former address, instead of only on Social Security number between credit reports and credit applications. (4) Improve address-change verification. (5) Close the “credit header” loophole that allows Social Security numbers to be sold on the information marketplace, including over the Internet. (6) Take Social Security Numbers out of general circulation. (7) Make it easier to sue credit bureaus and creditors. (8) Improve the pre-screening opt-out.

Some of these solutions are discussed in detail above.

The Hooley/LaTourette identity theft proposal, HR 2035, includes a number of these provisions, including the laudable free credit report, address change verification and fraud flag protections. Unfortunately, like-several state enacted identity theft reforms and several Senate proposals, it

also includes an unacceptable safe harbor for reseller credit bureaus. Resellers should not be treated differently than other credit bureaus24.

Get The Social Security Number Out Of Circulation: Several important provisions were included in HR 2036 in the last Congress (Shaw). The bill included a strict anti-coercion clause giving consumers the right to say no to most businesses demanding their Social Security Numbers. The bill included limits on public display of SSNs which will make it harder for identity thieves to obtain the key to a consumer’s financial life. The bill closed the so-called “credit header loophole” that has been narrowed by the DC Circuit decision upholding the FTC’s consent decree against Trans Union and its decision upholding the GLB regulations.2

Closing the credit header loophole will reduce access to Social Security Numbers. It will not shut the door completely on their use. Military IDs, insurance and Medicare IDs, college IDs and drivers’ licenses often routinely display Social Security Numbers. Businesses use the SSN as their database key for the same reason Mallory climbed Everest: “Because it is there.” Of course, they have less justification than Mallory did. He was an explorer, creditors and credit bureaus are merely lazy and sloppy. Unless legislation such as the Shaw proposal is enacted, SSNs will continue to be easily available and routinely abused by identity thieves.

Make It Easier To Sue Credit Bureaus and Creditors: In November 2001, the Supreme Court raised the bar for identity theft victims, by shortening the FCRA’s statute of limitations to sue credit bureaus to only two years after an error is made, in the case TRW vs. Andrews.26 The FCRA also unduly restricts a consumer’s right to sue creditors that make mistakes, restricting most enforcement to agencies.

Bi-partisan legislation, HR 3368, introduced by Reps. Schakowsky and Chairman Bachus in the last Congress would reinstate the previous rule of two years from date of discovery of the error by the consumer. A defective proposal, S. 22, in this Congress, would only extend the statute of limitations for identity theft victims, not for all consumers. That is unacceptable.

Consumers should also be able to obtain minimum damages for all violations of the FCRA, so that they don’t have to prove actual damages. The actual damages requirement is a difficult hurdle in many cases.

Require creditors to warn consumers of negative information: Last year, Rep. Gary Ackerman, a member of the House Financial Services Committee, pointed out during a markup that he will pay thousands of dollars in excess interest on a mortgage due to failing to qualify for a low-interest loan as the result of a 3-year-old error on his credit report. We expect Rep. Ackerman to offer a laudable proposal that would require creditors to clearly warn consumers when negative information is being sent to credit bureaus.

Free credit reports and credit scores: Transparency is critical. Consumers shouldn’t have to wait for credit denial to look at their credit reports, which can be sold into commerce without consent and may contain serious errors

The credit bureaus will likely make a claim that they shouldn’t have to give away their product for free. Their real customers are businesses. Consumers should have the right to audit their own records, for free. Instead, the industry has aggressively marketed credit reporting subscription services, warning consumers: “you could be an identity theft victim. Join now for $99/year.” That’s a deplorable form of protection racket, when the bureaus are both responsible for identity theft and are charging you a fee to look at your report

With credit scores being used for most credit decisions, credit scores should also be incorporated into reports. Credit scores should be banned for insurance uses.27

An additional problem of transparency is that consumers see a different credit report than subscribers do. Often, a consumer report is based on 5 pieces of identifying information and is more likely to be accurate than the subscriber report which resulted in a credit denial. It is much more likely to contain merged information about other consumers, since it is based on a less precise matching algorithm. Consumers should see the same report the subscriber used to deny them.

Furnisher completeness standards: While we recognize that the Congress is unlikely to require furnishers to report to credit bureaus, we believe that the committee should examine whether minimum “completeness” standards are necessary to correct the problems identified by the federal financial agencies due to incomplete reporting. If Congress is not going to change the “voluntary” requirement for reporting, it should at least make completeness part of accuracy. This is especially important if companies are using “account reviews” to raise consumer’s interest rates, based on negative items or changes in credit scores. What about the consumers who are victims of errors, identity theft or this gaming of the system? The Congress should consider severe restrictions on account reviews, which do not appear to be in any way being used for any legitimate, risk-related use, but merely to pump profits up.

Adverse Action Notices: Adverse action notices under the FCRA are important. The notices provide consumers a trigger that warns them of their other substantive rights. Yet, not all firms may be providing adverse action notices. The FTC has recently enforced an action against the Internet loan company Quicken28, but we believe that the problem is more serious and affects thousands of consumers in the mortgage market, where brokers, lenders and secondary market players may be failing to provide adverse action notices. According to the Washington Post:

Yet all too often, mortgage industry critics charge, today’s lightning-quick electronic underwriting systems leave applicants in the dark when they’re being charged higher rates or fees because of credit report negatives. Richard F. Le Febvre, president of AAA American Credit Bureau Inc. of Flagstaff, Ariz., says he has seen hundreds of cases in which borrowers were overcharged for home loans because of erroneous credit file information, without ever receiving adverse action notices 29.

Conclusion

We appreciate the opportunity to provide our views on the Fair Credit Reporting Act. We look forward to working with you in the future on these and other solutions to the problems consumers face in dealing with creditors, furnishers and identity theft. In this testimony, we have attempted to emphasize issues that were not being covered by some of the other pro-consumer witnesses. I concur with the recommendations made by National Consumer Law Center, the Vermont Office of the Attorney General, the National Association of Consumer Advocates and the National Fair Housing Alliance.

As we indicated above, the FCRA is an important privacy and consumer protection law. It provides consumers with substantive rights. We hope that a future hearing in this series will examine the effect of the growing use of affiliate sharing under GLB for profiling and credit decision-making. If credit decisions are made on the basis of affiliate-shared information, consumers do not have the same bundle of rights as they would under FCRA. As internal creditor databases increase in size and predicative value, either credit decisions or other profiling decisions (whether to even offer a consumer a certain class of product, for example) may more and more be made under the GLB regime. These adverse actions will not result in triggering the same disclosures and rights that consumers obtain under the FCRA. These changes in the marketplace, which are already occurring, mean that consumers may not have the same credit rights in the future. We would be happy to discuss these significant matters further.

==============================

1 “Surprise Jumps in Credit Rates Bring Scrutiny,” by Jennifer Bayot, The New York Times, 29 May 2003, Page 1.

2 “Credit Score Accuracy and Implications for Consumers”, December 17, 2002, Consumer Federation of America and the National Credit Reporting Association http://www.consumerfed.org/121702CFA_NCRA_Credit_Score_Report_Final.pdf

3 This is a partial list. Beth Givens of the Privacy Rights Clearinghouse has prepared a summary (5 pages) of all California identity theft related laws.

4 See for example, “Financial Privacy — The Economics of Opt-In vs Opt-out. (Updated 16 Apr 2003) by CRS’s Loretta Nott. It repeats a mischaracterization of GLB that I believe has been made in other CRS reports. The third sentence states: “A consumer’s financial information may be shared among the (affiliates of the same corporate) group as long as the person has been notified and has the opportunity to decline, or “opt-out.” The paragraph goes on to wrongly say that the Johnson S 660/Tiberi HR 1766 proposals are intended, among other things, to “maintain the opt-out policy for affiliate information sharing.”

5 Ideally, consumer groups believe that all privacy legislation enacted by either the states or Congress should be based on Fair Information Practices, which were originally proposed by a Health, Education and Welfare (HEW) task force and then embodied into the 1974 Privacy Act and into the 1980 Organization for Economic Cooperation and Development (OECD) guidelines. The 1974 Privacy Act applies to government uses of information.5 Consumer and privacy groups generally view the following as among the key elements of Fair Information Practices:

  • Collection Limitation Principle: There should be limits to the collection of personal data and any such data should be obtained by lawful and fair means and, where appropriate, with the knowledge or consent of the data subject.
  • Data Quality Principle: Personal data should be relevant to the purposes for which they are to be used, and, to the extent necessary for those purposes, should be accurate, complete and kept up-to-date.
  • Purpose Specification Principle: The purposes for which personal data are collected should be specified not later than at the time of data collection and the subsequent use limited to the fulfillment of those purposes or such others as are not incompatible with those purposes and as are specified on each occasion of change of
  • Use Limitation Principle: Personal data should not be disclosed, made available or otherwise used for purposes other than those specified in accordance with the Purpose Specification Principle except: a) with the consent of the data subject; or b) by the authority of
  • Security Safeguards Principle: Personal data should be protected by reasonable security safeguards against such risks as loss or unauthorized access, destruction, use, modification or disclosure of
  • Openness Principle: There should be a general policy of openness about developments, practices and policies with respect to personal data. Means should be readily available of establishing the existence and nature of personal data, and the main purposes of their use, as well as the identity and usual residence of the data
  • Individual Participation Principle: An individual should have the right: a) to obtain from a data controller, or otherwise, confirmation of whether or not the data controller has data relating to him; b) to have communicated to him, data relating to him within a reasonable time; at a charge, if any, that is not excessive; in a reasonable manner; and in a form that is readily intelligible to him; c) to be given reasons if a request made under subparagraphs (a) and

(b) is denied, and to be able to challenge such denial; and d) to challenge data relating to him and, if the challenge is successful to have the data erased, rectified, completed or amended.

  • Accountability Principle: A data controller should be accountable for complying with measures which give effect to the principles stated

6 See the FTC’s brief in Nelson vs Chase Mortgage at <http://www.ftc.gov/ogc/briefs/nelsont.pdf>. The 9th Circuit U.S. Court of Appeals decision of 1 March 2002 in Nelson vs. Chase Manhattan Mortgage is available at http://www.ca9.uscourts.gov as Case # 00-15946.

7 See http://financialservices.house.gov/media/pdf/050803jr.pdf

8 In 2000, the FTC did impose a total of $2.5 million in fines on the Big Thee repositories for failing to have enough staff to answer he phones.

