How Small Business Comes To Be So Misrepresented

There is one discovery I find especially intriguing when I drill down into surveys of businesses such as Bloomberg’s, which goes deep enough to reveal the sentiments of truly small businesses.

These are the concerns that make up 90% of small businesses nationwide, those that employ 5 or fewer employees including all startups.  Seventy percent are owned and operated by a single person.

Three-quarters, according to other polls, rely on locals for all or most of their business, making them the very backbone of economic development.

These so-called micro businesses, according to Gallup, make up an incredible 80% of all businesses in the United States.  Some calculations go as high as 92% by expanding the definition to include those that employ 10 or fewer employees.

Don’t even ask why the so-called Small Business Administration still defines small businesses in general by metrics as large as 500 employees.

But I have a hunch, that similar to the way official dietary recommendations were originally established, it was originally superimposed by special interests and politicians, not science.

However, these truly small businesses generate 7 of every 10 new jobs.

Fostering and fueling the retention and growth of these micro businesses is the “low-hanging fruit of economic development” overlooked by communities firmly addicted to providing incentives to larger but less fruitful concerns.

A study in 2012 found that micro businesses of 5 or fewer employees directly employed 26 million Americans and indirectly supported another 1.9 million jobs while inducing 13.4 million other jobs.

But these concerns don’t often show up on the radar or in the actions of self-described business advocacy organizations such as chambers of commerce.

Neither do they typically show up in any representative sample during public hearings regarding pending legislation.

While they are claimed as a cause celeb by many along the spectrum of political ideology, the sentiment that tells me these small businesses are not being accurately represented is how they regard government regulations.

In fact, in North Carolina, the political party now in power, often uses this group as an excuse to unravel these public protections.

However surveys such as the one conducted for Bloomberg, show that only 2.2% of these concerns rank complying with government regulations as one of their top problems, making it 10th on the list of concerns among small businesses in North Carolina.

The percentage with this view nationwide is 2.6%.

So what segment of business are Republicans really representing when they seek to undermine public protections in the name of being business friendly?

Well it isn’t large employers in North Carolina where it is a top concern for only 4.7%, making it 7th on their list of concerns and hardly emblematic for what partisan elected officials claim.

Nationwide, the view is held by only 4.3% of large employers, making it 9th on the list.

Taxes aren’t much of a concern either, ranking a top concern among only 7% of small businesses and 4.7% of large employers in North Carolina.

Of far more concern to small businesses are issues such as access to capital where studies show they are largely reliant on small, local banks which are being squeezed out of business by mid-sized and large banks.

Small, community-based financial institutions now have just 24% of overall banking assets and yet they make 60% of all small business loans while giant banks now control 59% of all banking assets and yet make only 23% of small business loans.

The reason is so-called regulation reform and the silence among the elected officials responsible is deafening.  This is in part because of the feed-back loop they helped create.

For instance, while only 2% of small businesses have regulations as an issue, nonetheless for having been caught for years in an echo chamber, this is one of the top two issues that Republicans say will influence their vote.

Just don’t blame small businesses.

So what is really forcing concerns of far less concern to small and large businesses alike, such as taxes and regulations, to the very top of the list for the Republican majority now dominating North Carolina’s three branches of government?

How does an ideology, any ideology, so often find itself so narrow in its representation?

I have witnessed personally, that in some cases, this happens when elected officials come to think it is their opinions they should push rather than those of their constituents.

I have also been privy to how large blocks of elected officials begin to view their constituency more as the special interests that financed their campaigns rather than all voters.

It doesn’t take much to form a vacuum-sealed feedback loop, especially when special interests have lobbyists that seemingly vote their opinions every single day at the state capitol while voters, in general, officially only get to weigh in every few years.

Cities that have taken the lead to require a livable wage aren’t just avoiding these feedback loops, they are fully disaggregating and examining the sentiments of employers rather than just listening to those who pay people to attend meetings.

This is an idea still novel to many officials.  But it is more complicated than that.

An understanding of how an entire political party or ideology can become out of step with business owners and other voters can be found in a paper published by Duke University business and psychology researchers.

It is entitled “Solution Aversion: On the Relation Between Ideology and Motivated Disbelief”, and weaves together a series of behavior studies.

“Solution aversion” explains a lot about how organizations such as business advocacy groups and elected officials can become so estranged from the views of their constituents.

It isn’t just because very few constituents have time to attend meetings or the patience to deal with the games played by those who do.

It is because we can all form cherished beliefs and then ideologically align with people who share those same beliefs based on biases rather than information in such a way that we are led to pair solutions and problems, not based on empirical and generalizable information, but on fear.

For anyone caught in an ideology or belief system that seems averse to solutions or trapped in positions where the same old worn out solutions are recycled with the same disappointing results, whether it be in business or politics or religion, this paper is an extremely worthwhile read.

Exceptionalism Imperative

My lineage as an American goes back 376 years.  By 1840, all but two lines had perpetually been frontiersmen and would continue to forge new settlements for another hundred years, long after the Census declared the frontier closed.

This gives me a different understanding of American “exceptionalism” than many today.  All of my ancestors came to this country in search of religious freedom as Remonstrates, Huguenots, Quakers, Amish, Palatines and Mormons to name a few.

But while forging a new land, they continued to reach back to their homelands and import “best practices.”

Many who wrap themselves in “exceptionalism” today may not have the benefit of that perspective for they seem to have given up on learning from other countries.

A few of my ancestors were Scandinavian including the linage of those who rode with William the Conqueror nearly a thousand years ago to establish what we know as Great Britain.

While throttling American progress over the last three decades or more with anti-tax, antigovernment rhetoric, today’s “exceptionalist wannabees” have ridiculed Scandinavia countries as tax and spend welfare states.

But they have ignored that Scandinavian countries also have some of the strongest economic outcomes in the world.

This country’s founders made it imperative to study and glean everything they could from the powers of that day.  Maybe that is the part we have neglected.

A new study by Dr. Henrik Kleven, a researchers and economist at the London School of Economics, who has also studied at Columbia and UC-Berkeley, unwraps some things we can learn from Scandinavian countries.

Apparently, the data shows that three factors are more important than the level of taxation:

1. Broadening the tax base.
2. Limiting legal tax avoidance (e.g. loopholes.)
3. Public spending focused on complements to work.

Complements to work include using tax revenue to fund universal child care, preschool and elder care etc.

