The Storehouse and the Clock

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Americans own
stuff. We own so much stuff that millions of us can’t store all
of it in our homes. We rent storage facilities. We are doing our
best to become junior versions of Charles Foster Kane.

"Rosebud!"

"Stuff"
is a noun. As with most English nouns, it can be verbed. We Americans
stuff our stuff into every available space, every nook and cranny.
(I don’t know what a cranny is, but I’m sure that my wife has used
up all of them that we own.) Americans never seem to have enough
space. Well, that’s not quite true. We never have enough space at
zero price.

In New York
City, apartment renters pay many, many thousands of dollars a month
for tiny living quarters. This high-priced living space creates
a problem for renters: What to do with all of their stuff? There
is a solution. It isn’t free. Oh, my, is it ever not free! Consider
this story, from The New York Times, published on November
12, 2006.

"The
$38,500 Closet"

To live in
New York City is to covet thy neighbor’s closet. Especially if
it’s a walk-in.

Developers
of new buildings tout basement storage units as an amenity almost
on a par with a gym or a doorman. Wire-mesh storage cages now
routinely sell for $30,000 to $40,000, and enclosed storage rooms
can sell for twice as much.

Not to be
outdone, co-op and condo boards in older buildings are finding
ways to retrofit extra storage space, even if that means evicting
the superintendent’s mops and dustpans from a utility closet so
that it can be rented out. Many of these spaces have waiting lists
that run for years, and they become available only when someone
moves out or dies…

"Closet
space is so precious in Manhattan," said Monica Klingenberg,
an executive vice president of Marketing Directors Inc., an agency
that markets and sells luxury co-ops and condos. "We’re all
trying to eke every square inch out of our living space, so the
ability to have additional storage space is just a gold mine."

A gold mine?
Is she kidding? Gold fluctuates in price all the time. Storage space
in New York City only goes up in price. Way, way up.

The story reports
that a bidding war broke out for a 10-foot by 10-foot basement storage
space. Eight people were in the auction. The winning bid: $38,500.
Then the couple spent another $5,000 to finish the space and install
shelves.

"I wish
we could have found another one like this," Mr. Alonso said.
"When you pay $500 a month to rent a storage room somewhere
else and you own nothing, you can begin to compare and you see
$38,500 is reasonable."

Why did they
need the space? Because they are collectors. What is a collector?
It is a person who spends lots of money to buy old stuff that died
off years ago in the new products market. We read, "virtually
every item in their one-bedroom apartment could be featured on u2018Antiques
Roadshow,’ from an original Felix the Cat metal toy to their antique
sleigh bed."

This is why
I do not allow my wife to watch Antiques Roadshow when we both are
at home. It is the only TV show that I have banned. As soon as I
hear the theme music, I flip the channel. I don’t have all that
much authority at home, but I put my foot down when it comes to
Antiques Roadshow.

[Note regarding
the most famous Antiques Roadshow: The Rolling Stones’ year and
a half tour has grossed over $430 million so far. It’s called
"A Bigger Bang," which ought to be subtitled, "for
your buck."]

The article
on New York City basement storage space goes on and on and on. It
is a very long article, which means that some editor thought readers
would be highly interested. My thought: only if they are specialists
in abnormal psychology. But if you want more evidence on closets
in New York City, click
here
.

SELF-STORAGE

The term self-storage
refers to warehouse space for families and small businesses. We
all know about self-storage.

A generation
ago, we didn’t.

I got to thinking
about this when I sat down to write this report. When did I first
see a self-storage unit? I could not remember, but I knew it was
not in my youth.

So, I went
onto Google and searched for "self-storage," "industry,"
and "United States." The first hit was for the Self-Storage
Association, which seems reasonable. At the top of its home page,
we read:

The SSA represents
the $150 billion+ (market cap value) and $21 billion (annual revenues)
self storage industry in the United States that comprises more
than 49,000 primary facilities with more than 2 billion rentable
square feet. Also, the SSA represents members in Canada and 18
other nations around the globe.