9 The following bulleted facts are from a Consumer Federation of America summary fact sheet on the report. “Credit Score Accuracy and Implications for Consumers”, December 17, 2002, Consumer Federation of America and the National Credit Reporting Association http://www.consumerfed.org/121702CFA_NCRA_Credit_Score_Report_Final.pdf

10 “Credit Score Accuracy and Implications for Consumers”, December 17, 2002, Consumer Federation of America and the National Credit Reporting Association http://www.consumerfed.org/121702CFA_NCRA_Credit_Score_Report_Final.pdf

11 See “An Overview of Consumer Data and Credit Reporting,” Avery et al, February 2003, Pages 47-73, Federal Reserve Bulletin http://www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf

12 See page 71, “An Overview of Consumer Data and Credit Reporting,” Avery et al, February 2003, Pages 47-73, Federal Reserve Bulletin http://www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf

13 See speech by Comptroller of the Currency John Hawke at http://www.occ.treas.gov/ftp/release/99-51.txt

7 June 1999: “Some lenders appear to have stopped reporting information about subprime borrowers to protect against their best customers being picked off by competitors. Many of those borrowers were lured into high-rate loans as a way to repair credit histories.” According to U.S. PIRG’s sources in the lending industry, this practice continues.

14 See advisory letter of18 January 2000 at http://www.ffiec.gov/press/pr011800a.htm 15 See advisory letter of18 January 2000 at http://www.ffiec.gov/press/pr011800a.htm 16 See http://www.pirg.org/reports/consumer/xfiles/index.htm

17 See http://calpirg.org/CA.asp?id2=3683&id3=CA&

18 See http://www.pirg.org/alerts/route.asp?id2=9791

19 See, for example, the recent opinion piece by Oscar Marquis in the American Banker, 17 May 2002, claiming that estimates of identity theft over-state the problem. Marquis was until recently the long-time general counsel for the Trans Union credit bureau. He has recently joined Hunton and Williams, a law and lobbying firm that is one of numerous financial-industry affiliated organizations that are publishing “reports” and other polemics in opposition to strict privacy protection laws. See, for a rebuttal to these industry-funded materials, “Privacy, Consumers, and Costs,” March 2002, by Robert Gellman. Available at http://www.epic.org/reports/dmfprivacy.html

20 The full report, “Nowhere To Turn,” by CALPIRG and the Privacy Rights Clearinghouse, May 2000, is available at <http://www.pirg.org/calpirg/consumer/privacy/idtheft2000/>

21 “Theft of Identity: The Consumer X-Files”, CALPIRG and US PIRG, 1996 and “Theft of Identity II: Return to the Consumer X-Files”, CALPIRG and US PIRG, 1997. See http://www.pirg.org/reports/consumer/xfiles/index.htm

22 In 1999 the Federal Trade Commission established a clearinghouse to assist victims of identity theft and document their cases in a database. This endeavor is a result of a new federal law, “The Identity Theft and Assumption Deterrence Act of 1998” (18 USC 1028), implemented in 1999. The FTC maintains a toll-free telephone number for victims, 877-IDTHEFT, as well as a web site, www.consumer.gov/idtheft.

23 When a “fraud alert” is placed on a victim’s credit file, the credit bureau reports to credit issuers that the subject of the report is a victim of fraud. The creditor is supposed to contact the victim at the phone number provided in the fraud alert in order to determine if it is an imposter or the rightful individual applying for credit. Obviously, if the credit bureau does not adequately report the presence of an alert, which often happens when only a credit score is reported, or if the credit grantor fails to detect the fraud alert, which is a common experience of victims, the imposter is able to obtain additional lines of credit in the victim’s name. Consumer and identity theft experts believe that one way that credit bureaus under-state the magnitude of the identity theft problem is by only calculating the results of consumers who place a 7-year or “permanent” fraud flag on their credit reports. Most consumers are quite unaware that there is even an option to insert a permanent fraud flag and are not routinely offered the chance when they call the credit bureaus and “speak” to their “voice-mail-jail” computer response systems.

24 The FTC’s enforcement position, as evidenced by the First American Credco consent decree and settlement order, is that resellers must comply with the FCRA http://www.ftc.gov/opa/1998/10/credco.htm We agree.

25 See PIRG’s financial privacy pages for a detailed discussion http://www.pirg.org/consumer/banks/action/privacy.htm

26 See TRW vs. Andrews, 13 Nov 2002, No. 00-1045, http://a257.g.akamaitech.net/7/257/2422/13nov20011040/www.supremecourtus.gov/opinions/01pdf/00-1045.pdf See the amicus brief of U.S. PIRG and other consumer groups, filed in support of identity theft victim Adelaide Andrews, at http://www.pirg.org/consumer/andrews6.htm

27 The committee held a hearing on credit scoring disclosure 3 years ago.

http://financialservices.house.gov/banking/92100toc.htm Since then, action on credit scoring issues has largely shifted to the states. California has allowed scores to be disclosed to consumers. Numerous states have sought to regulate or ban the use of scores for insurance purposes.

28 See FTC consent order, “In the Matter of Quicken Loans”, Docket #9304, 30 December 2002, http://www.ftc.gov/opa/2002/12/quicken.htm

29 “FTC Policing Accuracy of Credit Files, “The Washington Post, by Kenneth R. Harney, Saturday, 11 January 2003; Page H01

Chuck Marohn, president and founder of Strong Towns, discusses the housing affordability crisis that affects Portland and similar cities with Emily Hamilton of MarketUrbanism.com blog. Lightly edited for clarity.

Strong Towns:  A few weeks back I read an article from Emily Hamilton. She writes at MarketUrbanism.com and I’ve read her stuff before many of you probably have as well. This one was picked up by the Foundation for Economic Education. They’re holding a conference in June 2017. The article, The Hidden War on Affordable Housing was very provocative and had a lot of interesting thoughts and insights behind it. I just liked the thinking and I thought I would love to have a conversation with Emily and so we were able to arrange that.

Let’s talk a little bit about that piece in MarketUrbanism.com. It got picked up because it’s very good. Can you talk about the impetus behind it? What prompted you to write about this? What was the issue you were trying to bring to the fore?

Emily Hamilton:  Absolutely. Watching the movie Brooklyn is what really brought this to top of mind for me, seeing the experience in that movie of recent immigrants from Ireland living in New York City and the struggles that they faced but also the opportunities for housing that they had, which was really portrayed well, I thought. The story is about a group of people who live mostly in boarding houses, and it’s just an opportunity for housing that is no longer legal in most American cities today. But it was the type of housing that was crucial in the lives of many immigrants when they first arrived in this country.

Strong Towns:  I think there’s a sense today, looking back that this was somehow evil, somehow this was exploitative, that these buildings and structures were just unethical today, and that’s why we don’t do them. Is that why we don’t do them? And how would you react to that notion that this is essentially [an] immoral kind of housing?

Hamilton:  I think it’s a mix of reasons why we no longer have that type of housing. It’s certainly fueled, on the one hand, by progressive desire to ensure a minimum living standard for all Americans. But I think there’s also a lot of self-interest, in terms of people within neighborhoods who want to make the minimum level of housing unaffordable to people who would previously have lived in this type of housing when it was legal. So it fits with peoples’ generous desires to make sure that everyone has a certain standard of housing. But at the same time it meets their self-interest to protect the standard of living that they want to see in their neighborhoods.

Strong Towns: My good friend Joe Minicozzi is with Urban 3. I know you’re familiar with Joe’s work. In this talk he gives, he talks about a building that he originally worked on with one of the developers in Asheville, and they wanted to build micro apartments; they wanted to build 250 400 ft2 apartments in this building. They went to the bank and the pushback they got was “Well, we need a market study.” This is not stuff that’s normally done. The city was concerned too are these are these seem really small. They pushed through the process and they got them built. He said they’re the highest least spaces that they ever constructed. There’s huge demand for them. They never go unfilled – when someone moves out, someone moves right in. When we look at a place like New York or San Francisco or one of these really, really hot housing markets, why aren’t we building more of these kind of things? It seems like there’s a massive demand for them.

Hamilton: Definitely, particularly because there aren’t a lot of housing options on the market right now for young single people who are starting out in their careers and may not be able to afford a larger housing unit. These seem like a clear match between demand and supply. That’s often very difficult to build today.

I would point out that one difference between micro apartments today and boarding houses or single room occupancy hotels from the past is that, in the past, this very affordable, minimal-standards housing was usually built by splitting up existing homes into much smaller units. And that’s the way that you can get a really affordable housing. Whereas, when you build brand new construction micro apartments, they still might be out of reach for a lot of people. Obviously, the construction of new micro apartments is the first step to what could become more affordable housing after it’s been around for many years or decades. But it’s not quite the same process as what landowners were able to provide in the past.

Strong Towns: I remember, when I was back in college, I lived in a massive house with 13 other guys and we also had our own rooms and what have you. I went around this house, and I looked at their fireplaces all over and really fancy bannisters. It was a really high quality place. At some point, the highest and best use became not as a one wealthy person living unit but as a bunch of different people, essentially renting their own space and sharing some common facilities. Why doesn’t that happen today? What’s the thing that prevents those kind of things? And maybe not necessarily [renting] to students but to families? Why is that not something we see, particularly in places where you have really hot housing markets?

Hamilton: Yeah, well, it does happen to some degree as you mentioned with students. And here in D.C., there are certainly still lots of group houses that are rented out by groups of roommates, typically young professionals. But land use regulations have made it, generally, illegal to create these slightly nontraditional affordable housing arrangements for families and single people. So when groups of roommates get together to be able to afford housing they’re living in perhaps not ideal situations where you have a lot of people sharing one kitchen and a couple of bathrooms. Whereas if developers were allowed to build for these situations more easily they could have better arrangements to meet their needs, in California in particular. Parking requirements have been a huge obstacle to this more-affordable housing because a certain amount of parking is required for each bedroom rather than for her project as a whole.

Strong Towns: How are we trying to solve this problem? You talk a little bit in your article about the disaster of public housing. Let’s talk a little bit about how the government has tried to solve these [issues] at the federal level, at the local level, and then maybe use that as a springboard into talking about ways we could, in 2017, do this maybe differently.

Hamilton: At the federal level, most of the efforts have been either in the form of building public housing, through urban renewal projects or, more recently, Section 8 housing, which provides vouchers to low income people that are often used in a specified Section 8 developments but can also be used in other types of housing.

