It’s Only Temporary

Thirty years of bad policy gets you this — and about 48% of the population that doesn’t understand what hit them.

http://paul.kedrosky.com/3.html

What ticks me off most is the cars.

I am sitting in front of my mother’s house – more precisely, the house my siblings and I sold for Mom last year, after my father died and it was time to shut down the house where they lived for 45 years in a New Jersey suburb I’ll call Lake Naaw. That’s Lake Not-At-All-Wobegon, where the incomes are all well above average. I am there because the Internet brought a particularly nasty piece of news that day, one that dragged the house where my parents raised us into the headlines and me to the street out front.

The house is in foreclosure.

On paper, it should have been us. When I was three, my small-time developer Dad was held up by the mayor of Jersey City and the Democratic Chairman of Hudson County for a bribe. It wasn’t much, they insisted – at $10,000, small enough that the profit from getting a couple of gas stations approved would handle it easily. But my Dad said no, which was bad enough. Then he and his lawyer sued the mayor and chairman for extortion, and it all made the front pages of the Newark and Jersey City papers.

That was, ahem, not done. Zoning approvals in Jersey City? Fuggedaboutem. Pretty much everything my Dad did got shut down. Unable to make a living, he sold off the extra lot our $30,000 house came with, closed his business, lost his car at one point (he got it back), and ended up selling ladies shoes. That last one had to be a karmic joke on a man who, for all his good points, never especially liked women and totally didn’t understand them.

The point is, you didn’t mess with the house. And you didn’t give up on the house. Ever. It was where everything happened, where the teaching of children, first of all about character and perseverance, began.

There were a lot of families like us in Lake Naaw then: Gangs of seven (like us), 10 or 12 kids, Irish mostly, with Dads who made less than the corporate types who set the place’s tone. It was easier to stretch then, when the distinctions between affluent and aspiring were narrower than a long bull market, globalization and Reagan-Bush tax policy would make them. Today, there are only four houses in foreclosure there: The first mortgage on our place, $863,000, is the smallest. I call it Lake Naaw because its real name would point right to the buyer, and I don’t choose to do that.

We were all there for the schools, with parents who did what they had to do for us. Like, you sold shoes if you had to. You drove tiny Toyotas, replacing the Buicks Dad liked, that even skipped carpet for vinyl floors. You cut your own kids’ hair. You dug your own trench when the septic system failed: The four gladdest people when Lake Naaw got sewers had to be my brother and I (the diggers) and our neighbors on either side. You painted your own house and fixed your own plumbing, even though all of these self-taught crafts had pretty much the same, comically tragic, results. And if you didn’t know how to do it, and didn’t have the cash to bring in someone who did, you sucked it up.

And there was a price for that.

All of that is why I was so mad at the foreclosure. Coming not even a year later, there’s a fecklessness to it that my father would never respect. To stick to what’s in the public record, the buyer had a relative co-sign the loans – yes, plural — for a $1.04 million house. There were other signs, too, that he had troubles for a while and kept spending. We debated whether to bounce him, but in the 2007 market he was a gift horse willing to pay within $10,000 of what we thought the house was worth. His mouth was off-limits. Even if, as soon as he finagled the closing, dumpsters appeared in the driveway and a kitchen went in.

Even if, as I fast-forward to the present, an Escalade SUV and a Mercedes E-Class are there too. $120,000 worth of cars in the driveway, I mutter, and the guy can’t pay his freaking mortgage.

I observe finance by trade, so I’m attracted to snatching back the family homestead in one of those vulture-ish pirouettes I write about. Dad would admire the cojones. RealtyTrac, the go-to purveyor of foreclosure data, says the play is to offer 20 to 30 percent less than market value, $635,000 to $690,000 with the market’s decline, not much more than my house is worth. It’s a long-standing joke that I bought a scale model of Dad’s place: the layout of our first floors is almost identical, except his was bigger, with an extra floor upstairs and a yard eight times the size outside. And when you grow up in Lake Naaw, you’re taught success means being able to afford to move back. Part of me wants it bad.

And yet, I am the man my father’s struggles made me, so I can’t. I picked a place as different as another suburb 20 minutes away can be. My home town of Maplewood threw a celebration that made CNN when New Jersey legalized civil unions (co-sponsored by a realtor whose banner said he was “your perfect partner for real estate,” making gay marriage seem somehow much less avant-garde). My Sam had six black kids in his first-grade class, five gay families in our immediate neighborhood, a goes to a church where a Tony winner sang Jesus Loves Me, This I Know 20 yards from me, two days before my cancer surgery four years ago. It is all – especially the last one – so weirdly comforting. Most of all, I can afford my place without stretching, and without moral compromises. My father’s struggle – never spoken of, even as it dominated my childhood – demands at least that much respect.

I pick this place because of what I want to teach my son. I know all about today’s money culture, where debt is fine and defaults come with the territory. I wouldn’t be a Maplewood liberal if I didn’t feel some solidarity with folks losing their homes. I hope the guy figures it out and keeps the house; everyone says he’s nice. But still, it only took him a year to roll over. So I wonder as I stare at those foolish, foolish cars, what is he teaching his?

Hotel industry recovers along with the economy

The Sun – Baltimore, Md.
Author: Timothy J. Mullaney
Date: Feb 20, 1994

Stephen F. Bollenbach and Jack Pechter are looking at the hotel business a bit differently these days.

Mr. Bollenbach, chief executive of Host Marriott Corp. of Bethesda, plans to spend one or two billion dollars buying depressed hotels. Mr. Pechter closed his Quality Inn in Towson in October to make way for a shopping center, saying the 33-year-old motel wasn’t worth the money it would cost to renovate.

It’s a strange time for hotels. As the industry snaps out of a recession that hit it harder than nearly any other part of the economy, there’s enough good news to bring dealmakers like Mr. Bollenbach out of the foxholes and grabbing his checkbook. Then again, there’s still a lot of reason to sit tight.

After a disastrous 1991, the hotel industry earned an estimated $3 billion last year. It stands to make $6 billion in 1994. Yet only four full-service noncasino hotels are under construction in the United States, Mr. Bollenbach said. Hotels on average are worth only about 60 percent of what they cost to build. And the head of Maryland’s hotel industry association said occupancy in the state’s roughly 650 hotels and motels lags behind national levels.

The widest contradiction may be the difference in prospects for shiny first-class hotels like Host Marriott’s, and those for older roadside spots like the Towson Quality Inn.

The winners in all this have been the entrepreneurs — and their investors — who had the money and the moxie to buy first-class hotels in 1992 and 1993.

“We’ve been getting from day one well above 10 percent” return on the investment, said Ira Leubert, a partner in GF Management Inc. of Philadelphia, which bought the Sheraton Baltimore North in Towson in 1992.

Things have sure changed in the past three years.

The hotel industry lost $5 billion in 1990 and another $2.4 billion in 1991, according to a study by the Smith Travel Research of Gallatin, Tenn.

Room occupancy, which peaked in 1979 at 72 percent, fell to about 61 percent in 1991, said Roger Cline, worldwide director of hospitality consulting services for the Arthur Andersen accounting firm.

Hotels, which usually begin to make money when occupancy reaches 65 percent, hit 64 percent last year and will top 65 percent this year, he said. Maryland’s 650 hotels and motels posted a 62.6 percent occupancy rate through November.

Among those wounded by the slump was the former Marriott Corp., Maryland’s biggest lodging company. It was stuck with so many unwanted hotels and so much construction debt that its bond rating plummeted and its stock price fell to $8.875 in late 1990. That same stock is now worth more than $40.

The company split itself into two companies last year: Host Marriott, which assumed the risk of owning the 130 hotels that the old Marriott planned to sell but couldn’t; and Marriott International Inc., which makes money principally by managing 784 hotels that belong to Host Marriott and others.

But the old Marriott was not the only hotel company on the ropes in 1990 and 1991. Prime Motor Inns Inc., former owner of the Ramada Inn and Howard Johnson chains, entered Chapter 11 bankruptcy protection in 1990. Days Inns of America went under in 1991.

And thousands of smaller operators, many of them real estate developers who got into the hotel business for the first time in the 1980s, went down also.

Locally, downtown hotels like the Radisson Lord Baltimore, Peabody Court (now called the Latham) and Omni Inner Harbor were returned to lenders. South Charles Realty Corp., a sister company to Maryland National Bank which managed its soured assets, repossessed 20 hotels and motels. The Annapolis Ramada filed for bankruptcy. At least four hotels in Hunt Valley were put up for auction or sold after mortgage defaults.

The usual suspects in the late-1980s real estate bust were to blame: new tax laws that scared away investors, overlending by banks and an influx of foreign investors who were willing to pay inflated prices for properties.

The biggest problem was overbuilding, based on confidence that rising property values would eventually bail out hotels that were so expensive they could not pay their mortgage and still turn a profit. In Baltimore, the competition downtown pushed hotel occupancy to 58 percent in 1991.

Nationwide, the 3 million room industry added almost 800,000 new rooms between 1981 and 1990, even after subtracting the hotels that went out of business, Smith Travel Research said.

Now, as the industry recovers, the irony is that limited-service economy hotels — the cheaper facilities that didn’t get their owners into as much financial trouble during the recession — are starting to get left behind.

While these hotels are the ones being most actively traded today, sophisticated investors shopping for bargains are turning their sights to more luxurious, harder-to-duplicate business hotels and resorts.

Host Marriott has signed a deal to sell 27 of its lower-end Fairfield Inn hotels, but has one firm deal and three tentative deals to buy first-class hotels.

“Fairfield is a great product,” Mr. Bollenbach said, “but as soon as they need another 110 rooms out by the Beltway, in nine months someone will have a hotel across the street from you.”

