Chuck Marohn, Strong Towns: Our guest today is the author of a book, Human Transit. He runs the website and blog with the same name. He’s a consultant. He’s a speaker and he is an innovator. Jarrett Walker, welcome back to the Strong Towns podcast. You were on a couple of years ago at CNU (Congress for a New Urbanism).

I’m going to say, right now, just to get started [that] I am one of those people who is an outsider looking in. I’m not a transit rider. I live in a very small town. We have dial-a-ride, which in many ways is worse than having no transit system at all, at least in terms of our dialogue. So I’ve always been hesitant to have you on because I felt I would be wasting your time, not asking intelligent thoughtful questions. I’ve done enough homework now [to] where I hope I don’t waste your time but I want you to feel free to start at a 101 level.

I want you to start with geometry. You talk a lot about how geometry, essentially, doesn’t lie and is not subject to focus groups. Can you talk a little bit about transit and the geometry of cities and why the two are a match for each other.

Jarrett Walker: Sure. I think it’s helpful to start not so much with transit as a product as “what is the problem for which transit is a solution, [and] the problem for which trains is the best solution? — and in many cases the only solution [to] the problem of providing mobility and access to lots of people at fairly high densities or generally in cases where there is a strong disincentive to driving.”

So, right there, you can see that transit has a somewhat — in the U.S. the way it’s constructed, Canada too to a degree — has a somewhat contradictory mission, because there isn’t a contrary expectation that we run some transit service everywhere regardless of density because certainly there are, everywhere, there are people who can’t drive, [or do] without some sort of mobility assistance, transit, in the sense that we value with ridership.

And transit, in the sense that it achieves goals of substantially reduced car traffic, substantially reduces card dependence. Which is, of course, connected to the ability to use street space for something other than cars. All that really arises in places where there is sufficient demand for big vehicles running in regular patterns to be the right answer.

Strong Towns: There’s a lot of chatter right now about small scale transit of one kind or another.

Jarrett Walker: The word “transit” is being used to mean lots of different things. But fundamentally, really, really successful transit is transit that’s carrying a lot of people on relatively few vehicles. That’s the essence of what makes it highly effective.

There’s some geometry about where that’s likely to happen, and that’s the geometry that is primarily about density: How many people are around every possible stop.

Walkability, which is can the people around the stop, actually, are things close enough together that we don’t have to cross big wire or gas to get to them. You know that’s really what determines whether you’ve got a place where transit can succeed.

Strong Towns: And I want you to notice that with those things you’re thinking about your own town and it’s going to sound like him passing judgments about your own town whether it’s a good place or not. I’m not doing that.

Jarrett Walker: I’m simply describing some basic math about why transit works as it does. By the way if you Google an article of mine called “The Transit Ridership Recipe,” you’ll find an explanation of all this with some statistics.

Strong Towns: One of the things that I found very approachable about your work is that you go down the path that we don’t have to have transit everywhere to be successful. I know a lot of people who advocate for transit, advocate for transit at all times in all places. Can you talk a little bit about why that is maybe not the right approach and why you have a more nuanced understanding of where transit works well and maybe where transit doesn’t work as well and why there’s a important difference between those two?

Jarrett Walker: That comes right down to what you mean by working well. A lot of people believe that some measure of transit working well is that it has lots of riders that are relatively low cost. You read the newspaper, you look at the way average journalists writes about this stuff. and they just assume that the ridership is the measure of success.

Well, if we were designing a public transit network for high ridership, we wouldn’t go everywhere. We would think like a business, which is to say we would concentrate our service in the places where we are most likely to succeed. We’d concentrate on places where we have a concentration of potential customers and also where our competitor or the private car is at the greatest disadvantage, which tends to be in bigger denser cities and in denser parts. And so that’s what we would do if we were pursuing ridership in any community.

[One of the things] I’ve worked in there is an obvious, high-ridership thing to do, and that involves not going to a lot of the town, because those parts of the town are just not conducive they are giving me the density, walkability, linearity that I need to say that we’re going to have a good transit market. [Which means] that lots of people will drive.

I’m not saying you shouldn’t serve those places. What we always say is [that] if you serve those other places, you need to have a reason other than ridership, and you should be keeping track of or making clear about the fact that you’re doing this for a reason other than ridership.

I generally call that other reason coverage. Coverage is the contrasting justification of services where we run services to places where we know we’re not going to get high ridership, for teen ridership for this non-private purpose, maybe lifeline access to people with severe needs.

It may be perceptions of the quality. It can just be purely political. You know if we’re going to have some council members supporting the measure, we need to hit that and council districts, that kind of thing. Those are all, you know, perfectly good reasons why people demand coverage services, low ridership coverage services, and our role is basically to help communities think about this straight and reach an intelligent decision about what mix of ridership and coverage services they want.
It’s not that coverage services are bad, it’s just that, if you are being evaluated on ridership, you wouldn’t run them. So you have to be smarter about how you talk about what your goals are and what’s going to count as success if you’re going to run coverage.

Strong Towns: The tradeoff between ridership and coverage area it seems, a lot of time, like our transit systems today maybe were originally envisioned based on coverage area. And I’ll even go so far as to say they [were] originally envisioned for that person [who] has no other option, to serve the disadvantaged. Has that affected our cultural mindset regarding transit? Has that affected how we have tended to look at transit systems, and reforming them — some of the work that you’ve done to increase ridership.

Jarrett Walker: Right. Yes, there’s that history. There’s also a history of evaluating the ridership. The real problem that we have is that transit agencies are being given contradictory direction: they’re being evaluated on contradictory measures, and then we yell at them because they’re not satisfying our contradictory expectations.

You might as well tell your taxi driver to turn right and left at the same time. You know, it’s that stark. It’s that ridiculous.

If we’re going to measure transit agency outcomes on ridership, [then] you need to let them run service designed for ridership, and you need to not yell at them when they say “Well, that means we can’t go by Mrs. Jones house, even though she’s here standing in front of you with all of her Facebook friends telling you how much she needs [service].

And so, if we are going to go by Mrs. Jones’s house, I mean if we are going to satisfy everyone who has — everyone who has a severe need or a feeling of an entitlement to a bus that has two people — that were not doing that for a better reason, than let’s be clear about what we’re doing and why we’re doing that. There’s nothing wrong with doing that, as long as we’re being clear. So that, for example, the fact that you’re running that empty bus doesn’t get read as . . .

Strong Towns: Right — it isn’t failing when it runs an empty box of a low ridership area. It’s doing something that it is being demanded to do for inbound ridership. That’s the key distinction.

If we were going to, and I’m going to say this in a harsh way, if we’re going to just apply rote dollars and cents, are there a lot of parts of our transit system that we just wouldn’t cover then? If you are talking about a dollars and cents measure that comes down to ridership.

Jarrett Walker: You’ll hear “What percentage of our costs are we covered with fares?” That’s another way of saying ridership. “What’s the subsidy per passenger?” That’s based on ridership. So if any of those kinds of metrics, [which] ultimately vary with ridership, are going to push the transit agency toward running less, running more ridership service which means less coverage service.

You have to make sure, when you go to a transit agency with those metrics that that is really what you need. You know, the classic example is the relatively conservative elected official from a low-density outer suburban area who gets on the transit [board] or starts banging on about you know we need less subsidy per passenger. And the transit manager, quite accurately, says the best way to do that is to cut all the service to you or to your district; the best way to do that is to not go into those outer suburban, you know, unwalkable, low-density kinds of places that he may feel entitled to have the bus go to.

So there’s just no getting around. And, again, I will never say what we should do. What I do is convene communities and help them figure out what they want out.

Strong Towns: How does this concept of a total Transportation Investment fit into that? Clearly, if we’re talking about the suburban city council member, they’re not lacking for Transportation Investment are they?

Jarrett Walker: Right. In fact, this will seem much fairer. You know when I’m talking [about] this to the city council member who isn’t really sure he likes transit, but his attitude is usually “Well, as long as where I’ve paid for that . . .” And that often becomes a reason for why transit agencies are forced to run low-ridership services. You can think about that, which is to think about the fairness of the totality of the Transportation Investment. People who live in dense parts of cities people, who live in high density, who tend to be at the greatest need for transit stability, [have the] ability to generate ridership.

Strong Towns: Those people need a lot less asphalt per capita than someone who works in an outer suburbs.

Jarrett Walker: And if you thought in terms of that sort of, you know, square feet of asphalt per capita, you realize right away that in the inner city we get by with very little of that [compared to] in a very low density area, [where] you need a lot, because you need to cover long distances and there are [not too] many people.

If we could think about the totality of transportation, that’s what it would look [like] — fairer than what we usually do, which is to try to have a conversation about the fairness of transit in isolation because, however much you spend on coverage, it’s impossible to achieve something that everyone will experience [as] fair.

In fact, I argued in my book [that] one of the reasons I’m reluctant to use the word fairness is because people come with completely different definitions. There is no single, agreed definition of what a fair transit system is, really, at the end of the day. A cultural conversation that needs to happen. One of the reasons we struggle with transit [is] because we really haven’t defined what we are trying to do with our transportation investments.

Strong Towns: I think that’s absolutely right.

Jarrett Walker: Transit agencies — and this has been, you know, my life’s work for the last 20 years really — transit agencies have not demanded clear direction from their communities. But what the community wants [is for] them to actually prioritize.

This is really where my role has been if you will: to put elected officials to work. This is what elected officials are for, to make those hard, reality-based choices about which is more important. But elected officials all know, it’s basically the same experience you have when you’re drawing up a municipal budget. You have to decide what’s more important, and what you have to have painful conversations with them.

And that’s, essentially, what we’re trying to do in the transit space with encouraging communities to think about these unavoidable tradeoffs. Because in the absence of doing that, they’ll just keep yelling at their transit agency because they’re not getting something that they feel they’re entitled to.

Strong Towns: But if they don’t understand the math. You know a lot of the major transit investments that I see happening seem to spawn out of, like, a 1970s commuter mentality. The idea that we’ll have a central city and then we’ll commute people in. And if we can move people out of their cars and into a train that will just make it easier for people to drive.

There’s another mentality that I see starting, to have more primacy in places, and that has to do with, essentially, creating a high frequency transit network, the ability to get around in a place. Do those two mindsets compete with each other in a practical sense? And is there kind of one that you would prefer over another?

Jarrett Walker: Everybody’s mindset pretty much arises from their own daily experience, right? If you live in a suburb and your problem is getting into the central city, then you know that’s going to seem to you like the most important thing in transit too.

If you live in an inner city where you’re trying to get to many different places and getting around in the city, that’s really where the high frequency grid saves. That’s really where that pattern is most effective.

And so we’re really just talking about the right solutions with different places, different parts of our region. I’ll emphasize to you that there is a larger problem there, which is that the standard commuter express service is very very expensive per passenger to operate, particularly if it is the service that is flowing into the single big downtown at 8:00 in the morning while back at 5:00 in the afternoon.

That’s because all the trains and buses, and drivers who piled up in the city at A.M. as a result of all their trips, they all had to go back out, because you have all of these very short shifts and it’s difficult to get people to go to work to work for just three hours.

So and you have to own a fleet that you don’t use very much, and the distances are very long. If you ride a half-full to two-thirds full commuter express bus or commuter express train, your travel is probably being subsidized much more than if you ride a quarter whole municipal bus running a frequent network. The problem’s not just of the peaking, but a single directional nature.

And there are cities that do much better at this. Los Angeles comes to mind, because Los Angeles is so multi-directional because people are going all directions at once. There isn’t that huge single hotel in the morning, going back the afternoon.

So those are some of the issues [that make] suburban commute services very expensive. There are many possible ways in which you just cross subsidize by service. But you know it is part of the larger political consensus that makes regional transit agencies awesome.

Strong Towns: Can you elaborate on that a little bit? I’d like to contrast the L.A. experience, which I have been told by people, who have kind of pushed back against L.A. being a car city, [people] who said L.A. has some of the best transit in the country. Can you contrast that with Washington D.C. or a place that has maybe a more well-developed but, more high-end kind of transit system?

Jarrett Walker: Right. So I would say that Los Angeles has a lot of work to do on its transit system, and that it is doing that work. It is inevitably constrained by a legacy. You know, we are all forced to live in a world laid out for us by our parents and grandparents and great aunts.

And L.A. has the problem of the particular legacy that, you know, people’s grandparents and great grandparents wanted it for them, which was lots of roads and everybody driving.

L.A. has now grown to a point — it’s an extraordinary city because I don’t know any other place where there is such a massive consensus that the basic ways the city was laid out is not working.

I mean there’s a sort of complete existential rejection of how the city was built, and I find that very unusual. Most people allow their views to be conditioned by how their city is – [they] don’t really question it.

But the urgency about transit is so extreme. You know, we’re getting seventy percent, yes, on very expensive transit. No new taxes for transit. Seventy percent, yes. There’s just an overwhelming sense of urgency about that transit in L.A. is not everything it could be because they’re still scrambling to essentially compensate for all those decades of non-investment.

But, on the other hand, Los Angeles just has superb geography for trains — it’s hard to imagine a better city geographically. Precisely because, if you look out over it, and there are clusters of towers far apart, settled here and there, and those create those great markets where people are commuting both way at the same time, using the capacity very efficiently. And then you have a street network that’s ideally suited to that high frequency grid.

It’s mostly a grid in a city like Chicago. That gives you those very easy north-south east-west paths, where if you just run a service, running a frequency, and get the service running fast enough, you get these multiplier effect where it just becomes very easy to change from one ramp to another get to wherever you’re going.

The geography grid would be better. It’s just a matter of you know Los Angeles still obviously having to catch up after many decades of neglect.
Strong Towns: I want to ask you a question about building incrementally. We talk at Strong Towns a lot about our cities needing to kind of grow in this broader, more incremental way, as opposed to the large transformative investments. Many small investments over a broad area.

But when we get to transit, I get a lot of pushback. I get people saying “Well, Chuck, you can’t do transit incrementally, it doesn’t work that way, it’s an all or nothing kind of thing.” Can you talk about that? Is it possible to do transit incrementally? Can we scale transit over time? Or is that is that a crazy notion? Do we have to either be all in or not in at all.

Jarrett Walker: Let me be very clear. Yes, you can do transit incrementally.

Yes, you can get almost anywhere by starting with incremental improvement.

It doesn’t mean you don’t need the infrastructure. What it means is that the need for big infrastructure arises out of the fact that you’ve built a corridor that buses can’t serve anymore. And some of the best transit projects in the country, they’re incredibly expensive. But they are — they are the thing you have to do, once you’ve done everything you can with busses. [They] can be justified in those terms.

I’m thinking about the Wilshire Subway in Los Angeles. The Second Avenue subway in New York with Broadway Subway — the most obvious examples where buses are doing everything they can. And now we have built a manned transit demand to a point where we just have to do something higher order.

Strong Towns: That is I think a logical relationship between service and infrastructure. You use bus service to grow incrementally toward where you’re ready to do that big infrastructure.

There’s another theory of infrastructure though, which is that the reason we need the big bang is to attract more elite riders than those who are attracted to buses. You know, sometimes you have cases where there really is no transit value being added.