And, at the local level, inclusionary zoning is currently the most, perhaps fastest-growing type of housing affordability. And inclusionary zoning requires developers of new, market-based projects to provide a certain percentage of units that will be set aside for low-income renters or homebuyers. I should say not necessarily low income but renters or homebuyers who meet certain income standard.

Strong Towns: The thing that I always struggle with is it seems like in our cities we provide one of two options for people who have lower incomes. One is either substandard and declining housing, housing that other people don’t want, that is of low value, that is going essentially in the wrong direction.

And we sometimes label these [owners as] slumlords and what have you, but it’s stuff that is . . . there’s no market incentive, in a sense, to improve it because you can cash-flow the low rents and you just watch it decline.

The other one is these crazy subsidized ones where I’m very suspect[ious] of the underlying forces that are being marshaled to make those kind of things happen. Do those seem like the two options we pursue, and aren’t they a little extreme?

Hamilton:  Yeah, I certainly agree. On one hand, with the public housing or Section 8 housing, that tends to be very low quality. There’s well-documented problems with the issues of concentrating low income people in substandard housing and creating incentives for them to stay there rather than pursuing opportunities for better housing for their families and what might be a different location that doesn’t have access to the government subsidies.

And then, on the inclusionary zoning side, it just seems really impractical to provide the subsidized housing within new construction buildings where dollars are going to [provide] the least housing for people. And inclusionary zoning has provided just a drop in the bucket of the units that would be necessary to provide housing for all the people who would qualify for it. And one problem with both public housing and inclusionary zoning is that the units that are available typically have long waiting lists.

So if we think about immigrants coming to the US in the 19th or early 20th centuries, they could immediately find housing that they could afford rather than waiting months or years for publicly planned housing that would become available to them.

Strong Towns: I’m often baffled by this because I see those same numbers that you’re describing, where essentially we have this massive backlog of people who need housing and in need of certain price points and then I turn to I look at the market. And I say, “Why is this so crazy?” You live in Washington D.C.?

Hamilton: Arlington, actually.

Strong Towns: We’re bombarded all the time out here in Minnesota with the statistics from places like D.C. and New York, and I get the argument that “OK, if we don’t have to pay for a car and we don’t have to pay for certain other things, we can put more into housing.” But, still, the housing prices are crazy. I’ve seen statistics where people are paying 70-80 percent of their income for housing, not poor people by any stretch either. People of certain means that would have, in other parts of the country, options. The whole housing market to me seems a little bit crazy. Do you share that bewilderment? And I ask that because, to me, trying to solve one segment of it while the rest of it is crazy seems a little futile in itself.

Hamilton: Certainly. I agree, 100 percent. The trend towards building a few buildings worth of micro apartments in some of these expensive cities is great and exciting, but it’s definitely not going to go all the way. And I think that really reforming the institutions that are in place to slow down the development process — where each individual neighborhood gets to weigh in on whether or not a new project will be built near their homes is the root of the problem in D.C. and some of these other cities that just have crazy housing prices, where middle income people are struggling to find someplace that fits within their budget.

Strong Towns: I had someone earlier this week or last week chewed me out on social media; they were cranky with me because we had posted an article about migration and how people are moving, in some cases, from very expensive places to places that are more affordable. To me, I didn’t even think this was controversial. I didn’t realize that I had struck a nerve with people who felt “if you were born here you have like a right to stay here at a submarket price.”

And I had this ongoing conversation, and my Twitter feed just got flooded with people angry about it. And I thought, well, OK, I’ll just listen for a while. Is there anything objectionable to having – let’s say, in this case it was Cambridge, Massachusetts, which is bizarrely affluent and unaffordable – people depart Cambridge and say “I’m frustrated with it, I can’t afford to live here” and end up in a place like Cincinnati, which, in my opinion, is a really great city. It’s a city that is growing and has got a lot of things happening, and a lot of opportunity to get housing at affordable prices and see it appreciate, and see yourself build some wealth and equity even as a starter home at a low end. Is this somehow wrong in 2017, or am I just interacting with someone in a bubble?

Hamilton: Well, I definitely don’t think it’s wrong for people to move away from expensive housing markets to places where their dollars can go further, and definitely it might make sense for plenty of households and individuals to make that choice.

But I think the problem comes when some of the best economic opportunities and highest income growth and most innovative economies are also located in these really expensive cities so that people who don’t already have economic means might not be able to pursue the best job opportunities that are available to them if they can’t afford rent in Cambridge or San Francisco or New York City. So I think that’s the real macroeconomic consequence of gating off these both very expensive and very productive areas to people of a broader income range.

Strong Towns: Wouldn’t that be true though of the tech worker or the professional but not necessarily like the taxi driver or the barista or the person working a truly lower income type of job? Their opportunities aren’t necessarily going to be increased in that Richard Florida kind of way, by being in the big epicenter of technology and change that we’ve seen in some of the coastal cities. Am I saying something crazy? Or is that not true?

Hamilton:  No, I agree that the disparities in income opportunities are greater for workers of higher skills. So it might make sense for a tech worker to pay those crazy San Francisco rents because they can make substantially more money there compared to a lower-productivity city.

But it’s also true that baristas and taxi drivers make more in San Francisco than they would in Cincinnati or Houston or wherever. But it often doesn’t make sense for them to pursue that additional income or job growth potential because their housing cost is greater than the income differential for those lower skilled workers.

Strong Towns: Right. Let me put it this way … There’s a certain part of my question of housing policy, and I will freely admit that I don’t consider myself a policy expert. In graduate school when I had to take the housing classes, they just baffled me, they made no sense to me at all, and it was largely because of this general skepticism I have.

It seems to me like if you’re a very wealthy person in New York City or San Francisco or Boston, you don’t want your neighborhood to change: I don’t want that single family home to be converted into a house for three families at lower price points. I don’t want the micro apartment building up the street because I just don’t want that, that’s not the character my neighborhood is in. The downside of that policy – that essentially you’re not going to have that strata of employee in your neighborhood – you’re going to have to pay extreme amounts for daily services, and a lot of people who don’t find opportunity in your community are going to leave.

The feedback you’re going to get from a market standpoint is your place is going to cease to function, right? Am I delusional, that thinking, or is there something missing?

Hamilton: No, I don’t think you’re missing anything, and that’s why we read stories of teachers or our firefighters going through just insane commutes to be able to work where they’re employed.

And inclusionary zoning seeks to have people of all different income levels living within one specific building. And we talked about the drawbacks to that policy. But, in a free market, I think it’s very likely that we would see buildings that are accessible to people of many different incomes within the same general area. So they might not live exactly at the same address, but it would be much more feasible for service workers or lower income professionals to live near their job, and it would make these neighborhoods function much better, as you say.

Strong Towns:  Now I’m not questioning at all the people who work in affordable housing, which is that battle I got in. It was housing advocates who said “You should come out with me and actually work with people who are struggling.” So I get that there are really good people out there trying to do good work. It seems to me though, a lot of the support or the default – for some of these inclusionary housing and other housing vouchers and what have you is – in part and parcel – the affluent saying “I don’t want my neighborhood to change. And so I’m willing to, essentially, pay to accommodate people in someone else’s neighborhood as opposed to having the painful feedback of having my neighborhood not work.” Am I crazy on that as well” Is that something where am I taking that a step too far?

Hamilton:  No, I don’t think so. And I think that the real problem here comes when people who are higher income people don’t want their neighborhood to change. They’re using the political process to keep their neighborhood as it is rather than bearing the cost themselves of keeping a neighborhood as it is without allowing for new growth. And when we see neighborhoods that just aren’t allowing new housing, the filtering process that leads new housing to become affordable for lower income people over years and decades is prevented from taking place. So it becomes an enclave, where only people of a certain income can afford a place to live.

Strong Towns:  I’m from central Minnesota. We have tons of affordable housing here and lots of job opportunities. We have people trying to hire all the time here and they’re unable to fill up those jobs. Now there’s a lot of people that are unemployed, and there’s a little bit of a skills mismatch.

I have the good fortune of traveling all over the country. I was in Rockford, Illinois, last year. I was in Peoria, Illinois, last year. Both places that have seen layoffs and struggles but also have a lot of job opportunities and a ton of affordable housing. I mentioned Cincinnati earlier. I think “Here’s another place … What if our policy on housing switched from being — one of looking strictly at housing, where in a sense, we’re trying to subsidize and counterbalance what I think are crazy out-of-touch prices – and instead we focused on giving individuals more power and essentially more ability to, if they want to, stay and make it work fine. But if they want to move somewhere else – migrate, which I think is a great American tradition of moving on to better opportunities – what would be the downsides of a of a shift in that direction?

Hamilton: I think that that’s the policy that makes the most sense for ensuring that people have access to not just housing but the range of consumer goods that they need is to subsidize individuals with money that gives them the potential to make their own choices about how best to use it rather than subsidizing housing directly in only locations that are determined by policymakers.

Strong Towns: I feel like the downside would be that some of these wealthy, affluent neighborhoods would actually cease to function well. And, OK, then they would have to make a choice: Do we pay really high, high wages, to keep, essentially, people out that we don’t want, or do we have to start being more accommodating?

I struggle with that side effect of our housing policy. It feels like we are saving . . . .  I mean, I can just look at the neighborhoods here. It feels like we are saving people who don’t want their neighborhood to change from any like painful feedback, [namely] that the neighborhood actually doesn’t work unless it does change.

Hamilton:  Yeah, I think that’s right. And there may come a point at which these neighborhoods realize “Oh, we need to allow more housing construction or we’re not going to have any teachers for our kids or anyone to work in the restaurants that we want to go to.” But, unfortunately for income-mobility consequences, it seems to be that workers are willing to endure very, very long commutes in order to get to jobs that pay a little bit more than what they could make elsewhere. So these higher income people who are preventing new housing construction and their neighborhoods and cities are really causing bad consequences for the people who work in those neighborhoods.

Strong Towns:  Right. I want to ask you a question that might seem unrelated and out of the blue. I want to ask you a question about a basic universal income, and I’m actually intrigued by the idea and think that it might be a way to change some of these crazy distortions that I see in our system. One of the things that I’ve seen put forth is that you would have a different universal income if you lived in, say, San Francisco or Washington D.C. or New York than you would if you lived in say Cincinnati, Ohio, or my little hometown of Brainerd, Minnesota. And the reason would be because it costs more to live in New York than it does in Brainerd. You know, it costs more to live in D.C. than it does in Cincinnati. Not debating whether universal income is a good approach or not, but is that notion that, essentially, let’s just say it’s double if you live in New York, we’ll give you double the amount of money than if you live in Brainerd.