Big. Really
big. Lots of money and lots of square footage. But when did this
industry begin? There is a link on the home page to an article on
the industry. Here, we learn that the storage industry began in
the 1850s in London. Bankers offered a service to very rich clients:
to store their things while they went on cruises — sort of like
very large safety deposit boxes. In the early 20th century,
moving van companies offered a similar service to their customers,
who were on the move.

How often do
we see a moving van today? I mean a real one, like Bekins (remember
Bekins?) or Mayflower. Hardly ever. Yet in my youth, they were everywhere.
U-Haul killed them. When states authorized people with standard
drivers’ licenses to drive a family-size moving van, we became a
nation of move-it-yourselfers.

This created
a new problem: We also became store-it-yourselfers. The stuff piled
up. But where to store it? The moving companies had all shrunk.
Their storage space was located in distant low-rent districts. Nobody
wanted to go there.

The free market
responded, as it always does. According to the article on the site
of the Self-Storage Association,

In the mid
1960’s, Texas saw the first self storage facilities as we know
them today. Becoming immediately successful, development of facilities
spread quickly to the West coast and then throughout the United
States and Canada, with facilities now being constructed in Australia
and Europe. The majority of facilities operating today may be
classified as "second generation" self storage. These
include: typical row buildings, some multi storage facilities
and conversion of older buildings.

Local storage
facilities appeared all over the suburbs. Ours is about four minutes
away. We are good customers. It’s easy money for the company. Just
ding our credit card every month. No muss, no fuss.

Third-generation
facilities are now being built: up-scale, landscaped mini-warehouses
that blend into a neighborhood’s surroundings. I call this "designer
warehousing."

Self-storage
is spreading all over the world. But it was originally "Made
in Texas." The
story is here
.

So, the whole
world is either driving along Charles Foster Kane Highway or looking
for an on-ramp.

We call it
"self-storage." That term may be more perceptive than
originally conceived. We store a piece of ourselves in our stuff.

We impute value
to all that stuff. It has no intrinsic value, economists tell us.
All value is imputed by some acting agent, they say. I believe them.
But, by imputing value to our stuff, we associate our lives, dreams,
and hopes with it. So, it is very tempting to equate our lives with
our stuff.

"Rosebud!"

Several decades
ago, I was watching Citizen Kane on a local Los Angeles TV
station. To make the film fit into the allotted time slot, the local
film editor had snipped out what he regarded as an uninteresting
section of the film. It was where Kane is a boy, and his father
gives him a sled.

I had asked
my mother to watch the film. She had never seen it. At the end,
she did not understand the film’s climactic ending (which is where
climaxes belong, I always say). I had to explain it to her.

As I assume
you know, the film centers around the search by reporters to find
out what "Rosebud" meant. Kane had said this word just
before he died. (He was alone in his bedroom at the time. I don’t
regard the movie as the greatest film of all time, as many critics
do, but I regard this scene as the greatest film goof of all time.)
The reporters do not discover the secret. Only the viewer does,
at the end, when the sled named "Rosebud" is being burned
as junk in the basement incinerator of Xanadu, Kane’s gigantic mansion.
The last scene is smoke pouring out of the chimney.

What if the
scene of Kane’s youth had been cut from the original, to make extra
time for the theaters to sell popcorn?

That experience
has stuck with me for a long time. It raises a question in my mind.
How much of our stuff is mainly Rosebud? If we did not remember
the equivalent of our youthful sled — the Alzheimer’s threat — what
would all of our corroding sleds mean to us?

How much of
it will our children keep? Not much, I think. After all, they have
their own piles. They have their own monthly bills from the local
self-storage facility. Will they look through the piles of our stuff,
one last time, and reminisce about how much it meant to us? Or will
they just grab a hand cart to haul it away, piece by piece, to the
dumpster. "Goodbye, Dolly!"

Every self-storage
unit ought to have a dumpster.

Maybe even
a surroundings-integrated dumpster.

Into the dumpster
will go our formerly imputed hopes and dreams.

"Rosebud!"

THE TICKING
CLOCK

The clock is
ticking on our storage expenses. Our credit card report tells us
this monthly. It is ticking on us, too.

I don’t buy
much stuff. Used books, yes. But that’s a harmless addiction. Yet
each book testifies from its place on a shelf: "You’ll never
read me. You’ll never get to me. Don’t you hear that clock?"