A key finding in the study is that Scandinavians have a different view of poor people than most Americans.  In surveys, only 10-15% of Scandinavians view poor people as lazy compared to 60% of Americans.

The study also notes that “large tax collections go hand in hand with a number of measures of social cohesiveness like civic participation, voter turnout, trust, low crime and so on.”

As for something Americans have been arguing about since our nation’s founding, the study finds that there is a small amount of “tax-charity crowdout,” or the reduction of philanthropy when taxes go up.

But studies show no negative relationship between coercive taxation and voluntary donations, nor does it indicate that Scandinavians are less involved in charity than populations facing smaller tax takes.

There is much to learn from this study but unfortunately belief systems are rarely based on facts.

Revisiting A Frustrating Habit For Some

Frustrating regular readers, I have a habit of segueing while writing on one topic to another that is underlying, making it obvious that the six or more hours I spend per day on this post-retirement avocation is more about personal introspection than sharing insight.

But because one of these segues seemed to resonate, especially with the majority of readers who are beyond Durham, for anyone who missed it I’ll lazily pull one out for today’s post:

“Up through the 1970s and into the 1980s local government officials across the nation used to do a much better job of breaking dividends such as this down for residents and connecting the dots for folks like my neighbor.

Then it seems they suddenly stopped connecting the dots for themselves as well as witnessed somewhere in the first decade of my now-concluded career.

It is also how the insanity of “front end” subsidies, oh I mean incentives were born, another word for “legalized” panhandling.

In Durham for example they began very slowly hollowing out funds for basic community upkeep which in turn soon began to degrade curb appeal, which dampened property values, which slowed tax revenue, which resulted in more hollowing until a vicious cycle took root.

Of course, the intent was to restore upkeep before anyone noticed but gradually it became the new norm and then one day local governments began to whine that basic maintenance and upkeep of appearances was somehow an unfair burden.

Of course, this wasn’t a strategic decision.

If I hadn’t been a witness, it was easily gleaned from books such as The United States of Ambition that moves such as this take shape when politicians began to sense that “keeping people happy” by doling out these funds instead was far more rewarding and fun than upkeep.

But this has contributed to creation of a feedback loop where residents are frustrated and resistant to paying taxes (in reality only a tiny but vocal minority) so officials try to appease them by holding the line.

This, in turn, forced the year-to-year absorption of increases to the costs of living such as goods and services which means budgets for maintenance and upkeep get “rabbit-holed” into a downward spiral, which undermines resident confidence.

It is how communities that are otherwise seemingly vibrant and “cool” on the surface, begin to slowly and imperceptibly degrade at the margins before falling again into a cycle of decay.

Now instead of running local government like a business with 5% of budgets set aside for maintenance and upkeep along roadsides, streams and other commons, local officials are more likely to feel put-upon by this responsibility.

Soon they resort to panhandling businesses and volunteers to get by never realizing the resentment this creates because residents and businesses then silently fume because upkeep is something they feel they already shoulder in property taxers.

It has been this way in Durham for nearly three decades.  Even the increasingly depleted news media seems to have bought into this feedback loop rather than shining a light on its absurdity.

As a good friend who is a university executive mumbled under his breath, on a walk one day, when I noted a few years that had been the exception, “it won’t be enough to reverse that dysfunction has become the default.”

But this paradigm is not one in which Durham is unique.

To paraphrase the legendary “outlaw” of my time, Waylon Jennings, a fellow stoic who wrote in 1978 just before this all began, “We’ve always been crazy but its keep us from going insane.”

It seems so thoroughly embedded in the psyche of futility common among nearly all public administration professionals now that they probably never knew it was any other way.

Sadly, so many of those elected to shift the paradigm seem converted instead within a few weeks of being sworn in.

It may be left to Millennials and social entrepreneurs like the young developer of Wetrock to reconnect the dots and return us to true sanity.

In the meantime, I swear to do everything I can to never be an enabler.”

Reconnecting the Dots

A neighbor of mine lives along one of Durham’s most beautiful parklands but fails to see the irony whenever he complains that the city should focus less on greenways and more on funding hard services such as police.

He would be well advised to read a book, published earlier this year by a friend of mine, entitled Conservation Communities: Creating Value with Nature, Open Space, and Agriculture.

In part it details the type of development now underway in Durham by a young entrepreneur I met just I was retiring called Wetrock Farm.  Since we met he graduated from Duke and completed an MBA at the University of Miami before returning to the Bull City.

Durham is a single-city county by the same name, the fourth largest city in North Carolina and located in the 17th smallest county by land area.

Making this a tight fit is that the northern third of the county has been set aside in watershed.  Restricted this forms a sort of natural urban growth boundary but also guarantees that this part of Durham’s sense of place will remain rural and open.

Wetrock will exist in what Durham has set aside as “conservation subdivisions” (see article 6.2.4 in District Intensity Standards,) a best practice as I will describe later in this essay that belies a paradoxical failure to connect the dots overall.

These are areas designed to provide clustering of houses and structures in a way that preserves wetlands, streams, woodlands, wildlife habitat, historic and archeological sites as well as “authenticity” and sense of place.

Specifically, Wetrock Farm will develop 230 acres into 141 home sites with 2/3rds of the land preserved as forest.  It will also incorporate trails and a working farm with 140 acres permanently protected by a conservation easement.

All of this will be just 10 miles from amenities such as Duke University and the City Center District, 12 miles from North Carolina Central University and only 14 miles from Research Triangle Park just on the other side of Downtown.

Too bad this rationale wasn’t applied to every neighborhoods here as they began to take shape a hundred years ago.  In fact, even business districts such as downtowns.

The book Conservation Communities uses real estate research to quantify the dividends communities reap from developments such as Wetrock Farm:

• Environmentally sensitive areas are protected along with water quality and urban forest canopy.
• Property owners reap a dividend in the form of higher property values.
• Local governments reaps a dividend in increased property taxes used to fund overall community services such as public safety.

Up through the 1970s and into the 1980s local government officials across the nation used to do a much better job of breaking dividends such as this down for residents and connecting the dots for folks like my neighbor.

Then it seems they suddenly stopped connecting the dots for themselves as well as witnessed somewhere in the first decade of my now-concluded career.

It is also how the insanity of “front end” subsidies, oh I mean incentives were born, another word for “legalized” panhandling.

