Marlboro Countries

When I worked in Moscow for a total of six years in the 1980s and 1990s, my office was a converted, two bedroom apartment with a small bathroom with a bathtub and a balcony that titled precipitously towards the nine-story drop. We crammed at least five people at any time in the news bureau of BusinessWeek where I was chief. My newspaper-reader and office manager was a KGB informant named Tanya with bobbed hair and penetrating Gypsy eyes. She smoked coarse, foul Russian cigarettes like a chimney. It made me sick, but to be honest, the work was so stressful that I resumed my habit, too.

Russians like Tanya are perfect market material for Philip Morris International. Russia is a hot market for the Swiss-based firm that until last year, was part of the now-Richmond-based Altria family. PMI has introduced new products to get more people around the world to smoke, such as "Marlboro Intense," a shortie cigarette that you can puff through in fewer drags while you take a break outside from your non-smoking restaurant, "Marlboro Wides" which are Marlboro fatties, and "Marlboro Mix 9" a higher potency Marlboro. The product have been test marketed in Turkey, Portugal and Indonesia, respectively.

In Russia, 40 percent of all kids smoke by the time they are 18 and more than half of all men smoke. Smoking is one reason why Russia's population has dropped by 6 million since the mid 1990s.

PMI is now free to pursue its global marketing initiatives without behind held back by the kinds of health lawsuits that have shackled its sister, Philip Morris USA, back in Richmond, which until this December made billions of cigarettes for the overseas market at the huge factory off I-95.

Neatly separated by new articles of incorporation, the two firms have different approaches. PM USA urges you not to use their products. PMI isn't as supposedly health conscious and promotes like crazy. It does very well and an analyst calls PMI "recession resistant." Its biggest markets are places like Russia and Ukraine and perhaps soon China through a JV with a Chinese firm.

That may be great for shareholders, but not so world health. The World Health Organization reports that a staggering one billion people may die of smoking-related illness inthe 21st century. That's far more than the Bubonic Plague and World Wars I and II put together. The ill effects will be forced upon poorer nations not capable of meeting their existing health demands.

But hey, it's profit and we Virginians love tobacco. Built the Commonwealth. Governments near and far shouldn't be allowed to tell people what to do. Nossir. And, the very first act of our beloved General Assembly was to adopt price supports for tobacco back in the 17th century. Fighting malaria or dealing with Native Americans were second-fiddle to the Golden Leaf we all so worship.

For details on the global crisis, consult my story in Style Weekly: styleweekly.com

Peter Galuszka

Big Sister Is Watching You!

It's always amazed me how people tend to fall back to religion when they face confounding times.

So it is with conservatives and free-marketers who have become unscrewed by the free-falling economy, the failure of laissez faire theories and the profound sense of apprehension and bewilderment as Barack Obama, an entirely unknown entity, gropes for solutions.

It's back to basics time and for many of this genre that means back to Big Sister. Ayn Rand is the secret St. Christopher's medal for many who have lost their intellectual bearings. Want reassurance that the market is always right? Want to be patted on the head that government is always the enemy? Want to be told soothingly that "greed is good" and the ego is OK? Join the "Back to Rand" movement.

Rand has had a lot of followers, including former Fed Chief Alan Greenspan, former SEC head Christopher Cox and Ronald Reagan. In Reagan's case it was unrequited love. Rand despised him. Whatever. In Virginia, too, lots of members of the crazy, mixed-up Republican Party are turning Back to Rand for a reaffirmation of their ideas. It could be that in this regard, Rand is an even more potent elixir than the familiar Thomas Jefferson, even though Jefferson, like the Bible, is widely misinterpreted and his reality was far different from what is presumed.

Rand was a victim of her times. As a Jewish girl in newly Bolshevik Russia, she came to loath the Communists since they shut down her father's drug business in St. Petersburg. She jinked to the states on a temporary visitor's visa and ended up writing screenplays in Hollywood. She despised all that was statist and regulatory seeing them as a form of theft. Individual freedom and responsibility are key. Altruism is nonsense. The ego is what matters. People serve themselves and society much better by adopting a selfish self-interest. Only free market capitalism can unlock true creativity and efficient production.