I hear it.
It is getting louder all the time.

In the inescapable
trade-off between time and money, I’m long on money and short on
time.

The marginal
utility of money falls as we get more of it. The marginal utility
of time rises as we run out of it. At some point, the lines cross.
When it does, the shock can trigger strange effects. Sometimes it
results in male mid-life crisis, or so I’m told. Personally, I was
so busy writing books and building my publishing business that I
missed it. It was like the sexual revolution era of my youth. I
was so busy in grad school that by the time I noticed it, I was
married.

Ben Franklin
wrote this in Poor Richard’s Almanack: “A child thinks that
20 pounds and 20 years can never be spent.” A pound sterling was
worth more in those days. But, life expectancy being what it was,
so was a year.

The ticking
clock, when coupled with rising income due to competence in one’s
profession, places a premium on time, meaning leisure time, meaning
time that generates no monetary income. Time gets more expensive
in money.

In China, the
mania for money is operational in the cities. The Chinese were poor
in 1980. Most of them are poor today. Those who are getting rich
are a minority in a country of 1.3 billion. But a Chinese minority
is a lot of people. The Chinese middle class now numbers in the
hundreds of millions. If you want to get a visual image of what
I am talking about, see
Photo A
.

The quest for
money has made the younger Chinese ferocious competitors on the
production side of the ledger. They are buying money with time.

Yet China is
running low on time. Its demographic clock is ticking. The one-child
per family law has produced 20% more marriageable males than females.
(When it comes to abortion in Asia, females get the sharp end of
the knife.) The enormous population is aging faster than capitalism,
despite its remarkable speed of development in China, can produce
wealth to support aged Chinese.

Nicholas Eberstadt,
a demographer, predicts that between now and 2025, almost two-thirds
of China’s population growth will be in the cohort over age 65.
By then, China will have an older median age than the United States.

How will working-age
people support the oldsters? There is no pension system. This helps
Chinese economic growth rates today, but what about 18 years from
now?

Eberstadt
writes
:

Where in
the early 1990s the average 60-year-old Chinese woman had five
children, her counterpart in 2025 will have had fewer than two.
No less important, China’s retirees face a growing "son deficit."
In Chinese tradition it is sons, rather than daughters, upon whom
the first duty to care for aged parents falls. By 2025, a third
or more of Chinese women approaching retirement age will likely
have no living sons.

The vast majority
of today’s Chinese are rural, poor, and without prospects in the
new urban economy. They are the victims of three decades (1949—79)
of Communist economics and Mao’s ruthlessness. Yet they must somehow
support themselves, building capital for retirement. This is demographically
impossible.

So, while younger
Westerners worry — a little — about old age, their educations, their
experience, and their inheritance of 200 years of capital accumulation
in a free market social order have put them far ahead of most Asians.
Economic competition from Asia will surely increase. But we are
so far ahead of them today, and so few of them proportionately are
marching up capital mountain, that typical Americans in retirement,
although unlikely to match their youthful dreams of care-free aging
in the golden years, will enjoy better lifestyles and suffer less
despair.

CONCLUSION

Our stuff is
like the blob in the original Steve McQueen movie. It spreads. It
overflows. It swallows everything in its path.

We are long
on stuff compared to time. This is a very recent phenomenon, and
more of a North American problem than any other society in history.
This is capitalism’s gift to the West and especially Americans and
Canadians. We are the heirs of compound growth — the legendary eighth
wonder of the world.

So, when you
allocate the inevitable trade-off between stuff and time, be aware
of the falling marginal value of your stuff and the rising marginal
value of your time.

Think ahead:
How will you enjoy your stuff at age 70 or 80? Where? What kind
of stuff will still be worth storing? Where?

In
the trade-off between more stuff now vs. more personal productivity
in the future, buy future productivity by investing the money that
would buy more stuff now.

January
13, 2007

Gary
North [send him mail] is the
author of Mises
on Money
. Visit http://www.garynorth.com.
He is also the author of a free 19-volume series, An
Economic Commentary on the Bible
.

Gary
North Archives

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