Doesn’t that freeze the inequities or the bad outcomes that we currently have in place and not allow them to be smoothed over? In other words, if you can live really well in a place like Brainerd or Cincinnati but live really poorly in New York on the same amount of money, why wouldn’t we allow people to make that decision? And I think more people would move to places and we’d have more opportunity in places like Cincinnati. Is that a concept that seems foreign, or is that something that maybe make some sense?

Hamilton: I haven’t really thought about universal basic income that would be adjusted for purchasing power before. I think it’s an interesting idea, but I think that you raise an important concern, that we wouldn’t want a case where people can live on universal basic income alone a low-productivity, low-cost part of the country and face an incentive to go somewhere like that, where they might want to live just on their basic income alone without working. Tyler Cowen here at the Mercatus Center has written quite a bit about how work is important, not just for economic growth and productivity but also it’s such an important part of human happiness and the ability to learn and grow in a career. And so I think that that’s one important side effect that should be heavily considered in any sort of UBI policy.

Strong Towns:  I’m getting back to the migration thing. One of our writers, a guy named Johnny Sanphillippo. He writes the blog, GranolaShotgun, which is really out there. I was going to say it’s out in left field but it’s out in right field too, it’s all over the place. The guy has a certain level of brilliance to him that I’ve come to find endearing. He told me once a story about three young people who lived in San Francisco and they couldn’t find their own places what they wound up doing was getting the house together. And he told me how much they pay for rent. I can’t remember. All I know is that it was astounding, it was like each was paying double what I’m paying for my mortgage something along those lines. And they were paying that, they were each paying that for their own room. So they said they didn’t have a house like I have, they have single rooms in an apartment and they were working multiple jobs, very hardworking people, working multiple jobs to try to make ends meet because they like living in San Francisco. I totally get that. There might have been a point in my life when I was in my younger 20s when that that made a lot of sense to me.

But he talked to them and, essentially, counseled them, “Hey, at some point here, you may want something different. And why not move and actually go back to Cincinnati?” Because, I think it was Cincinnati where he had a neighborhood he was looking at, “Why don’t you move here” and they did. And at a much lower burn rate of income, they were able to essentially have a different style of living. It wasn’t a San Francisco-style living, but it was one with a lot less work in terms of labor to make ends meet. It was one with a lot more free time. And, net, a much higher standard of living. Much of our housing policy today, I think, robs people of those kind of choices, or doesn’t present those kind of choices, or presents them as essentially equivalent when maybe they’re not.

Hamilton: Yeah, there’s such a bias, among the people who write about urban policy, to focus on the expensive cities and the housing issues that they face rather than the Cincinnati, where housing is abundant and if there’s a problem with people being able to afford housing there, that’s probably an income problem rather than a housing problem.

But I think that the goal needs to remain to make the cities that are currently unaffordable but are in high demand affordable. Because the reason that they’re in such high demand is because of the economic and growth opportunities that they present. And it’s just, I think, difficult to impossible to replicate a Bay Area or New York City in another part of the country because those cities have such a history of organic economic growth and agglomeration benefits within and across industries that the same economic opportunities can’t be recreated in other parts of the country where housing is more abundant.

Strong Towns:  OK, this is what I want to get at. Now you’re saying something that I think is a good counterargument. Let me restate it and you can tell me if I’m hearing you correctly.

You’re saying that a place like New York is just going to be unaffordable, it’s just going to have really high prices because so many people want to be there. So many people want to be there because of the economic opportunity and you really can’t transfer that economic opportunity to other places. Is that a fair summation of what you just said?

Hamilton: I certainly agree that the economic opportunity of a New York City can’t be transferred to somewhere else. But I don’t think it’s necessary that places with high demand like New York City have to have high housing [costs], or at least not anywhere the prices that they currently have. People have described that single-room occupancy hotels and boarding houses of the past as the lowest rung on the housing ladder. And what’s happened with urban policy is that the lowest rung has been eliminated so that there aren’t affordable opportunities that the least well-off people in a city can access.

Strong Towns: OK, let me let me say something then that might be a little controversial from an economics standpoint: I get the notion that the fire of New York’s economy is burning really hot right now, it’s really strong. Is the national policy, [or] should [it] be, “let’s try to get some more wood on that fire. Let’s try to get that fire going even bigger.” Or should it be “let’s try to get some of that fire transferred over to a place like, I don’t know, Philadelphia, Baltimore. I mean, here’s two cities within – not daily commute [distance] but certainly [close] enough to have a regional back-and-forth economically, where you have massive amounts of economic distress and whole neighborhoods that are in terminal decline. That would be very affordable if you could make some policy changes and have some of that fire burning in those places as well. Is this a situation where too much of a good thing in one place is not healthy?

Hamilton: I don’t think that national economic policy should be focused on either promoting more job growth within currently very productive, very expensive places or moving it necessarily to other places.

I think that the only way to allow for the highest possible economic growth is to allow firms and individuals to decide where it makes sense for them to locate. If we think about industries that are currently situated in one geographic area like, of course, the tech industry tends to locate in the Bay Area, or the entertainment industry tends to locate in Southern California. That’s an organic process that happens over time as certain factors make those areas attractive to certain industries. And I think that government policies that either try to perpetuate that in current areas or try to move economic activity to places that are currently less in demand are going to result in fewer opportunities for economic growth and income and job growth because these cluster economies are based on so many individual decisions that just can’t be replicated by public policy.

Strong Towns:  I hear you, and I agree with you, but let me let me throw this out. What about the fact that we’re making these massive infrastructure investments?

What about the fact that we, at the federal level, subsidize certain types of housing? I get back to the earlier conversation about maybe sometimes these places will burn so hot that they will become unaffordable. And the feedback you get is that things stop working — they can’t get teachers, they can’t get police officers, they can’t get what have you. And that’s one of those natural market feedbacks that suggest “hey, this should be happening more in in Philadelphia and a little bit less in New York.” It seems a little bit like our policies go the opposite direction: In other words, we seem to be fighting this fire at the source? How do we deal with the affordable housing crisis here in D.C.? How do we deal with affordability crisis here in New York? As opposed to looking at it in a broader national framework. Do you have a reaction to that? Because I hear what you’re saying, and I agree with you that firms and individuals should make these decisions.

But we’re also really distorting the marketplace that they’re playing in, are we not?

Hamilton:  Well, I would say that the move toward Section 8 housing, away from public housing provided by the federal government, is a slight move away from directing where affordable housing resources go geographically. And certainly inclusionary zoning efforts are usually run by local governments, so they are local policies addressing local affordability challenges rather than trying to get people to live in places that are already some of the most expensive places.

But to your point that cities face a constraint, after a certain point of becoming too expensive they will cease to function well. I think that that’s absolutely true, and that there is a price of unaffordability at which a Bay Area becomes less desirable than it was because services cease functioning, like schools and service industries and transportation because the people who work in those industries simply cannot afford it.

Strong Towns:  If you look at the Bay Area, which I’m probably more familiar with the infrastructure in Northern California than in the Northeast. If we look at the Bay Area, we see the federal governments investing lots of money in what we call commuter rail, not rail connecting one place to another but rail that is designed to bring people from cheaper neighborhoods on the edge to the more affluent or more productive neighborhoods in the center. To me this is a federal policy that is essentially trying to circumvent the difficult feedback that these San Francisco neighborhoods should be experiencing when they become so unaffordable. Essentially I feel like you’re trying to bring in workers you can pay less instead of having to pay them more, and deal with the consequences or adapt a different housing approach? Is my take on that valid? Or am I seeing something that you’re not? Or am I seeing it wrong?

Hamilton: No, I think you’re right that that federal infrastructure investment distorts housing market policies. But I think that it’s true all across the country, whether we’re talking about investment in rural infrastructure that’s serving a declining and small population or infrastructure in urban areas that’s allowing problematic housing policies to go on. There are plenty of distortions in infrastructure policy to go around, and I’m not sure which effect is larger, if it’s the subsidizing people who live outside of these expensive cities or whether it’s allowing labor markets to grow geographically in these expensive regions.

Strong Towns:  So it’s just that the idea, and I’m with you, I totally agree the notion that you take a place like Silicon Valley, you take a place the Bay Area, and you look at the massive growth that they’ve experienced, and it’s hard not to say great this is excellent for our economy. This is a source of innovation. This is driving all kinds of economic improvements around the country around the world. This is a great thing.

But I also step back and look at the conversation they’re having there on their housing. And it just seems to me to be this bizarre intertwining of distortion after distortion after distortion. In fact I was in. What was that little, that city, I was going to say little, it’s like 200,000 people, little for Northern California size. And they were telling me about how, basically, prices they’ve been going up for years, they’re going to continue to go up. And the mantra was “prices only go up.”

And I said, “Well, didn’t you have prices go down in 2008?”

“Oh, yeah, it was horrible. But by 2010, we were back going up again, and there’s no reason to suspect that prices will ever not go up.” I’m not even exaggerating what they were saying. They were adamant that prices only go in one direction and, therefore, we must be doing all these other things, whether it’s transit investments, or affordable housing subsidies, or inclusionary zoning, or what have you. Because prices only go in one direction.

It just felt to me like I was in a different kind of bubble world, where the actual market feedback would just ceased to work. Maybe I’m just lamenting to you because I don’t get it. I feel like we try to simplify it down to this family can’t afford the house. Therefore, let’s find them a house they can afford or give them money. I almost feel like in a Nassim Taleb “via negative” way, we need to pull out some of the distorting things and see where prices actually end up at the end of the day, because it seems to me like they’d have to be more rational than they are now.

Hamilton: Yeah, as you say, there are so many interconnected issues when we’re talking about housing policy, and an important one is the public policy goal of promoting homeownership as an investment that goes up in value over time. That’s been hugely problematic and created incentives for homeowners to treat their houses a scarce resource that they need to protect from competition and just really misdirected resources toward housing that could better be invested in other industries.