On the other hand, in the high-end hotel market, there is not likely to be any new construction for years, even after the industry fully recovers, he said.

Mr. Bollenbach also added that the full-service hotel market has lots of what he calls “accidental owners,” meaning banks and insurance companies that own hotels only because developers didn’t repay their mortgages. The great thing about an “accidental owner” is that one is usually also a “motivated seller,” he said.

Mr. Leubert and partner Ken Kochenour agree. They paid just $10 million for the Sheraton in Towson, which would now cost in the “mid-$30 millions” to build, Mr. Leubert said.

The reason why these investors are confident their good times will last is simple: Virtually no one is building hotels any more, and older hotels are leaving the market at a clip of 20,000 to 30,000 rooms a year. The bad memories of developers and banks who overreacted to strong demand in the late 1970s and 1980s are keeping them away from hotels in the still-young recovery. Combined with zoning complications and the low values of hotels today, the construction drought could last for years.

But that doesn’t mean running out and buying hotels — or hotel stocks — is a riskless path to riches. That’s because most of the easy money has already been made, Mr. Cline said.

“It’s the contrarian investor who’s going to make a killing,” he said, and that meant those who bought more in 1991 through early 1993 when prices were at the bottom.

Hotels are using their breathing spell from new competition to boost occupancy. Marriott International’s occupancy of between 75 percent and 80 percent leads the industry. But the market hasn’t gotten strong enough to let hotel owners raise rates much. That, they say, will be the next frontier.

The first casualties of rising rates will be the discounts hotels give to groups such as airline crews. Only later will promotions like Marriott International’s Two-for-Breakfast cheap weekend rates get weeded out, he said.

The keys to keeping the good times rolling are assuring new hotels aren’t built and hoping that the overall economy, which has helped both business travel and tourism recover from the recession, continues its upward course. Both seem to be under control. “There doesn’t seem to me to be any downside risk,” Mr. Bollenbach said. “The hotel industry has always grown with the national economy. I don’t think there’s any chance of a recession.”

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Westinghouse unit supported risky ventures Loan recipients included area real estate projects
The Sun Baltimore, Md.
Author: Timothy J. Mullaney
Date: Oct 9, 1991
Start Page: 1.C

The unit of Westinghouse Electric Corp. that caused the company’s $1 billion-plus third-quarter loss has a taste for lending to big real estate projects, including some in the Baltimore area, and admits that it was used to taking bigger risks than banks would accept.

“They made some big investments, and I had the impression that they took some risks the banks wouldn’t take,” said Robert Hedrick, a securities analyst who follows Westinghouse for Principal Eppler Guerin & Turner Inc. in Dallas. “The banks were being squeezed {by federal bank regulators}; Westinghouse was unregulated, basically, and that’s what gave them the risk-taking ability they had.”

The risks came home to roost Monday for the second time in less than a year. Westinghouse announced Monday that losses in its Westinghouse Credit Corp. unit would spark a $1.48 billion third-quarter loss and force the firing of 4,000 workers. In February, the credit company had taken a $925 million charge, which gave the unit a $474 million loss for its last fiscal year.

The two big hits slammed the door on what had been a profitable subsidiary of the Pittsburgh-based defense, electrical equipment, television and radio and financial services conglomerate. In 1989, the credit subsidiary accounted for $157 million of the parent company’s $922 million profit, according to Stewart Smith, a Westinghouse Credit spokesman.

“The announcement had to do with real estate,” Mr. Smith said. “That’s the basic problem of the company.”

But even Mr. Smith wasn’t disputing the basic picture that Mr. Hedrick painted. “I think that’s fair,” Mr. Smith said. “We weren’t doing the same thing as the banks. We’re not regulated by the Office of the Comptroller of the Currency or by the FDIC {Federal Deposit Insurance Corp.}. We’re regulated by the market.”

He added, “To the extent we took more risk, we were being compensated for that risk,” in the form of higher interest rates and other charges.

That taste for extra risk showed in some of the investments the company made in the Baltimore area. While Mr. Smith couldn’t give precise details of the company’s investments in Maryland, Westinghouse and its credit unit were allied with some of the highest-profile, highest-risk developments in the area.

For example, Westinghouse Credit was a major backer of NVR L.P., which, as the parent company of Ryan Homes and NVHomes, is the second-biggest homebuilder in the metropolitan Baltimore market. NVR, which is based in McLean, Va., has had severe financial problems in the past year and has allowed its lenders to repossess most of the land it had acquired for future development.

Westinghouse, for example, gave a loan commitment to an NVR-led partnership for more than $25 million to develop the Villages at Lyonsfield Run, a 600-acre planned community in Owings Mills. It isn’t clear how much of that money was actually lent, however. The project has not been built.

Westinghouse had also committed itself to finance the proposed Worldbridge Centre project in Middle River, which later collapsed when the developer, Dean Gitter, wasn’t able to convince Baltimore County to grant needed zoning changes. Worldbridge Centre was slated to be an Asian-themed cultural, trade and investment complex, and its cost had been estimated at $1 billion.

A unit of the credit company has also held a majority stake in the Omni Inner Harbor Hotel in Baltimore. Mr. Smith couldn’t comment on whether it still holds that stake, which was reported in The Sun last year.

The Omni deal was unusual for Westinghouse because it usually was a lender, not an owner.

The credit unit had $9.8 billion in assets as of June 30, according to filings the parent company made with the U.S. Securities and Exchange Commission. Of that, $7.3 billion was invested in loans and other receivables, including $2.9 billion of real estate loans. The biggest chunk, $3.3 billion, was in loans to medium-sized businesses, Mr. Smith said.

Less than 1 percent of the credit company’s assets were tied up in financing the sale of the parent company’s equipment, a function Mr. Smith said Westinghouse began phasing out 20 years ago, even though finance subsidiaries of some other industrial companies still make that kind of lending their principal business.

“The company changed because the market changed,” said Mr. Smith. He said the market changed because of the deregulation of financial markets in the 1970s and 1980s. “It’s what finance companies did at the time, and banks moved into finance companies’ territory.”

NVR loses $172 million, plans restructuring

The Sun – Baltimore, Md.
Author: Timothy J. Mullaney
Date: Nov 22, 1990

NVR L.P. said yesterday that it lost $172.3 million in the third quarter, mostly on land it had bought for future homebuilding development, and announced a reorganization that closes the books on a bold but risky strategy that made the parent company of NVHomes and Ryan Homes the nation’s biggest home- building company before NVR ran into financial problems.

NVR had based its drive to the top on a uniquely 1980s-era blend of heavy borrowing, speculative land buying, a hostile takeover, and a plunge into all aspects of the home- building, community development and home financing businesses.

For a time, it worked. By 1988, Builder magazine rated NVR the nation’s biggest builder of for-sale housing, as opposed to rental units. In early 1990, NVR passed Ryland Homes to become the top-selling builder in metropolitan Baltimore. But in recent months, NVR’s debt load has cast doubt on its ability to survive the recession in the new-home industry.

Yesterday, McLean, Va.-based NVR said it will get out of both the manufacturing business and the development business, in which it bought land for itself and for resale to other builders.

The company will close its manufacturing plants in Virginia and Ohio, which were set up to make home components for both NVR-owned and competing builders.

NVR also reiterated earlier announcements that it had stopped buying land, and said a management committee had been set up to sell the land the company still owns.

The company in a statement said it will push forward only with its two home building companies, which have begun to lose money as the new-home market has weakened, and with its profitable mortgage company and savings and loan.

Company officials couldn’t be reached late yesterday after the 4:30 p.m. announcement.

NVR’s homebuilding operations will also be getting out of other cities, concentrating mostly on the Baltimore-Washington market and metropolitan Pittsburgh.

NVR will also abandon its late-1980s strategy of selling ever more expensive homes in order to concentrate on the healthier market for lower-priced homes. That move will crimp profits even further because more expensive homes offer wider profit margins.

NVR has previously entered the California market through an acquisition and has had operations throughout much of the Midwest and South.

“Well, they’re definitely making an earnest effort to restructure this company,” said Michael Mead, an analyst who follows NVR for Legg Mason, Wood Walker Inc. in Baltimore. “They’re making a big bet that the Baltimore-Washington area bounces back, because they’re cutting back to that, their core.”

But Mr. Mead isn’t convinced that the local housing market will be strong enough to assure the company’s survival.

“There’s a lot of reason to wonder whether this will be different than normal housing cycles,” he said. “I think we’re blaming Iraq for a lot of things that would have caught up with us.”

Company officials have said in recent months that they believe the company’s survival has been assured by steps NVR has already taken. Yesterday’s statement said the company thinks its financial-services business will stabilize its overall financial position. Chairman Dwight Schar added in the statement that NVR doesn’t foresee any more major charges against earnings associated with the restructuring.

In the third quarter, the company said its $172.3 million loss included one-time charges of $169.3 million. Write-offs of land deals accounted for $141.4 million of the charges, with $18.3 million earmarked for closing the manufacturing plants and other restructuring expenses.

But before NVR can see whether its new strategy will work, it has to announce its plans for restructuring the debt that has crushed its profitability since the housing market began to soften last year. The company lost $53 million during the second quarter, also because of accounting charges that reflect the fact that its land portfolio has fallen sharply in value since NVR bought it between 1987 and 1989.

NVR said its financial restructuring will not be ready for announcement by Dec. 15, when it has to make a semiannual interest payment on the nearly $220 million in junk bonds that financed its 1987 takeover of Ryan Homes. The company said it is unlikely that it will be able to make its bond payment.

The restructured company is sure to get off to a rocky start, based on information in yesterday’s release. The company lost about $3 million on operations in the quarter, as the profits from NVR Mortgage and NVR Savings bank couldn’t overcome losses in home building. And home building losses are likely to get worse in quarters to come.