Like when you introduce a street car that’s going to be stuck in traffic instead of a bus. It doesn’t do anything the bus can’t. But even where we are building services that are going to be faster than buses, we as planners will certainly notice that there’s a subliminal message of the reason this has to be so expensive is that we’re trying to appeal to a higher class of people.

Jarrett Walker: So the big warning I have to always give is “If you are a very fortunate person who tends to sit in powerful rooms making propositions, you know, if you are a millionaire, if you are an executive, you have to start by remembering that most people are not like you.

You represent a small minority, and therefore your personal tastes, in what you would like in transportation, [you are a] very poor guy to [know] what will make a good investment for the entire city. So when someone comes up to me and says “Hey, I drive my BMW and what are you going to do to get out of me out of my BMW?”

My answer is there’s no there’s no public interest in getting you out of your BMW because there aren’t that many of you for it to matter. What matters is the way we incrementally expand people’s liberty, opportunity to transit, so that people who are in a financial or personal position where transit makes sense for them, they don’t have the BMW, maybe they own you know 1989 Chevy, those people can make the switch.

Strong Towns: What about this notion that “We have to build something big and permanent looking. We’ve got to have tracks in the ground and overhead wire. Otherwise we won’t get developers to build. We will get people to commit to it.”

Jarrett Walker: Well, that’s called infrastructure hostage taking. You know you basically give hostages, you lock up a certain amount of money from the ground, and therefore the real estate industry thinks that’s permanent. That’s actually a really bad guide to permanancy.

Let’s take one of the most obvious examples. At the same time that people were going around saying we have to have streetcar tracks in the streets, the service will be permanent, we were going around and ripping up whole freight tracks in the same neighborhoods.

In fact, you have the whole part of the martyrdom of the original streetcars, which were torn up by evil people. That’s not really the total story, that’s the story here. And of course that story proves that those rail tracks in the street didn’t make it permanent.

What is actually permanent is high ridership. So if you want service to be permanent, you want service to succeed in ridership terms. Because if it doesn’t succeed in ridership terms, the infrastructure isn’t going to stay, that’s the reality. Over and over, you’ve got to remember that transit operating costs are the — transit costs are primarily operating costs and that’s got to make sense in terms of ridership.

So that’s why it’s so important to recognize permanence. To say that a transit corridor is going to be permanent is to say that it has permanent high ridership.

And to say that it has permanent high ridership means that the land use conditions, that physical conditions are favorable, comes back to what I mentioned at the beginning: Get a walkability here, that’s where you got a permanent high ridership. So, ultimately, the permanence that realtors should be looking for is actually the permanence that they are creating with dense development the permanence of a land use pattern is what matters, not whether they’re attractive.

Strong Towns: I was on the outskirts of Portland with some of the transit planners there, and one of the things that was pointed out to me as being a huge win for them was this art installation at the station. The station itself had very little built around it. They were planning some big investment, hopefully, in the future, but it was pretty barren. The planners seem very, very happy, about this art installation essentially. You talk about the dependent writer, or derogatorily people call them captive writers, taking them for granted and kind of making a system based around getting that guy out of their BMW.

Jarrett Walker: Let me say my parents were public art experts. I grew up in the arts. I have a degree in an arts field, so I’m all for public art. I think that public art has an incredibly positive role, if it is bottom up, if it has arisen out of the community, it’s therefore an expression of a community’s particular value.

I think that top-down public art is probably less effective, but no one has a problem with there being an aesthetic dimension to service. The larger issue though is how much? When the question becomes “How much less service are we going to have so that we can pay for this?” That’s really the frame in which you need to think about that question.

So I’ll switch that to a common example, [people] calling me when their book came out about 10 years ago, they used the word transit has become dull and “utilitarian,” utilitarian of course is a derogatory word meaning useful. No indication that there’s something wrong with the fact that transit is just useful as opposed to beautiful and the way we think it should be.

And they use the example of you know whimsical bus shelters that create delight. They included a photograph of a famous Japanese bus shelter that’s shaped like a strawberry.

And my response to that was, “OK, how much service, less service are we going to [have] so that we can have those? How many people we going to tell that they can’t get where they’re going when they need to? Because we chose instead to invest in cute bus shelters.”

Strong Towns: Yes.

Jarrett Walker: And when they use the train. My job is to make that tradeoff visible and not let it get concealed behind vague romantic notions.

I’m fine with public art — I’m fine, you know I’m GREAT. I love art. I want that to be part of the experience, but part of the beauty to me is the beauty of people that have great lives and being liberated to do what they want to do because the transit system works for them.

And that requires sheer quantity. So I point out, for example, to the San Francisco bus shelters that were introduced a few years ago which have a very simple kind of waveform to them they are nice they’re distinct and they say something about San Francisco. And yet they’re designed to be just stamped out of a kit of parts very cost-effectively because the crucial thing about transit is that transit is big scale, and if your idea doesn’t scale it doesn’t matter.

That’s what you’ve got to be careful, too, about the demonstration project. The idea that “We’ll just do this little thing over here, and that we’ll see if it works,” and then it will take off. Very few things in transit — that works fine for a lot of product development kinds of ways, but it just doesn’t work in transit because if it doesn’t work at the scale of the network it probably doesn’t work.

Strong Towns: As a final question I want to pose to you the whole autonomous car conundrum and maybe we don’t have time to get into it too deeply but I’ll set it up this way.
I was in Omaha last week and we were having a conversation about transit. A nice little lady in the front row raises her hand. She is well into retirement age and she referred to this, you know, burgeoning technology of autonomous vehicles and how it basically is going to make transit systems obsolete and make the entire conversation we were we were having kind of silly. I had an answer for her, but I’d like to give you an opportunity to give your answer to her.

Jarrett Walker: There are three big kinds of problems in transportation, especially urban transportation. And they have three different kinds of solutions. And although it’s fashionable to want to mix them all up and create some sort of romantic or sexy vision of the future, you’ve got to keep one foot on the floor to do that. You’ve got to think about these three questions separately.

But first of all there is the problem of emissions and energy efficiency, for which the solution is electrification.

Then there is a problem of safety and use of time for which the solution is automation.

And then there is a problem of the efficient use of space in dense cities. Which the solution is big vehicles that use space efficiently.

Those are three different problems, and we can certainly imagine a future in which those three things get combined in the electric automated bus. Those are the solutions to all three problems combined as they apply to the city.

Now there are plenty of places where autonomous cars are going to be great, but they’re going to be the places that have room for [them] like outer suburbs, [not] in dense cities, [not] in places where space is precious.

They’re going to be a disaster if they if they are allowed to just go everywhere in a free market way, they’re going to create their own congestion, their own problems and that’s why, by the way, I want to give Uber and some of those companies credit. They are looking ahead to road pricing, the prospect that they will have to, in some way, pay some sort of pricing that that gives them a reason to use that road space official.

The notion that autonomous vehicles can replace public transit is probably true in some places. It’s true in the coverage places. It’s true in our suburbs. Places where transit doesn’t work well anyway. But it’s a disastrous vision.

Strong Towns: Do you think autonomous vehicles are going to make transit cheaper?

Jarrett Walker: I think yes. If we had an autonomous bus. Many many subway systems are autonomous now. You know, most people have ridden one of these things. But when it comes to autonomous buses, which are rapidly under development in places like Europe and China, where they where the value is “if we had that, bus service would suddenly become vastly more abundant” because the primary the cost on the quantity of bus service right now is labor.

So, you know, I look at typical bus systems, and I imagine how utterly transformative it would be if the bus was every five minutes, where we can’t afford that now. The cost is high that way. But that becomes possible with automation. What that would do is it would transform the useful mass of buses.

Strong Towns: It would also then transform people’s attitudes toward buses. And you know we’d be in a much better course the next time we chat.

Modal Data

Tables 29 through 41 provide statistics about the characteristics of the various modes of public transportation operations. Data are presented on two summary tables of national information, with roadway modes in Table 29 and rail modes and ferryboat in Table 36, followed by tables listing agency-specific information on unlinked passenger trips. Given the large number of bus, demand response, and transit vanpool agencies, only the largest 50 agencies of each mode are listed for bus and demand response, and 30 for transit vanpool. Tables 30 through 35 and 37 through 41 list agencies operating each mode in urbanized areas and Tables 42 and 43 list agencies by mode of operating service in rural areas.

Transit service is provided by a variety of modes, defined both by the type of vehicle they use, operating characteristics of the service they provide, and the travel needs of the riding public for which they are designed.

A mode is a system for carrying passengers, described by a specific right-of-way, technology, and operational features. The mode of service in most cities is buses.

BUS SERVICE:

 2016-APTA-Fact-Book

The Greater Lafayette Public Transportation Corporation provides fixed-route scheduled bus service in the Lafayette, IN area. Bus data are reported in Tables 29 and 30.

Fixed-route bus service, called “bus” service in the Fact Book, is the basic public transportation service in most American communities. Nearly one-half of all public transportation trips are taken by bus. Modern buses have automated stop announcements, security cameras, bicycle racks, and are accessible to persons in wheelchairs. This Foothill Transit bus provides express service from Diamond Bar, CA, into downtown Los Angeles. Bus data are reported in Tables 29 and 30.

Bus service is provided by rubber-tired vehicles powered by engines using fuel carried on the vehicle. Most buses operate in fixed-route service on regular schedules, and passengers pay a fare or present a pass or transfer when boarding their bus. Nearly all buses are accessible for wheelchairs by lifts or ramps, and most can carry bicycles on racks in front of the bus. 

BUS RAPID TRANSIT SERVICE:

Bus Rapid Transit systems operate vehicles on separate rights-of-way with high-frequency service, low-floor vehicles, stations, traffic signal priority, and other operating improvements which increase their speed and passenger capacity. BRT is the newest operational type of bus service and offers increased capacity and higher speeds when buses are taken off of congested streets and arterials in central areas.

The Greater Cleveland Regional Transit Authority Health Line provides bus rapid transit service in bus-only lanes that are prohibited to other vehicles. This BRT bus is headed east on Euclid Avenue toward University Circle from downtown Cleveland, OH. Bus rapid transit data are reported in Tables 29 and 31.

COMMUTER BUS SERVICE:

 

Commuter buses provide high-speed longer distance service to commuters for their daily journey to work. The average passenger trip length on a commuter bus is over 26 miles while the average trip on a regular bus is less than 4 miles.

Community Transit Double Tall buses in Everett, WA, provide commuter bus service to downtown Seattle. Commuter bus data are reported in Tables 29 and 32.

DEMAND RESPONSE SERVICE:

Demand response service vehicles travel on roads and streets but take passengers directly from their origins to their destinations. Demand response service is provided primarily by vans. By law, accessible demand response service must be provided in all areas served by regular route transit service to persons with disabilities or those otherwise unable to use fixed-route service.

The Central Florida Regional Transportation Authority provides Access LYNX demand response service in the Orlando, FL region. Passengers who are not able to use fixed-route services are taken directly from their origins to their destinations. Demand response data are reported in Tables 29 and 33.

General demand response service is not required by law and is often open to larger segments of the public or all riders. Some general demand response services are operated during late-night and weekend hours in place of fixed-route services.

TROLLEYBUS SERVICE:

Another type of roadway transit service is the trolleybus. Trolleybuses are standard rubber-tired buses except they are powered by electric motors and receive electricity from two overhead wires through trolley poles on top of the vehicle. Able to negotiate congested city traffic, trolleybuses provide environmentally friendly transit service.

This TransLink trolleybus operates in the central area of Vancouver, BC. Trolleybus data for U.S. are reported in Tables 29 and 35. Data for Canadian transit operations are reported in Table 44.

RAIL SERVICE MODES:

Five rail modes provide most of the rail transit service operated in the U.S.: light rail and streetcar, heavy rail, and commuter rail and hybrid rail. Each of these modes operates on rail rights-of-way, but they differ in many other characteristics. Most operate on private right-of-way exclusive of motor vehicles but some operate in streets. Passengers board some only in stations but others pick up riders at stops in streets. Some are designed for fast, long distance trips and others for shorter trips in congested areas. The following sections describe those and other differences among modes of rail service.

LIGHT RAIL SERVICE:

Light rail is a mode of service provided by single vehicles or short trains on either private rights-of-way or in roads and streets. Passengers board in stations or from track side stops in streets. Light rail vehicles and infrastructure are designed to carry a “light” load of passenger traffic when compared to heavy rail which carries a “heavy” load of passenger traffic. A primary difference between light rail and streetcar is the longer distances between stops and higher operating speeds of light rail trains. Streetcars often function as distributor systems in congested central areas.

Los Angeles County Metropolitan Transportation Authority light rail vehicles provide transit service in the Los Angeles, CA region. Light rail vehicles operate on private rights-of-way and city streets in many American urban areas. This train is passing the Los Angeles Trade Technical College on the Exposition Transportation Corridor (Expo Line) from Culver City to downtown Los Angeles. The Expo Line is being extended to Santa Monica with passenger service scheduled to begin in 2016. Light rail data are reported in Tables 36 and 40.

STREETCAR SERVICE:

 Streetcar service is a type of light rail service with frequent stops with nearly the entire route operated in streets. It is usually in denser, high-traffic areas, and the vehicles are designed for lower speeds and to allow quick boarding and alighting by passengers.

Streetcars provide a type of light rail service characterized by more frequent stops and shorter trips in higher density areas. This streetcar is owned and operated by the City of Portland in partnership with the Tri-County Metropolitan Transportation District of Oregon. Streetcar data are reported in Tables 36 and 40.

Relocalizing Economics Part II

[The conclusion of the interview of Catherine Austin Fitts by Chuck Marohn on “Relocalizing Economics” from OregonPEN for 14 October 2017.]

Chuck Marohn, Strong Towns: I want to ask you a couple of questions about housing. I want to start with a story again and have you react to it and tell me what I’m missing.

After 2008 we had a bunch of houses here that went into foreclosure and we also had a lot of unemployed people. And we also had a lot of people who needed housing. And so I looked at this and, much like other people around the country, was a little bit bewildered about, “Well, why doesn’t one of these people who is an unemployed former carpenter or whatever, who was working for a big company, got laid off because they’re not building tract houses anymore, why doesn’t that person wind up with one of these houses. And then, convert it into a duplex, and sell it or rent it out?”

Why is that kind of thing not happening? And then, conversely, why are these kind of nameless, faceless entities from outside the community buying all these up with cash? Essentially we have you know unoccupied houses sitting here with people who need housing and people who need jobs. What’s broken here?

Fitts: Because the housing policy was designed. Remember I was the lead finance or my company was the lead financial adviser when the engineering of the housing bubble began and the housing bubble was engineered top down. So it took many years and many complex regulatory and administrative changes in the government to engineer it. The large banks knew exactly what they were doing. This was a highly engineered.

And let me just give you an example. I think it was 1994, FHA [Federal Housing Administration] was working on its plan its long term strategic plan. And FHA had traditionally been the provider of mortgage insurance credit in the low-income neighborhoods. And at the same time, they were promulgating affordable housing regulations for Fannie Mae [FNMA, Federal National Mortgage Association].