In Durham for example they began very slowly hollowing out funds for basic community upkeep which in turn soon began to degrade curb appeal, which dampened property values, which slowed tax revenue, which resulted in more hollowing until a vicious cycle took root.

Of course, the intent was to restore upkeep before anyone noticed but gradually it became the new norm and then one day local governments began to whine that basic maintenance and upkeep of appearances was somehow an unfair burden.

Of course, this wasn’t a strategic decision.

If I hadn’t been a witness, it was easily gleaned from books such as The United States of Ambition that moves such as this take shape when politicians began to sense that “keeping people happy” by doling out these funds instead was far more rewarding and fun than upkeep.

But this has contributed to creation of a feedback loop where residents are frustrated and resistant to paying taxes (in reality only a tiny but vocal minority) so officials try to appease them by holding the line.

This, in turn, forced the year-to-year absorption of increases to the costs of living such as goods and services which means budgets for maintenance and upkeep get “rabbit-holed” into a downward spiral, which undermines resident confidence.

It is how communities that are otherwise seemingly vibrant and “cool” on the surface, begin to slowly and imperceptibly degrade at the margins before falling again into a cycle of decay.

Now instead of running local government like a business with 5% of budgets set aside for maintenance and upkeep along roadsides, streams and other commons, local officials are more likely to feel put-upon by this responsibility.

Soon they resort to panhandling businesses and volunteers to get by never realizing the resentment this creates because residents and businesses then silently fume because upkeep is something they feel they already shoulder in property taxers.

It has been this way in Durham for nearly three decades.  Even the increasingly depleted news media seems to have bought into this feedback loop rather than shining a light on its absurdity.

As a good friend who is a university executive mumbled under his breath, on a walk one day, when I noted a few years that had been the exception, “it won’t be enough to reverse that dysfunction has become the default.”

But this paradigm is not one in which Durham is unique.

To paraphrase the legendary “outlaw” of my time, Waylon Jennings, a fellow stoic who wrote in 1978 just before this all began, “We’ve always been crazy but its keep us from going insane.”

It seems so thoroughly embedded in the psyche of futility common among nearly all public administration professionals now that they probably never knew it was any other way.

Sadly, so many of those elected to shift the paradigm seem converted instead within a few weeks of being sworn in.

It may be left to Millennials and social entrepreneurs like the young developer of Wetrock to reconnect the dots and return us to true sanity.

In the meantime, I swear to do everything I can to never be an enabler.

7 Things To Look For In Feasibility/Impact Studies

Supply-side economic developers often latch on to tourism as a rationale for mega-facilities such as theaters, stadiums and civic/convention centers, even though that demand-side form isn’t remotely their forte.

They do this as a means to siphon off visitor-related taxes as a means of financing things that will avoid voter scrutiny, masking that the real purpose for the facilities is to prop up nearby private property values so as to better enable development.

Flattered to have tourism acknowledged at all, in some places, demand-side community destination marketing organizations have played along, or worse, failed to grasp the inherent supremacy of demand-driven economic development.

Fortunately, as was almost pathetically apparent recently at the 100th annual conference of DMO execs, this clique is a dying breed.

It is easy to find fault with feasibility consultants, who in a perfect world, should be brought in to do a needs and impact assessment unfettered by the “push and pull” agendas of advocates and local officials who have already made up their minds and only seek cover.

So increasingly, the ability to dissect feasibility studies both to keep them objective and as probing as possible, and then later, to further dissect reports for news outlets, concerned residents, neighborhood groups and any still-objective officials, is a requirement of being a demand-side DMO exec.

The importance of learning to fulfill this thankless task first emerged as a “best practice” nearly three decades ago (1985) when a handful of DMOs began to circulate a ground-breaking essay coining the term sense of place.  They also began to grasp the risks inherent in mega-facilities.

Central to what had become a movement a decade ago is the increasingly irrefutable mountain of evidence that if mainstream mega-facilities such as these are not proportional in scale and very delicately feathered into the ecosystem of what makes a community distinct, they rapidly hollow out its appeal.

Why does this responsibility fall to demand-side destination marketing organizations?  First of all, it’s because they must be intimate with sense of place to craft appeals to visitors, including more than 8-in-10 newcomers and relocating executives.

This also makes them, by default, responsible as the guardians of sense of place.

The second reason this responsibility falls to DMOs is that this is the organization in a community charged with spearheading overall visitation, including any portion necessary to pay off the debt on these facilities, as well as that which can be harvested by these facilities to make them sustainable.

Here are 7 things I learned to look for during my now-concluded four-decade career when assessing feasibility/impact assessments for mega-facilities:

Residential Burden from Visitor-related Taxes

Just because they are called visitor or tourist taxes does mean there isn’t a cost to residents and other local businesses.

This is far more than the small amount economists have identified through research that will be absorbed by the businesses collecting these taxes (e.g., lodging, prepared food, admissions, car rentals or special business districts’ property taxes.)

The impact is also far more than the visitors who will be lost at the margins due to the tax, something economists can also compute.

Far greater is the fact that any time a tax is assessed on a visitor, it subtracts from funds they have to spend in local businesses during the trip, an amount that adds up very quickly.  It can also be computed in advance during feasibility/impact analysis.

If spent on marketing to draw more visitors to a community, a visitor-related tax is offset by more than a 6-to-1 increase in visitors, and tax revenue generated from their spending that can offset the local tax burden through more visitor spending.

But when spent on debt service to finance a facility, that amount immediately leaves the local economy to pay off bonds.  Even the amount ineligible for marketing will still take away from availability to fund roads, trails, wayfinding, and the operation of other cultural facilities and events underwritten by local government.

The public has a right to know how much this will remove from the local business climate.

People who say financing something is painless because a visitor tax will pay for it may not realize it, but unless it is reinvesting in community marketing, they are deceiving local businesses and residents.

Insist On Estimates of Downstream Improvement Costs

Also beware of studies that cite the impact of similar facilities in other cities without showing the differences between what was projected by consultants on those projects and how hey have actually performed.

Studies should also reveal ongoing costs for renovation and upfit, which will ultimately far transcend the original construction costs.

An example is the Charlotte Coliseum.  It opened in 1988 but was demolished and replaced by another in 2007 before its original construction cost, $104 million in today’s dollars, had been paid off.

Now just nine years old, the newer $265 million facility is already in need of a $28 million upfit.  While a bit extreme, this example isn’t unusual for other mega-facilities there and elsewhere.

The downstream costs should be estimated in preliminary studies of feasibility and impact.