Strong Towns: I want to end up by talking about just the human aspect of this a little bit too. I was in Portland and I was chatting, we were out looking at some transit stops and one of them we had a bunch of neighborhood activists with us, and we were walking around and I was talking with one of the gentlemen in that group and he told me that he was paying $3,000 a month for his rental. I don’t know what he did for a living. He was not a professional. He was doing blue-collar, non-professional work. And maybe he was making a decent living. It didn’t seem like that from my conversation. It feels a lot like the distortions that we have, we can describe them as “people struggling to make ends meet.” But I actually look at it a lot more of this as we are just robbing people’s future from them. We are, in a sense, not allowing them to build their own wealth, their own security, their own safety cushion. Can you talk a little bit about the human side of this and what you see is some of the real human downfalls of our current approach?

Hamilton: Yes, I agree completely that it’s just a sad situation when people, all the way from middle income down to the least well-off person in a city, might be struggling to find housing that fits within their budget.

And that’s if they’re taking the opportunity to pursue a job or whatever else is drawing them to an expensive city, they are then forced to trade off good personal finance, where they could be saving for their futures. I think it’s just a human tragedy. When we think about that the urban policies that we’ve discussed are falling hardest on the least well-off people in a city, who are least able to bear these preferences of higher income people who just want to prevent housing below a certain standard from being built anywhere near their home.

Strong Towns: I see the stories that affordable housing advocates put forward and they’re very compelling. They’re there. They pull on your heartstrings, but I often feel like we’re not getting to the real crux of things. If we find people an affordable place to live, that solves whatever the immediate problem is, but it doesn’t necessarily put them on a path to independence, it doesn’t put them on a path to actually getting their own economic security. It feels a lot like even our best intentions trap people in a place where they’re not able to realize their full potential as humans. I don’t know if you have a thought in those regards.

Hamilton:  I think you’re right. In The Power Broker, Robert Caro has a great section where he talks about a neighborhood and the process that was made up of largely recent Jewish immigrants who had moved from the Lower East Side tenements into this new neighborhood in the Bronx where they had higher housing standards and healthier, safer conditions than they had in the Lower East Side. And this happened within less than a generation, and that income mobility that we see from the market-provided low-income housing is not what we tend to see in government-provided low-income housing, where the problems of intergenerational poverty are well documented.

Strong Towns:                                      I do this sometimes when I’m giving a talk. If we get on the topic of housing I will say to the audience “2001 to 2008 was a housing ____________” and then they’ll fill in “Bubble” and I’ll say, “OK, 2010 to 2017 is a housing ____________” and everybody looks at me like, “What?”

And then someone will sheepishly say “recovery” and I’ll show them the chart. Basically, here’s the bubble and then here’s the recovery, and it’s two different terms for essentially the same distortion, like we are back to where we were, and then some, in 2008. When we look back and say “Well, that was a bubble” and now we are recovered essentially to a bubble.

Do you have, like, existential concerns about housing in this country, and that we really have foundational problems, that maybe we’re dealing with around the edges but thwarting any ability to do good things at the local level?

Hamilton: The macroeconomic areas is out of my area of expertise for sure. But I would say that I find it mind boggling that the federal government has not only perpetuated the policies that facilitated the 2008 housing crisis but created new policies that allow people with minimal assets and minimal credit to purchase homes. And I think that’s all part of this idea that homeownership should be seen as a great investment. Whereas that’s not necessarily true for everyone and shouldn’t be encouraged by a public policy.

Strong Towns:  I feel like we have done everything we can to prop up housing prices. I believe that you’re younger than me I’m 43. I’m going to say this, and I don’t say this as a way to bash Baby Boomers, although that’s fun from time to time. I can I can do that because everybody can bash their elders, right? It feels like we have done everything we can to prop up the housing market while the Baby Boomers find ways to, essentially, cash out and sell and get their nest egg out of their home equity.

But the cost of that has been Millennials and younger people have, and poorer people, people who are trying to get entry level type of home, have experienced much, much higher housing costs than they otherwise would.

I understand the macro policy, but the real effect is that we’re trapping younger people who have all the student loan debt, all the other drags on their upward mobility at the start of their professional careers. Are we hitting them in a double whammy here?

Hamilton:  I think so. The mismatch between housing supply and demand in cities where housing supply stopped being so elastic really took off in the 70s and 80s in a lot of the cities. So people who got in before that time period or shortly after it have had opportunities for huge house price increases. But it has intergenerational consequences for the younger group coming along, who will really struggle to be able to come up with a down payment for a house as prices keep rising.

Chuck Marohn, StrongTowns.org

Years ago, I ran my own planning company. And one day, I was sitting at my desk and one of my colleagues came storming into the office. And he is a pretty mild mannered guy, not one to gratuitously go off half cocked. He comes in, and I could just see the storm cloud over him. He’s slamming stuff down and carrying on. And I came to find out that he had gotten a ticket. He had gotten pulled over and issued a citation for not coming to a complete stop at a stop sign. Now it was that the incident happened in the city north of Brainerd where I live. He had gone up there. We were working for the city actually.

They had had some turnover, and we were filling in part time until they brought in someone full time. He had gone up there to cover a couple of things and pulled into the main intersection in town. Now, there are other stop signs in town. But this is the main intersection. And just looking at it — I’ve been here many, many, many times. It’s one of those where you pull up and you can see half a mile in each direction. So he pulls up to this and, supposedly, he rolled through. He contends quite forcefully that he came to a complete stop. Nevertheless the police officer pulled him over. And I don’t know what his reaction was, he’s not a guy to pick a fight, but I’m sure he was a little shocked and actually got a ticket. And he was he was pretty ticked off.

It didn’t surprise me — and it didn’t surprise me not because Tim has this history of breaking the law. He doesn’t. Dare I say, he is a pretty standard, mild, easygoing guy. The problem was that I had worked in the city, and I knew how their police department operated. For a while, I had served as the city administrator. They were in the process of bringing on an administrator. I filled in part time. This is something that I did in many different jurisdictions across the state when they needed someone temporarily, they would call us and we would fill in.

So I had met, in that capacity, with their police chief. Let me just say, he’s a really nice guy. He’s not there anymore, he’s retired. He’s a really nice guy. His kids had my mom in school. My mom was a teacher for many years. His kids had my mom, they liked my mom, my mom liked them. I like them. They’re nice people. They’re really nice people.

But he explained to me how they did business, and he was not shy about this. He was very proud of it. He was very clear on the way they operated. He said that he had instructed his officers to be aggressive in pulling people over. They call this an investigatory stop. So someone pulls up to a stop sign. They don’t come to a complete stop. You pull them over and you use that incident as a way to — and I’m going to use my words, not his — as a way to fish for other things, right?

So you run their license, do they have a warrant? Do they have expired tabs? Do you smell alcohol, do you smell pot — is there something else?

And he told me about this approach and how they did this and said that, essentially, it was a really good way for them to interact into the mainstream happenings of the community and find nefarious activity. He told me they’ve found numerous people with warrants. They have discovered numerous people with drugs. This was one of the ways that they were able to do policing. And, according to him, they had a pretty high success rate of identifying what they would call really bad characters.

But my friend Tim got caught in the crossfire. Didn’t appreciate it. I have to say I got pulled over [there] too, a number of times, before this, before I was aware of this, [and] actually since I’ve been aware of this. If there are multiple routes I can take and one goes through [there] and one doesn’t, I just I don’t go through. I stay away from it. I stay far, far away, but I had, in years past, gotten pulled over a couple of times.

One time, I had a taillight out, one of my tail lights were out. I had a Toyota Echo. A little car that I had for a long time. We had mice in the garage that had gotten in the car and chewed some of the wires, and I got it all fixed, but we could not figure out why this taillight would go out.

And the frustrating thing is that it would be on. It would work just fine and would flicker out and literally all you had to do to get to work was go back and pound on it and it would it would click back in. And I brought this to the dealership. They went through it. We did all kinds of stuff and we just could not figure this weird thing out. So I got pulled over for that once, and the police officer came to the door. “Do you know why I’m pulling you over?” “No, I have no idea.” He goes “Well, you got a taillight out.”

I’m like “Oh.” And I explain to him what was going on. I said “Could I get out and fix it because I’ll show you I can I can fix it.” And he’s like, “Sure, pop your trunk, and we’ll go back there and take a look at it.” So I popped the trunk and we went back and he shined his light around the trunk and, I guess, made sure I didn’t have any dead bodies. And I tapped on the light and it turned back on and he said “All right, well, why don’t you get that fixed?” and I’m like “I’ve been down that road, dude.” But anyway, he let me go and I went on my way.

I’ve been pulled over many, many times — in fact, I’ve often thought if I became a public figure, the kind that was subjected to scrutiny the way that a political candidate would be, for example, that one of the things that would come up was this horrific driving record that I have.

I don’t know how many speeding tickets I have. I would say if you gave me an over/under, more or less than 15.

I would say less than 15. So, somewhere in that range 10 to 15 speeding tickets. I’m 43 so I’ve been driving decades now, but most of my tickets came in a very specific period of time. It was a period of time when I was running my own planning company. We were working all over the state. I would have night meetings fourteen or fifteen times a month, and they were always in some remote rural location ,and I would be driving back home in that magical period of time between 11:00 p.m. and 1 a.m.

Now why is that a magical period of time? It’s a magical period of time because the police are very aware that there’s a lot of people who are out driving intoxicated during those hours. People go to the bar, they’re heading home. They’ve had too much to drink and, particularly in a lot of these small towns, it becomes a very — and I want to say I want to say this in the right way – it’s a very easy and convenient way to do one of these investigatory stops and find out if someone’s been drinking or not, right out on the edge of all these towns.

Every single one of them, there’s this transition zone where the highway design is the same. Everything looks the same. You’re going legally 55 miles an hour and then all of a sudden it changes to 40 or changes to 30 and there’s this abrupt transition, even though the visual cues to the driver are no different. Everything’s the same, it’s just that there’s a sign there. People speed through these areas all the time. I mean it is — I to this day — I know where a lot of them are. I was driving home from Grand Rapids the other day, and I drove through this little town of Deer River and it seemed like a mile out of town it switches to 40 miles an hour for no discernible reason. And then when you get to town and it becomes more discernible, “OK, I should be driving a lot slower now.” You naturally start to slow down.

But you have this stretch, out on the edge, where, unless you catch the sign, unless you know — there’s no other cue is what I’m trying to say. There’s no other visual cue that tells you drive slower except for this road sign. So I would get pulled over all the time. I mean all the time. It just seemed like it was always 50, 40, 55, and 45, those kind of things. I got pulled over for going 45 in a 40. I mean I’ve gotten pulled over. It was just a pretext that you were breaking the law.