And when the Fannie Mae rules were promulgated, I looked at the volumes and I was shocked. Because what they were saying was, literally, you are going to have to issue more mortgages in low-income neighborhoods than there were houses. People were going to have to be refinancing mortgages from prison, you know two or three times a year, to make the numbers. And it was impossible.

And I went to a very senior official at FHA, and I said “Look, this is not possible.” Because we were working on Community Wizard and doing the play space data. And I said you can’t issue more mortgages in a neighborhood than there are people or houses.

And she looked at me and said “Shut up, this is none of your business.”

Strong Towns: “Oh, you just watch us do it.”

Fitts: Right. So this was — the creation of a large foreclosed housing pool was planned, and it was also planned that you would have large investment entities pick this up and aggregate.

So between 2008 and today, if you look at the top 100 landowners in America, their holdings have doubled on average, but the plan was to centralize control of land in real estate in in places. And it was a plan.

So a lot of those properties were picked up by investment entities, which were planning on doing basically what investors want which is income, income-producing investments that would give investors a steady income, and of course they would make a lot of money and own the equity.

Strong Towns: This feels like, again, one of these things where it might be really good if you’re sitting at the Federal Reserve Bank reading GDP statistics or if you’re running for Congress or President and you want to be able to tout some top line numbers, but this seems really at odds with what is in the best interests of the Popsicle Index, of our local communities and their strength and resiliency.

Fitts: Here’s the question.

Let’s see if we take the top 1 percent. Are we going to run the economy to maximize their ownership and control, or are we going to run the economy according to the Constitution. And the problem is if you look at what they’re doing to centralize most of it is, one, it’s outside of the law, or some of their tactics are outside of the law

Two, it’s destroying productivity. Productivity right now in the United States is falling. This is probably, from the point of view of the top people are the pension funds, this is the most serious problem. We’ve played this game of centralization in a way that is now wrecking long-term productivity and trust in the economy.

So it’s outside the law. It’s wrecking productivity. And its dirty little secret is that it depends on a negative return on investment on the government money, and we’ve plugged that [hole] with just printing currency and running up the debt. How much further can you play that game?

Strong Towns: I’ve listened to people who said indefinitely. I don’t think that’s true. But why would someone suggest that?

Fitts: Well, you can do it indefinitely if your weaponry is sufficient and your teamwork is sufficient. So if you’re willing to depopulate, globally, sufficiently to do that, in theory you can.

Now I just look at my understanding of reality and everything I’ve seen, I don’t think it’ll work. But you know in theory if you could have superb teamwork and the weaponry was there you could do it.

Strong Towns: Let me ask you one more question on housing. It’s current to our time. We just got done with hurricane Harvey as you and I are recording this. We’re hours away from Hurricane Irma in Florida.

Let’s forget about federal flood insurance, which I think is just a crazy concept in of itself, the way it’s done. How can you buy a house in a floodplain and not have the holder of that mortgage demand that you be insured against floods? How does that even happen in our system?

Fitts: Because if, basically, if the institution or, if you have insurance, the insurer doesn’t require it, then it’s a no brainer.

Strong Towns: OK, let me let me give you two scenarios. Let’s say you’re the local bank and you’re holding onto this thing. And local banks don’t hold 30 year paper, but let’s say you’ve got a seven-year balloon. Aren’t they going to hedge their bets by requiring flood insurance? If you’re a local bank, could you take that much risk without it?

Fitts: Well if you’re a local bank, and there’s real risk of floods, you’re going to want flood insurance if it’s on your balance sheet. But, again, if it’s being pumped into through the federal credit system, through Freddie, Fannie and they don’t require it, you don’t care, and you’re not going to require it.

Strong Towns: So if you’re the local bank and you’re not planning to hold the mortgage more than 30 days while you sell it off to Fannie or Freddie or whoever, it doesn’t matter to you. It’s not something that’s going to ping — you just want to get the transaction for selling it.

OK, Let me ask you this then: if I am the pension fund who has bought a bunch of mortgage-backed securities, and I look now, today, and I realize a huge portion of my portfolio is under water in Houston, Texas. Do I care? I mean, does that bother me in any way? It seems to me there’s a strategy here, if I’m in Houston, and I have a huge mortgage and I’m literally underwater as well as being financially underwater now. Why don’t I walk away from that?

Fitts: Is Texas an anti-deficiency [state]? I don’t know. I should know but I don’t. I don’t remember offhand. But the reality is, as long as you’re not in danger of a deficiency judgment, you probably will walk away. Depends.

Here’s where the system has really fallen down. In 1997, I made a presentation. I had a subsidiary of Hamilton Securities. [We] had a relationship, a contract with the Department of Justice, and we were trying to work with pension fund leaders to see how we couldn’t turn the existing situation around, all of the things you and I are talking about now.

One of our goals was to ensure that the pension funds made their target investment rates so that the Boomer retirement was taken care of.

So their big question was “We have this big bulge of people moving through the system. How do we make sure we can achieve their targeted retirement goals?

So, a wonderful group of pension fund leaders. And I made a presentation about how we could take all the federal money going into Philadelphia, and turn it from a negative return investment to a positive and do it in a way where, with the place-based equity funds, the pension funds could make huge and hideous profits and thus be able to fund Boomer retirements.

And one of the people on the board was the president of CalPERS.

CalPERS is the largest pension fund in the country, the California public pension fund. So the president of CalPERS looked at me, he said “You don’t understand.” He got all excited, he said, “Oh my God, this could really work,” and then he froze and he said “you don’t understand. It’s too late. They’ve given up on the country. They’re moving all the money out starting in the fall.” And that was the fall of 1997, which is the beginning of fiscal 1998, when all the $18 trillion started going missing from the federal government.

Now, here’s what you need to understand after that meeting.

CalPERS proceeded . . . . You know, of course, we know they didn’t re-engineer the government money. Instead we had a huge housing bubble that generated a huge amount of capital that could then be moved and globalized and a whole bunch of other things. But here’s the thing.

CalPERS then proceeded to buy — and then subsequently lose a huge amount of money on, basically, mortgage fraud. But they knew. They knew. Now that is in complete violation of the law and fiduciary obligation.

And what I learned from that one example, that one event, was that, literally, you had a centralized governance that could tell a public pension fund, it could order a public pension fund to basically buy hundreds of billions of dollars of paper that the organization knew there was something wrong [with].

I come back to governance structure. We have a governance structure which is invisible. It’s secret. It’s massively misallocating capital from any standpoint of productivity or efficiency, as you and I would define it, and it seems to be able to get a wide number of players — throughout the capital allocation process and state and local governments — to behave in ways which were not only unlawful but economically irrational. And the question is what do we do.

Strong Towns: I don’t know if you read the book The Big Short.

The movie didn’t really do justice I think to this particular scene although it tried to. There’s that scene when they’re in Vegas, and they sit the guys down with the pension fund guy, the guy running the pension funds, says you know, I don’t care. I’ll buy every mortgage-backed security you guys issue, I’ll buy every insurance contract you issue. The guy stands up and says “Whatever that guy owns, I want the opposite on.”

I think the power of that scene was that, here was a person who was running hundreds of people’s future, people’s retirement, and the incentives that this person had had nothing to do with how good the quality of what they were purchasing.

It was very, very, short term. I can’t help but react to that by thinking that the centralization is like the core problem.

Fitts: Well I would say this: I would say the governance structure is the core problem. We are being governed by a system which is secret, and invisible, and it is centralizing, and it is using centralization. It is doing that centralization, among other things, by running the federal government outside the law.

So, in 2001, I went to speak with the chief of staff to the chairman of the Senate Appropriations Committee that appropriates, the subcommittee that appropriates for HUD. And it was a person I had never met before, so I being sort of trying to be discreet. And they said to me what do you think is going on at HUD.

And I said, I don’t know, what do you think is going on at HUD? And they looked me dead in the eye and they said HUD was being run as a criminal enterprise. And I said you know I don’t disagree because in fact HUD was being run his criminal enterprise at the time, and sorry it was in 2000, it wasn’t in 2001, HUD is being run as a criminal enterprise at the time.

But here’s what you need to know. HUD is run on a matrix structure. The New York Fed depository banks control the bank accounts along with the Department of Treasury. And then the Department of Justice is very controlling and instrumental and of course the intelligence agencies, unfortunately, are in there too.

And you can’t run what is a criminal enterprise unless . . . and the big defense contractors who run the information and payment systems . . . So you can’t run HUD as a criminal enterprise unless all those groups are doing so, which means, you know, the whole U.S. government is being run as a criminal enterprise. So, you know, it’s a big place, it’s a complex place, so I’m not trying to impugn anyone.

But here’s the big problem I have in trying to do anything locally in my neighborhood or your neighborhood. You know, it’s easier in wealthy neighborhoods than in poor neighborhoods.

But the management — every neighborhood is producing, is being drained financially, to produce wealth for this system. You know the system that is centralizing.

And the reality is, if I get 20 soccer moms together and we try and back hard narcotics trafficking out of the neighborhood, you know, that hiccups the cash flows of the central machinery, and the next thing we discover is the drugs are financing Tony Soprano who is financing James Bond and we’ve got black helicopters coming down on our heads.

And so in a model that is this centralized, you know nobody can be an exception. And you know we’re up against centralized forces, and so the question politically is how do you organize you know 3100 counties at a local level to say, “Wait a minute, you know, we’ve lost our local power, we need to get it back.”

So this is a power equation between local communities trying to run things productively and an invisible governance system, I think that’s why people call it the Deep State or . . . . There are various names for it, and a lot of us would just like to say “Look, I want to make my neighborhood wonderful, I don’t want to get into all of that.”

And the problem is, if there is an invisible tithe going from our neighborhood up to that governance structure, think of this as an invisible tax, and everyone of us are paying that tax, and the payment of that tax requires that we run things in a way which to us looks intuitively irrational.

How do we deal with that? Now what I just have to say is there are lots of ways of dealing with it, but I had a great pastor in Washington who was fabulous. He used to say “If we can face it God can fix it.”

The first thing we need to do is we need to face what’s happening, and we need to face our complicity, because the reality is we’ve been in the central banking warfare model, that’s what I call it, for five hundred years, and most people in America are beneficiaries of the model.

I’ve told you the red button story, right?

Strong Towns: No, I don’t think so.

Fitts: Do I have time for another story? This is my favorite story.

Never have an epiphany in the middle of a speech. So I was speaking, I have been invited by a wonderful health care practitioner to speak to a group that she is in called Spiritual Frontiers Foundation International, and they have a conference each year to talk about how we can evolve our society spiritually. A wonderful group of people, very serious, very responsible, pretty financially secure, hardworking people who take care of business.

Anyway, so there I am in Philadelphia giving a speech, and I’m in the middle of a speech, and I’ve been asked to speak on how the money works in organized crime and it’s really sort of a light, funny description of the intersection between illegal cash flows and Wall Street and Washington because they were trying to understand the corruption.

So I’m in the middle of a speech, and I’m talking about working for a reporter who was interviewing a spokesperson from the Department of Justice during the congressional testimony on the Dark Alliance allegations which was narcotics trafficking by the U.S. intelligence agencies into South Central L.A.

It was the crack cocaine epidemic. So the Department of Justice spokesperson tells the reporter that the U.S. economy launders $500 billion to a $1 trillion a year of all illegal cash flows. So that’s narcotics trafficking, that’s illegal gambling, that’s sex slavery that’s everything.

So I said to this wonderful group of 100 spiritually evolved people, what would happen if we stopped? What if we just said, you know, we’re not going to do that anymore. We’re going to be good Christians, and we’re not going to, you know good, spiritually evolved people, we’re not going to basically going to not do that. What would happen?

And they said, well you know, we would have a problem, because all that accumulated capital would leave the New York Stock Exchange and go to Zurich or Hong Kong. And you know, they might not want to refinance the government debt, so we might have a problem with the government budget. I said, OK, well let’s pretend there’s a big red button up here on the lectern and if you push that button you can stop all hard narcotics trafficking in your town, your county, your state, your country tomorrow, thus offending those people. Who here will push the button?

And out of 100 people dedicated to evolving our society spiritually, only one would push the button. And I said, why would you not push the button? And they said we don’t want our government checks to stop, we don’t want our taxes to go up, and we don’t want our 401(k)s and IRAs to go down.

So here’s the problem. Let’s say, against your better judgment, we make you president next year. Your political guy is going to walk into the office and say the American people just spent $1 to $2 billion to get you elected, they all want their government check, you know, they want their money. So you’re going to turn to your Secretary of Treasury. He’s going to say, well, you better be nice to the people who control what was, in 1998, $500 billion to $1 trillion of all illegal money, and now it’s much bigger.

And so, if the American people won’t push the red button, how are you supposed to push the red button? Because for you to make radical change you need 80 percent or more consensus in the general population, and you’ve only got 1 percent behind you.

So what the American people are basically saying to you is, we want our check and we want you to pretend. We want you to give us a story that allows us to feel good about ourselves, we’re good Christians, and we’re not doing all of this crazy stuff to get the money.

Strong Towns: It seems like there’s a there’s an end story there, that doesn’t bode well.

Fitts: The end story is that if you keep playing the red button you’re going to keep shrinking productivity, and shrinking the pie, and shrinking the economy. So think of it as if I’m taking drugs. I’m slowly destroying my body.

Well, it’s the same thing with financial addiction to narcotics money or criminal enterprise. We’re doing something that is financially not sustainable and we’re liquidating our intellectual capital, we’re liquidating our economy, we’re liquidating our human civilization.

So it doesn’t make us healthier. And what the problem was, not that nobody wanted to deal with it, because what people were saying is my fiduciary obligation is to my family, my business, my you know, and if I try and do this big overwhelming thing you know I won’t be effective. And so I’m not going to deal with it.

The problem was not that they would not push the red button, the problem was that they wouldn’t start talking about what is happening and saying, “OK how can we make money pushing the red button?

I call it turning the red button green. How can we make money pushing the red button? How can we generate fees for our friends pushing the red button? Because then we will push the red button. And in fact pushing it in an effective productive way will turn this around and make the economy start growing healthy again.

Strong Towns: Catherine Austin Fitts, president of Solari Inc. I’m going to give people the Web site here now Solari.com.

Fitts: So can I just say one thing, before I close? I really want to stress that, in 20 years of dealing with this issue, I’ve never seen anyone do a better job of going at the heart of the matter and turning it around than you and what you’re doing in Strong Towns.

By Ryan Gabrielson, ProPublica
Originally published as “Supreme Court Errors Aren’t Hard to Find


In 2007, a group of California Institute of Technology scientists working at NASA’s Jet Propulsion Laboratory filed suit against the venerated space agency. Many of the scientists had worked on NASA missions and research for years as outside employees. As part of efforts to tighten security measures after 9/11, in 2004 NASA started requiring outside workers to submit to the same kind of background checks used for federal employees, including questions about drug use. The scientists, some of the nation’s best and brightest, protested and resisted for years, and finally went to court to argue that the checks violated their privacy rights.