Don’t Settle Just For Estimated Activity

Be sure the study reveals three trend lines:

• Percentage of visitor participation across the nation over time in the related activity as a proportion of overall visitation;
• National estimates of the time Americans devote on average to the related category; and
• Percentage of their income spent on that activity.

Economists know that these three factors rarely change over time.  They may keep pace with population but not capacity.  Time devoted to leisure today for example is the same as it was in 1900.  In fact, “pure leisure” has declined since 1965.

About 1-in-10 hours on weekends is available for events.

Instead, new facilities create a transfer or substitution within a category, e.g. leisure, not detectable in direct competitors but at more vulnerable levels.

This is why performances in non-profit theaters increased by 5,000 annually between 2004 and 2007, but attendance declined as the number of theaters doubled.

Often this effect is masked as it is in commercial touring Broadway shows where playing weeks and revenue increased during a similar span, but attendance, while up and down, is essentially what it was twenty years earlier.

This is why mainstream facilities are always a two-edged sword.  There may be a visible bump in participation, but the hollowing out at other levels that are even more distinct to a community’s identity are barely detectable, until it’s too late.

Most developers and related consultants dismiss this because many depend on “churn” to justify their developments.  But a community that ignores this is destined to lose its soul, if it hasn’t already.

A staggering number of cultural facilities were built in the United States between 2000 and 2007, especially performing arts centers, and yet the percentage of visitors participating in and/or prompted by these events along with overall attendance remained flat.

The index for ticket sales to commercial concerts increased from .73 to 1.38 driven by the 5% of performers who are driving 90% of concert revenues.  But it was flat to slightly down when compared to the index for capacity.

Good studies for a new theater, for example, should show not only how capacity has increased overall through the years but that the percentage of adult Americans attending various types of concerts collectively over the past decade has been flat to down at 22%.

Yet of the nearly $16 billion spent by communities on 725 new cultural facilities between 1994 and 2008, most were spent on performing arts centers during just five years between 1999 and 2004.

Look Carefully At Trend Lines

A decade is not enough to spot decline.  For example, a chart of the last 15 years for attendance at conventions will show only a valley, a peak and a slightly lower valley.

Some consultants for convention centers add a trend line at the end going straight up.

But to see the long, slow decline in this segment of visitation requires zooming out to at least 1974.  Suddenly, it becomes clear that over the past three decades, both the valleys and peaks gradually each became lower and lower than those past.

Of course, conventions and meetings are still an important visitor segment, but any community looking at a convention center must also ask to see the corresponding trend line for the number of groups using convention centers.  This is about 30%, broken down further by cohorts of average size by both overnight and daytrip, e.g. 80-85% are 2,000 or fewer in size.

Charts should also overlay a trend line for capacity, showing the more than doubling of convention space during that decline as well as the explosion of major convention hotels with meeting space.

Durham and Raleigh are a case study of comparison.  The former built what we call a “boutique convention center” as the decline became apparent, while Raleigh erected a mega-convention center several years ago.

Yet during the five years they have co-existed, Durham and Raleigh have continued to draw the same proportion of overall visitors to each community who attend conventions, with Durham actually exceeding Raleigh during some years in the proportion attending other types of meetings.

Similarly, Durham opened a new performing arts center during that period—its twelfth—which supplanted one in Raleigh for touring Broadway and other performances.

Yet, this has not decreased the proportion of visitors to Raleigh who take in that activity or changed the proportion of residents so inclined in either community.

Mega-facilities increase supply, but not necessarily demand.  Those that succeed are often due to anomalies.  Make sure feasibility studies detail downside risks beyond those that are merely financial.

Beware Of Including Resident Impact

Research economists uniformly disregard resident spending as part of a facility’s economic impact.

This is not only because a new facility will result in a transfer, or substitution of leisure time use and spending rather than an increase.  It is also because residents would have been spending the same amount of discretionary income somewhere else in the economy if not there.

Still it isn’t uncommon for downtown advocates or local officials to shop for consultants until they find one that will inflate projected impact by including residents.

This may because downtowns have a win/lose inferiority complex born of years of neglect, but it may also have to do with adopting the “churn” mentality of some developers.

But anyone credibly evaluating a feasibility study should back out resident spending or show it merely as “economic contribution” but not value-added.

However, a growing trend is to try and compute “retained tourism” which is “locals willing to travel” for similar events but because of the proposed facility, will now keep that spending local.

We attempted to calculate it in Durham for facilities during the last decade.  It must be customized to each community because “locals willing to travel” will fluctuate greatly on how close or far away alternative communities and facilities may be.

It is a legitimate calculation if very carefully done based not on conjecture, but sound research.  Of course, as with visitor impact, this should distinguish between attendees prompted by events from those who take them in on trips for other purposes.

New Visitors Attributable To Vs. Required For A Proposed Facility

Consultants usually make an attempt to quantify the number of visitors who will travel for the main purpose of taking in events at a proposed facility either in lodging room-nights or admissions or car rental days or meals, versus those who may happen to take in events during trips for other purposes.

But it is just as important to also make sure there is a calculation of how many additional visitors the destination overall will be required to draw to make up the amount needed to pay for the facility either by direct subsidy or from revenues fueled into government coffers.

A good estimator will suggest, based on this calculation, a corresponding increase a community should simultaneously invest in community marketing to generate this increase in visitation.

A good performing arts venue hosting a mix of concerts and touring Broadway productions may generate up to 15,000 hotel room-nights from cast and crew, which to officials, may seem like a lot.

But remember that the tax is paid on the rate paid for the room, not the room itself.

Even for a destination such as Durham, where rates are the highest of its comp set, this means that such a facility will generate less than 1% toward a debt service requirement of $1.5 million.

So good business dictates an increase to overall community marketing of $250,000 to $500,000 annually to generate the rest of the revenue needed.

ROI

A good feasibility study won’t just calculate the raw impact of a facility but also the return on investment to local government from non-resident visitor spending.

This should be net the cost of the land and any costs related to relocating existing businesses or services as well as the cost of construction.

This will include taxpayer return on investment from any parking and concessions or revenue-sharing.

Local governments are notorious for accounting practices that make it difficult to trace revenues related to expenses but especially beyond just operations.  A study might go so far as to recommend a special account to do this.

The ROI should include related visitor spending broken down by prompted vs. those taking in the event on trips for other purposes as well as the induced value added to the economy.