Clearly, I’m not arguing that I was not breaking the law. I was breaking the law. I was going fast. But these are places that during the day nobody bothers with, right? There’s no police officer that sits in most of these places. They go out during these high crime periods of time, and they try to pull people over because a percentage of them will be drinking. And, generally, when we get pulled over, police officers would come up and say “Do you know why I pulled you over?” And I say either “Yes, I was exceeding the speed limit” or “Gosh, really, I have no idea.” The latter usually ticked them off. The former, they appreciate that you would acknowledge it you were going too fast, but then we’d have a little bit of dialogue. And I think they would figure out that I was not drinking and generally I would be allowed to go on my way.

Every now and then I might get a ticket. But, generally, I was allowed to go on my way. I had this thing for a while where, if I was wearing a tie, I did not get a ticket and I would say I had a stretch of five or six times where I was wearing a tie and I did not get a ticket. And so I actually got a little clip-on tie. And I wore a tie to most of my meetings. So I was pretty much wearing a tie, but there were some times where I didn’t, and if I had a collared shirt, I would have this little clip-on tie. And as soon as I saw the lights, I would reach over, I had my tie hid there.

I put my clothes on and when they came up, I would I would have my tie on, and I never got a ticket. I think I got a ticket once. But it was years later during that period of time, when I was getting pulled over a lot, I did not get any tickets with a tie on. I just didn’t.

So this is the kind of interaction with police that I have experience, that I’ve seen from the perspective of an affluent professional person who has worked in city government with police officers and seen how all of this operates. I feel I get the system, and I actually don’t think that any of these people are evil. I would get frustrated with the officers because “I’m why are you doing it like this,” it just would make me so frustrated. But I never got to the point where I’m “OK these police officers are just evil. They’re terrible, they’re doing wrong.”

They were doing what we expected them to do, right? They were doing what we asked them to do, and when they would show up at the council meetings and say, “yes, we pulled over, we had this many tickets that we issued. We set up a little speed trap on the edge of town or we would we would park in a spot on the edge of town. And, boy, we get one or two drunk drivers a week or a night” or whatever the rate was. The council would applaud, and the public would applaud, and in general we applaud the perceived interdiction of crime, right? We’re good with this. I get it. I totally, totally get it.

 

I want to talk a little bit about Philando Castile, the gentleman who was killed by the St. Anthony police here in Minnesota a few weeks back during a routine traffic stop.

It came out in the newspaper in the following weeks that he had been pulled over by police forty-nine times. Forty-nine times. And I remember looking at that number going “Wow, that is a huge number of times.” You get pulled over now and then, I thought, “How many times have I been pulled over?” Forty-nine? Probably not forty-nine now.

Castile was eleven years younger than me. I am over 40 now, but maybe at [age] 30 — even [to be] pulled over thirty times – forty-nine is an amazingly high number for anyone. I think 30 is probably a high number. If I looked at someone like my wife, who doesn’t drive in these high pullover-rate times, and doesn’t drive in high pullover-rate neighborhoods. She’s probably been pulled over five times, six times, so my thirty times would seem huge. Forty-nine seems just outrageously high, right? And the local newspaper laid out what was going on, and I’m going to read a quote from them because it sounded eerily familiar to me, both from my experience as a driver and also as the administrator in the city where I had the opportunity to work with the police chief here. The Star Tribune, the state newspaper here in Minnesota said “Could still have been stopped before when officers spotted him not wearing a seatbelt or when an officer ran his plate number and found his license had been revoked for not paying an earlier fine. Numerous stops came after he didn’t use a turn signal. A few came after he was speeding. He was stopped for rolling through a right turn on a red light, having windows tints that were too dark, and at least twice for not having a rear license plate light. He was rarely ticketed for the reason he was stopped.”

Now we’re not going to talk at all about police shootings here, and we’re not going to talk at all about that whole controversy. I don’t want to get into it. I have some opinions. I don’t know if I have any Strong Towns type of opinions on it. It all makes me sad. I don’t want to get into it. And some of the people in the article that I wrote this week on the blog wanted to go there and I don’t. There are plenty of places talking about that. And I think they should go talk about that there. I don’t want to talk about that. If he had broken the law, if he had a taillight out. I guess I’m not suggesting that the cops were wrong in pulling him over, and I’m also not suggesting that the police were wrong in pulling me over any of the times that I got pulled over. I know they were legitimate traffic stops, right? What I do want to talk about today is a couple of things regarding this notion of the investigatory stop and how to view that in light of the environment that we have built.

I want to put forth the notion that everybody breaks traffic laws. And I know there are people listening right now [saying] “I never break traffic laws.” Yes, you do. Yes, you do.

You have you break traffic laws at times. You don’t know your headlight’s out, you don’t know your taillight’s out. You’re telling me that you always do a preventative maintenance check before you turn on your vehicle and make sure that all the lights are working? No, you don’t. You’ve broken traffic laws. You come to an absolute complete stop with an interval of zero forward motion at every single stop sign? No, you don’t, you do not do that, you’ve never gone through an accelerated through when a light turns yellow to try to make that turn? You’ve never driven a mile over the speed limit? Yes, you have, every single person listening to this breaks traffic laws all the time. All the time, right?

The people who have commented on the post I do this week said “You know, well, they could just follow the law.” And the other one I like is “Or they could just do what the officer says.”

And both of those I find just bizarre because, for the most part, there are a lot of people in this country who believe that if you just follow the law you could live a life like me and never get pulled over by the police.

And I’m telling you the reason you’re not getting pulled over by the police is not because you’re not breaking a law, it’s because you’re not in that target zone. Right? You’re not out driving in the transition zone on the edge of town in a rural community between 11:00 p.m. and 1:00 a.m. You’re not there. If you were there you would get pulled over, but you’re not there, right? You’re not there so you’re not getting pulled over. If you leave your cul-de-sac in your very nice, modern, brand-new car with no rust, and the exhaust muffler not making noise, and you drive down the street to the school and then to your office park and back, you’re not in an area where police are targeting. You’re not in a crime area where we have an expectation that police will be out doing these type of investigatory stops in order to essentially stamp down crime or prevent crime from happening or be tough on the criminal element.

So I want to just get to a place where everyone acknowledges that we all break traffic laws all the time, all the time, every day, all the time. Routinely, people break traffic laws and are never held to account for this. And I’m not arguing that that’s bad. I’m saying that’s a good thing. Most traffic laws’ and this is really where I want to get to’ most traffic laws are — how do I put this? In a way, I’m going to say frivolous, because if you’re driving with a taillight out, you should get that fixed, right, but they’re not life threatening.

Right now, I’ve got two daughters. There’s a certain scream that they do sometimes, like they’re mad at each other, or they’re playing, or the one stubs their toe and they scream like someone’s going to die kind of scream. And I come running. My wife comes running. “Oh my gosh, what happened?”

And it’s “OK, no, that did not warrant that level of scream. That level of scream is for “Dad, I’m about to die, someone’s about to get hurt, come quickly.” So we’ve got to teach our kids, OK, you can go ahead and express your displeasure here but not in that way that’s out of proportion.

When we look at traffic stops, they’re not the scream come running because someone’s about to die kind of thing. They’re the nuisance kind of things. Your taillight’s out. You need to get that fixed.

And this is the case because, when you get pulled over for having a taillight out, what does the officer do, right? The first thing they generally tell you “Your taillight’s out” and I’ve gotten that one before. They’ll say you need to get that fixed, right? Sometimes they’ll write you up a warning, sometimes they’ll write you up a ticket, but they generally just say “Hey, I want you know, you got a taillight out. Go get that fixed.” But then they let you drive off, right? They don’t impound your car there. They don’t make you sit on the side of the road until AAA comes and fixes your taillight. They let you actually proceed on your way because driving with a taillight out is not creating chaos and mayhem on the roads. The correlation between that and people dying on our streets is incredibly, incredibly low. Let’s get you home let’s make you aware. Go take care of it be a responsible citizen. OK.

When we get to things like speeding — and this is really the one that that I’ve been the most passionate about for a long, long time — when we get to things like speeding we have a completely different kind of mindset, right? I am sitting here in the office in Brainerd today and outside my window, there’s a place where the police sit all the time. They’ll come here, and I say all the time, I mean once every couple of weeks, there’ll be a police officer that sits outside here. It’s the perfect speed trap place, right? Really, really wide lanes. I mean, 18-foot lanes, these are huge industrial, commercial-sized lanes, a sweeping curve so they can sit on the curve and people coming around the curve can’t see them, and they can sit here and just pull people over all day because everybody who drives through here is speeding. Everybody who drives through here is, when I see the police out there.

And I will leave, and come back, and I will be speeding, right? And I’m not trying to break the law. It”s just — the speed limit is 30 and the road is designed for 60 mile an hour speed, and it’s really, really hard — you have to consciously focus, think — really take yourself out of the second part of your brain and put yourself in the very first, the active part of your brain, in order to make yourself drive slow, because all the signals in the environment are “Drive fast, drive fast, drive fast.”

So police just pull people over all the time they just they just sit here and they pull people all the time. Here in Minnesota, we have some deal where some of the revenue goes locally but a lot of it goes to the state. And I’m not really sure where it goes. I know that they don’t get . . . it’s not like a Ferguson situation where we’re funding city hall with police fines, that doesn’t happen.

There’s the civil asset forfeiture laws, which are really screwed up, which does in ways. I think the optics are bad on. I’m not suggesting the police officers are abusing this here locally, but if they wanted to, there’s no accountability for that. It’s one of these laws that’s written with the assumption that all police are honest all the time. And for me I think anytime you write a law like that you’re just you begging for nefarious activity. As an aside, we used to have a thing we said in the Army, “There are no thieves in the Army.” There’s no thieves in the Army. And that was like, the thing. You said “Hoow do there’s not thieves in the Army?” – Because we all put locks on our wall lockers, right? Now no one was going to steal your stuff because it’s locked. It wasn’t that nobody was a thief, it’s that we always lock up right? So when you say “There are no thieves in the Army” it’s not that you just leave your wall locker unlocked then? There’s no thieves because we don’t allow people the opportunity to steal, right?