In leftie Hollywood, Rand took being a reactionary to a new level and made it an art form. She fought against soft-headed actors, producers and screenwriters being sops for Jolly Joe Stalin and other Commies. Indeed, she was a rare "friendly" witness during the House UnAmerican Activities Committee which pursed its Red Baiting witch hunts in the late 1940s and 1950s. When called the testify, Miss Rand did so gladly. Afterwards, a snarky reporter asked her if she had any regrets about testifying. Her answer: "Yes, they didn't give me enough time."

Her two best books are the "Fountainhead" and "Atlas Shrugged." Both make heroes out of average guys who beat government regulation and other snake nests of evil. (I confess that I have never read the latter. I found the 1,100 pages too daunting).

In her personal life, Rand had some interesting quirks. Though conservative, she was liberal on race and love. In fact, she often would try to re-mate members of her little salons with other people, concluding that their marriages had been mistakes. She, of course, knew better than the men and women involved.

She embraced philosophy that she called "Objectivism" although many mainstream philosophers never quite saw it as distinct enough to be regarded as a separate school of thinking.

After she died in the 1980s, her followers created shrines to her, including an institute near Los Angeles. Its advertising material shows lots of 1930s style skyscrapers like Rockefeller Center. The grandeur of capitalism, I suppose.

Anyway, read any op-ed page. Ayn Rand is hot now and it is a sign of the times.


Peter Galuszka

A Visit to Valladolid

Pardon my lengthy absence from the blog -- I've just returned from vacation in Cancun. I didn't spend much time studying human settlement patterns -- I was happy to spend most of my time in the Club Med compound, and there was nothing about Cancun, which was first developed only 30 years ago, that struck me as worth seeing. However, we did take one day trip to Chitzen Itza, the magnificent Maya ruins, and stopped briefly in the charming colonial town of Valladolid on the way back to Cancun.

Valladolid is a "third world" urban area in terms of living standards. But the center city, serving a municipality of about 70,000, has a charm that I have found lacking in the cities of most developing nations that I've visited. Borrowing its city plan from the city of the same name in Spain, Valladolid has a large public square in the city center, which is flanked by the obligatory Cathedral as well as banks, shops, restaurants and small hotels -- many of which are open to the air. Other than a cell tower emplanted in the square, the entire area was well kept, well maintained and attractive.

The town center is so delightful that it has become a frequent stop for excursions from Cancun into the interior of the Yucatan peninsula. We stopped for the obligatory Margarita.

What's the lesson of the story? My takeaway is this: A community need not be wealthy to create quality places where people enjoy spending time. There was nothing arresting about any of the buildings, or even the park, in Valladolid. The building fronts were plain, and the Cathedral was not especially impressive in size or ornamentation. But the elements of the town center were laid out in a way that engendered pride among the people who live there and made it a place worth visiting.

UNDERSTANDING LOCATION VARIABLE COST

WHY IS IT SO HARD TO UNDERSTAND LOCATION VARIABLE COSTS?

EMR is awaiting Groveton’s examples of same house, same builder prices to support his assertions on THE ANATOMY OF AN ILLUSION post.

In the meantime, Groveton has forgotten that EMR has outlined homework for Groveton to use to prove to himself the validity of location-variable cost calculations.

Before we start lets be sure everyone understands that it is not Groveton’s fault that he does not pay his location-variable costs. No one does for reasons spelled out in The Shape of the Future. The same is true for the full cost of air travel – greatly subsidized by all tax payers and by all citizens but that is another story.

First EMR is glad that he did not say that Groveton could not afford to live where he does if he had to pay the location-variable costs. EMR said Groveton would not have made the location decision if he knew the true costs and thought he would have to pay that cost. EMR stands with that.

Based on his 8:30 AM comment of 14 March, Groveton probably could afford the true cost but he does not pay that cost and neither do his Clustermates and they may or may not be able to afford those costs.