The case ultimately made it to the U.S. Supreme Court, where, in 2011, the justices unanimously sided with NASA. Justice Samuel Alito, who wrote the opinion, made a central point of noting that such background checks had long been commonplace in the private sector. Alito even cited a very specific statistic: 88 percent of all private companies in the country conduct such checks, he wrote.

It was a powerful claim in a decision with real consequences for American workers. It was also baseless.

Alito, it turns out, had borrowed the statistic from a brief filed in the case by the National Association of Professional Background Screeners. ProPublica asked the association for the source of its statistic. The association offered a variety of explanations, none of which proved true, and ultimately conceded it could not produce evidence that the 88 percent figure was accurate or say where it came from.

The decisions of the Supreme Court are rich with argument, history, some flashes of fine writing, and, of course, legal judgments of great import for all Americans.

They are also supposed to be entirely accurate.

But a ProPublica review of several dozen cases from recent years uncovered a number of false or wholly unsupported factual claims.

The review found an error in a landmark ruling, Shelby County v. Holder, which struck down part of the Voting Rights Act. Chief Justice John Roberts used erroneous data to make claims about comparable rates of voter registration among blacks and whites in six southern states. In another case, Justice Anthony Kennedy falsely claimed that DNA analysis can be used to identify individual suspects in criminal cases with perfect accuracy.

In all, ProPublica found seven errors in a modest sampling of Supreme Court opinions written from 2011 through 2015. In some cases, the errors were introduced by individual justices apparently doing their own research. In others, the errors resulted from false or deeply flawed submissions made to the court by people or organizations seeking to persuade the justices to rule one way or the other.

Some of the mistakes were technical or arguably minor, and it is difficult to determine with certainty if they played a vital part in the court’s reasoning and final judgments.

But the NASA case was not the only one where a mistake involved a core aspect of the court’s ruling on an issue with widespread ramifications.

In 2013, the court issued a unanimous ruling in a case involving Fourth Amendment protections against unreasonable searches by the police. In the case, the court determined that when a drug-sniffing dog signals it smells an illegal drug from outside of a car, police have probable cause to search the entire car without a warrant. Justice Elena Kagan, who wrote the opinion, took on one of the central fears of those worried about innocent people being caught up in such police searches.

Kagan argued that the risk of “false positives” — instances in which a dog might mistakenly identify the presence of drugs — should be based on whether the dogs had been formally certified by police groups as reliable in their performance. She cited material from the Scientific Working Group on Dog and Orthogonal Detector Guidelines to support the court’s position.

However, none of the largest certification groups actually test for the risk of false positives. ProPublica reviewed standards and testing records and interviewed several experts on drug-sniffing dogs, including the head of the working group Kagan cited. He said her confidence in the certification process was misplaced.

“It’s important that it’s not just taken at face value to say just because the dog’s certified with a national organization that means they’re reliable,” said Kenneth Furton, the chairman of the working group, who now is provost at Florida International University.

Karen L. Overall, an applied animal behaviorist who served for a time as the co-chair of the dog working group, said she resigned from the group because she couldn’t endorse guidelines that didn’t insist on statistically measuring the reliability of police dogs.

ProPublica provided its findings on the seven mistakes to the court in early September and asked for interviews with Roberts and the other four justices who wrote majority opinions containing factual errors. The justices declined the requests and did not respond to any of the specific reporting. In an email, a spokeswoman said that, by policy, the court “does not comment on its opinions, which speak for themselves.”

In interviews, former law clerks for Supreme Court justices, including some who argue cases before the high court today, said any errors were surely accidental, produced by talented and devoted people doing complex work under daunting circumstances.

“The court, like any institution, never wants to get it wrong,” said Erin Murphy, a former law clerk for Roberts and now a lawyer with the firm Kirkland & Ellis.

The court’s rulings have been fiercely debated from the start of the republic, but most of the scrutiny has been aimed at justices’ legal reasoning or political bent. The risk of errors — that could cause embarrassment or have lasting legal consequences — has occasionally prompted calls for action. Thirty years ago, Kenneth Culp Davis, a leading legal scholar, went on a speaking tour calling on the court to establish its own research operation.

“When the court lacks the needed information, it usually makes guesses,” Davis told an audience at the University of Minnesota in 1987. “Much of our law is based on wrong assumptions about legislative facts.”

Supreme Court opinions contain two types of facts: “adjudicative” facts, which deal with legal procedure and precedent, and “legislative” facts, which are assertions about the outside world and how real life works.

Former Justice Harry Blackmun conceded in a 1984 opinion that there were limits to the court’s ability to be 100 percent right when it came to real-world facts.

“Like all courts,” Blackmun wrote, “we face institutional limitations on our ability to gather information about ‘legislative facts.’”

Still, this type of information can be important, even decisive, to rulings. In a 2015 opinion, Alito upheld an Arkansas inmate’s right to grow a beard while in prison in adherence to his Islamic faith. Alito accurately wrote the inmate’s belief that his religion called upon him to wear a beard was common to several schools of Islam, which further justified legal protections for the practice.

At least five previous errors in Supreme Court rulings have become public during the past decade, all involving legislative facts.

In a 2002 opinion, Kennedy wrote that untreated sex offenders commit new sex crimes at a startling rate, “estimated to be as high as 80 percent.” The statistic came from a magazine article, which did not provide a source. The article’s author has admitted to legal scholars the number was a guess. Studies of sex offenders indicate the true rate is a small fraction of the one Kennedy used

A 2008 decision, also by Kennedy, said that within the U.S. criminal justice system, only six states allowed death sentences for defendants convicted of rape committed against a child. That was true, but incomplete. Such crimes were also punishable by death in military courts, under a law passed by Congress two years earlier. The author of a military law blog exposed the omission days after the opinion came down.

Perhaps the most alarming of the previously exposed inaccuracies came in an immigration case, Nken v. Holder. In 2008, the solicitor general’s office, which represents federal agencies before the Supreme Court, misled the justices about a key fact. The office said in a legal brief that the government routinely brings back immigrants it has deported if they later win their cases to stay in the U.S. The court’s opinion repeated the claim.

Records obtained by immigrant legal advocates at New York University show the government does not readmit people who’ve been wrongly deported, and the solicitor general’s office knew this.

Since certain parties like the solicitor general’s office have special standing with the court, errors in their arguments are more likely to be repeated in justices’ opinions, said Nancy Morawetz, the New York University law professor who exposed the falsehood in Nken. “It’s a highly imperfect process.”

In 2003, the court ruled in another matter, Demore v. Kim, that the federal government can detain certain immigrants facing deportation without bail for the entire time courts take considering their cases. Former Chief Justice William Rehnquist described immigrants’ time in cells as “brief,” lasting four months on average and sometimes less as judges worked through the appeals.

The truth was far different. When federal officials correctly analyzed their data, the average time immigrants spent in detention was nearly 13 months, triple what Rehnquist wrote. The solicitor general notified the court of the inaccuracies in August 2016; yet, to date, the error remains in the official opinion on the court’s website.

ProPublica decided to examine the court’s record for factual accuracy after the erroneous sex offender statistic became news earlier this year.

In the course of our examination, ProPublica vetted 83 majority opinions randomly selected from a five-year period, 2011 through 2015, and focused only on legislative facts. Just 24 of the 83 opinions contained such facts.

The research, of course, was far too limited to calculate an error rate for the court. That said, there were plenty of mistakes — seven in 24 opinions with legislative facts.

Our review showed justices appointed by both Democratic and Republican presidents had inaccuracies in their opinions. Three of the mistakes were made by Kennedy, long considered the court’s swing vote.

The chance that justices might rely on suspect material presented to them as part of cases has exploded in recent years. A virtual industry now exists to funnel information to the court through filings called amicus briefs. These come from people or groups that are not parties in a case before the court, but advocate for justices to rule a certain way, frequently by offering their special expertise on the subject at hand. Amicus briefs can be helpful to justices, who need to master an imposing host of issues. They are also risky because courts do not always scrutinize the briefs for accuracy.

Lawyers can introduce inaccuracies as evidence, especially on complex subjects, said Bryan Gowdy, a Florida appellate attorney who has argued before the Supreme Court. Such errors might be more understandable if the stakes weren’t so great.

“When you’re in a case where Betty Smith is suing the Jones Pharmaceutical company, and there’s a mistake like that, well that affects Betty Smith and the Jones Pharmaceutical company,” Gowdy said. “But when you’re at the U.S. Supreme Court and they make a mistake like that, it affects the entire country.”

Through most of the Supreme Court’s history, justices used statutes and legal precedents in their rulings, leaving out facts about the outside world. That shifted a century ago when Louis Brandeis joined the court, bringing a philosophy that judges needed to consider how life works in addition to what the law says. Brandeis, continuing a practice he had pioneered as a lawyer and scholar, regularly reviewed studies he found himself and included their results in opinions.

But adding these kinds of facts introduces the risk of errors. As a result, Davis, the legal scholar, floated the idea of the Supreme Court creating its own research team, modeled on the Congressional Research Service. The service is part of the Library of Congress and has a staff of trained researchers that pursues answers to lawmakers’ questions.

The justices did not follow Davis’ advice.

The court’s law library is a highly regarded and invaluable resource for justices, said Allison Orr Larsen, law professor at the College of William & Mary and former clerk for Justice David Souter. But it is not built to fact check briefs or the court’s opinions.

Every proposed solution for factual errors also causes problems, said Gerald Rosenberg, a University of Chicago professor of law and political science. Rosenberg is the author of “The Hollow Hope,” a hotly debated book arguing the courts are ineffective at propelling societal change.

A court research service suggests the justices are writing laws, he said, not rulings based on the law. At the same time, Rosenberg said ProPublica’s reporting indicates that the justices remain vulnerable to mistakes, both large and small.

“What do we do with the fact that they’re either consciously playing fast and loose,” Rosenberg said, “or they’re just not aware?”

Here are summaries of six of the recent Supreme Court opinions in which ProPublica found errors. The seventh will be the subject of a subsequent article.


A Sampling Of Errors

NASA v. Nelson

In 2011, the justices unanimously held that independent contractors working for the federal government could be subjected to background checks that ask open-ended questions about their private lives, including drug use. Federal employees submitted to such checks. It was the norm in the private sector, too.

At least that’s what Alito asserted in writing the opinion for the unified court. “The questions challenged by respondents are part of a standard employment background check of the sort used by millions of private employers,” Alito wrote.

The court received eight amicus briefs in the case, seven of them from privacy, civil rights and labor advocates supporting the contract employees. The one brief backing the federal government came from a collection of private investigation and background check industry groups.

The industry groups argued this kind scrutiny is routine, and essential in protecting the government and private companies from bad hires.

The filing included a section detailing who submitted the brief. One of the industry groups was the National Association of Professional Background Screeners, which said in the brief that its “clients are among the more than 88% of U.S. companies that perform background checks on their employees.”

The filing doesn’t say where the percentage cited by the background screeners comes from, a deficiency first documented by Larsen, the law professor at the College of William & Mary, in her study of the high court’s use of amicus briefs.

In truth, research into employment screening is scant, and hard numbers nonexistent.

The Society for Human Resource Management has surveyed its members about backgrounding practices multiple times and its reports are the only publicly available information on the subject. The society published survey results in January 2010, shortly before the background check groups filed their brief. The society’s results show that 92 percent of those surveyed check applicants’ references and 74 percent said they perform criminal background checks, but the results don’t include the 88 percent figure.

The society’s survey also reflects practices of a small subsection of American businesses, gathering nearly all its responses from companies that employ 100 or more workers. Less than 2 percent of U.S. companies are that size, according to Census Bureau data.

ProPublica asked the National Association of Professional Background Screeners to provide the basis of its “more than 88%” figure. Melissa Sorenson, the association’s executive director, initially said the statistic was from the human resources society’s survey. After ProPublica informed her the survey did not include that number, Sorenson gave two answers she said were based on her conversations with a lawyer who represented the association on the brief.

First, Sorenson said the association got an advance look at the human resources society’s survey results, “so we were running with preliminary data that wasn’t public.” Preliminary results were slightly different from the published report, she said.

But Michael Aitken, the human resources society’s vice present for government affairs, said he couldn’t find any record his organization had provided anyone with preliminary survey results. And neither the preliminary nor the final results included the 88 percent figure, Aitken said.

Then Sorenson said the background screener association calculated the number by combining data from two separate questions in the human resources society’s survey. One question asked about background checks on job applicants, the other about checks on existing employees, she said.

The survey only asked about checks performed on job applicants, the published results show. Asked again for an underlying source, the background screeners association responded that it had no answer.

“Unfortunately, we have not identified anything in our records to shed further light,” a spokesman said by email.

ProPublica found the background screeners association featured the 88 percent number in its lobbying materials nine months before the human resources society’s survey that included the background-check question was conducted.

Larsen, the William & Mary law professor, said she’d assumed the statistic had some basis in reality. “This is much worse than I expected,” she said.


Arizona v. U.S.

Arizona’s state Legislature enacted a law in 2010 to enlist local police in immigration enforcement. It made it a state crime to be in the U.S. illegally and to seek work without legal documentation.

The law required Arizona’s sworn police officers to verify the citizenship status of all people they detained or arrested. And it allowed officers to arrest without warrants people they believed were undocumented immigrants. The federal government sued to block the law, arguing the state law infringed on its powers to manage the nation’s immigration system.

In 2012, the Supreme Court largely sided with federal officials, and struck down most of Arizona’s law. However, it left intact the provision requiring police to check the citizenship of people arrested or detained.

Kennedy wrote the majority opinion. In addition to his legal reasoning, Kennedy argued that the citizenship checks were defensible because of the threat undocumented immigrants presented to Arizona. Specifically, he wrote, “in the State’s most populous county, these aliens are reported to be responsible for a disproportionate share of serious crime.”

Kennedy sourced that statement to a report from the Center for Immigration Studies, a nonprofit that advocates for reduced immigration and strict enforcement. The justice described the report as “estimating that unauthorized aliens comprise 8.9 percent of the population and are responsible for 21.8 percent of the felonies in Maricopa County, which includes Phoenix.”

The center gathered those figures from other sources. The percentage of felony crimes committed by undocumented immigrants originated in a 2008 study published by former Maricopa County Attorney Andrew Thomas, the elected prosecutor. Thomas vehemently opposed illegal immigration, and made local enforcement a top priority. He did not respond to several calls and emails seeking comment.

The study, titled “Illegal Immigration,” determined undocumented immigrants made up 18.7 percent of the individuals sentenced for felony convictions in Maricopa County court in 2007, not 21.8 percent. The 18.7 percent figure, to be sure, is still disproportionately high compared to undocumented immigrants’ share of the population.

The higher number, it turns out, was an estimate, but it is unclear exactly how Thomas produced it. Data tables in the study show 18.7 percent. (Thomas’ study included only 2007 because his office began collecting data on defendants’ immigration status that year.

Even the lower percentage overstates what portion of the county’s convictions for serious crimes were attributable to undocumented immigrants.

Underlying data published with the study breaks out convictions by the most serious offense involved. Thomas took an aggressive approach to three offenses: smuggling, impersonation and forgery. He prosecuted these cases involving undocumented immigrants as felonies, though they could have been reduced to misdemeanors.