The company said customers ordered only 599 homes in the third quarter, down 48 percent from a year earlier. In Baltimore and Washington, the company sold only 325 homes, down 56 percent from 733 in the third quarter of 1989.

The third-quarter orders point to future trouble because customers usually pay for homes one or two quarters after they order them, after mortgages have been lined up and other details settled. Weak orders in one quarter mean weak profits in the next.

Reproduced with permission of the copyright owner. Further reproduction or distribution is prohibited without permission.

PLENTY OF NOTHING Stalled projects leave developers holding the bag
[The Sun- Baltimore, Md.
Author: Timothy J. Mullaney
Date: Jun 14, 1992

In 1987, Robert A. Manekin's view from the corner of Baltimore Street and Guilford Avenue was bright. His family's development company was building the Bank of Baltimore building a block away and had picked up the site of the old Tower Building from the carcass of Old Court Savings & Loan -- Old Court had held the loan on the property -- where they planned to do the same shiny, profitable thing all over again.

Now homeless people sleep on benches in the small park the company built -- at the city's insistence, Mr. Manekin said -- at the Tower site. And the prospects for developing the land soon are almost as grim as the prospects of its temporary residents.

Everyone knows by now about the plight of developers stuck with office buildings they can't rent. But behind them stand the owners of a half-dozen more big-time development sites downtown, in for as much as $20 million in land and pre-development costs.

They're stuck with their land and their tied-up money not just until the economy recovers, but until the city's backlog of office space is occupied. It could take years.

"In terms of a speculative office building, I don't think we'll see another one for the rest of the century," said J. Joseph Casey, president of Casey & Associates, a real estate brokerage firm in Baltimore. "Not only is the downtown market like that, but also the industrial market and everything else."

Manekin Corp., where Mr. Manekin is a senior vice president, has lots of company in the dream-deferred category.

Capital Guidance Corp. and its foreign investors still own the land for what was supposed to be Baltimore's biggest building, at One Light Street.

The Rouse Co. can't move ahead with developing the old McCormick spice factory site across Light Street from Harborplace.

Schulweis Realty of New York is asking the city for permission to use the block once occupied by the News American building at 300 E. Pratt St. as a parking lot for two more years.

Provident Bank of Maryland scrapped plans for a headquarters tower and has had its land on Calvert Street between Lexington and Saratoga streets on the market for two years.

And Glen Burnie developer Leonard Attman is still seeking city approval of revised plans for Baltimore Financial Centre at Redwood and Charles streets amid skepticism that it ever will be built.

All of those sites were purchased when developers still were eager to cash in on 1980s-style speculative building. The idea was to get a few tenants, start building and lease the rest of the space during construction or after the opening. It worked great -- if the builder got started soon enough to beat the recession.

But that was before the downturn.

Now, tenants are scarce, and banks, chastened by bad real estate loans and pressures from federal regulators, are loath to finance speculative construction. And plans are changing all the time.

"It's unlikely we'll be doing anything speculative there {at the McCormick site}. I don't think we'll be doing anything speculative anywhere," said Cathy Lickteig, a spokeswoman for the Rouse Co.

She pointed to the company's most recent office project, the Ryland Group Inc. headquarters building in Columbia that was completely leased before construction, as a model.

"That's the direction we would be going in," she said. For now, 414 Light St. is a parking lot.

Manekin and its partners don't have a clear plan for their land, Mr. Manekin said. They were disappointed in March when the city passed over their proposal to build a new police headquarters at the Tower site, choosing instead to move to the old Hecht Co. building on Howard Street.

"If the Hecht site doesn't work out or the numbers don't work, we could {still} be in it," Mr. Manekin said. But he knows that's a long shot. "We're not holding our breath."

Some of the sites probably won't ever be developed as large office buildings. Mr. Casey, who holds the listing on the Provident Bank site, sees it being developed for mixed uses, probably a blend of retail, parking and offices.

"I don't see it being all any one thing," he said. "It's going to be creative."

All of the projects were held up by the recession, but some also were affected by other events. A Provident spokeswoman said "a leadership change was a factor" in the bank's decision to shelve its building, of which the bank would have occupied only a small percentage.

And One Light St., the 45-story, $200 million behemoth (by Baltimore standards), was put off largely because the developers lost a major tenant.

"When we entered the project, it was represented to us that Maryland National {Bank} would be the main tenant," said Amer Hammour, executive vice president at Capital Guidance's Washington office. But Maryland National backed away from the deal before a lease was signed, he said.

"If we proceeded, we would have a speculative building of 700,000 square feet," Mr. Hammour said.

MNC spokesman Daniel G. Finney declined to comment.

No one puts up speculative buildings of 700,000 square feet anymore. No one wants to build them, and no bank wants to finance them. The reason is an office market so glutted that it would be years into a moderate economic recovery like the one economists have projected before the glut is cleared up.

Downtown Baltimore had 1.1 million square feet of Class A office space, or space in buildings that are either new or have prestigious tenants such as top banks and law firms, vacant at the end of 1991, according to a W.C. Pinkard & Co. report. Another 450,000 square feet is under construction at Commerce Place, a South Street building scheduled for completion this year.

If the city's businesses leased as much vacant space as they did on average from 1985 to 1990, it would take more than three years to lease it all.

But even that would mean a huge recovery from leasing levels of 1991, when tenants actually moved out of more Class A space than they moved into, a phenomenon brokers call "negative absorption."

Such a recovery, set back by the demise of the law firm Frank, Bernstein, Conaway and Goldman, which occupied 89,000 square feet at 300 E. Lombard St. and the move of CSX Corp.'s Baltimore offices from One Charles Center to Florida, is not in sight.

"We're going to have a negative one {absorption rate} this year too," Mr. Casey said.

Reversing the trend could be especially tough, since many of the few customers available look at both suburban and downtown locations, said Sally McGraw, a broker for Manekin's downtown office.

"Our biggest concern is keeping the downtown viable," she said. "Bobby's {Robert Manekin's} famous line is `Stay alive till '95.' And the response is, `For what?' It's going to be tough."

Still, not everyone agrees with Mr. Casey that the next speculative building will be built -- from the real estate industry's perspective -- in the next eon.

Mr. Manekin said a 1997 or 1998 opening is likelier. Even before then, cranes could dot the skyline during construction of buildings designed for individual tenants -- similar to the new Ryland headquarters in Howard County.

One possibility is the headquarters of the U.S. Health Care Financing Administration, if the federal government chooses a downtown site controlled by a Rouse-led partnership instead of a location in Woodlawn.

That decision is scheduled for August.

Meanwhile, work is under way on Crescent City, an 11-story office building at the southwest corner of Baltimore and Howard streets. But Crescent City is more a 1990s building than one based on the speculative model of the 1980s: Crescent City is 95 percent leased to federal agencies, including the U.S. Army Corps of Engineers.

When it is time to build again, everyone agrees, development will be a different game from what it was in the late 1980s. Mr. Hammour said downtown Baltimore is unlikely to see more than one new building a year for a fairly long time.

All agree that banks aren't likely to make construction loans until a building is at least 40 percent leased (by comparison, Commerce Place is 22 percent leased).

The early leasing guarantees that someone will be paying rent when the building opens, which lets a developer get a long-term mortgage to pay off the shorter-term construction loan. That keeps banks out of the hot water that singed them in 1990 and 1991.

And all agree that the next speculative building to be built -- whenever that is, it isn't likely to be speculative by recent standards -- will be the one that gets a major tenant capable of leasing half a building or so.

"What will determine it is who gets the preleasing first," Mr. Hammour said. "There isn't going to be construction financing for anyone who doesn't have the preleasing, which means an anchor tenant plus {other, smaller tenants}. After that, I hope everyone will be reasonable and not rush in all at once."

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State’s economy sees shift; Technology replaces blue-collar industry in quiet revolution

The Sun – Baltimore, Md.
Author: Timothy J. Mullaney
Date: Nov 3, 1996
Start Page: 1.A

Meet the new face of Maryland business.

William M. Gibson doesn’t run a bank, and no smoke belches from his Rockville office. And unlike the stereotype of a suffering Maryland economy, his software company, Manugistics Group Inc., isn’t stuck with a stagnant stock and bleeding jobs.

Instead, the 51-year-old is the accidental leader of a quiet revolution reshaping the economy of the nation’s fifth-richest state in terms of personal income. Manugistics’ stock is up 191 percent this year. More importantly, it is the hottest in a wave of Maryland high-tech firms that are taking over economic leadership from traditional smokestack and locally-oriented service industries. “We have a 33 percent market share,” Gibson said, in a $150 million niche of the software market expected to grow to $1 billion in annual sales by 2000. “That implies if we simply maintain our share, we’ll have $350 million in {software} licensing revenue and another $350 million-plus in service-related revenue.”

The shift has been developing for years, but the last several weeks have been particularly full of signs Maryland may finally live up to predictions that it would come to rival California or Massa chusetts as a technology center.

Digex Inc. of Beltsville became Maryland’s first publicly-traded Internet service provider in an offering that valued the 6-year-old firm at $110 million. Trusted Information Systems Inc. of Glenwood and V-One Corp. of Rockville, which make software to safeguard electronic commerce, went public two weeks apart, bringing the total to 16 Maryland companies that have launched initial public offerings in 20 months. And Inc. magazine’s new tabulation of the 500 fastest-growing private companies in America listed 18 Maryland firms — as many as in both Carolinas and Tennessee combined.

New on list

In mid-October Bloomberg L. P. added 18 new companies to its index of Maryland’s top 100 publicly traded firms, the biggest change since the index began in 1994. Nearly all owe their growth to new technology, the expansion of managed health care or this year’s federal law to boost competition in communications businesses. All but three of the 18 companies have gone public since mid-1995.