When we look at the police department say “There’s no bad cops, it’s . . .” right? That’s what our law. Says you can arbitrarily seize assets that are, ancillary or not, you suspect to be involved in a crime. You may have the vast overwhelming percentage of police officers that do not abuse that power but the optics of it is horrible and the inducement of nefarious activity, whether it’s happening or not is just not right. I mean to me, if I was a police officer, I want to get rid of that law. I want to change that because, if there is no way you can defend it, there’s no way you can defend it.

So I’ve got a little bit off track here but I want to get back to speeding because the idea that they can just sit out here and pull anyone over at any time creates the situation where police speeding stops become less about enforcing behavior that is socially acceptable than it is about what is being called these investigatory stops. And an opportunity to proactively create an interaction with the public as a way to – and, again, these are my words, fish for other things.

And I say that because — think about the street right outside the office here. If the concern was that driving at high speeds is unsafe, OK, I have that concern. I think that that is a concern. If the concern is that driving at high speeds is unsafe, well then, we have to step back and look, and we can see that the police officers got here all the time and just pull everybody over. I mean most people are speeding. A high, high percentage of people are going over the speed limit. I just made a broad brush statement, I’m sure there are some that are cringing at that.

Look, I’ve done speed studies. I’ve sat out, not here, outside the office, but other parts of the state. I did an internship for the DA back when I was an undergrad and what I did for a month was do speed studies. And there are places where every single person is speeding. You will have a place where eighty percent of the people are going over the speed limit. And that’s the situation out here. Obvious. Most people are speeding. So in that case, you have to ask yourself, if most people are speeding and going fast is not safe then, is this really an enforcement issue, right?

Is this really an issue where enforcement of the speed limit is going to change behavior and make things safe? Now maybe if the police officer just sat out there 24/7, right, and had a had a visual presence out on the street, it would have an impact, but that’s not what they do, right?

They hide on the corner to catch people speeding. If they really want to slow down what would they do? They would sit out there and say. “OK, I going to be here. If you speed I’m going to get you. But I’m going to be out here, visually present, so that you see and slow down.” And that’s not what they’re doing. They’re trying to catch people speeding? Right? They’re trying to have this interdiction. In essence, if we really cared about the people speeding, if speeding was the problem we were trying to solve, what would we do? If speeding was the problem we were actually trying to address and solve, what would we do in a situation like this?

Well, we would ask a different set of questions. We’s say “Why are people speeding? Why is the average person — and we can assume that the average person is a non deviant, right? If eighty percent of our population are deviants, where do you live, right? We’re not. Most people obey the law or try to obey the law. So if most people are not, in an instance, obeying a traffic law, then what’s going on here?

And I would suggest strongly that that law is not right. The law is incorrect. And one of two things needs to happen. Either, one, the speed limit needs to be changed, because it doesn’t reflect accurately the way the street is designed and the way it’s inducing people to drive. And that’s actually traffic engineering 101, right? I mean, people complain about speeding, and they’ll go and do the traffic study and then find “Yeah, there’s a lot of people speeding,” and they raise the speed limit. I get this complaint all the time. It’s called the eighty-fifth percentile. And that is actually the correct way to do it. If you won’t, do option number two. Option Two is to go and change the design if you’re getting the results that you don’t want, if you’re getting results that are not safe.

So we’re in an urban area here. The speed limit is 30. People are routinely driving 40, 45 miles an hour. That is considered not safe through this section. What is the proper response? Enforcement is not going to do it, because we do that and people still speed, right? And the majority of people are speeding. So it’s not like it’s a deviant behavior.

What is the proper response? The proper response is to go out and redesign that street and to get the optimum outcome. Things like narrowing down the lanes, creating some edge friction, bringing the trees, and bringing the curbs in and doing stuff to slow the section down, so that the average person, the typical driver, when they drive through, gets the visual cues that it’s not safe to drive fast, you must drive slower.

We don’t do that. We never do that. We never do that. And let me give you the very cynical reason why. And then maybe I’ll talk about less cynical reasons, but I think if you wanted to be very cynical — and I’m not sure I believe this but I certainly am sympathetic to it. I certainly think there’s an element of this; if you want to be very, very cynical it is quite convenient. From a law enforcement standpoint, to have a set of laws that nobody follows — that allow you to, at any point in time that you actually need to, to interact with anybody, right? If we were going to design . . . let’s say this is not the United States of America, this is like Stasi Germany right. East Germany in the Cold War. And we wanted — We’re going to have our movie, that’s going to set out the way that the Stasi police go around and harass people. What we would do is we would expect them to set up these arbitrary rules that go against human nature, that nobody really follows.

That would allow you to just at any point in time go out and say “Hey, you’re breaking a rule, I’m going to bring you in, we’re going to have this investigatory stop, and I’m going to check out your papers and everything about you and make sure that you’re not up to no good because I’m looking after the state, right?

I know that just made a lot of you uncomfortable, because you think I just called our police the Stasi. I did not. But I am drawing some parallels because the mindset is somewhat the same, right? We have these laws that nobody follows, that are literally designed so that human nature conflicts with what the law says for the vast majority of people all the time. Yet we allow this to continue because it’s convenient from an enforcement standpoint.

I want to play a real quick little clip here that I want you to listen to. This is from a video called “Speed Kills Your Pocketbook” and it’s I think it’s hilarious. It is. It is a breakdown of the engineering profession, the police profession, and government, and how this kind of unholy intersection of bad design with random enforcement is really in the interest of governments but not people. I want to I want to play this one clip for you because it’s a clip of an incident where a police officer’s out and is just doing, with a news crew, is taking speed limits and finding that nobody [doesn’t] exceed the speed limit. Everybody was speeding. We haven’t seen a single person that has been doing the speed limit.

And that’s what I’m saying. I’ve been in those situations, with a radar gun, where every single person is speeding. It’s not an enforcement problem, it’s a design problem. And when we don’t treat it as a design problem, it raises all these red flags. Why do we really want, is it so important that we be able to pull anybody over at any time for any reason, or have a reason to pull anybody over at any time? Is that important from a crime-fighting standpoint?

And for those of you that say yes, OK, I’m not going to argue with you. I’m not going to argue with you. I just don’t want you to get away with the idea that we’re pulling people over because they’re breaking the law. We’re not. Yes, they’re breaking the law. But everybody is breaking the law.

We’re still choosing where and when to pull people over, right? We’re still choosing that. So that was the cynical view. I want to give you the non-cynical too, because I think it’s worth thinking through, and I’m not sure I wholly buy this one either. I maybe buy a blend of the two. But I think it’s important to realize that this is not some grand conspiracy that was created to make the U.S. a police state. This is just something that we’ve fallen into. The whole idea of forgiving design, the whole idea that you make roads safer by widening our driving lanes, by adding recovery area, by adding clear zones, by removing obstacles from the edge. This is this is proven design for roads, right? Between places where we’re trying to get long distances at speed. We’ve become really good at designing environments that are really safe by applying these forgiving design principles, but when we get into urban areas, when we get into places where there’s complexity, where cars turn, where cars stop, or cars park, where people walk across the street, where people walk adjacent to the street, where bikers are, or where people are on roller skates and roller blades and skateboards.

When we have complex environments, forgiving design does the opposite, right? It signals to drivers that things are safe when they’re not. It signals to drivers that higher speeds are safe — are actually safe to them, right? And there’s an asymmetry there because the drive, for the driver, is safe. If the driver hits a pedestrian the driver will suffer emotional damage but [escape] physical damage.

This is Ben Hamilton Baille. He said, if we were going to have symmetry of risk, as opposed to an asymmetry of risk. If we were going to have the risk be equal between the person outside the car and inside the car, when the person inside the car got into an urban environment, the seatbelt would come off, and automatically a little knife would come out from the steering wheel and be pointed at the person’s heart. And then, if there were a collision where they ran into something, they would suffer the same level of damage in pain as the person outside. And his statement was [that] what this would force them to do is [that] people would drive like it mattered. They [would] drive really slow and really cautiously, because they would be experiencing as much risk as the people outside the vehicle.

That was hyperbole, right? That was to make a point about how asymmetrical this risk is. But, what we have done is we have taken an ethic of highway engineering and design and what is safe in a highway engineering and design type of ethic, and we have brought that into our neighborhoods and we’ve said it’s safe here. It’s now safe there. [But] the reality is these are very different environments and fast speeds — high speed, when you induce high speeds, you kill people. You kill people and you create mayhem.

So from a design side, and there’s a ton of reasons why this has happened. I would blame the way that we have funded this stuff and the way we have centralized it. We centralized federal highway policy so that we could build the interstates and then we funded all these local road building programs through those same kind of channels. And what you get is you get a conveyance of standards and information and know-how that now becomes the way we build every neighborhood. And it’s just it’s just wrong. It’s not a conspiracy. It’s not like someone set out to do this but you’ve got the wrong values and the wrong ethics being applied in the wrong place.

And now that we’re here, what has morphed [from that] is that this is [a] very convenient law enforcement tool, where we can go out and, at any time of the day, find people that are breaking the law because they’re breaking law all the time, everywhere. And we can pull them over and we can do an investigatory stop and essentially find that nefarious activity.

I suspect, and I’m willing to admit that I do not know, I have not been with police officers when they’ve patrolled high-crime neighborhoods. I don’t have a lot of experience with high-crime neighborhoods. I don’t. I’m not going to pretend that I do. I live in a community that is predominantly middle-class white people. I do not have experiences beyond that that are worthy of . . . . I cannot stand here and say I speak as an authority on this, right?

I suspect — and here’s my theory: I suspect that when we go out and target as a policy, high-crime neighborhoods, be they racially diverse or not, they generally are, as Kareem Abdul-Jabbar points out, the Ebola-like problem of being poor. Right? They generally are poor neighborhoods.

When we go out to poor neighborhoods, we label them high-crime and we use these kind of random traffic stops as a pretext to these, tougher policing, and are getting tough on crime or the investigatory stop as a way to initiate contact and randomly scoop up bad people doing things you’re not supposed to do. I can see how that creates resentment, right?

I can also see how that is a crime fighting technique, right? I can see how people who are in law enforcement say “this is a very effective technique for us, that we catch a lot of bad guys doing this. And if we didn’t have this technique we wouldn’t catch as many bad guys.” I might not believe that but I can see why they would say that. I can see how that would evolve and why they would make that argument. I can see why the tough on crime people would say “we need this. We need to be able to do this.”