In the cases of smuggling, Thomas went further and prosecuted undocumented immigrants being smuggled into the U.S. as “co-conspirators” in their own smuggling. This turned a group previously treated as crime victims, or at worst as human cargo, into smugglers. No other county attorney in Arizona used the statute that way. Criminal impersonation is the use of another person’s identification information, such as a Social Security number on a job application. Arizona’s forgery statute makes it a felony to possess an identification card with false information.

In 2007, more than 1,500 undocumented immigrants in Maricopa County were convicted of the immigration offenses that Thomas targeted, including 339 for smuggling.

Except for smuggling, impersonation and forgery, undocumented immigrants made up 13.8 percent of defendants convicted of felonies that year.

Thomas commissioned the study to dispute local media reports that said undocumented immigrants were not an outsized share of criminal defendants. “This landmark research belies the claim that illegal immigration and crime are not related,” Thomas said in the press release announcing his results. “To the contrary, our border crisis is directly fueling Arizona’s crime rates.”

Five weeks before Kennedy published Thomas’ statistic in a Supreme Court opinion, Arizona disbarred Thomas. The state bar’s probable cause report details an array of misconduct during his tenure as county attorney, much of it involving “dishonesty, fraud and deceit.”


U.S. v. Windsor

U.S. v. Windsor was one of several landmark Supreme Court decisions recognizing constitutional protections for same-sex marriages. Kennedy wrote the 2013 majority opinion ruling that the Defense of Marriage Act, which limited marriage to unions between one man and one woman, violated same-sex couples’ right to equal protection under the law. As a result, same-sex couples cannot be deprived of federal benefits.

Part of Kennedy’s argument was that the federal government had long treated all marriages authorized by the states as legitimate. This has been the practice even though marriage laws differ from state to state. For example, he wrote, “most States permit first cousins to marry, but a handful — such as Iowa and Washington … prohibit the practice.” Kennedy listed only the two states’ marriage statutes as sources.

The primary elements of his statement are false. Half the states prohibit marriages between first cousins, Iowa and Washington among them.

Five states (Arizona, Illinois, Indiana, Utah and Wisconsin) severely limit marriages between first cousins, requiring the couple to be infertile or both individuals to meet minimum age requirements that range from 50 to 65 years old. Maine requires that first cousins obtain a physician’s certificate of genetic counseling about health risks to children before receiving a marriage license.

A minority of states, 19, permit the practice without limits. At the time Kennedy wrote the opinion, the National Conference of State Legislatures had a webpage tracking marriage between first cousins by state, which any internet search engine could have found.

The error was not significant to the ruling, as Kennedy focused on how the Defense of Marriage Act discriminated against same-sex marriages, which was the law’s intent.


Florida v. Harris

The Fourth Amendment protects people from unreasonable searches by the government, but it’s always been ticklish to define “unreasonable.” In 2013, the Supreme Court considered the use of dogs to detect drugs and justify searches.

A Seminole County, Florida, sheriff’s deputy had pulled over Clayton Harris’ pickup truck one day in June 2006 for an expired registration tag. The deputy saw an open beer can in the cup holder and noted Harris was shaking and breathing rapidly. The deputy asked for consent to search the truck; Harris said no. So the deputy brought out his drug-sniffing dog, Aldo, to smell the outside of Harris’ truck. Aldo signaled that drugs might be somewhere in or near the driver-side door.

The deputy found ample ingredients to make methamphetamine inside the truck and arrested Harris for possession of illegal amounts of pseudoephedrine. But there were no drugs that Aldo was trained to detect. Harris’ defense lawyer asked a state court in Florida to toss out physical evidence from the truck search, because it was warrantless and without probable cause. The dog’s “alert” was unreliable, the lawyer argued. The state court disagreed.

Several years later, the Supreme Court took up the appeal of the Florida case. It upheld the state court’s finding unanimously.

Kagan, in her opinion, discussed how to assess whether alerts from dogs to their police handlers should be trusted. Her concern about mistakes was evident. She expressed skepticism of records detailing how dogs perform while on duty in the field.

“Errors may abound in such records,” she wrote.

Performance records from the field can’t track times a dog failed to smell drugs present in a car, she noted. And instances when a dog alerted handlers to the smell of drugs but the search found none might wrongly suggest the dog was at fault. What if, Kagan wondered, hours earlier there had been a bag of marijuana or heroin in that spot? The dog might have performed perfectly and yet no arrest resulted.

“The better measure of a dog’s reliability thus comes away from the field, in controlled testing environments,” Kagan wrote.

In such a controlled setting, tests could be done to see if a dog was vulnerable to false positives, she wrote. In a footnote, she attributed this confidence to the Scientific Working Group on Dog and Orthogonal Detector Guidelines. The working group is one of 19 assembled by federal agencies to establish best practices and support research to improve specific areas of forensic science.

Quoting from a set of guidelines published by the group in 2010, Kagan wrote that “a dog’s reliability should be assessed based on ‘the results of certification and proficiency assessments.’” That way, she concluded, “you should know whether you have a false positive.”

Controlled tests, to be sure, provide advantages. But the nation’s largest police dog certification organizations do not measure the risk of false positives in their tests. Some altogether exclude inaccurate alerts from their evaluations, instead scoring dog teams only on how well they find drugs hidden in cars and rooms.

Earlier this year, Overall, the animal behaviorist who resigned from the working group, published a report detailing how to assess whether dogs can reliably detect a specific scent. “The minimally acceptable test design is 40 boxes (20 empty and 20 with target),” she wrote. In the context of drug detection, dog teams need to interact with 20 items or areas that contain drugs and 20 that contain none, which are randomly spread throughout a test. That is the minimum to determine a dog’s potential error rate.

Police dog certifiers generally include a small number of “blank searches” in their tests, instances where a dog might indicate the presence of drugs where there are not any.

The National Police Canine Association, for instance, has dog teams search seven areas, four with drug “finds” and three without. However, it does not count false positives in its scoring. “K-9 Team must locate at least three (3) out of the four (4) finds to certify,” the association standards state.

False positives are barely included in the United States Police Canine Association’s evaluation, and by themselves can’t keep a dog team from being certified, scoring forms show. Inaccurate alerts are considered along with the dog’s perceived attentiveness and whether the dog peed during the test. Only false negatives — missing a hidden drug sample — can cause a team to fail.

The National Narcotic Detector Dog Association hides four drug samples in four rooms, its standards state, without any blank search areas. A dog team fails certification if it twice alerts handlers to drugs in the wrong spots before it finishes locating the four real samples.

Tests like these prove nothing, Overall, the behavioral scientist, said, and their results are just “random chance.” Representatives from law enforcement, she said, successfully opposed adding tougher testing requirements to the guidelines.

To many working group members, Overall said, “having a conviction reversed or having to use a more stringent evidence collection standard was a problem.” ProPublica provided Overall’s comments to the working group’s chairman, but he did not give a response.


Maryland v. King

Kennedy wrote the 2013 majority opinion in Maryland v. King, which ruled it was constitutional for police to take biological samples from arrestees by swabbing the inside of their cheeks.

Molecular biology was central to the case, and justices couldn’t avoid dealing in scientific facts. Kennedy wrote a brief description of DNA analysis for human identification, just seven sentences, and referenced his source, “Fundamentals of Forensic DNA Typing,” a textbook by John Butler, a top official at the National Institute of Standards and Technology.

But Kennedy made multiple mistakes in those few sentences, inaccurately defining scientific terms and asserting that DNA analysis is so accurate that it can literally match a single person with no chance of error.

In fact, while DNA profile matches can identify people with great precision, they cannot do so with absolute certainty. The limits of DNA in that sense were described amply in the textbook Kennedy referenced.

Butler, the textbook’s author, told ProPublica that Kennedy’s sentence overstated the reliability of DNA analysis.

“To be able to say, ‘It is that individual,’ you’d have to sequence the entire genome,” Butler said. “And even then, you could have an identical twin.”

The error was not critical to Kennedy’s argument, which emphasized that cheek swabs are not invasive, and that the DNA material taken primarily contains identifying code rather than genetic traits.


Shelby County v. Holder

Congress passed the Voting Rights Act in 1965 to stop several southern states from denying African Americans their constitutional right to vote. The law initially required six states — Alabama, Georgia, Louisiana, Mississippi, South Carolina and Virginia — to get federal approval for their election laws and any contemplated changes. The original act expired after five years, but Congress renewed the landmark civil rights law repeatedly and, in 2006, extended it another 25 years.

In a 2013 case called Shelby County v. Holder, the Supreme Court, in a 5-4 decision, determined that it was no longer necessary to keep the six states under federal oversight. America had changed, the court concluded. Chief Justice John Roberts, writing for the majority, called the “extraordinary and unprecedented” requirements of the Voting Rights Act outdated and unfair.

To illustrate his point, Roberts constructed a chart and published it in the body of the opinion. It compared voter registration rates for whites and blacks from 1965 and 2004 in the six southern states subject to special oversight. Roberts assembled his chart from data in congressional reports produced when lawmakers last renewed the act. The data displayed clearly that registration gaps between blacks and whites had shrunk dramatically.

But some of the numbers Roberts included in his chart were wrong.

The chart suggested that rates of registration for blacks in 2004 had matched or even outstripped those for whites. But Roberts used numbers that counted Hispanics as white, including many Hispanics who weren’t U.S. citizens and could not register to vote, which had the effect of inaccurately lowering the rate for white registration.

There is no question great strides had been made in black voter registration in Georgia, which reached 64.2 percent in 2004. However, white registration was 68 percent, not 63.5 percent, as Roberts’ chart claimed. The rate of registration for whites exceeded that of blacks by 4 percent, rather than trailing it.

Similarly, the chief justice’s chart asserted that in Virginia, the rate of registration for whites was just 10 percent higher than the rate of registration for blacks, a narrowing that would have reflected enormous progress. But the actual gap, removing erroneously counted Hispanics, was 14.2 percent.

The argument Roberts was making — that the progress in southern states had been so substantial that there was no longer a need for the U.S. Department of Justice’s exacting oversight — might have remained persuasive. But the data he used as evidence was not true.

How did Roberts arrive at his numbers?

Roberts had relied on a report generated by the Senate Judiciary Committee from 2006. The committee’s staffers went to the right source: the U.S. Census Bureau’s post-election survey in 2004. The survey provides estimates of voter registration and turnout by state, gender, race and ethnicity, and citizenship.

But the staffers went to the wrong set of numbers for white voters. They pulled voter registration rates for “white alone” to represent white voters, perhaps unaware of how the census bureau handles race and ethnicity.

“White alone” means all people identified as being part of the white racial group. The census considers ethnicity separately from race. If a person identifies as Hispanic, they will also be counted as part of at least one racial group (i.e. white, black, Asian, Native American, other).

Most Hispanics are counted as “white alone” under race. Which is why the Census Bureau provides separate numbers for the category “white non-Hispanic alone,” usually right next to the “white alone” figures.

To those familiar with Census Bureau data, the difference is well understood. Researchers frequently convert the Hispanic-origin ethnicity into its own racial group when analyzing disparities. The Census Bureau itself does so in reports using its election survey data.

Roberts’ chart, however, did not use generally accepted definitions of race.

A fascinating thinker (Catherine Austin Fitts) in conversation with Chuck Marohn of Strong Towns:

Chuck Marohn, Strong Towns: A little bit about Catherine Fitts, who’s our guest today. She’s formerly managing director and member of the board of directors of the Wall Street investment bank, Dillon and Company and Federal Housing Commissioner at the U.S. Department of Housing and Urban Development in the first Bush administration. She was also the president of Hamilton Securities Group prior to that. I’m really excited to continue our conversation and be the one asking the questions this time. Catherine, welcome to the Strong Towns podcast.

Fitts: Thank you Chuck. It’s really a privilege. You know sometimes I feel when I talk with you, all I can do is say “you’re right, you’re right, you’re right.”

Strong Towns: That’s very kind. I’ve been listening to more of your stuff since we chatted. I don’t know if everybody in my audience here heard our interview we did on the Solari Report. I want you to, if you don’t mind, talk a little bit about your time at HUD and maybe we can start with the conversation about affordable housing.

Fitts: Well, when I first got to the Department of Housing and Urban Development, I spent the first month being lobbied by mortgage bankers, home builders, various people interested in credit flowing into communities. And I developed a free-floating anxiety — I’m a very intuitive person – “Something is wrong. something’s wrong, something’s wrong” and finally what I realized was, if you look at how our financial system is currently organized, everybody could get their stock to go up by doing something that increased production, whether it’s housing or consumer goods. But nobody could make money, or there are very few people could make money in the stock market by making communities more wonderful.

And I said, you know, there’s something really wrong — everybody’s looking at the Dow Jones Index and I came up with something called the Popsicle Index to express the well-being of a community. And I thought, well, you know, how can we rebalance the financial system so that we could have a positive relationship between the health of communities and the financial markets and financial investors and equity. So I went to work and I found out that there were a couple of obstacles.

One was, and I would say this is the biggest, is that the federal government money pouring into communities — and I should just step back and say I look at America as, sort of, 3,100 counties. So if you look at our federal budget by county for 3,100 counties, what you discover is that government money has what I call a negative return on investment. It’s really funny. It’s basically coming to very similar conclusions as you did. But I’m using financial terms and you’re using engineering terms. But people were putting money into stuff that made the economics worse.

And so the question was OK well how do we turn that around?

And so the first thing I discovered was you had an infinite number of constituencies who were financially dependent on the current model. And that was number one.

Number two was that there was very little transparency about the government money. You and I can go to the White House budget and we can download lots of information that shows us how the money works everywhere. But there’s no what I would call actionable intelligence, because we can’t see what’s going on in our neighborhoods. So I decided, you know, I’ve had it with this. When I left HUD, I started an investment bank and I said “I’m just going to take my own business money, the money, the profits my companies generating, and I’m going to build a software tool that will allow us to take all the publicly available data from the federal government, by agency, by program, from OMB, downloaded into — relational databases have come along, so suddenly this is possible — and I’m going to look at how the money works by neighborhood so that we can get actionable intelligence. And one of the things that happened, we got hired back on competitive bid to the department to be their financial adviser and adviser on about $12 billion of loan sales. We did about 10. And then when we got hired back, it gave me an opportunity to download and look at all the mortgage data. HUD is the richest depository of mortgage data on the United States, in the United States. And we download it all when we started to look at it by neighborhood.

And what I discovered was that we were that HUD was spending $250,000 per unit to build or rehab public housing in neighborhoods where $50,000 could buy and rehab a single family property in the FHA foreclosed property. And if you look at optimizing the housing stock and credit and mortgages that the federal government owned by place, not just FHA, but VA, Farmer’s Home, Fannie, Freddie. . . . You know, if you looked across the board at everything the taxpayer was paying for by housing by place, there was enormous opportunity to improve the economics. Why spend $250,000 to create one unit of housing when you can create four or five.