The best practice economic model will also calculate unavoidable “leakage” specific to a community; e.g., supplies that must be ordered from vendors outside the community.

It should also make it practical for a community to institute policies and metrics that encourage use of local vendors and the hiring of employees who live in the community or otherwise deduct that from the impact of the facility.

A “best practice” community destination marketing organization can re-calculate these numbers annually using the same model.

In summary, communities that value the importance of sense of place not only for appeal to visitors and new business relocation or expansion, but also for resident attachment and passion should carefully evaluate any proposal for mega-facilities.

Preservation of sense of place and community revitalization require strategic decisions as much or more about “what not to do” as they do about “what to do.”

Those most appealing in the future will be communities that learn to say “thanks but no thanks.”

The Decade of Insight Behind Today’s Accolades

One of the things running through my mind recently while helping a friend clean out a garage in the Buckwater Creek neighborhood of Durham, North Carolina where we both live was how forward thinking the Durham native was to leave huge stands of trees.

By the mid-1990s when that neighborhood was completed, Craig Morrison’s Cimarron Homes had been developing neighborhoods for more than a decade.  Craig was a “green” developer decades before it became cool.

He grasped what some homebuilders down in Raleigh didn’t when along with other special interests their whining spurred a bill to ban development related local tree retention, preservation and reforestation ordinances.

Good developers know that trees improve property values and help sell homes and lease commercial property of all types more quickly.

Trees also provide a number of ecosystem services that affect the entire community such as evapotranspiration, a process by which trees slow, capture and cleanse storm run off and put the moisture back in the atmosphere.

In Minnesota, instead of banning tree ordinances, the state is developing a system of credits for retaining and planting trees with the formula calibrated to trees as they grow, canopy, impervious surface, soil type, temperature, rainfall and other variables.

Unfortunately, the only credits that will be given in North Carolina if a few regressive lawmakers have their way, are those designed to incentivize deforestation.

In South America, some outdoor billboard companies are bragging that with new technology, this form of sign blight could cleanse up to 25 gallons of water a day in countries where clean water is still hard to come by.

But in thousands of acres of roadside where North Carolina lawmakers are now permitting out-of-state billboard companies to clear-cut the length of a football field, each would cleanse 400 gallons per day if permitted to remain.

Anyway you slice it, the giveaway makes no sense and runs in the face of an amendment to the state constitution.

The variety of calculations that economists and forestry researchers are now placing on the value of trees may one day help lawmakers understand how foolhardy it is to public health alone to ban tree retention and preservation ordinances.

Even in some highly acclaimed cities such as Durham, where the challenge is cleaning up urban streams that flow into water supplies, an obsession with not raising taxes is obscuring services that are lacking and hollowing out others.

For example, neither the city nor county of Durham has an agency tasked with keeping these streams clean or following up to find polluters.  Instead, we rely on episodic clean ups by agencies, non-profits and volunteers such as Creek Week that barely make a dent.

Maybe local as well as state officials should be required to publish a list of services that are being neglected or hollowed out whenever they take credit for not raising taxes or even cutting taxes.

The public has a right to know that what we take for certain is more often actually being neglected.

Durham was renowned for investing in its future especially from 1900 into the 1940s thanks to forward thinking leadership and visionary public servants such as John C. Michie, William M. Piatt and Dallas W. Newsom in the period that led the way to professional management of cities and counties.

Then Durham suddenly descended into another period not dissimilar to the one we are in now where an obsession with holding the lid on taxes took precedent over preparing for the future during the late 1940s, 1950s, 1960s, 1970s and early 1980s.

Durham was held back during this span even as state and business leaders from here laid the foundation for the transformation of North Carolina’s economy to what it is today.

The costliness of that era when Durham was around a third the size it is now is made strikingly apparent by what happened during a remarkable decade beginning in 1982.

It is this decade that truly laid the foundation for making Durham known worldwide today for where great things happen.

It began when now-Mayor Bill Bell, then just in his early 40s was elected chair of the Durham Board of County Commissioners and joined by community activist Becky Heron about the same time Cimarron Homes was founded.

An incredible generation of students who had graduated from college in Durham in the 1970s has stayed here and had begun to be elected to the Durham City Council, including Wib Gulley who would go on to serve two terms as mayor and several as a state senator.

In 1983, Orville Powell was recruited as city manager, followed a year later when Jack Bond was recruited as the new county manager for Durham.

Together, these managers and elected officials all with fresh eyes, decided to make it clear to residents what they had been missing during the four-decade obsession with not raising taxes rather than investing in the future.

These are also the years when local officials also grasped that by forming a community-destination marketing organization (DMO), which I was brought here to start in 1989, they could also grow the local tax base through attracting visitors.

It is also the decade when Durham banned billboards and cleaned up other sign blight, first initiated adaptive reuse of historic factories and warehouses, grew organic districts such as Ninth Street, and established tree preservation ordinances and scenic overlays along major highways, all by fostering the community’s unique sense of place and authenticity.

In the years and months before I arrived, these Durham city and county officials also asked residents to approve two huge bond issues designed to catch Durham up and lay the groundwork for the future, followed by several subsequent bond issues.

In response, realtors and developers in neighboring communities began to hammer Durham as having higher taxes failing to mention that Durham’s city taxes were 19% higher because after running utilities to make Research Triangle Park possible, corporations there were subsequently exempted by the state from paying a full share of Durham taxes.

These detractors also obscured the significant difference between “tax rate,” “tax valuation” and actual “tax burden”which must be factored into any comparison.

In response, Durham’s fledgling marketing agency fueled the local and surrounding news media with better information, but the damage had been done.

Some Durham voters had become confused by the constant misrepresentations, especially in the more conservative unincorporated areas of the county.

Jack Bond retired from local government in 1991 and after a stint in state government and on the governing board for Durham’s DMO, he passed away in 2001 about the time Bill Bell moved over as mayor.

Bell had been briefly replaced as a Commissioner in 1994 because he had supported school merger and while he was soon re-elected, some conservatives were also elected in the early 1990s whose rhetoric deepened suspicion among residents about taxes.

As it still is today, this changed the conversation from taxes as investment and it set Durham back again to the regressive thinking of the 1950s and 1960s, a preoccupation that quietly began again to hollow out initiatives such as upkeep and refocus attention only on the near term.

One conservative elected official during that transition even asked me in a hearing, when we would have enough visitors and wouldn’t need visitor spending or resulting tax revenue.