The companies that Bloomberg bumped to make room say almost as much. Out went some of Maryland’s most familiar names — Monarch Avalon Corp., the game maker; Environmental Elements Corp., makers of pollution-control equipment; even Jos. A. Bank Clothiers Inc., one of the few clothing companies that still manufactures here.

The news highlights a slow but dramatic shift in where Maryland finds its wealth — and its new jobs.

Maryland’s economy was based on manufacturing through the 1960s, and by the 1980s the state was a haven for defense contractors, federal workers, financial services and a burgeoning construction market that made Maryland more dependent on building than any state but Nevada.

But those five sectors have all struggled to add jobs during the 1990s, holding down Maryland’s overall job growth and leaving rising industries to take up the slack. Forty percent of the state’s net private-sector job growth last year — more than 10,000 jobs — came from business services companies, according to the Regional Economic Studies Institute at Towson State University.

The business services group, which includes many of the emerging industries but not lower-wage personal services and restaurant jobs, added jobs four times faster than the state average in 1995. RESI expects business services to lead the 61 industry groups the state tracks in Maryland job creation through 1998.

“Why we’re different is fairly significant,” said Manugistics’ Gibson. “It’s a clean industry, it’s a very highly educated industry, it’s a very young industry. And these are very fairly compensated individuals.”

The stock market expects the young companies to keep growing, and Manugistics, which makes logistics planning software, is a lesson in why. It had $62.3 million in sales in its fiscal year ended in February, and is up to 550 workers from 150 a few years ago. But the lure of $700 million in sales only four years away shows how fast its financial world is still changing.

That’s why Gibson, who made just over half the salary of the head of Baltimore Gas & Electric Co. last year, has made almost $60 million on his Manugistics stock.

A common stock-market measure, the price-to-earnings ratio, shows how much the market expects Maryland companies to grow.

It’s a simple concept: a company that has 1 million shares of stock outstanding and makes a profit of $1 million a year, or $1 per share, has a P/E of 10 if its stock sells for $10. The higher the P/E, the faster the company is expected to grow.

When P/E ratios reach 20 — the Dow Jones Industrial Average is now at about 18 — it means people are very confident. Tech stocks often get the highest multiples.

Beating Silicon Valley

Friday, the Bloomberg Maryland Index closed at 48 times earnings, leaving even the Silicon Valley Index in the dust. Though not all of Bloomberg’s 54 regional indexes are calculated the same way, Bloomberg says Maryland stocks are the second or third most expensive. Manugistics’ P/E ratio is a whopping 330.

“It says we’re starting to get companies that can command national attention,” said Charles W. Newhall III, a partner at New Enterprise Associates, the Baltimore venture capital firm. “Years ago, Maryland would have been a 10 or a 15 {price-to-earnings ratio} and San Francisco would have been a million. Now they’re even.”

But others say it’s a fluke, driven by high-tech firms with little or no profits that have posted huge stock gains.

“I think it’s statistical,” said George A. Roche, chief financial officer of Baltimore-based mutual fund house T. Rowe Price Associates Inc. “There’s nothing about the state that I know of.”

Buttressing that assessment is the fact that the state economy has grown sluggishly since 1990. Only three states — Maine, Mississippi, Hawaii– added jobs more slowly in the year that ended in August, according to Salomon Inc.

The reason: big traditional industries like defense contracting, banking and construction shed more than 50,000 jobs in the early 1990s that haven’t come back. If they had, Maryland’s 4.9 percent unemployment rate would be almost 2 points lower. Factor in flat employment here by the federal government and in manufacturing, and you have the argument that Maryland’s economy is on its knees.

“Every time Martek {a Columbia biotech firm} or JP Foodservice {a Columbia restaurant-supply company} or Manugistics hires someone, the federal government lays someone off,” said Jeffrey D. Saut, research director at Ferris, Baker Watts Inc. in Baltimore. Debate over strategy In Annapolis, slow job growth has fueled the contention by the state Chamber of Commerce that high state taxes and tough regulation are slowing the economy down. Business groups contend Maryland needs to emulate poorer but faster-growing states in the South, cutting taxes and regulation and resisting unions.

“The way the market values these stocks is a function of so many different things, I’m a little leery of saying I understand why the P/Es are what they are,” state Chamber president Champe McCulloch said. “I have to go back to the sources of information I trust most, and that’s what my members tell me.”

But McCulloch concedes the Chamber’s members include a bigger percentage of companies from manufacturing, banking, and utilities than the state economy as a whole, and fewer representatives of the emerging growth industries.

Gov. Parris N. Glendening has echoed much of the Chamber agenda, contending that Maryland is being left behind by the Carolinas, Virginia and others. And Secretary of Business and Economic Development, James T. Brady, has reportedly hinted he will quit unless the governor backs an income tax cut.

Many high-tech CEOs say they need different things from the state than do prominent, mature industries such as real estate development, law and insurance, each of which has also cut jobs since the last recession. Breaking with traditional business organizations, they argue that much of the governor’s economic agenda misses the point — they worry more about growing than holding down costs.

“Everyone I talk to goes into cardiac arrest because of the income tax rate and the cost of buying homes,” but the overall cost of doing business here is reasonable, said Richard Kozak, chief executive of American Communications Services Inc. of Annapolis Junction. ACSI is building local phone networks in the South and West to compete with Bell company monopolies that are being subjected to new competition by deregulation.

“We see the world in terms of areas where we have a good concentration of an educated work force,” said Kozak, who moved ACSI here from Illinois last year. “They tend to be the customers who are more receptive to leading-edge technology, and those are the people who spawn other jobs.”

State taxes criticized

But Manugistics’ Gibson says Maryland’s taxes put the state at risk because of the proximity of Virginia, where taxes are lower. Especially galling to a company where employees have extremely valuable stock options, he said, is the fact that Maryland taxes capital gains at the same rate as other income.

Manugistics is looking for a new headquarters now. Gibson said scientists might not want to move to a state like West Virginia, but for Manugistics, the key advantage of Maryland is proximity to Washington — and Fairfax, Va., is just as close as Rockville. Some of his employees already live there.

“My response is not a ringing endorsement of how marvelous an environment the state of Maryland is,” Gibson said.

New Enterprise’s Newhall says tax and regulation cuts will help. But he calls corporation-friendly policies “only one of six or eight things that need to be done.”

He says the biggest key to job growth is creative people outside government. “The solution is right in front of our eyes.

Where are the biggest hubs of entrepreneurial activity?” Newhall said, pointing to Silicon Valley and the Boston suburbs.

“Both of these are essentially socialist economies,” he said. “They’re incredibly hostile to business. It helps to have a welcoming environment, but that isn’t what makes areas hotbeds of entrepreneurial activity.”

The creativity Newhall mentions shows in the diversity of the newcomers. Of the top 100 public companies, about 25 are related to information technology.

Not all of these are software companies, however. They include companies such as Tessco Technologies Inc. of Sparks, which distributes parts for wireless phones and the call handling networks that connect them; broadcasters such Sinclair Broadcast Group Inc. boosted by deregulation; and others like HCIA Inc., which crunches data about health care for its customers. HCIA uses computers, but its business is information.

Mysterious attraction

Why most of these companies’stocks are so hot is no mystery. “Last quarter, our sales were up 90 percent,” said Tessco chief executive Robert B. Barnhill, Jr. “We’re in a gold-rush business, selling the picks and shovels.”

Another 15 of the top 100 are biotechnology companies. Virtually none is profitable, but several have won federal approval during the past 18 months to market their first products, sparking expectations several will begin making money by 1998.

Others are doing more preliminary work that nonetheless is so promising that success is considered a nearly sure thing.

“People now are worried about how to sell and market, not about the technology,” said Martek Biosciences Corp. chairman Henry “Pete” Linsert Jr.

Pub Date: 11/03/96

[Illustration]

HCFA: SUSPENSE IS BUILDING Battle over agency site highlights issues dividing city, Baltimore County
[FINAL Edition]

The Sun – Baltimore, Md.
Author: Timothy J. Mullaney
Date: May 3, 1992
Start Page: 1.C

They are 12 minutes apart by car and yet worlds apart. One is downtown next to Oriole Park at Camden Yards, the other in Woodlawn by split-level houses and a Ms. Desserts “Whoops” shop. One is a parking lot today, the other an empty field.

But one of these patches of ground will be the next home of the U.S. Health Care Financing Administration, the agency that runs Medicare and Medicaid. The estimated $100 million building in HCFA’s future has officials and developers in the city and Baltimore County scrambling like high school boys after the same girl.

“It’s significant to the county because you’re taking a major employer away and devastating that part of Baltimore County,” said James F. Knott, president of James F. Knott Development Corp. in Towson, one of two firms leading the bid to keep HCFA, now based in Woodlawn, in the suburbs. “We’re supposed to have regionalism.”

That, however, is hard to swallow for the Columbia-based Rouse Co., which is leading the development team trying to persuade the government to move HCFA downtown.

“I’d like to know how many of those 29,000 jobs lost to Baltimore City last year were lost to the county,” counters Daniel P. Henson III, a Baltimore developer who, along with Whiting-Turner Contracting Co., is Rouse’s partner in the city bid. “The Social Security Administration wasn’t always in Woodlawn. It used to be in the city.”

The HCFA issue pushes many of the city’s and county’s latent opinions of each other to the surface. All of the issues that have marked the decades-long exodus of people and corporations from cities to the suburbs are on the table — traffic, congestion, parking, the “quality of life.”

And, although Mr. Knott and his development team haven’t raised it, many of HCFA’s estimated 2,800 employees — who like the suburbs — are eager to talk about crime.