In the 8:30 AM post Groveton said:

“OK -

“It's tax time in the Old Dominion. I pay about $225,000 in state and local taxes. Not federal and I'm not even counting sales taxes, etc. Just plain old income and real estate taxes. I live on a 7 acre lot. I drive about 10,000 miles per year - total (commute and errands). My street is owned by me and the neighbors. We pay to pave it, plow it, repair it, etc. I have my own septic system and well water. I have five sons - one is in college (out of state), three go to private schools and one is in the Fairfax County system.”

“Now ... just one more time ... please explain how I am not covering my full costs.”

It is clear that Groveton would pay the same state and municipal taxes if lived in a dwelling that was taxed the same amount REGARDLESS OF WHERE he lived in the Commonwealth and the municipal jurisdiction. So by definition, not much of the information provided gives a hint of total location-variable costs.

In general taxes one pays DO NOT go to support location-variable costs. If one could reallocate payments to the location-variable cost categories Groveton, who pays $225,000 might come close,but on average those in his Cluster, Neighborhood and Village do not come close.

There is further information from Groveton’s past posts that provide additional insights:

Groveton says he “lives Great Falls.” By that we suspect he means that he lives in the 22066 Zip Code. (More on Zip Code data problems in a future post.)

Groveton also implied that he is in the Difficult Run watershed and that this stream is close to where he lives. That means he lives in the far southeast (most Urban) corner of Zip 22066. His total location-variable costs will be lower here than in “Great Falls Proper” which is north and west of the Walker Road / Georgetown Pike Cross Roads (Village Centre). Places such as Richland Forest, Tally Ho or Beach Mill Downs to pick three names at random off the map

Now about those costs:

The first thing to do is to pick a nice house on Lake Audubon or Lake Thoreau that has about the same market value as his house.

The following will remind Groveton that EMR suggested an exercise to get a grip on location variable costs.

Start with electricity. How much is the cost of generation, transmission and distribution of a kilowatt to Groveton’s vis the alternative (capital cost and monthly delivery). Be sure to figure in line loss for low voltage transmission, the singe most clear demonstration of location-variable costs.

There are 40 plus or minus services that vary in cost by location that are, by-in-large now charged on a flat fee basis.

The original calculations were based on 1,000, 4 bedroom, two car garage Single Household Detached Dwelling Units (a nominal Neighborhood) located on 10,000 acres in four different patterns:

10 acre lots

functional but scattered Dooryards

functional but scattered Clusters

A functional Neighborhood.

It was assumed this Neighborhood was adjacent to another Neighborhood but the location- variable cost savings at the Village, Community, Subregion and Region were NOT calculated.

The best available cost were used and yes there were changes for water and sewer licencing, monitoring, and testing and off site impacts based on charges made in other Regions.

There were assumptions about the cost of bussing children, the cost of mail delivery, parcel delivery, telephone service, etc.

The data was collected and refined over a four year period. Two years after The Shape of the Future was published, and no one who bothered to take the time to understand the calculations challenged the assumptions or the numbers the data was recycled when EMR moved to from Inside the Clear Edge around the Core of the Subregion to a location inside the Clear Edge around a potentially Balanced but Disaggregated Village.

In 2008, some of the costs will be higher, some will change completely – cell phones use for example -- but overall the 10 X Rule would stand up quite well.

Groveton said: “This is BS. The facts don't support the conjecture.”

This is not BS, it may appear to be inconsistent with the experience of those who do not bother to take the time to understanding human settlement patterns and location-variable costs.

In the same string of comments, TMT said that “Not EMR” was smoking something AND inhaling.

Actually “Not EMR” really does understand, he / she just can not bring themselves to admit it, and so they work to obscure and obfuscate reality.

TMT also said: “A semi-rural Great Falls is the best friend of county residents.”

It would be it the residents paid their fair share of the location-variable costs.

There is no reason for scattered Urban land uses outside the logical location of the Clear Edge around the Core of the Subregion – UNLESS THEY ARE IN COMPONENT OF A BALANCED COMMUNITY, in which case they would be within a Clear Edge of that Alpha Community.

EMR