So I’m an optimizer and I very much wanted to sort of optimize the budget. So the story that you mentioned was I went to the assistant of the person who ran the program that was doing the $250,000 and I said “Look, look at these numbers you know look at in Chicago, New Orleans, all these different places. You know if we just re-optimized the money to get the best local results for the place we could generate four or five times the amount of housing as now,” and the total numbers were profound.

And she turned bright red got really angry and said “But how would we generate fees for our friends?”

Strong Towns:  Yeah, I just wanted to hang there for a second because it is such a profound statement.

Fitts: What you’re saying is I want children to be homeless so our friends can get fees. Now I just have to step back and bring up a new factoid that I didn’t have when I spoke to you last. I don’t know if you saw this, it just was published this week, John Stanton, who I’m a great admirer of, he’s got something called the Stanton Foundation, he said “Look, the Gates Foundation is publishing all these great global health care statistics, but if we’re going to be in integrity, we need to look at our own backyard. And he funded $300,000 to do an analysis of health data within just the immediate Seattle area. And what it shows is the life expectancy spread between the wealthy neighborhoods and the poor neighborhoods was 14 to 19 years. Now that’s what I call actionable intelligence.

And what I will tell you is if — we built a software tool that the federal government seized and destroyed — but if you had Community Wizard or a tool like that, and you overlaid it, what you would see is there is a direct correlation between the amount of subsidy that the federal government is pouring in and life expectancy

Strong Towns:  And that subsidy is inverse, or directly?

Fitts:  Both. Both. So it’s a very complex equation when you get down to seeing how it all works. So, for example, one of the big subsidies is quantitative easing, and trying to bring that down on a place basis is a very complex thing. Now of course you can pro forma for the population, how much per person, but you know so it can get very complex when you get out of concept very fast.

But the reality is it’s incredibly important to look at our government investment by place, and at a level where a neighborhood can take action. But, more importantly, I think it’s really important if you’re as interested as you and I are turning that government investment into a positive return on investment, because that’s really what we need to do, we have to grapple with how can we make sure all of our friends generate fees based on performance. The problem is right now they’re generating fees, but it’s not based on a metric that improves the economy. And that’s what. We want our places to be wonderful. And so part of that is setting up, whether it’s a governmental process or a private sector process, that says we’re going to allocate capital according to performance as opposed to privilege.

Strong Towns: I wanted to drill down on that, the friends thing, and the notion that you were, as a newcomer, deeply lobbied in advance. My days doing engineering work, I was on the other side of that. We had really good compelling narratives as to why the money should continue to flow, essentially to us, because you know we were taking care of these cities, building these engineering projects. How does this come about? I’m assuming that these are not you know evil self-centered greedy people. What is the mechanism that happens, you think, that gets us to a point where the fees for our friends becomes a real narrative that we’re concerned about?

Fitts: This is a complex phenomena but let’s just dive into one example. Let’s take a community thirty years ago, and let’s say that community has a hundred small businesses making a million dollars in revenues each at a 10 percent profit margin. So you have 100 million revenues in the in the town and 10 million in profits and all the equity is owned locally or regionally.

And so if these are all private businesses they’re not publicly traded. And if we were going to appraise them and buy them, if somebody is going to come in and buy the local dry cleaners, let’s just say that they’re that they’re trading in a multiple of five times earnings. So we would value their business if they’re each making a million dollars. We would value their business at five million. And so, you know, so the total equity value business equity value in the place is 50 million. OK so I’m a senator, and I’m a senator from that state, and let’s say I’m real close to the chairman of a company and that company let’s say it’s a restaurant franchise. That company’s stock is trading at 10 to 20 times earnings and let’s say of those 100 businesses, 10 are restaurants. And so they’ve got a million dollars of restaurants. So basically, let’s say that 50 million of equity, 10 million of it is restaurants. If I can get that $10 million moved over to these to this publicly traded company, their value doubles or triples.

Strong Towns:  Right, because instead of five times earnings you’re now at ten times earnings.

Fitts: Right. Basically if I can engineer rules and regulations, zoning, all sorts of state, local, and federal stuff, and get those revenues and that income flowing through a high P/E company, then that company can afford to fund my political campaign.

Strong Towns: Wow.

Right. Now it gets even better so. So let’s look at these small companies. Let’s go back to our hundred small businesses. All of them are required by law, or encouraged by law to put a percentage of their earnings in 401(k)s and IRAs for their employees. and employees are doing IRAs they’re doing 401(k)s, or defined benefit plan.

So they take a portion of their profits they put it into those vehicles, or they pay taxes and then the local municipality, you know, puts a portion of that money, that tax money, into pension funds. So, between the private retirement and the public retirement, those businesses are funding a whole series of different retirement funds directly or indirectly, that are then required by law to only put their investments into the 10 to 20 P/E multiple companies. Who are then going to come in and take over their business, thus generating more cash for that part of the economy.

So my profits are financing a machine that’s destroying me.

Strong Towns: Let me tell you a story. And then I would like you to give me your reaction to it, because I suspect again will be very similar but with different backgrounds and understandings.

We don’t have Dunkin Donuts here in Minnesota until two years ago. And when Dunkin Donuts came to the state they said we’re going to open 50 franchises in Minnesota. And if you want to be an owner one of these franchises “Here’s what you need to have.” Now, before I tell you what you need to have, note that there’s no simpler business than a donut shop. If you’re a local young kid who wants to get started in something, you’re not maybe not going to go to college, or maybe with college and a business degree — you need a deep fryer or a counter and a cash register. Really, it’s that simple. This is a pretty low capital type of thing. And when we think about people bootstrapping themselves and getting things something started and starting with nothing and building up to something, a donut shop is a pretty easy. But in order to start a Dunkin Donuts, to get a franchise, you need a half million dollars of net worth, and half of that quarter million dollars has to be liquid net worth, so cash sitting around.

I looked at that and I said “Why would anybody start a donut shop? Why would anyone in their right mind go out and take on their own risk of starting Katherine and Chuck’s donut shop? Why would you ever do that? Because as soon as Dunkin Donuts comes to town, they’re going to get the tax increment financing subsidies, they’re going to get all the stuff that the local governments do to get them in. They’re going to be on the federally subsidized frontage road, and you’re going to get wiped out. Tell me the financial the other side of that. What am I either missing or not grasping, or what else is there?

Fitts:  OK, so here’s the other side of that. When I left that serving as Assistant Secretary of Housing I started Hamilton Securities Group. Having looked at this exact phenomenon, I said, “Look now with the Internet you can create a venture pool for a community.” So, I’m a big believer in A share, B share plans. So you create a governance structure of the local leadership. OK so this is just like the Harvard endowment or the Yale endowment does it. You have a private corporation. It’s a self-perpetuating board. So let’s say we choose 12 people from the local economy, you know, knowledgeable about the local economy and active in it, to be our shareholders. And they put money in for the B shares. And the money’s in the B shares, the non-voting shares, and then they have voting shares because we want strategic leadership.

We are not just trying to make money, we’re trying to make our place wonderful so we need people who can think long term and strategically. So they put money in for the shares and then they turn around and do a community offering. OK. And so everybody in that county or that community, however you define that your area, can invest stock. Because one of the problems with Dunkin Donuts is when everybody shops at Dunkin Donuts and buys donuts at Dunkin Donuts, their equity doesn’t go up there, they’re not getting a piece of the action, the equity on their own purchase. So now we sell stock and then we turn around, we work with the local banks because the local banks are very helpful and important in this. We work with the local banks to help the small businesses get the kind of equity capital they need to get better, at the business of the business.

You know business is three things. It’s the business. It’s the business of the business, and then it’s financing the business. Generally small business is better at the business. They’re not as good at the business of the business, which is CPAs and systems and lobbyists.

But if we, as a neighborhood, aggregate and share business of the business, like the CFO or CPA functions, we can be as smart as the smartest guys in the world. Not only that, we can solve the number one economic drain on most communities, and that is all the talent is we’re paying to raise and educate the talent and the talent leaves, and goes off to the big cities and we don’t get the benefit of those young people coming and taking over and leading the businesses. And so we can create an options program that makes sure that we have this deep bench just like the top corporations for our place and our businesses. OK, so now lets say we created an exchange where everybody who owns the stock can trade it if they want.

And lets say the stock is trading at$10. What happens if we do a series of things that cause the Popsicle Index in our neighborhood to go up? Stock goes up. What’s going to happen if we do things to you know reduce the environmental pollution in our neighborhood? Stock goes up. What’s going to happen if we bring in new energy technology that radically reduces the costs of energy? Stock goes up. And so now what we’ve got is we’ve got the consumer, the business person, and the community all in the business of making our place more wonderful, because it makes them money together.

So, right now, you’ll see very ruthless competition between small business and a place. But, frankly, if I’m in a venture pool with you, and you do better, you lower my cost of capital ,so I have a vested personal greedy interest in helping you do better.

One of the powerful things about it is you create an intelligence system where the consumer in that place has a reason . . . . They’re a shareholder, so they march in and say “Hey, you know 30 miles down the road, Wal-Mart’s doing this, and you’re not paying attention. You need to get with the program because I don’t want Wal-Mart to get all the business because, you know, I own shares.” So you’ve got you’ve now got an intelligent network trying to help you make money.

Strong Towns:  My solution to this has been to look back at the way cities were built 100 years ago and try to understand the economics. It seems like what you’re describing is basically a modernized version of a local economic ecosystem. You know people invested in the local bank and the local bank had boards of directors and . . . Is it essentially that?

Fitts:  Yeah. Basically you had an ecosystem that was cycling intellectual and equity. So the intellectual capital and the financial capital were cycling around the economy in a system where people did better by improving the productivity of intellectual and financial capital.

So let me give you one more example before we bring it back down home. So we created programs at the federal level that would allow banks to basically get guarantees for mortgages. So let’s say I’m a small bank, I issue a thousand mortgages in the place and they’re on my balance sheet: I care tremendously about the health and enforcement and the quality of law and law enforcement in that place. I don’t want any crimes or shenanigans going on because it’s going to hurt my balance sheet. But now, if I can issue mortgages and just guarantee them, sell them into Fannie Mae and bring them back on my balance sheet you know the place goes to hell in a handbasket, it’s not losing me money or, I’m just selling them into Fannie Mae. So I don’t really care. Now what does that mean?

That means you can bring narcotics trafficking and mortgage fraud into a community and rape a place, and the bankers are going to make more money because, one, they’re protected on the mortgages, and two, they’re making money on all the activity from the drugs and the money laundering. OK. So you create a model where crime pays.

Strong Towns:   Let me try to state it a different way. And tell me if I’m right or wrong. We essentially created a financial model based on transactions, not on equity and wealth creation at the local level.

Fitts:  No. You’ve created a economy which makes money from centralizing control. The problem is, as you centralize control, you suboptimize the total economy. So you use a negative return on investment to the taxpayers to fund a process that centralizes control as it shrinks the pie.

And so government debt continues to go up-up-up. War continues to go up-up-up. The economy continues to centralize and you’re shrinking the pie, because you basically are marginalizing or destroying a great deal of the intellectual and financial capital that is productive. And frankly you’re destroying human productivity.

So let me just say one thing, there’s a wonderful chart in Fortune magazine that shows that, from 1955 to 1995 when we created the World Trade Organization, the Fortune 500 revenues and the USA GNP sort of track together. You know they basically went up very close alignment. And then suddenly in 1995 until 2015 the Fortune 500 revenues skyrocketed at about 4000 percent. And the GNP stayed rising at about 2 to 3 percent. And what that was was a giant sucking sound, engineered very much with government capital, and government securities, and government enforcement of the economic flow, into large publicly traded corporations.

And what happened. One of the things that facilitated that process was that political contributions were being engineered from the capital gains, both on the publicly traded companies and the real estate.

I should just mention, I did, to help people understand this phenomenon, Chuck,. I discovered in the 90s, after this was started to take off and the game was sort of afoot, I discovered people really didn’t understand the financial engineering that was really centralizing control and this giant sucking sound, neighborhood by neighborhood, county by county.

So I wrote a case study called “Dillon Read and The Aristocracy of Stock Profits” and I went through the creation and funding of a private prison company and showed exactly how the financial engineering worked. And it was designed, in fact, for a professor who needed literally a case study to show how this worked and how it was destroying the economy. Because it had such a positive return to the corporations, but was being engineered at a deeply negative return investment to the taxpayers, and if you looked at it on an integrated basis it wasn’t economic, bet you had to be able to see and look at all the financial engineering. So that’s up at url DillonReadandCo.com and it’s called Dillon Read and the Aristocracy of Stock Profits. It’s in Spanish and French as well as English. If you want to understand this phenomena it’s a great just case study.

Strong Towns:                                                          It felt to me a little bit like mercantilism here in a small town. I looked at one city that I worked with once as an engineer and the major income category that people in the city had was Social Security, essentially government benefits, money flowing in. But all the money flowed right out again. There was a dollar store and a couple of national chains, and it seemed to me like all these people existed fot, in the eyes of macroeconomists, was just to generate a growth number on a GDP charge by generating these transactions. We send them money, they spend it at this place, and it gets sucked right out.

Fitts: If you go through the continuum, which I’ve done since 1995, all the players in the mix, what you will discover is many of the different players in the whole circle of this are chasing fees.

And if you go all the way to the very top what you’ll discover is the people at the very top want to centralize control, and one of the reasons they want to centralize control is they want to compete successfully on the global stage. So if you’re competing against China that has 1.3 billion people and India that has 1.2 billion people and you want to compete up against that and win, you want to centralize as much control into the big players as possible so they can compete successfully in the world stage.

That’s kind of the theory. I don’t necessarily buy all of it. The problem is that it’s a highly uneconomic model and it requires massive government subsidy, much of it invisible and secret. And that has caused the debt to skyrocket and the model requires more and more force to force everybody to take dollars or treasuries and to use them. And of course at some point I just think you can’t run a whole planet based on force, although we see we seem committed to trying.

Strong Towns: Right. We’re going to test — we’re going to test that theory.

Fitts: We’re going to test the limits.

And, frankly, you know, a lot of this comes down to weaponry. And both space weaponry, a lot of invisible weaponry if you look at the history of the development of the invisible and very powerful weaponry, it’s definitely, you know impressive, what has been created, if you want to work on a force model. But I think, what I would argue is that nothing this economic can last. So I think what we all need to do is, at the at the neighborhood or county level, take a look at the model that’s working now and start to grapple with “OK, how can we start, incrementally, day by day, week by week, month by month, as a practical matter get this going in a more positive direction.” And one of the things we need to grapple with is we need to create a model that provides fees for our friends you know their model provides fees for our friends. Our model needs to provide fees for friends because, ultimately, we need to empower the most productive players in the local economy, and the way to do that is to shift the cash flows in their direction. So how can we take the local 401k plans and IRAs and make them eligible to invest in venture pools or REITs that build up our place?

You know, right now, I can take my entire net worth and spend it on the lottery or go drive a few miles down the road and spend it on illegal narcotics.

But if I invest it in securities in a local small business, the small business owner and I can go to jail. So part of this is how do we grapple with the extraordinary complex regulatory structure related to circulation of capital within a place.