“CRIME, CRIME, CRIME — It may never happen to me,” wrote HCFA employee Kathy Shaffer, in a letter to the U.S. General Services Administration released last month as part of the environmental impact statement on the project.

“But my gut feeling (fed by myriad newspaper and TV news reports) is that if HCFA moves downtown, my chance of being a victim of crime leaps tremendously,” she wrote.

THe GSA makes the decision on where HCFA goes, and it is expected to act in August. The fight over HCFA has become a very big fight, because the HCFA project is a very, very big deal.

“There’s no one project this size around here,” Mr. Knott said. “This is the biggest project around here in 10 years.”

Rouse’s plan, for the block just north of the new stadium across from the Marriott Inner Harbor hotel, calls for a 22-story, 919,000-square-foot building plus a 713-space parking garage in the next block to the west. By comparison, the office building alone is bigger than all four of the office towers that Rouse built next to the Owings Mills mall in the late 1980s combined, Rouse Vice President Robert Minutoli said.

Knott would build 875,000 square feet spread among three office buildings and a warehouse. The biggest would be six stories tall, the other office buildings three stories.

The site Knott and partner Boston Properties control is tucked in behind a residential enclave near Dogwood and Rolling roads.

Each side thinks its site is terrific, and each is probably right — if you like what they’re selling.

For fans of corporate campuses, the Woodlawn site is big enough to build a fine one — and between Knott and Boston Properties Inc., the development team is experienced enough to build one of the best.

For fans of downtown locations, Rouse’s project would define the western edge of the city’s Pratt Street promenade, with an L-shaped building designed to make the project stand out as the end of the city’s de facto main street. And Rouse has made a national reputation for its urban projects, including Harborplace, Boston’s Faneuil Hall and New York’s South Street Seaport.

The question is what the GSA thinks, and GSA isn’t saying. All GSA will say is what the standards are — and even most of those, depending on whether you look at them from a suburban or an urban perspective, can be interpreted to favor either side.

First and most important to GSA is building quality, which includes both the architecture and the nuts and bolts such as lighting and air conditioning systems. Next is the impact of each site on employees and on the public’s access to HCFA. The third factor is the experience and management plan of the development teams.

The last, and supposedly least important, is “national headquarters identity.” But both the Knott side and the Rouse side rise to that issue like fish to bait. The question is: What is headquarters identity anyway, at this late stage of the nation’s city-to-suburb exodus?

“How many major corporations have a campus for their headquarters?” Mr. Knott demands to know. The answer, he says, is nearly all of them, and he can tick off a host of examples. “The only downtown headquarters you see are for banks, or for someone who has to be downtown.”

Mr. Minutoli and Mr. Henson bristle at that. Sure, corporations are in the suburbs, Mr. Minutoli said. But he says their isolation actually takes away from headquarters identity, which he says is what private companies wishing to work in privacy have in mind.

He said HCFA’s mission is different because it serves the public. “Instead of HCFA being this thing back there in the woods, HCFA can be in front of {the public} every day,” he said.

Mr. Henson bristles at the idea of a suburban campus being more prestigious than downtown. “On Dogwood Road?” he said. “Every time the camera pans around from the Oriole game the {downtown} HCFA headquarters will be seen. That’s headquarters identity.”

The “impact on employees” criterion highlights the other issues that divide city and suburb. HCFA employees worry about crime and commuting, and the developers debate about parking arrangements, mass transit and how to expand the project in the future if HCFA grows beyond the 3,300 employees that the new headquarters will be designed to accommodate.

In other words, they are talking about what people and employers trying to decide between the city and suburb always talk about. They are simply doing so in public.

The Knott team is pushing hardest on employee convenience, Mr. Knott said, and that means reminding GSA that the Knott site is close to the nine Woodlawn buildings HCFA uses now. That means commutes would be shorter and parking more plentiful.

According to GSA’s environmental impact statement, the average commuting time would be 32 minutes to Woodlawn and 44 minutes to downtown, based on where HCFA workers live now.

Partly offsetting that advantage, downtown has far more mass transit alternatives. And fewer employees would have commutes longer than an hour to downtown than to Woodlawn, the impact statement said.

Once employees got to Woodlawn, parking would be simpler than it would be downtown. The Knott proposal calls for 3,156 surface parking spaces. Rouse’s proposal calls for 1,800, including 713 in the garage and 1,087 spaces in stadium lots leased from the Maryland Stadium Authority by the city for 20 years.

Mr. Knott pounces especially on the stadium parking, noting that it is on the opposite side of the stadium from the Rouse site; HCFA would need a shuttle bus to serve it.

“Anything that has time limits {the 20-year lease} is built-in obsolescence,” he said. The city’s parking solution will work, but it won’t work as easily, he said. “If you could go out and crank your car up every morning or just turn the key, which would you want? It’s just a pain. It’s something to worry about.”

“Their parking concern is addressed and the parking is free,” Mr. Minutoli countered. “If you went out to Social Security and had to walk to the most distant space, it’s not a short hike.”

But the impact that many suburban employees fear most in the city is that of crime, judging from letters to the GSA. And that’s where, reputations to the contrary notwithstanding, the city may actually have a small advantage.

When GSA studied crime in the area near the Rouse site and in Woodlawn, it reached conclusions that could shock the casual watcher of the 11 o’clock news. Since 1988, the Woodlawn area has had more murders, rapes and aggravated assaults. Downtown has had more robberies and larcenies.

“None of the . . . study areas is particularly more crime-prone than any other,” the impact statement said. “Crime risks to daytime employees {are} relatively minor in all study areas, especially for violent crime.”

“Public safety is totally under control,” Mr. Minutoli said. “The nature of the neighborhood is changing, and it’s only going to get better.”

Mr. Knott thinks his team’s best issues are employee convenience and the excess land Knott and Boston Properties can provide for future expansion. Mr. Minutoli said the city site’s best advantage is the greater efficiency of one building rather than three connected by walkways.

Both sides, as well as city and county officials who have helped them, said they have stopped lobbying. They expect to go to public hearings later this month, but they don’t expect to hear from GSA until a decision is made in August.

“They’re smart, they’re capable, they do a good job, and they’re very powerful people,” Mr. Knott said of the Rouse team, reflecting what Mr. Minutoli said about Mr. Knott and Boston Properties. “We think we have a good shot, but we think they do, too.”

[Illustration]

Letter from Rodgers Forge: Trouble Right Here In Edge City
[FINAL Edition]

The Sun – Baltimore, Md.
Author: KIMBERLY A.T. MULLANEY and TIMOTHY J. MULLANEY
Date: Feb 9, 1992
Section: FEATURES
Text Word Count: 1239

Document Text

Bill Calvin wasn’t a famous leader in 1985, just the mayor of a small town. We talked about him for the first time in years this week, as Rodgers Forge recoiled from the thought of three bulimics living nearby as if Jeffrey Dahmer were in our midst.

Mr. Calvin was mayor of Morris Township, N.J. when the Association of Retarded Citizens bought a house there to use as a group home for retarded adults. ARC had already bought houses in two towns next door, and reaction had been frantic.

Hundreds had taken up the cry as one: Property values will fall. How do we know our children won’t be terrorized? Our quiet residential community will be forever changed. They’re too different, dangerous. Save our community. Keep them out. Get the guns (or the lawyers, today’s really heavy artillery).

So when a reporter called Bill Calvin, he expected the mayor to join the crowd. But the mayor had a surprise.

“They’re moving to my neighborhood,” he said. “And I’m glad they’re here.”

Bill Calvin was more than just a good person willing to improve the lives of a few retarded people by having the guts to tell his neighbors — and his constituents — that their fears were ignorant and morally wrong. He was a smart man who understood what was happening to suburbs like Morris Township — and like Towson. He understood that they’re not the quiet little refuges they may have been once upon a time. They haven’t been for years.

Now a group house for mentally ill people is coming to our neighborhood, a collection of 1,777 brick rowhouses that begins just a good shout at midnight from the city-county line. We’re glad they’re here, even if many of our neighbors and our community association aren’t.

Sheppard and Enoch Pratt Health System Community Housing Program has bought a house at 7112 York Road, which it will rent out to three mentally ill outpatients at a time. The residents won’t be violent druggies; more like people with eating disorders and depressives, and maybe some schizophrenia patients, Sheppard Pratt officials said. Every one of them will be ready for release.

If the patients don’t live in this house, they could freely rent the house next door to ours (except that Mrs. Walters, our seventysomething neighbor, has lived there since the 1940s and would never move). The hospital is a two-minute drive away, with staff on call around the clock and visiting every day.

But when Sheppard Pratt officials tried to explain their plans to a community meeting Wednesday, they had an audience that wasn’t listening.

Instead, our neighbors talked about the same things Bill Calvin stared down in Morris Township. They don’t want a business in their residential neighborhood (perhaps they haven’t noticed the gas station, High’s, Royal Farm or Baskin-Robbins in the same strip of York Road). They talked about property values and how this three-person house would somehow threaten the quiet residential community they chose to move to.

Different people proposed picketing the house or suing to keep it out. The president of the community association said the group hasn’t taken a position (technically true, though another board member said opposition was a foregone conclusion), but admitted to The Evening Sun that it was looking for legal “ammunition” in an attempt to block the plan.

One person wanted the community to have access to the house to verify that residents take their medication. Another told Kim she would help us sell our house because, since we won’t fight this, we don’t fit into Rodgers Forge. Apparently we, too, are too different.

It’s sad that this community of nice people is descending into this thinly disguised prejudice. It’s sadder still that all this hot air is being wasted to defend a vision of Towson — and, more broadly, of suburbia — that has been history for years.