“Uhhh…never,” I replied, “Not if we want Durham to thrive.”

By 1993 Gulley had gone on to the state senate and in the mid-1990s, Orville moved on to teach at Indiana University’s School of Public and Environmental Affairs.

Durham has passed bonds since then and has had many good leaders, but the obsession with capping taxes at any cost has systematically hollowed out local government while simultaneously blinding residents and probably some elected officials to what isn’t being done as a result.

The revitalization of downtown today, a remnant from that decade of forward thinking, belies the fact that we’re no longer keeping the community up as a whole or investing in the future.

All of this is to say, that Durham needs leadership to stand up again and level with Durham residents and business owners about what is needed to prepared Durham beyond our current terms of office and lifetimes.

Durham can’t sit back and rest on today’s accolades, most of which are really the result of strategic groundwork initiated in the 1980s and early 1990s, while the community silently slips behind again.

Nor do we have to sell Durham’s unique character out to the highest bidder so we don’t have to ask residents to shoulder this investment.

We just need another period where preparing Durham for the future is considered an investment, not a burden.

Changes at the Margins for Local Businesses

A new study published last month by researchers at Ohio State University Fisher College of Business found that finally requiring online retailer Amazon to pay state and local sales taxes in some jurisdictions results in a two percent shift in purchases back to local “brick and mortar” stores.

The study confirms several things about the effects of such taxes even at the margins.

One of my ongoing challenges during a four-decade career in community marketing representing three different areas was trying to help those in local government understand that increasing a sales tax, even by a point, is not free money.

Many elected officials were quick to grasp that at the margins even a one point increase has consequences.  It was the professional administrators preoccupied with only “pie-slicing” who were often the thickest.

Maybe price elasticity isn’t taught in public administration or public policy schools.  One manger even blew off the $40 million my organization spearheaded in annual tax revenue for local governments at the time by quipping that his job was only to worry about how it gets spent.

He went on to say to a room full of onlookers that revenue is  generated only when elected officials increase the rate of taxation.

This man was the quintessential poster child for why a fifth of small enterprises obsess about taxes and ridicule peers who support increases even when assured the expenditure will be used to offset any impact.

When I retired almost five years ago, a friend and former elected official suggested to the Sanford School of Public Policy at Duke here in Durham and the Institute of Government in nearby Chapel Hill that they seek my pro bono advice on how to better integrate revenue-generation in curriculums, but there was no response.

A momentary breakthrough in Durham, North Carolina, the last stop in my now-concluded career was when the DMO there commissioned for the benefit of local and state officials an economist to compute the impact of sales taxes on lodging, retail, foodservice, transportation and entertainment, all industries in the tourism sector.

It was beneficial and hailed as a best practice.  Some took note of recommendations on how to offset such increases.

But it was not enough to relieve the preoccupation by some elected officials and administrators with budget pie-slicing, a distraction from what should be an equal concern with revenue-generation and cost-benefit metrics.

Of course, there are also a few surprising enablers.

Ironically, the very businesses who oppose levying a tax on their own customers are often the most engaged in pushing for government incentives or tax breaks or even increased taxes to be levied on some other businesses but for their benefit.

Too often the governments paying heed to these requests can’t seem to be bothered to detail stipulations to fully benefit the local economy and ensure that these breaks aren’t used to displace business from existing concerns.

So subsidized businesses often seem to be invested instead in securing non-local vendors or formula stores that will hollow out the very local, independent concerns that make a place a place.

This isn’t the only way local and state governments seem aloof to the plight of truly local businesses, most micro businesses or entire organic districts.

Often without any strategic plan for enabling these place-based assets so critical to sense of place, they enact ordinances that often undermine them by driving up the cost of doing business such as parking and rental rates.

Recent studies show that these factors are of far greater concern to truly local businesses, more than most concerns, especially regulations.

Even leveling the playing field after granting 15 years of de facto tax advantages to online retailers, won’t be enough. While restoring tax coffers, the change has ten times the benefit to other online retailers than it will to local “brick and mortar” stores.

Local governments are the beneficiaries of local, independent businesses because when leveraged by community marketing they are far better for visitor-centric economic and cultural development than formula stores, but their ecosystem is oh so fragile.

This is why it is so bewildering when those in communities such Durham where sense of place still thrives, are so oblivious to the need for indepth strategic plans to guide the nurturing of pillars such as urban forest, local-independent retail, wayfinding and general upkeep.

One was done here for the cultural aspect at the insistence of Durham’s DMO when a new tax on visitor businesses was sought.  But plans, of course, amount to nothing without aggressive, energetic and disciplined long-term execution.

Well-meaning elected officials need to connect the dots for themselves and administrators between these factors, revenue optimization and quality and sense of place – before it is too late.

An $11 Trillion Diet Deficit Hawks Can Munch On

A friend and I have recently started walking an additional 12-15 miles a week up and down the many hills in my neighborhood in Durham, North Carolina.  Coupled with eating out half as much, it not only feels great but researchers note it should be expanding my hippocampus.

This is the part of the brain thought to be the central processing area for memory and learning which gets a workout during the 6 or so hours a day I spend researching and writing essays to post on this blog.

At the risk of offending my Tea Party friends who still can’t seem to come to grips with the fact that health insurance is not only for their benefit but to prevent uninsured costs from being shifted on to other people, I recommend a report published last month entitled The $11 Trillion Reward.

That is how much would be saved each year if Americans just increased their consumption of fruits and vegetables and yes, it would ultimately lower the deficit.  No, I don’t just mean those living in Red States which tend toward higher rates of obesity.

I was only saved from the genetic tendency toward being overweight by the fact that doctors discovered in my early 20s that I can’t metabolize sugar very well, including refined carbohydrates.

If they didn’t make me sick, I’d still be binging on my mom’s homemade cinnamon rolls and a big bag of glazed Spudnuts.

But all my life I’ve eaten way too much red meat, not just because I grew up on a cattle ranch, but because a high-protein diet suits me.  But recently I began to substitute poultry or fish four or more times a week.  I know, not very Idahoan.

The report is not only about quantifying savings if Americans increased our individual fruit and vegetable daily intake on average by 1/12 cups of fruit and a mere cup of vegetable, although just that change would save 127,261 lives a year and public savings of $54 billion a year in medical costs.