And how do we start getting the intellectual capital and the financial capital circulating in our place, and I would I think the number one way to start is to say “OK, let’s get a group of small business owners, let’s get the local community bank, let’s get the local community college or tech center, maybe the high school principal, you know people involved with kids education and business, and let’s see if we can’t start to create an apprentice program where kids can cycle through the different businesses. And let’s see if we can’t create a Shark Tank that over time, can start to offer to finance the kid either buying the businesses of people who want to retire or start their own businesses. So let’s get in the business of taking the young people and creating opportunity for them on Main Street in a way that gives us a deep bench and reverses the strain of intellectual capital. I think you’ve got to start with the people.

Strong Towns:   Just listening to you describe this, it seems to me like there is a tension between what I see is a kind of a fragile national construct: The idea that if we don’t have GDP growth in excess of certain amounts, if we don’t have inflation at certain rates, things are going to start to go bad on a macro scale in a way that is just going to wash over everything.

Fitts:  Chuck, things have already gone bad on a macro scale.

Strong Towns:   I feel that too right. It seems to me there’s a tension between what the people at the macro level say which is needed to keep it all going just fine and what is actually good for our neighborhoods and our cities and our families and our small businesses.

Fitts:  OK, so let’s look at it this way. So let’s look at the U.S. budget.

If you look at that money coming into the U.S. budget and going into, let’s just pick any county, I’ll do Hardiman County where I live. You have an enormous number of people in a Hardiam County dependent on things working the way they work.

So they’re getting disability checks they’re getting Social Security checks. They’re getting community block development grants. They’re getting HUD vouchers. And they’re all living paycheck to paycheck or check to check on that money. You know if you cut that money they’re scared to death.

Strong Towns:  You’re in Tennessee right?

Fitts: I’m in Tennessee. You don’t want to start me on agriculture in the U.S. budge and how that destroyed agriculture. That’s really a good conversation.

Anyway, if you look at all the money it’s got a negative return on investment now. You know, let’s say that you owned a mutual fund that had a negative return on investment. And so every year it went down in value, and every year your adviser called you and said “Look, it went down, so you need to put more money in.” At some point you’d say, well wait a minute, let’s turn it to a positive because you know I need my money to be making money for me not losing money.”

You know the problem is, to turn it to a positive, you have to have a serious conversation with everybody about how it’s working now, and everybody’s going to have to change. All the people getting checks, all the people getting fees are going to have to grapple with, instead of getting the kind of money they’re getting now, how to get that money in a way that has a positive return, OK, so that’s problem number one.

Let me describe problem number two.

Problem number two is that since fiscal 1998 18 trillion dollars has disappeared from the U.S. government. This is $18 trillion of what’s called undocumentable adjustments which is an accounting term, you know, and for all you and I know it could be two trillion, it could be $40 trillion, we have no way of knowing, and I can assure you that it’s with securities fraud you can steal 40 trillion.

So we know that the US federal accounts are operating significantly outside of the law. And the problem is, if you run a negative return on investment system and you run it outside the law, there are no solutions to that problem. In other words you have to get the finances compliant with the law which is the Constitution and the financial management laws.

And that includes proper disclosure. So that’s at this point and this is not including the bailouts, that’s even more. But for a family of four this is $200,000 which has disappeared.

Now I can’t I can’t run a healthy county system if every 20 years or every year ten thousand dollars disappears. Because not only is that — on average in Tennessee, say we’re paying $5000 a year in federal taxes. Suddenly it’s all the money spent in taxes plus my debt liabilities going up by five thousand. So in other words, you have a federal financial mechanism that has reached a level of corruption which is completely unbearable.

Now you know the reaction of the Washington establishment is to just double down on going the way it is. Can’t work.

Back to you and me in Hardiman County, what do we do?

Really what you need to do is you need to find the five to ten percent of the people who are willing to look at this and see if you can’t bring about incremental change. I go back to the question of who you’ve got in a local place who’s willing to start to say “OK, what’s our talent here and what can we do and how can we start to circulate more capital locally and start to build this up?” And how can we do it in a way that protects us from pressure from the governor’s office or you know the senator’s office to bring in more Dunkin Donuts.

Strong Towns:  What I call this is we’ve got to build our own local wealth. Your popsicle index I think is so good at this. And the description you gave earlier. What we have done is we have taken a system where quality of life and really our own individual prosperity in a community of people who are becoming more prosperous was reflected in our wealth by our balance sheets. And we’ve gone into a system now where our balance sheet, or at least the way we’re accounting it, is not at all correlated with our quality of life or how we’re doing better.

Fitts:  Well, let me give you a couple of metrics. So we’ve gone from a world of family wealth to corporate wealth, and the reality is families traditionally, particularly within a place, if you if you go into a place, the thing that makes a place wonderful is usually about 20 families who have taken an enormous leadership role in not only building one or more businesses but in using a portion of their capital to make sure their kids are raised right.

Their parents are taken care of, but also invest in the local civic infrastructure. And a lot of them are the ones that finance the new small businesses and circulate capital locally. And so what we want to do is we want to preserve and build up family wealth. Because family wealth is not about being greedy or making money, it’s about making sure your kids have enough money to go to college without getting raped by student loans. It is making sure you have enough money so you know your grandmother has a decent life if she lives beyond the age of 80. It’s the money to make sure that our quality of life is there.

And that’s why I say if you look at the Seattle study there is a very direct correlation between who has capital and financial resources and life expectancy.

If I was going to pick any one number that you could look at only because the centralizers use it tremendously is life expectancy. So I agree. to me this is not about money. But whether it’s intellectual wealth or financial wealth.

Ultimately the source of all financial wealth is either natural resources or human capacity. Unfortunately, the centralizers are looking increasingly at humans as though they’re natural resources which they’re not. But there is a balance between living equity or human equity and financial equity. And ultimately, when you look at how quality of life or wealth works, they’re one thing.

Now we’ve grown up in an educational system an economy that tries to separate them out, which of course if you’re a centralizer and you want to harvest people like they’re natural resources, you try and keep it disassociated. Our job is to integrate it and keep it deeply associated, at which point there’s absolutely no balance. So you know all financial wealth is going to within a place is going to come.

The key driver of financial wealth and family wealth within a place is going to be intellectual capital. So one of the things I rail about is diet and nutrition, because if you look at the diet and nutrition of the U.S. population, you take one look at what we’re eating. There’s no way we’re ever going to be prospering.

Strong Towns:  I could not agree more.

Fitts: But it it’s very efficient, for that 4000 percent increase in corporate wealth. But I come back to, taking responsibility here, because if you look at the amount of money we’re spending on a hard narcotics, if you look at hard narcotic sales in many counties, a lot of that is just low-cost replacement of pain killers that you can’t get from the pharmacy because they’re too expensive. But we’ll deduct that out.

If we look at hard narcotics trafficking, an excess of alcohol an excess of tobacco, and how much time and money we spend watching TV or entertainment and also on the lottery, we have within our own command from those sources, enough money to really start to circulate and build up the local businesses and the local civic institutions and make things work again.

And the beauty of doing that one of the reasons I so appreciate your work. The beauty of doing things is when you use that private local capital to circulate and build, what you get is you get the right balance between investment and private activity. You don’t invest way beyond what the private activity can justify in terms of income and maintenance.

Strong Towns:  I feel like I’m viewing a different world sometimes because I look at these distortions here — how can you have this strip mall for example be vacant for 10 years? It makes no sense yet they’re building another one a quarter mile up the road. Like how in any functioning world does that happen? It only happens when the people making the decisions have no clue about the local ecosystem.

Fitts: Well, here’s the thing. I come back to an equities system. It’s not my business to do this anymore so I’m sharing ideas — if you want to do a local venture fund in your neighborhood. You know, we’ve got lots of material and ideas on how you might do that, but you’re going to have to figure it out.

You’ve got to build alignment locally between you know the providers and users of intellectual equity and financial equity. And so you’ve got to build an incentive system. You know it’s really funny because when I was at the top of Wall Street or Washington when people wanted to engineer something they didn’t engineer it. They said, OK, how can we engineer the financial incentive so everybody makes money? You know we want everybody to go to Rome, we’ll just financially engineer it so everybody makes money going at Rome. It’s the same thing with how we do the local economy.

And let me explain the beauty of this. Let’s go back and say we’ve created our local venture fund where the stock is trading among the members. We’ve got a membership exchange. It’s trading among the members at $10. We’re in negotiation with the state and local pension funds to bring in money. You know they’re interested in playing, and we’ve got it liquid to the point where an institution might be interested in investment, things are really going.

Now there is a theory in the world that you need consumption to keep the economy going. But in fact, if we do things that improve our local economy and make people better off that reduce consumption, our stock goes up, and now people can make money on reducing the cost of energy, reducing the use of fossil fuel, reducing consumption, so reducing consumption can make money. And making things environmentally healthy can make capital gains. It’s back to we’ve created a model where you know that the people who invest in the Dow Jones index can increase the value of their stock by doing things that cost the popsicle index to go up.

One of the things that most irritates me about America is I think teachers are seriously underpaid. What’s interesting is if 3100 counties financed with local place-based equity, what you would discover is the way you could get your local equity to go up is by getting the best teachers. So in one of our first prototypes we had a stock option plan and the governance board could allocate options to the teachers to buy them away from the next county.

Strong Towns:   Yeah. Imagine there s a competitive marketplace for the best teachers? Yeah right. Yeah. It would be incredible. Right.

Fitts: And the pressure would be on to have the education be wonderful.

Continued Next Week

(OregonPEN frequently offers the writings and interviews of Chuck Marohn, founder and president of Strong Towns, a national membership organization dedicated to addressing the fundamental causes of the woes of our cities and towns, the Post-War suburban development model that cannibalizes the future for the whims of today.  Now that Puerto Rico — “Rich Port” — has been leveled and sent back several centuries, Chuck’s insights into the responses to Harvey are even more important. Below are two separate articles warning against repeating the mistakes in the name of recovery.)

After Hurricane Harvey, don’t empower the engineers. Please.

When I hear people talking about an event like Hurricane Harvey and how we were unprepared for it, that Houston filled wetlands and sprawled all over the countryside in a way that only magnified the flooding, I cringe. Not because these analyses are de-facto wrong (I’ve said they are right in a certain context, just not in the extreme event of Hurricane Harvey) but because they present a limited understanding, one that — if not corrected — I fear will prompt us to divert scarce energy and resources into activities that will be destructive.

I am immediately skeptical of the notion that more stormwater management and/or zoning regulations would have had any significant impact on the extent of the damage from Harvey. This reflective response certainly frames, if not clouds, my analysis of the situation. When it comes to both stormwater management and zoning regulations in these kind of extreme events, I am a skeptic in our ability to ever translate intentions into meaningful action, if that were even possible.

That’s my bias. In my defense, I’ll point out that it’s the 180-degree opposite bias I had twenty years ago. Back then I would have — like many of our readers — looked at a flood and asked, why can we not prevent that? I would have considered projects I have worked on and extrapolated them to the scale of the problem in front of me. My faith in the spirit of American ingenuity (and my own abilities) would have driven me to think that anything is possible and that if I were properly empowered and supported, I could prevent the next disaster and limit the needless suffering.

In reflection, my attitude towards my and my profession’s abilities was very much like that of Anikan Skywalker, the tragic hero of Star Wars in his pivotal transition to the dark side. I’m going to build a more powerful project than any engineer has ever dreamed of…..and I’m doing it to protect you. Don’t you see? We don’t have to fear congestion / flooding / ___(insert malady here)___ anymore. We can make things the way we want them to be. 

That may seem melodramatic in our context, but it’s not. Citizen Jane, the documentary that pits Jane Jacobs against the evil Robert Moses did a real service in humanizing Moses. In much the same way (although with less fandom controversy) that the Star Wars prequels gave the evil of Darth Vader a sympathetic back story, Citizen Jane told how Robert Moses was an advocate for parks and fountains and art and beauty and all the things we’d like to associate with a city that Jane Jacobs would have loved. It was only later, when given the power and the mandate, that he began to do things that today we look at as destructive.

Do we doubt that Robert Moses truly believed he was working for the greater good? Did he go to the dark side or did he just believe strongly that what he was doing was the right thing, all other considerations being lesser?

Now I’m not suggesting that engineers and planners are the equivalent of Darth Vader or Robert Moses, but Star Wars and Citizen Jane both highlight a character flaw that engineers, planners and many of us charged with shaping the world around us hold in common: a lack of humility.

This problem looks like a big nail. Thank goodness I have this huge hammer and can solve it for you. Just give me the money and get out of my way.

There are three real world ramifications of the lack of humility that come into play with Hurricane Harvey.

1. Flooding is not the real problem that needs solving.

I think it is very seductive to look at Houston’s flooding as a simple engineering and planning problem. Let’s just build a bunch of stormwater management systems and increase our development regulations and we’ll handle this. Again, when you have a hammer, every problem looks like a nail.

A levee breaks during Hurricane Katrina in New Orleans. (Source: FEMA)

A levee breaks during Hurricane Katrina in New Orleans. (Source: FEMA)

So, did the people of Houston’s past not also think like this? Were the stormwater reservoirs sold as half-measures when they were built? Were the pipes they laid and the retention areas they constructed simply a false front or did they really believe them adequate?

Did the people of New Orleans not do this? Were their dikes that failed not constructed in anticipation of the largest storm they felt reasonable?

What happened?

Without a sense of history and a proper sense of humility, we just assume that the people of the past were ignorant fools, that those in the intervening years were greedy and selfish, simply unwilling to do the proper things to ensure their own security. Somehow we are different in our enlightenment. Maybe at last society will heed our expert warnings.

I think a more difficult challenge — the real problem — goes beyond the engineering or planning and gets into human nature. It’s very plausible to me that the dikes in New Orleans were built to handle the worst event anyone could remember, plus a little more. Then complacency set in. Not only were there always more urgent things to do than maintenance, but having *solved* the problem we no longer needed to worry about it. Go ahead and build there, we’ve got you covered. What’s one more? And one more?

We’ve written here about the Oroville Dam and our seemingly-genetic predisposition to de-prioritize maintenance (see “A Dam Mess“). We’ve also written a number of times about risk compensation, how making things safer and more protected only prompts us to extend the risks we are willing to take (see “Texting in Your Risk Gap” and “More on Risk Compensation“).

Much like traffic congestion is a complex problem that cannot be solved by building more lanes, neither can flooding be solved by simply constructing more elaborate, complicated and violent stormwater management and regulatory systems. To think otherwise leaves out the human element. It also puts more people at greater risk.

2. Flooding is not the whole problem that needs solving.

While I have a hard time understanding it, there might be some good reasons why someone chooses to buy a house in a floodplain. Perhaps they got a good deal, don’t plan to stay there long, believe it won’t happen to them. Lots of these decisions that look terrible in retrospect can be easily rationalized along the way.

What’s more difficult to understand is how a bank can make a loan on such a house. How can you get a mortgage in a flood prone area without flood insurance?

Well, answer this one: Why does your pension fund own mortgage backed securities containing homes in flood zones without flood insurance?

