Daily Archives: May 14, 2007

The American Experience on Alexander Hamilton

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AlexanderHamilton.jpgPBS’ excellent American Experience series provides a two-hour documentary tonight appropriately entitled “Alexander Hamilton” (PBS, Monday 8-10 p.m. CDT, but check your local listings), which will focus on the remarkable life of arguably America’s most controversial Founding Father. One of my favorite books of the past several years is Ron Chernow’s excellent biography of Hamilton, so I am looking forward with great interest to the American Experience‘s treatment of the man who is most responsible among the Founding Fathers for the success of the U.S. market system.
Hamilton’s numerous political opponents used to call him “the bastard son of a Scottish peddler,” but the truth is that his parents were not legally married, he grew up dreadfully poor in the West Indies, and he was orphaned at an early age. Although the prideful Hamilton was ashamed of his troubled start in life, it fueled a fierce ambition that propelled him as a teenager to write newspaper articles that were so impressive that a group of men from St. Croix passed around the hat to pay his way to New England so he could attend college. At the age of 17, Hamilton literally stepped off the boat in Boston into the beginning of the American Revolution and, within three years, had risen through the ranks to become General Washington’s chief of staff and most trusted aide.
That the young Hamilton in just a few years went from writing newspaper articles about hurricanes in the West Indies to becoming one of the key leaders of the American Revolution is merely one of numerous remarkable aspects of his compelling life. So, pull up a chair tonight and enjoy the fascinating story about the man who has much to do with establishing the foundation for the enormous wealth creation that has taken place in American society over the past 200 years.

Rationalizing a boondoggle

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dome.jpegAnne Linehan over at BlogHouston.net continues to do a fine job of following the various rationalizations of several local governmental types over how to justify public financing for the proposed the Astrodome hotel project (Charles Kuffner comments, too). The latest proposal being floated is to give the deal $150 million in hotel and sales tax breaks over a ten year term to facilitate about half a billion in private financing for the deal. The rationalization is that the rebates are worth it because the tax revenue wouldn’t be there in the first place but for the hotel generating it. Plus, the hotel really is a good thing for Houston, so why worry about a measly $150 million over the long term?
Putting aside that dubious reasoning for the moment, the reason that this project is a boondoggle isn’t because of $150 million tax rebates over ten years. On a boongoggle of this potential magnitude, that’s peanuts. The real financial risk comes when the hotel falters in paying its private financing. In almost every case, the local government that backed the facility will be placed in the difficult position of either putting up additional funds and security for the project or face the politically untenable position of watching the project fail. Guess what politicians usually vote to do when the alternative is to be embarrassed with a failed deal on their watch?
The problem with boondoggles of this type is that they “eat” — they must be fed money when the operating losses start mounting. There is a reason that the promoters of this deal can’t arrange private financing. That is a reason for the county government to back off the deal, not to embrace it.

The real New York squeeze play

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hrlogo.jpgOne of Houston’s many alluring qualities is the depth and variety of affordable housing, so those local businesses or institutions in competition with New York entities for employees should take note of this recent NY Times article:

As the [New York City] apartment-hunting season begins, fueled by college graduates and other new arrivals, real estate brokers say radical solutions among young, well-educated newcomers to the city are becoming more common, because New Yorkís rental market is the tightest it has been in seven years. High-paid bankers and corporate lawyers snap up the few available apartments, often leading more modestly paid professionals and students to resort to desperate measures to find homes.
While young people in New York have always sought roommates to make life more affordable, they are now crowding so tightly into doorman buildings in prime neighborhoods like the Upper East Side that they may violate city codes. [. . .]
. . . The rents for one-bedroom apartments in Manhattan average $2,567 a month, and two-bedrooms average $3,854 a month, . . . but rents tend to be far higher in coveted neighborhoods like the Upper West Side and TriBeCa.
Because landlords typically require renters to earn 40 times their monthly rent in annual income, renters of those average apartments would need to earn at least $102,680, individually or combined, to qualify for a one-bedroom and $154,160 to afford a two-bedroom.