by Gary North
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.
"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 ‘Antiques 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.
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.
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.
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?
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.
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
Copyright © 2007 LewRockwell.com