The scientists and public policy experts who authored the report include proposals for overhauling our entire public farm and food assistance policies by things like:

• Recalibrating programs to increase R & D and production of fruits and vegetables by shifting incentives to help diversify growers and gearing them to local markets.

 

• Grants to spur greater availability of farmers markets and grocery stores in low-income neighborhoods including moving “helping hand” food programs to more healthy choices.

Don’t go all “nanny state.”

This is simply about protecting innocent Americans from the hidden costs related to the actions of others.

Edmund Burke, considered the father of modern conservatism and a mentor to our founding fathers wrote that “whatever each man can separately do, without trespassing upon others, he has a right to do…”

I agree, and I suppose that means that anyone should be free to binge on whatever foods they wish, and businesses should be free to cater to those binges with junk.

But other Americans should not have to shoulder the costs of healthcare consequences of these binges or their binge enablers nor should my tax dollars be used to subsidize either the binging or the creating of the foods that are binged upon.

According to Joseph Thorndike, head of the Tax History Project and author of a book published this year entitled Their Fair Share: Taxing the Rich in the Age of FDR:

The original Tea Party “was a protest not against taxes but against tax loopholes.”

Shifting costs onto innocent Americans because you are too stubborn to have health insurance or to eat what is good for you, is a huge tax loophole.

The Same Ole’ Enemy – 239 Years Later

Taking a long-view of economic history is another way to pinpoint the fact that climate change is a direct result of human activity.

Years before it would be confirmed by Berkley Earth by scientists who were skeptical about climate change but who found the link after going over data from the last 250 years, one could see the link pinpointed in the work of economic historians such as the late Dr. Angus Maddison in his book entitled Contours of The World Economy 1-2030 AD.

Berkley Earth reconstructed climate data to make their link, while Maddison reconstructed economic growth over three millenniums to find a pattern.  He learned that between the years 1 and 1000 AD, around the time that another era of climate change spawned Viking conquests, people had actually become slightly poorer overall.

Between 1000 AD and 1820, economic growth was stagnant even in western Europe and spinoffs such as the American colonies and fledgling United States of America.  The surge following 1820 was brought about as the industrial revolution kicked into ever higher gears.

Ironically, the seminal Boston Tea Party protest was not over unfair taxes but a revolt against a tax loop-hole created by the British for a “too-big-to-fail” corporation at the disadvantage of small independent merchants, some of them smugglers, as noted in this excellent TED Presentation  published on “Black Friday” by Stacy Mitchell, a senior researcher for the Institute for Local Reliance.

I agree with Republican lawmakers that there is something wrong with government but, in my opinion, size isn’t the real issue.  Making government more nimble and responsive seems much more important. Nor do I buy the part of their tightly-woven narrative that this group’s frequent stalemating is on behalf of small businesses.

I am far more persuaded that the policies that have marginalized the middle class over the last thirty years and eroded small business by consolidating almost every part of the economy into the control of a few top-heavy players has been engineered not by government or the free market but by those on whose behalf lobbyists have rigged the system.

Even the process of devising regulations has been polluted by special interests; and those who argue that regulations should be simplified are far too often only fronting for interests, such as outdoor billboard companies, eager to see these regulations further rigged to their exclusive benefit.

“Rent-seeking,” the term economists give this loathsome activity probably dates back to the 1879 book Progress and Poverty, written by economist Henry George in the early years of the Gilded Age.  George observed that poverty occurred back then when policies permitted absurd “economic rents” to be charged by monopolists including landowners resulting in an over-concentration of unearned wealth.

George proposed solutions he believed would benefit both capitalism and labor while curbing these rent-seekers.  Seven years after the book was published, George sought the office of mayor of New York City but finished behind a Tammany Hall candidate.

However, the coalition forged by George caught the attention of the third place finisher, Republican candidate Theodore Roosevelt.

Henry George had forged a coalition of groups that in a few years would become nationwide force known as the Progressive Era, which sought, in part, to curb the excesses of the Guided Age.  A variation would elect President Theodore Roosevelt and inspire the Square Deal including conservation and anti-trust.

It isn’t easy being a Republican right now.  A social network feedback-loop has the party torn between a “circle the wagons” approach and a desire to open up to alternatives.  A new poll for ABC, Washington Post and the Pew Center shows that by 53% to 27% Americans will blame Republicans if the current impasse persists.

The party would do well to study T.R., one of its greatest Presidents.  The real enemy isn’t government or taxes and it isn’t Democrats or women or minorities.  Just as it was in Boston harbor as the dawn of the American Revolution, the common enemy is still economic rent-seekers.

This issue isn’t about the 1% or the wealthy, although many didn’t earn their wealth but used rent-seeking instead.  The issue economic rent-seeking, as Joshua Brown, who blogs at The Reformed Broker, put it so eloquently a year ago is about the fact that:

• “America hates unjustified privilege,
• it hates an unfair playing field and crony capitalism …,
• it hates privatized gains and socialized losses,
• it hates people who have been bailed out and don't display even the slightest bit of remorse or humbleness in the presence of so much suffering in the aftermath
• it hates rule changes that benefit the few at the expense of the many…”

Do Tax Cuts Generate Growth?

There are some really smart people who run for President of the United States of America and many who may be even smarter serving as advisors to these candidates.  One of them, Mitt Romney, who was a richer if not also smarter classmate of mine at Brigham Young University during the 1970s, is promising to cut taxes even further as a means to quicken economic growth.

To moderate Independents such as me that may sound reasonable, in the same sense that any stimulus is also reasonable, until you look at the result of past tax cuts as illustrated in the chart in this blog which appeared last month in a New York Times piece by David Leonhardt.  

Looking at the period covered by the terms of our previous four presidents, it turns out that when taxes were increased during the George H.W. Bush and Bill Clinton administrations growth occurred – indicating that their tax increases actually generated or were not adverse to economic growth.

The complete opposite happened, when in the both the early and mid 2000s, George W. Bush cut taxes.

Of course it is more complicated than that and anyone interested or swayed one way or another to base his/her vote on this issue alone would be well advised to read Leonhardt’s piece.

One reason tax cuts have so little, if any, impact is that tax rates are are currently so low.  Tax cuts also don’t make much sense at a time when our most important priorities are to make significant reinvestments into aging infrastructure, research and development to achieve energy independence and to restore strategies to generate social mobility and pay down the deficit.

Any tax priority now seems better aimed at revising the code and eliminating loopholes and especially favors carved out by rent-seeking groups that rather than create value-added to the economy seek to use lobbying and campaign donations to rig the system in their favor.