Simply put, Towson isn’t a bedroom suburb any more. It’s not a city like Baltimore either. It’s a whole new beast, and when all is said and done, the flap over the Sheppard Pratt home is going to be one of the landmarks that helps our neighbors get used to that.

In a new book, journalist Joel Garreau calls them “Edge Cities.” In the back, he lists them all, all over the country. Around here, he lists Towson, Hunt Valley and Columbia. He says Owings Mills, White Marsh and the BWI corridor are emerging edge cities.

What’s an Edge City? It has 5 million square feet of office space. More than 600,000 square feet of retail space. Its population gets bigger at 9 a.m. — making Edge City primarily a work place. (If you doubt this applies to Towson, check the Beltway at rush hour). It has a local reputation for offering mixed uses — housing, entertainment, shopping and work places. And 30 years ago, Mr. Garreau says, it was “overwhelmingly residential or rural in character.”

All this is true of Towson. Today, Sheppard Pratt’s new house is on the busiest commercial corridor in Towson. It’s a mile from the 13th biggest city in America. The house is a mile and a half from Towson Town Center, whose new addition alone is 600,000 square feet. Towson Commons opens in April, adding eight movie theaters, restaurants, and another 200,000 square feet of office space. The Edge City is an accomplished fact.

Edge City happened because people wanted it to happen, Mr. Garreau says. They wanted short commutes from the suburbs to work, convenient shopping, and nearby entertainment. What developers built, people bought. Because they liked it. That simple. Rodgers Forge gives you all that.

You can make the argument that if all these things exist in Edge City, we have a duty to make room for people like the people who will live in this house. But even if you don’t, honest people have to admit what Edge City really is, what kind of community we’re really discussing here, and whether this house will really disturb some idyll we’ve all been enjoying.

Edge City has problems that some Ward Cleaver fantasy suburb doesn’t. Our neighbors in Rodgers Forge may not want these problems, but they already have them. Ask any of the victims of the recent flurry of Rodgers Forge purse snatchings reported in the Towson Times. Ask the people who got robbed on York Road near the neighborhood when the shotgun bandits were in the headlines. Ask the guy who raced through our back yard one night last month, right after someone called 911 from a nearby house (the police didn’t tell us which one) but hung up. If you can find him.

Making Sheppard Pratt’s house go away won’t change that. Even Sheppard Pratt’s mental hospital, something Ward never discussed with The Beav, has been at Rodgers Forge’s edge, without a fence, since before the neighborhood was built.

We moved to Rodgers Forge last year from Upperco — which really is a bedroom-only suburb — so we know Towson is full of mixed uses. And we knew Rodgers Forge wasn’t Cleaverland: A realtor we talked to lives two blocks from our house, and someone had tried to steal his car. We knew it was an Edge City, though we hadn’t heard the term yet.

As the saying goes, that’s what we moved here for.

Kimberly Mullaney is a health educator in Baltimore. Timothy Mullaney is a reporter for The Sun.

Clinton’s Democrats Bid Farewell to the Politics of the Industrial Revolution

The Sun – Baltimore, Md.
Author: TIMOTHY J. MULLANEY
Date: Jul 26, 1992

“Ma, where’s my Pa?”
(Republican campaign jingle mocking Grover Cleveland, 1884)

“Get to know Bill Clinton the way Gennifer Flowers did.”
(Come-on for Republican phone hotline, 1992)

McLaughlin Group, — get a history lesson! When the history of Gov. Bill Clinton’s seizure of the Democratic Party is written, no one will care that he pushed the party to the “center,” that he and Sen. Al Gore were baby boomers, or that he made a play for suburban independents and Republicans.
That’s all true, but what the commentators miss is what it all adds up to. In the Democratic Party this year, politically speaking, the Industrial Revolution died. And it’s about time: Economically speaking, the U.S. Industrial Revolution died a long time ago. Long live the Information Age.
Millions complain that political parties have nothing to do with their lives. They’re right. That’s how Ross Perot got his 15 minutes of celebrity. But commentators act as if disillusionment with parties has never happened in America. They’re wrong.
It happened the last time we went through an economic transformation of this magnitude, the Industrial Revolution. Politicians bred on the coalitions established in the party realignment of 1860 had no clue what it meant that agrarian America was giving way to smokestack America. The erosion of parties ended only when to the nation’s conflict over industrialism came to a head in 1896, when Republicans won a realigning majority.
The same disillusionment has happened now because neither of today’s parties has figured out what a program or a coalition for the post-industrial age should be. Instead, Democrats pine for another 1932, the last time they forged a newly realigned majority, and Republicans just wander.
Forget 1932. Consider what historian James Sundquist said about the election of 1896 in his book “Dynamics of the Party System:”
“The 1896 election was the first to be fought out along the new line of cleavage that had been developing in American politics since the 1860s, cutting across the line established {in 1860, when Abraham Lincoln won} on the issues of slavery, war and reconstruction.
“For 20 years the two-party system had been based on dead issues of the past. It had offered the voters no means of expressing a choice on the crucial issues of domestic economic policy around which the country had been polarizing — slowly at first, but beginning in the 1880s at a headlong pace.”
Sound familiar? Today’s parties have been just as confused about what the wane of industrialism and rise of a service-based and high-value-added manufacturing-based economy means. That’s because the voters are confused too.
The kind of dirty-pool politics that has dominated presidential elections for 20 years happens when parties can’t fathom the still-emerging divisions of the time. While we’re figuring it out, we blather. That’s why the nation knew about Grover Cleveland’s love child, why Michael Dukakis thought competence was the only ideology that counted, and why 1992 Republicans want to talk about Gennifer Flowers.
Much has been written about how, as baby boomers, Bill Clinton and Al Gore have been shaped by different experiences than elders like George Bush. We’ve heard about Vietnam and Watergate, feminism and the arms race.
All are important, but none matters nearly as much as the change in the most fundamental experience that shapes everyday lives — how we make a living. Messrs. Clinton and Gore came of age in a different economy than did President Bush or Democrats like Mario Cuomo. It made them different people.
The last realignment of U.S. political parties, in 1932, was about how to divide the spoils of industrialism. The next realignment will be about how — even whether — America will face up to being a largely post-industrial nation, and how we go about making an information economy work for us.
That realignment just happened — before your very eyes — within the Democratic party. Liberals like the Rev. Jesse Jackson, Gov. Mario Cuomo and Sen. Tom Harkin lost for the same reason Democrats have lost the White House for years.
They’re out of touch not — as Republicans charge — because they rely on government as an agent of change, but because of how they want to use government power, and for whose benefit. They want government to help labor unions, prop up old-line manufacturers who use union labor and preserve high-wage manufacturing jobs in America that can be done by low-wage labor elsewhere. Plus, they want to subsidize those whom industrialism leaves behind.
The beneficiaries of these policies no longer add up to a winning coalition. Most Americans haven’t worked on the factory floor for decades. Even General Motors employs more white collars than blue. This year, for the first time, the majority of the electorate lives in the suburbs, home of nearly all the information companies building the new economy.
The rule of winning elections is appealing to the ever-elusive “people like me.” But out here in the nation, the rest of us look at each other and say, “what in hell are they arguing about car factory jobs for? I don’t work for that kind of company, or in that kind of job. I work for a law firm, or a hospital, or a high-tech company that does precision manufacturing, the kind of stuff someone making 25 cents an hour in Mexico can’t do. I live in the suburbs — I work there too. I’m middle class, at least for now. What does any of this have to do with me?”
Arguing over New Deal issues is absurd. Even if we would, it’s not in our power to make lower-cost car factories or clothing go away, no matter what Jerry Brown promises the United Auto Workers or the International Ladies Garment Workers’ Union.
So when you think of Jesse Jackson or Tom Harkin, remember these three little words: William Jennings Bryan.
Bryan was the defender of the farmer in 1896, the railer against Wall Street, the champion of the working (read, agrarian) man against the moneyed interests. Yesterday’s railing about free silver, a monetary policy designed to inflate farmers’ way out of debt, equals today’s railing about the Mexico-U.S. free trade agreement.
Bryan stood for the older, agrarian way as Mr. Jackson and Mr. Harkin stand for the New Deal economic order, for the dignity of the labor that went into the old economy, and for the right of the people who benefited from it to keep doing the same things for the same money or better. Forever.
The contemporary labels for Bryan were “radical,” “liberal” or “progressive,” — the same labels applied to Messrs. Harkin and Jackson. In fact, Bryan was a reactionary — he ended up attacking the theory of evolution as the prosecutor in the Scopes Monkey Trial. Bryan forced the issue of industrialism versus agrarianism on the electorate 20 years after the Industrial Revolution had taken root in the economy — just as we’ve been a post-industrial economy for 20 years or more.
Bryan posed the cutting-edge issue of his time — farms versus factories — so clearly that Republican William McKinley couldn’t avoid him. Instead, he ran over Bryan like a truck. The 1860 coalitions broke once and for all. Parties realigned around the new issue — industrialism.
The majority, by 1896, made their bread from it, so the majority were for it. Even for those who weren’t plutocrat factory owners, the factory filled their pay envelopes — many more pay envelopes than farms filled by 1896. The Republicans were for the factory. The Democrats weren’t. The Republicans held the White House, interrupted only by Woodrow Wilson, until 1932.
Now services and high-value-added manufacturing fill pay envelopes, more than unskilled and semi-skilled jobs on the line. That’s why Mr. Clinton talks about the middle class more than the working man. The middle class is to 1992 what the “working man” was to the 1896 and 1932 realignments — the place where the numbers are and where they’re growing because of economic change.
That’s why Governor Clinton dispatched Tom Harkin in no time, why Paul Tsongas, another advocate of the next economy, was the only serious challenge he ever had, and why he has gotten away with snubbing Jesse Jackson.
Mr. Clinton’s economic vision isn’t about turning back the clock, as Bryan wanted in 1896, and it isn’t fundamentally about distribution, as in 1932. It’s about making the pie bigger through activist government and about seeing different industries bake the pie. It’s about getting the New Deal workers’ kids good jobs in the “dozens of new industries” he talked about in his acceptance speech, not freezing them into car factories hermetically sealed off from competition and subsidized like farms.
The country can’t do without a manufacturing base, any more than in 1896 it could do without food. But in 1896 it didn’t need enough farmers to dominate national politics. And today the manufacturing labor base and its allies aren’t enough to make a winning presidential base. Narrow-profit-margin, labor-intensive manufacturing at American wages can’t compete, so many of those jobs have gone away. The economic interest in them that sought political expression in the New Deal coalition has shrunk. This year, manufacturing constituencies can’t even carry the Democratic party.
Mr. Clinton now sets off with a chance, however remote, to do something extraordinary in the fall. Having finished a long-evolving realignment in his party, sealing it with his choice of Senator Gore as a running mate, he can now set after the Republicans with realignment in the back of his mind.
There the values of the baby boom will serve him well, despite what Dan Quayle thinks. Economic change causes social change. A worker who can perform sophisticated services — practicing law or engineering — isn’t likely to think he or she needs government to decide whom to sleep with or what to do about a pregnancy. Such workers don’t take orders at work nearly as much as their factory-worker forefathers did.
They don’t appreciate taking orders from government at home, either. Many of them are suburban Republicans who have been uneasy with Mr. Bush, and with Republican gubernatorial candidates like Marshall Coleman in Virginia and New Jersey’s Jim Courter, because of abortion. Mr. Clinton will tell them they don’t have to take orders at home. Will George Bush? If he tries, will they cross the remnants of existing party lines to forge an Information Age coalition?
Mr. Clinton is attempting to play up his family roots, and Mr. Gore’s, as proof that he understands what values have not changed. His wife’s career, among other things, shows he thinks he knows which values have changed.
“Suddenly, with the nomination of Bryan in 1896, the party system took on meaning once again,” Mr. Sundquist wrote. “Each major party now had a position, and a program, that was relevant on economic matters. . . . The party became, again, something like a church — a militant, crusading church to whose aims the true believer could give no less than full devotion. Political bonds formed at such a time prove durable.”
Maybe this year is such a time. True, there is no clamor for Democratic solutions (even Mr. Clinton’s new ones) that suggest a historic shift in party allegiance is at hand. But the solutions Democrats propose — and more importantly the vision they imply of who wins, who loses and whose grievances the party system is geared to redress — changed drastically at their Convention.
At the least, Mr. Clinton’s supporters have a shot at giving Republican smutmeister Floyd Brown, he of the Gennifer Flowers hotline, the same answer Cleveland’s backers gave Republicans who demanded to know “Where’s my Pa?”
“He’s in the White House,” the chant went. “Ha, Ha, Ha!”