The point I’m trying to make is I can see why people become resentful. Right? If I’m pulled over forty-nine times as Philando Castile was, if I’m pulled over forty-nine times just for the crime of driving a junker car in a poor neighborhood and, really, living my life in all other ways like a person in a affluent neighborhood driving a Lexus, but when their taillight is out they don’t get pulled over. But I do, because we have sting nets in my neighborhood, trying to be tough on crime. I’m going to feel oppressed. I’m going to be ticked off and I’m not going to like that. Right. Someone sent me this week a study showing a correlation between people who have been pulled over for traffic violations and people who commit more — it wasn’t violent crime, but it was more serious crimes.

Right, and their point was, “Well, look, when we pull people over for traffic stops where these people are out committing other crimes.” And yeah, that’s because you’re focusing on the high-crime neighborhoods, right? If traffic laws were equally enforced across all neighborhoods – in other words, everybody pulling out of their cul-de-sac or their alley who had a taillight out were equally likely to get pulled over, and equally likely to be ticketed, that correlation would go away — would go away, would completely go away. It’s only because we do these things in poor and high crime neighborhoods as a law enforcement tool that those correlations exist in the first place.

So my senses, my theory, is that the people who are complaining about being oppressed, the people are complaining that we are being targeted, we’re being profiled, this is not fair. They’re right. They’re right. This is not fair, because the random rule as it’s applied to you is not being randomly applied to other people who are breaking the law everyday, all the time, because they’re not poor, they’re not a poor neighborhood, they’re not in a high-crime neighborhood. On the other hand, the people who are saying “Well, just follow the law.” Right. Like, “just follow the law” are blind to the fact that they’re not following the law. They’re just not having it forced on them.

And I would say, the police officers who are saying this is a great way, this is a really good tool for us to interdict in criminal neighborhoods and find bad people, I suspect they’re right too, right? I suspect that they are also correct. I suspect that they are also identifying a technique and an approach that actually works for them.

Here’s where I want to go with this.

Because I’m not pretending that we’re going to solve the problems that we see in the Philando Castile case, which I said we’re not going to talk about police shootings. I can’t say that I understand what happened, it doesn’t make sense to me.

But I have to ask myself are we really building a strong America?

Are we really building a great nation?

Are we really a just people?

Are we really focused on the safety of our places with the current approach that we have, by ignoring speed in our design, essentially saying “Here’s our design” and then enforcement is what’s going to deal with the speed.

We’re really not dealing with speed, right? We are continuing to perpetuate a cycle of people speeding. And as a society we’re seemingly OK with that. We then are inducing a pattern a system an approach to enforcement that is rather random.

And as we’ve seen in recent years, and maybe has existed for a long time but is now being put in our faces, probably rightly, so is now something that thanks to smartphones and what have you, as not being swept under the rug, right? A “he-said, she-said” where one side is law enforcement, the other side is someone with a long record of getting pulled over by the police, right?

We’re seeing that this approach is having some negative effects.

Now I want to I want to quote someone from a law enforcement advocacy organization. This actually comes from an article in a law enforcement journal that I pulled out and I’m going to quote because it quotes this guy who is with the national tactical officers association. He says quote “traffic stops and domestic violence are the highest risk calls. You have no idea what you’re walking into,” said John Nagy executive director of the national tactical officers association. “If I had to rank them I’d rank traffic stops first. And domestic violence second, so traffic stops are the most dangerous things that police officers do.”

And this article goes on to point out that from 2000 to 2009, 118 officers were killed conducting traffic stops, 82 in domestic violence complaints, and 74 during disturbance calls. And there are other websites that looked and saw that these traffic stops are by far the most dangerous thing police have to do. More police officers are killed and injured during these traffic stops than anything else than anything else.

So I’m sitting here in my office in Brainerd, Minnesota, and I’m saying I want police to be safe. I do not want to put law enforcement in harm’s way. When we need law enforcement to show up and actually go into harm’s way, I want to do that purposefully. I don’t want to do that willy-nilly. I don’t want to do that on a whim. If we’re going to ask — and I’m former military — if we’re going to ask our military to go fight a war, we’re going to fight a war, we’re not going to go light, right? We’re going to do everything we can to win if we’re going to ask our police officers to go out and risk their lives. It better be for something that counts. It better be for something that matters.

I’ve also seen neighborhoods that are disadvantaged, and I’m hearing people in neighborhoods that are disadvantaged saying “Look, we’re being picked on, we’re being oppressed, treated unfairly, we’re living in an oppressive type of society.” And I am sympathetic to that. I get it. I see it. I think that that is a reality that this system has brought about. And I’m actually sitting here as a parent, as a husband, as someone who lives in a neighborhood in a community, and I’m watching people speed all over the place, and I’m watching our street designs be despotic to people who are outside of an automobile. And I look at my profession, the engineering profession, as largely not caring about this at all, or saying “Well, law enforcement will take care of that” and I’m putting these three things together. I want it to matter for police. I don’t want people to be oppressed. And I want our streets to be safe. And I’m saying I think we can fix this.

I think we can fix this.

So how would I go about fixing this?

The first thing I would do is I’d say, all right, speed. From now on, if I’m a mayor of a city, I’m saying I want to know where people are speeding. You show me, you map this out, give me a GIS map and show me where chronic speeding is. And then I want to deploy my engineers, my planners, my urban designers, and all the people who can add something to this conversation to those speeding spots. And I want them redesigned so people drive slower, and we’re going to keep iterating back and forth, and iterating, and iterate, and iterating, until the 85 percent, the vast majority of people, are driving at a speed that is safe. And if we’re not doing that we are not a moral people then. This is the approach I take. From now on, everywhere. This is the approach I got and I take everywhere in response to speeding.

Now, my police force. They can pull over speeders, right? Because the only thing they’re going to get now are the deviants, right? Are there people who are deviating from the law and you want to make a correlation there, go right ahead. But if the majority of people are speeding, they’re not deviants. I want to get it to where the design brings people to where they should be driving at safe speeds. And then we have law enforcement focus on deviants, which is what we want them to do, right? We want them to do things that matter.

Here’s the second thing I do, and this is a little bit more of a leap, because the first thing is right in my wheel house and I get and understand the second thing is a little bit outside of it. But I feel it’s technologically possible and also very easy to do. Let’s picture Philando Castile driving down the street and the police officer sees his car with a taillight out. OK, the taillight’s out. Here’s what I would like to see happen: this police car is, or should be, equipped with a camera, maybe multiple cameras. I know the officers have computers in their car. I would love to see a button, press that button, would then capture the last 30 seconds of whatever is on that camera along with whenever it continues until the button is pressed again. It will give audio for the officer the officer to describe what’s going on say “Hey, here’s a car. It is a whatever make and model, here’s the license plate,” it is automatically date and time stamped. They say “I have observed the taillight is out, you can clearly see this or this video.” Bam, the button is pressed, that gets downloaded, gets sent. It’s automated.

They send them that. Philando still gets home. A couple of days later, gets a ticket in the mail. The ticket is perhaps a warning on the first time saying “Hey, look, dude, we want to let you know — for your health and for everybody else’s safety — that you’ve got a rear light missing. You weren’t wearing your seat belt, you were doing some other non-life threatening thing, but something that is a problem, is a nuisance, you were doing this. You were observed by a public safety official in doing this. If you would like to view the documentation, here’s the web site, you can go enter your citation, you can view the documentation if you want to dispute this. Here’s where you can go to do it. But we saw you doing this and you need to have this fixed within seven days. Call us and acknowledge that you have fixed it, and if you get caught again you can get a ticket.

I’m not going to get into how the fines should be stepped up and what have you. But if the idea here is to actually enforce the law or actually have a safe environment, to me, that is a much safer way to run a city, right?

We’re not asking the cops to go out and do these really high-risk dangerous interdictions randomly, right? We’re not asking people to be subjected to, in certain neighborhoods, at certain times, in certain places, police-state type oppression, right? We’re not, and we’re actually then dealing with the real true public safety issues at play.

I’m not gonna pretend that that is the golden solution. I’m not going to pretend that I thought this all through and this is exactly how this will solve every problem we have. I’m not that naive. But I think that this kind of thinking — the kind of thinking that acknowledges that traffic laws are not the hill we, as a society, want to die on, right? It’s not the place where we want to make our stand between chaos and mayhem and order and decency, right? That’s not the place.

If we can agree on that. If we can agree that we want to actually, generally make things safer, we want to make this country safer. We want to make our streets safer. We want to make our places safer. We want to make things better for people. And if we also can say that we want to use law enforcement respectfully, respectful for the officers. I don’t want to put them randomly in danger for no good reason. I don’t want to ask them to do things that are going to put their lives at risk for very little benefit.

Let me deal with the very last thing here. And that is without investigatory stops are we just going to have rampant crime. I had someone send me that Timothy McVeigh was caught with a random stop. As if Timothy McVeigh would never have been caught in any other way. I don’t know. And you go ahead and cherry pick your example. Someone said Ted Bundy the serial killer was caught through a random traffic stop.

I am I’m always amused by these stories: OK we did this one thing and it worked this one time. So now let’s institutionalize it across the board with no other statistics. No other data, just cherry picking a few results. The pushback is that I’ve gotten from law enforcement people is “OK with all the investigators stopped, what do we do? How do we stop crime? How do we help these poor struggling neighborhoods who are — one person wrote they’re overrun with gang bangers — how do we deal with them?”

And I’m going to tell you I’m not exactly sure. I don’t know. I’m not gonna pretend that. I don’t know exactly. But if you’re telling me that the only way we can begin to control crime in high crime areas is the random — using traffic laws as a random pretext to essentially stop and get up in people’s business, and that is what law enforcement has become in this country, I’m sad. I’m really sad, because that’s not the kind of country I want to live in. And that’s not the kind of America I think any of us really wants, right?. That’s certainly not the Fourth Amendment. That’s certainly not the intention of the founding fathers when they wrote the Constitution. That’s certainly not the type of civil society that any of us aspire to live in.

I know there are really smart people out there working on this. I know they’re really smart people out there in law enforcement and law enforcement community who have ideas on how to solve this problem.

What I’m contending is that the laziness of the engineering profession should not be a pretext for those things.

And the more and more we make it, the more we’re going to have a divided society, the more we’re going to put cops at risk, and the more that we’re going to have designs and places and streets that are just simply not safe.

I want our laws to matter.

I want them to be enforced, and to have that we have to have a different mindset and a different approach to traffic violations.

It is time to end the routine traffic stop.