As for the so-called 47% who Romney claims don’t pay federal income taxes, which is more like 1%, it appears to me from recent analysis that they disproportionately live in red-states and that the proportion has tended to increase during my lifetime mostly during Republican administrations.

There has to be more to the fact that so much analysis reveals that states dominated by factions who seem to despise government and taxes the most, including reforms such as those being made to healthcare, are the same states where residents take far more than they give in terms of federal benefits, who are more obese and drive up healthcare costs, scam Medicaid while going to college and have higher teenage pregnancy and the worst credit.

Maybe some of this can be chalked up to “inversed projection,” a condition where individuals or groups subconsciously rationalize a contradiction by painting themselves as the victim instead.

But just maybe, across the political spectrum, we all need to be a little less impious and spend more time looking into the mirror than down our finger.  Humility in a candidate may be the attribute that most swings my vote in this election.

Joining The 40%

I may have been part of the reason that net income fell 58% at Amazon.com in the fourth quarter of 2011.  I decided to become part of the 56% of US consumers who try to only buy products from brands that do good things for the environment or community.

According to the research conducted last year, Amazon will face even more scrutiny in China, where that percentage zooms to 83%.

In fact, I became part of the 40% of consumers who go even further and stop buying from that brand compared to 20% who do, about the same percentage who tell others not to boy.  I may also be part of the reason that local independent retailers across the nation outperformed the national average in holiday sales this past year.

It was hard not to keep rewarding Amazon for its incredible innovations.  I had hoped that Amazon would eventually do the right thing.

But that inventiveness, built on a platform that was researched and developed by public tax dollars, will never outweigh the company’s hypocrisy in refusing to pay local tax revenues while it desecrates local business climates.

I just don't buy Amazon's claim that it is refusing to pay local taxes because it is inconvenient or unconstitutional while hoping that instead a uniform tax will be enacted nationwide.  Any national retailer can tell you a simple today’s easily available databases make it for them to localize each purchase both to where the consumer lives and related jurisdictions.

In free-market terms I would call this the mother of all negative externalities, meaning that Amazon is benefiting by neglecting to include the true cost (including negative impacts) of its products and services and is further amplifying those hidden costs by spending tens of millions of dollars fighting any effort toward what economists call corrected pricing.

I don't expect my gradual withdrawal will bring Amazon to its knees. I began by forgoing any use of my Kindle or the related apps I had begun using instead a couple of years ago on my smartphone and tablet.

I switched to using an equally convenient alternative called IndieBound, the app created by a “community-oriented movement begun by the independent bookseller members of the American Booksellers Association.”

I buy the e-books via the website for my favorite local bookstore, which happens to be The Regulator Bookshop located on Ninth Street in Durham, North Carolina, where I live, and  the books download into my IndieBound app just as they did in the Kindle app.

You can find the participating local bookstores near where you live by going to this link.

My switch is not just symbolic.  A much greater proportion of each dollar stays in my community where local businesses create jobs for my neighbors and reinvest taxes in my community.  It is also better for the environment because it involves less packaging, less transportation and an overall smaller carbon footprint.

I'm sure Amazon means well and its founder is sincere in his beliefs, but that doesn't compensate for the company’s hypocrisy or the fact that no amount of good can ever compensate for the vast amount of harm it is creating to states and especially to communities.

The free market is a marvelous thing but let's face it, the reason we have what is called a mixed economy is to make adjustments for what the free market won't, doesn't or can't do rapidly enough.  If it could or did, either the products sold on Amazon would be unaffordable or the company would be paying it's fair share of taxes.

Amazon has the right to spend tens of millions of dollars trying to dodge taxes. But so do the 40% of its customers like me who will stop buying products from the company altogether as it becomes more and more evident that it just doesn't do “good things for the environment or the community.”

To support independent retailers search online for a similar movement in your community like Sustain A Bull in Durham.

Demagoguery Falls Between Pawn Stars and American Pickers

The adjustment I made a few weeks ago so that my mortgage payment would be sure to reflect a modest increase in local property taxes made me think back to something I read in a book a month or two ago.

I found it interesting that:

“the federal government accounts for about 65 percent of total tax revenues, while state and local governments account for 35 percent.”

“…the United States collects around 18 percent of GDP in tax revenues at the federal level and another 12 percent of GDP at the state and local levels. Washington currently returns around 4 percent of GDP to the states to implement health, education and infrastructure programs at the state and local levels.”

Equally interesting was the data that the book’s author, clinical economist Dr. Jeffrey Sachs, used to illustrate that “federal tax revenues as a share of GDP were nearly constant from mid-1950s onward at 17 percent to 18 percent of GDP.”

He continued by asserting that “in the United States, there has been essentially no change in the tax-to-GDP ratio since 1965.” The title of Sachs’ book, The Price of Civilization, comes from a quote by U.S. Supreme Court Justice Oliver Wendell Holmes Jr. in a speech he made in 1904, just a few years after he was made a recess appointee to the court by Republican President Theodore Roosevelt.

Holmes said that “Taxes are the price we pay for civilization.”  He had been wounded in combat, fighting for the Union during the American Civil War.  He died two days shy of his 94th birthday in 1935 --  just more than a decade before I was born and only a few years after he retired from the nation's highest court.

To put that in perspective, I was two years old when the 1st Cavalry Division was breaking through Korea's Pusan perimeter and the last time taxes were this low as a share of the nation's economy, according to the Associated Press. 

So I smiled yesterday as I read a weekly opinion column in the Washington Post by Richard Cohen who wrote that “it is entirely appropriate that last week’s GOP debates fell between ‘Pawn Stars’ and ‘American Pickers’ in the 10 most-watched cable television shows.”

I admit to watching two of the three.  I avoided the debate probably because, in the words of another WP columnist Kathleen Parker written a few months ago, I have trouble with “the Palinization of the GOP, in which the least informed earns the loudest applause.”

I agree with Cohen that the GOP appears to have “turned hostile to thought, reason and the two most important words in the English language: It depends.”

As with taxes he continues, “Should they be raised? It depends. It depends on economic and fiscal conditions — and on whose taxes will be raised and by how much.”  It depends!

“The answer cannot be “No, never.” That’s not an economic position; it is an ideological one and exhibits a closed mind.”

By the way, is it just me or is Rick on Pawn Stars a dead ringer for Homer Simpson?