Timothy J. Mullaney is a financial reporter for The Sun.

A Message to Middle Class: Stop Whining
[FINAL Edition]

The Sun – Baltimore, Md.
Author: TIMOTHY J. MULLANEY
Date: May 17, 1992

I was 14 when New York City had its fiscal crisis and went to Washington, as supplicants do, expecting to be bailed out in 1975. And when Jerry Ford initially said no, the New York Daily News supplied a headline I’ll never forget: “Ford to City: Drop Dead.”
Seventeen years later, the country has sunk to a self-pity worthy of 1975 New York, and it’s time for another president to give us a new headline, one you should see but won’t. How about “Bush (or Clinton) to Middle Class: Drop Dead?”
Exit polls tell us this year’s middle class voter is mad as hell and not going to take it anymore. No one does anything for the middle class, Mr. Middle Class says. The government just bails out S&Ls and gives tax breaks to fat cats. And the spending giveaways to welfare queens! I’m gonna write my congresswoman!
But politicians aren’t the problem. We are. Sure Washington has thrown money around all these years. We in the middle class should know this better than anyone: They’ve thrown the biggest chunk of it at us. And we’ve yelled for more.
It’s really a joke, the thought of Mr. Middle Class crabbing that the government wants too much of his money. He would write his Senator in an educated tone, the result of four years of federal Pell Grants and Perkins Loans that helped send him to college, from a house whose mortgage interest and property taxes he writes off each year, in a suburb that wouldn’t exist in its present form if Washington hadn’t paid most of the bill for its highways and sewers. What a farce.
The punch line, of course, is that this vision is no fantasy. It happens every day. And a look — an honest look — at any of our lives, any of our communities, will prove it.
Consider Mr. Middle Class’ life. The list of entitlements above costs big bucks — $5.4 billion for the Pell Grants, another $5 billion for the student loans. Taxpayers wrote off $131.3 billion in state and local taxes and $193.2 billion in interest in 1989.
This list doesn’t even get into Social Security, the child care tax credit, Federal Housing Administration mortgage insurance, the non-taxation of company-paid benefits, and on and on.
The mortgage interest deduction is probably the biggest freebie of all. It arguably adds up to 28 percent to the value of every house in the country, a handout food stamp scammers never dreamed of.
Better yet, consider my middle-class life in a county where Spiro Agnew — Mr. Silent Majority himself — was once county executive. Then ask yourself how whether the government is putting it to the middle class.
When Robert Young ruled the roost on “Father Knows Best,” making it into the middle class was the measure of success. Like nearly everyone I grew up with, I’ve done that.
So how did I make such a success of myself?
Four years of college — and four years of Pell Grants, along with National Direct Student Loans at 3 to 5 percent — didn’t hurt. Neither did a year of graduate school — aided by a Guaranteed Student Loan, plus I wrote off my tuition on my taxes. Now I go to law school at night; since I go to a state school, tuition is only about 67 percent of the school’s budget. And the law school has it tough. Tuition pays only 21 percent of the University of Maryland system budget.
What my wife and I earn is between the IRS and us, but it’s more than Maryland’s median household income of $45,034, while nowhere near rich. How much of it do we give back? We paid about 12 percent as federal income tax last year.
We didn’t cheat. We simply bought a house, then wrote off the points, the interest payments on our federally-insured mortgage, the property taxes, our state and local income tax and what we gave to the United Way. In other words, we acted as middle-class people act and were rewarded for it.
I pay about $1,200 a year in property tax. For this, I can send as many kids as I want to public school. If, like my parents, I had seven kids, would that be a bad deal? Baltimore County spent $6,007 a pupil in the 1990-91 school year; private schools near my house charge from $2,250 to $9,250 each. I also pay about $1,000 a year in local income tax. For that, I get police protection that arrives lickety-split when called, a park system that should be better and all the usual services. I pay nothing to Baltimore City, where I spend up to 13 hours a day. There are worse deals.
And don’t forget: Maryland has the third highest state and local taxes in the nation, according to Money magazine. In Alaska, I’d pay a lot less.
I’m not saying pro-middle class policies are bad ideas. Promoting home ownership is both wise and humane, as is promoting higher education and quality child care. But as many problems as I have, this middle class guy has a hard time feeling picked on.
You might think that the rest of my middle-class community would be less aggrieved than it is, but consider some of my county’s headlines in the last year. Baltimore County Executive Roger B. Hayden got in hot water because he cut funding for school nurses. Horrors, until you consider that he cut nurses for private schools.
The parents marched, and TV reporters reported their weeping uncritically. But they deserved to be criticized. “Hey, people, it’s a private school,” the criticism should have been. “That means you pay for it, not me.”
Then Mr. Hayden had a long night at a town meeting. The highlight on the newscast I watched was the angry wife of a cop facing unpaid furlough days telling Mr. Hayden that when money is tight in her family, they don’t make excuses — they cut expenses. The TV reporters missed the obvious again.
Here’s what the reporters should have asked, if we were as skeptical as we say we are: Hey lady, what do you think he’s doing? Your husband is the expense that he’s cutting — worth buying, but not affordable right now, like a lot of things during a recession.
But our sense of middle-class grievance is too inflamed to make such truth-telling feasible.
Enough of my life: what about yours? Have you griped about both government services and taxes lately; do you want more of the former, like the cop’s wife, and less of the latter, like the tax protesters? Bet you have. But the local stuff is mostly penny-ante. Let’s talk S&Ls.
For people who moan that the S&L bailout shows how government sticks it to the middle class, here’s a question: What does the bailout pay for? If you thought it pays off stockholders of S&Ls, guess again. Those billions will actually bail out depositors like you up to $100,000. Stockholders’ lost money is their tough luck, as it should be.
The deposit insurance bailout is the best evidence going that when the fuss about politicians and fat cats dies down, the problem is that no politician asks us to look at ourselves. And we won’t do it on our own.
When you were putting your money into Fairfax Savings in Baltimore in 1985, didn’t it dawn on you to ask why Fairfax paid higher interest rates than other banks in town? Maybe you didn’t know Fairfax lent Jim Bakker $12 million, but maybe you should have found out. Or you should have asked yourself what Mom said about things that seem too good to be true.
Want to know where all the money went? To your 11 percent CD, which Fairfax and others covered by charging Bakker and others 15.25 percent, a rate way above the market because people like Bakker were lousy credit risks.
Banks and thrifts made crazy loans to stupid projects to pay for those deposit rates — which Mr. Middle Class accepted gladly, indeed demanded. He also accepted the construction jobs, the orders for building supplies, and the legal and accounting work that went into building projects that weren’t worth what they cost. That’s what the S&L crisis is, aside from a handful of spectacular frauds. Who got the money? You and I did. Years of bad government have put the country in a state as dire as New York City’s in 1975, except the federal government can print enough money to humor us indefinitely. Will they? George Bush wants to throw more money at home buyers. Bill Clinton wants a middle-class tax cut. Jerry Brown wants to make apartment rent tax-deductible. Pat Buchanan says the problem is that blacks and gays have too many rights. You figure it out.
But, remember this: They tell us this tripe because we make them.
Bailouts of New York City and of Chrysler Corp. in the 1970s had strings attached to talk sense into their recipients. When it comes time for us to be bailed out, who will explain the strings to us? When someone tries, will we act like Al Sharpton, quintessential New Yorker and lately quintessential American, all grievance and no sense?
No one is as mad as Al Sharpton, one-time New York child preacher cum civil rights wannabe whose conspiracies-are-everywhere rhetoric helps give New York politics its special tang. (Remember the Tawana Brawley case, where Rev. Sharpton and associates claimed the black teen-ager was raped by white policemen, possibly with some connection to Irish nationalists?)
Then again, maybe not. Maybe the sort of lunatic fringe oppressed-minority mind-set that supposedly alienated the middle class from the Democratic party has afflicted us all. Maybe this year’s middle-class “anger” is just the Al Sharptonization of America.
Jimmy Carter called this malaise. Actually, it’s a temper tantrum of the sort my parents easily recognized in their 14-year old in 1975. Their reaction to my adolescent fits would make a good tabloid headline for the next president. How’s this? “Prez to America: Grow Up.”