Or how about this one: Why does the Federal Reserve swap U.S. Treasuries for mortgages when those treasuries are highly rated and secure but some of the mortgages are in flood prone areas without flood insurance?

“There is a chain of soft corruption shielding people from the feedback that should come with their decisions, from the way we structure and sell mortgages to the entire system of moving risk from private balance sheets to the public sector.”

There is a chain of soft corruption shielding people from the feedback that should come with their decisions, from the way we structure and sell mortgages to the entire system of moving risk from private balance sheets to the public sector. In a world where banks and insurance companies were expected to experience losses, even failures, when they got things wrong, flood insurance would be both mandatory and cost-prohibitive for most people in these kind of flood prone areas.

Are we really going to subsidize flood insurance at the national level and then turn around and spend tens of billions — maybe more — constructing stormwater management and mitigation systems to protect these same homes? If we insist that the problem here is a lack of engineering and planning, that is exactly how we’re going to respond.

The actual damage from the flooding in Houston is more about flood insurance, mortgage regulations and bank bailouts than it is about engineering or planning. Failure to grasp that only ensures that future disasters will be greater than those in the past.

3. Flooding is not the only problem that needs solving.

After 9/11, the only problem we needed to solve was terrorism. We spent trillions — insane sums of money — ensuring that no terrorist action would ever happen again. In a civilized nation where people must be protected, how could we do anything less? We’ve fought (and are still fighting) wars around the world, armed our local police with military weaponry, created a domestic spying apparatus that would make the Stasi blush, established a theatrical production at each airport and major public building where we pretend to screen people and, after all is said and done, I can still carry the same exact weapon that the hijackers used on 9/11 (a box cutter) onto a plane.

Source: US. Dept. of Homeland Security

Source: US. Dept. of Homeland Security

A commonly asked question we like to debate is: Are we any safer? The history of terrorism tactics and the repeated inability of governments to stop terrorist acts using brute force suggests we are not, but whether or not you agree, that debate keeps us from a more important set of questions:

  • Are we more prosperous as a result of this focus?
  • Was this the best way to spend our resources?
  • What things have we not done, what actions have we not taken, because we focused on solving that one problem?
  • What are we incapable of doing now because we’ve committed to a certain approach, one that we culturally can’t back down from?

I was in New Orleans a few years after Katrina and got a tour of the billions of dollars worth of flood prevention and mitigation systems that were built miles away from where anyone lived or would ever live. To me, this was the ultimate case of asking the engineers and planners to solve a one-dimensional problem. See nail, apply hammer.

And they solved it, or at least we think they did. New Orleans has not been tested since Katrina and, statistically, is unlikely to be tested again until we’ve long become complacent again about flooding there. Think there will be any pressure in the coming days to divert New Orleans maintenance money to Houston or Florida? Who is going to stand up and oppose that? Yet Katrina is still raw in our minds; what kind of anguish will we experience over a budget cut to maintenance two decades from now?

The last time I was in New Orleans (2012) large parts of the city were abandoned and had not recovered. The population is down and, tragically if you value the unique Cajun culture, has been dramatically altered demographically. If our flood mitigation efforts had been more focused, could we have invested more in an actual recovery? Could we have built greater resiliency in a way that improved the lives of people instead of simply providing them with pipes, concrete and steel over an enormous area they will now struggle to maintain?

Organizations like the American Society of Civil Engineers are salivating at the opportunity for Congress to summon the experts to Houston with billions of dollars and a one-dimensional set of solutions. The city of Houston was financially on the brink before Harvey. They had way too many roads, streets, sidewalks, pipes and ditches for their tax base to sustain, let alone create wealth for paying pensions and other obligations. If our solution to this tragedy is to give them even more infrastructure, we have failed.

Many of you are angry — to put it mildly — that I’ve called Hurricane Harvey an extreme event, one that transcends our ability to plan for or mitigate through better engineering and more aggressive planning regulations. I respect your feedback and, while I still believe in everything I’ve written on the subject, I’ve taken extra time to examine my biases. I acknowledge that I’m definitely skeptical of, and hostile towards, those who would narrowly define this event as a nail only to empower — intentionally or not — destructive people to deploy a very large hammer. I see a broader set of forces at play and much more at stake.

“Many people are so confident they not only understand what happened in Houston but have a clear sense of what now needs to be done. I find these people dangerous.”

Many people are so confident they not only understand what happened in Houston but have a clear sense of what now needs to be done. I find these people dangerous. I also find that a lot of people speaking on this subject have little real knowledge of what it would take to do accomplish what they claim they want to see happen. I’ve found myself questioning the sincerity and motives of experts that I think should know better and I’ve found myself annoyed with a long list of non-experts who, nonetheless, have expert opinions they (rightly) feel empowered to share, often in a rather derogatory and pompous manner.

I’m not proud of my immediate internal reactions to this. I’ve found myself counting to ten — sometimes a hundred — more often than normal. I don’t need (or want) any more fatherly/motherly emails written so as to help this wayward child you believe is suffering a momentary lapse in judgement. If Strong Towns to you is a movement about deploying more planners and engineers to implement a top/down strategy for doing more of what we are doing today, only marginally better, you might want to dig a little deeper.

I’ve gotten out my old hydrology books and, in my next article, I’m planning to show you just what it would take to manage a rainfall event on the scale of Harvey for a typical residential parcel. You might be surprised.

The Real Lesson of Hurricane Harvey
— Strong Towns

 

We’ve documented here and on our social media feeds our belief that more zoning and regulation would not have changed the devastation from Hurricane Harvey in any meaningful way (“Piling on Houston” and “Houston isn’t flooded becuase of its land use planning“). Even still, many of you are insistent that there is a valuable lesson to learn here, that the “wild west” attitude of Houston/Texas is dangerous and, if karma is to have any meaning, there must be consequences. Specifically, Houston needs proper zoning that would, at a minimum, keep all new construction out of floodplain areas, require additional stormwater management and reduce the amount of impervious surfaces.

We agree there is a lesson to learn here, but that’s not it—not in this instance. Here’s a thoughtful and credible piece of feedback we received last week challenging our assertions:

I’m a flood modeler, and I will tell you straight up that pretty standard modern landscape planning standards absolutely would have prevented some (by no means all, or perhaps even most) of the misery in Houston. But this is when people are paying attention, and it makes all the sense in the world to say we can and must do better. Climate change science informs us that these seemingly improbable, outlier events are becoming more common and likely. Throwing up our hands and saying nothing at all would have ever made this better is basically negligence when something similar happens again and nothing was done to mitigate because “no one plans for outliers.”

No one plans for outliers

Later this week I plan to outline what it would take to accommodate a Hurricane Harvey level of event (hint: it’s ridiculous) but for now, let’s hone in on the notion of what an outlier is because, contrary to the assertion of many, we can plan for outliers. We just don’t plan for outliers the same way we plan for routine or even rare events.

There has been a lot of talk about repeated flooding events in Houston. The notion is, we see this over and over and Harvey is simply another in a long list. The first part of that reaction is true — Houston has seen a lot of flooding — but the second part is not. The website FiveThirtyEight.com has the best graphic on just how much of an outlier Harvey is (I’m jealous; I wish we had that kind of research and graphics capability). Scroll down to the third chart and you’ll see a plot of events by inches of rainfall. Harvey is alone in the upper right corner. No other event comes close.

The two recent Houston events that many people yelled at me about were the Memorial Day Flood of 2015 (11 inches) and the Tax Day Flood of 2016 (7.75 inches). FiveThirtyEight suggests Harvey dropped 52 inches of rain on Houston.

There is an assumption — and I think it is debatable at the margins, but that debate is not real important for this conversation — that rainfall amounts follow a normal distribution. In other words, we can plot of the number of events of different intensity levels and there will be far more routine events (trace levels of rain, 1/4 inch of rain, etc…) than outlier events (2 inches, 4 inches, etc…). The more intense the rainfall, the less frequent the events become. Such a distribution would look like this.

normal-distribution-probability.jpg

Let me be explicit here and repeat something I’ve said multiple times over the past week: If we’re discussing frequently occurring or even rare events, I think the people being critical of Houston for not having good stormwater management have a valid point. If you buy a home with a 30-year mortgage and that home is in the 100-year floodplain, assuming that designation is accurate (it’s likely underestimating your risk), you have a 25% chance of being flooded before your home is paid off. That’s the simple math of taking a 1% risk every year for three decades in a row. Those are not odds I like, and I find it rather insane that Houston would facilitate people to build — and that the federal government would then offer insurance — within such an area.

With Harvey, we’re not talking about that. The people in the 100-year floodplain flooded. So did everyone else. Harvey was, in my chart above, an Extreme Event. It was off the charts. Not absolutely unpredictible, but not something that can reasonably be anticipated and planned for. Not something we’ll build a cultural consensus around mobilizing resources.

If we took the most progressive set of planners and public officials and transplanted them in Houston a generation ago and instructed them to do what it took to properly manage stormwater, all of their mitigation systems would have been overwhelmed in the first few hours of Harvey and then everything would have flooded just as it did.

I realize many of you don’t care about this nuance. As the commentor said, “This is when people are paying attention, and it makes all the sense in the world to say we can and must do better.” To quote Rahm Emanuel from his days as President Obama’s chief of staff, never let a crisis go to waste. Let’s use this extreme event to mobilize action so Houston — and cities tempted to emulate them — cleans up their act and won’t suffer in the more-frequent rare events.

If that’s your political stance, fine. Whatever. But if you’re here at Strong Towns attempting to understand the world a little better, that kind of simple, linear thinking is not good enough.

Complex Systems during Extreme Events

Cities are complex, adaptive systems. That means a city emerges from a collection of interacting objects, each of which experience their own feedback, are free to adapt their strategies based on their experiences and are influenced by their environment. Such systems have unique characteristics. They often function in ways that are seemingly predictable, until they don’t. Complex systems also respond to extreme events in fascinating ways.

As an analogy, I’d like to focus on a complex, adaptive system we are all familiar with: the human body. Under normal circumstances, our bodies are a collection of interacting objects — white blood cells, bacteria, protiens and hormones to name a few — that operate in mostly predictible ways. I’ve been diagnosed with hypothyroidism, a condition where my thyroid doesn’t produce enough hormones. It causes my body to want to store fat and sleep as if I were trying to hibernate. A small pill each day replaces those lost hormones and tricks my body into working fine. It’s genius and I’m intensely grateful to the brilliant people who figured this out.

Dr. Scott Somers describes the steps that occur when the body is injured.

Sometimes, however, the human body experiences an extreme event. Once I fell while climbing rocks and another time I was in a serious car crash. Both times I experienced a variation of the body’s response, an involuntary set of reactions evolved over tens of thousands — maybe hundreds of thousands — of years. In retrospect, it’s an astounding feat.

First, the body goes into shock. It’s a preservation mechanism to keep blood flowing to critical places at the expense of the less critical. If you’ve experienced this, there’s also often a shot of adrenaline. I imagine an early version of a sapien attacked be a predator, fighting it off and then fleeing madly only to collapse into a coma as the body shut down to preserve vital functions. That pre-human survived, which is why you have a chance to survive a brush with death today.

Whether or not the body goes into a coma, multiple systems start to kick into a different gear. Metabolism changes. The immune system goes into overdrive. Parts of the body are cheated of normal support so that aid and repairs can be given to injured parts. It’s truly remarkable.

Historian and author Rebecca Solnit is the author of A Paradise Built in Hell: The Extraordinary Communities that Arise in DisasterIn listening to the book, it was hard for me not to connect how humans (an evolved species) interact with each other in our cities (our evolved habitat) during times of crisis. As presented in a New York Times review of the book:

“What is this feeling that crops up during so many disasters?” Ms. Solnit asks. She describes it as “an emotion graver than happiness but deeply positive,” worth studying because it provides “an extraordinary window into social desire and possibility.” Our response to disaster gives us nothing less than “a glimpse of who else we ourselves may be and what else our society could become.” Her overarching thesis can probably be boiled down to this sentence: “The recovery of this purpose and closeness without crisis or pressure” — without disaster, that is — “is the great contemporary task of being human.”

Lesson for a Strong Town

You are more likely to survive a traumatic event if you are healthy, not sick. You are most likely to survive it if you are not so young that you’re still developing or not so old that you’re experiencing decline. You increase your odds if you eat well, exercise and don’t live with a lot of stress. In other words, the complex adaptive system that is your body is most likely to carry you through an extreme event the closer to optimal condition you are. You’ll get through alive, recover more quickly and then return closer to normal the stronger you are going in.

Of course, by definition, we never know when that extreme event will be. We can’t stop aging, but there are a lot of things we can do to help our bodies be stronger and healthier throughout our lives. The great thing is, even if we don’t experience that extreme event, the things we do to be stronger and healthier help us in many other ways. There is little downside and lots of upside to healthy living.

This is why it’s not good enough to let a myopic reaction to Hurricane Harvey obsessing with stormwater management and regulation dominate our discourse. No reasonable amount of that activity would have mattered for this extreme event, but Houston is a really fragile place. Before this latest disaster, I had the chance to speak with a number of public and private officials, on and off the record, and got a real sense of the impending fiscal disaster that is Houston’s city budget. There was no way they were ever going to have the money to fix all the roads, streets, sidewalks, pipes, pumps, etc… that they were obligated to take care of with the tax base they had. This was a pending catastrophe for the people and businesses that depend on those systems. Now that hundreds of billions of that tax base has been destroyed, the desperation is going to ratchet up considerably.

And that is before factoring in pension obligations, staffing levels, current service levels and debt service, all of which depend on aggressive growth from a fragile — now impaired — tax base just to stay even.

It’s not clear to me how Houston will respond to this trauma. Maybe the city will get a lot of federal aid (although the numbers I’ve seen have underwhelmed), but most of the loss is actually in the private sector. Much of that private loss is uninsured. Maybe this will provide a pretext for Houston to do some community triage and shift their public investments from the unproductive outskirts to their more productive downtown and core neighborhoods. Maybe the reduced emphasis on regulation and taxation will be a driver of the economy and allow them to adapt in novel ways. I’m not predicting Houston’s demise, but the poor financial health of their city government has given them little margin for error.

For extreme events, we can’t measure risk, but we can measure fragility. Cities that want to protect themselves from extreme events need to become less fragile. They need to adopt a Strong Towns approach.

Later this week I’m going to examine the myopia of the planning profession, “flood modelers” and policy wonks and the psychology that drives them to learn the wrong lessons from events like Harvey. I’m also going to look at what it would take to design a stormwater system for an extreme event like Harvey (it’s insane). I’d also like to take a deeper look at complex versus complicated systems (in Nassim Taleb language: the difference between a cat and a washing machine) as a prelude to examining what a policy approach based on stormwater management will look like (see: New Orleans post-Katrina) as well as the tradeoffs involved (funding ditches, not schools). We should also examine how we can use antifragility during frequent events to improve our robustness to extreme events.

Finally, because I was told a number of times how irresponsible I was to not obsess about climate change, we’re going to take some lessons from Fooled by Randomness and hopefully find a way to explain rare/extreme events without making everyone ticked off.

(Both articles above republished with kind permission of the author and Strong Towns.)