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A vote on jobs of future
[FINAL Edition]

By Timothy J. Mullaney

No one needs to tell Robert L. Ehrlich Jr. the world has changed since he grew up in blue-collar Arbutus. No one needs to tell his Dundalk-raised challenger Connie Galiazzo DeJuliis either. . . .America’s shift from a manufacturing economy to the Information Age has been the central historical fact of their lives. Now it is the central historical fact of their faceoff for Ehrlich’s congressional seat. Down deep, theirs is Maryland’s first post-industrial congressional campaign.
Obviously, the Information Revolution didn’t just get started – it has been building for 40 years. But their race in the state’s 2nd District is the first competitive local race in which the parties are presenting contrasting, well-developed visions of what an information-based economy means for Maryland – and what each party would like to do about it.
The Democrat, DeJuliis, has moved beyond the traditional position of the unions that form her political base, many of which implicitly want to use politics to lock the old economy into place. Instead, the candidate talks with a certain wonder about how her younger children will graduate from college and compete for jobs that didn’t exist when they enrolled. The Republican, Ehrlich, acknowledges there’s a role for government to help ordinary people connect themselves to the new economy.
It’s up to us now to decide which vision of post-industrial government we think works better: DeJuliis’ vision of a helping hand that lets people adapt to economic changes government can’t stop, or Ehrlich’s view that most of the solution is smaller government that pushes power to the local level and gets out of the way so people can build the future, whatever it might turn out to be.
“I think government’s responsibility is to reward hard work and create and invest in opportunity,” DeJuliis said, pointing to job-training efforts and student loans – the latter a program, she points out, Ehrlich used himself. “Government has no control over where the economy is going, but we do control whether we help people have the tools.”
Ehrlich puts it this way: “One party stands for ‘Let the government take care of it,’ and one is for individual initiative.” Ask him how government can make a post-industrial world work better, and he mentions cutting regulations and capital gains taxes, trying to boost the savings rate, even tort reform. Only when asked again does he bring up training programs, college grants and community colleges: “We literally can’t afford the government approach.”
If you can’t find any differences in there, you’re not listening.
A good spot for a faceoff
It’s fitting that the Ehrlich-DeJuliis faceoff comes in the 2nd, because the state’s most potent symbol of industrial decline is at the district’s eastern edge: Bethlehem Steel Corp.’s Sparrows Point Plant, once the biggest steel complex in the world. Of the 100,000 manufacturing jobs Maryland has shed since the 1950s, nearly a quarter came from the Point alone. To people from Dundalk and to a lesser extent Arbutus, the Point is a symbol of a time – and a life – gone by. Both candidates have seen it happen.
“Here’s what our future was,” DeJuliis says, thinking back to Sparrows Point High, Class of ‘64. “The guys were going to do their time in the service and work at Bethlehem Steel, or at General Motors or the docks, from high school right into manufacturing. The girls, some were going to secretarial school and some to cosmetology, but always with the goal we were going to get married. … It was laid out for you – you’re going to work at Bethlehem Steel.”
Ehrlich, a child of the 1970s, saw a darker side to the manufacturing-job dream because he came of age as it was fading. He has ridden the new wave skillfully: He went on to Princeton, law school and private practice, then to the state legislature and ultimately to Congress.
“We think about this stuff because I’ve lived it,” he says, and the people he has lived it with have encountered mixed results. “When I think about my friends, many became firemen, police, traditional-type jobs. Some who have had technical training have done very well. … Some of those who didn’t go on to higher education or technical education have had a very tough way in life. “It sounds like a lecture to a high-school class,” he concedes. “They’ve struggled. They’ve changed jobs a lot and basically struggled in life. The environment just changed.”
Given their backgrounds, it’s understandable that DeJuliis and Ehrlich both sound less than happy about the nation’s shift to a service-based economy. Ask them whether Maryland is better off, overall, and DeJuliis says she would rather not answer directly.
Ehrlich, trying to sound optimistic, says “the net/net is somewhat negative” but probably not as bad as most people think.
Truth is, they’re both mostly wrong.

As hard as it is for many people to admit, the information economy has been great for Maryland – better than for almost any other state.
Maryland was the 12th richest state in the nation in 1980 – DeJuliis remembers people in southeastern Baltimore County were terrified in the early 1980s as unemployment rose to about 20 percent in some neighborhoods – and was fifth by 1990, as the change took firm root. Despite all the concern about the state’s slow growth in the 1990s, fifth place is where Maryland remains.

Maryland gets only 8 percent of its jobs from manufacturing now – much less than the already diminished national average – but the numbers have been close to stable for several years and average manufacturing wages here are a healthy $706 weekly, led by Beth Steel and General Motors’ Broening Highway plant. If you look at a list of job creation by industry here, you see why the small size of the manufacturing sector hasn’t hurt the state much.
The “business services” sector, which includes a lot of high-tech industries but is hardly limited to them, boosted its Maryland employment by 6.3 percent last year, 4 times the state average. Other top job adders were health care and private companies that provide social services. And retailers continued to expand here, attracted by customers’ high incomes.
More than 15 Maryland companies have staged initial public offerings since March 1995, almost all of them driven either by new technology or by regulatory changes in existing industries like broadcasting or health care. Maryland stocks trade at prices more than 50 times higher than the past year’s profits of public companies in the state – an extraordinary multiple that shows confidence that companies here will grow explosively. The future is arriving, and Maryland is on board. Firmly.
Yes, Maryland has lost a lot of manufacturing jobs. Some were great jobs. Others were no great loss.
Remaining Maryland jobs in the category that includes Beth Steel paid an average weekly wage of $931 in 1995, the state government reports, well above the statewide average of $560. But remaining jobs in apparel, an industry at the heart of the idea that the new economy has killed American jobs, paid only $416.
“When we were really adding to our manufacturing a couple of years ago, we couldn’t get labor,” Timothy F. Finley, chief executive of Jos. A. Bank Clothiers Inc. of Hampstead, said in March. Bank makes suits and sport coats in Baltimore. “No one wants to go into this trade.”
Despite the political myth that manufacturing provides the only “good” jobs, states that still get the biggest share of their jobs from manufacturing are hardly at the top of the wealth pile. The top four states in personal income are Connecticut, New Jersey, New York and Massachusetts. All have gotten on with adjusting to the new economy – which has a place for manufacturing, especially when it is complicated enough that workers here can do it better than workers in developing nations – and winning a big share of industries that are growing now.
But if Ehrlich and DeJuliis are ambivalent about the way this economic change has treated Maryland, they are right to believe it leaves a significant job for politicians to do. The change has left many people behind, and most economists agree it has contributed to the growing inequality between the incomes of working people and the new class of professionals and entrepreneurs.
“I’m not depressed, but I represent areas that are depressed because of these changes,” Ehrlich said. “I represent those folks as well.”
That’s a large part of what their campaign is all about. DeJuliis and Ehrlich have blurred the point in the last weeks of the campaign. But each warms to the idea that he or she is fighting over which approach really helps people adjust to the new world.
And they’re right. A look at history “Suddenly, with the nomination of {Democratic presidential candidate William Jennings} Bryan in 1896, the party system took on meaning once again. Each major party now had a position, and a program, that was relevant on economic matters. … The party became, again, something like a church – a militant, crusading church to whose aims the true believer could give no less than full devotion. Political bonds formed at such a time prove durable.”
Political scientist James Sundquist wrote that years ago, about how voters faced the last economic change as big as the one we’re seeing now. For decades, political scientists have waited for the parties to build programs “relevant on economic matters,”
believing that was the key to new party coalitions that reflect emerging economic interests. Political thinkers call that process of breaking and remaking coalitions a “realignment.”
It hasn’t yet happened; many think it never will. However, since 1992 we’ve seen realignment within each party. Newt Gingrich transformed his Main Street party with the idea that the information age demands a stripped-down central government that lets entrepreneurs dream and create – whether they are creating new technology or just beach volleyball. Ehrlich basically agrees: He’s simply more likely to credit the ideas to the popular Jack Kemp than the unpopular Speaker of the House.
Bill Clinton has basically crushed the forces in his party that resisted economic change. Instead, he offers the vision DeJuliis has adopted: an activist government, but one that focuses less on passing out fish and more on programs that teach people how to fish, presumably off the side of that bridge to the 21st century. Is that enough to get us to go back to church, as more campaigns come to look like Ehrlich vs. DeJuliis?
The answer is unlikely to be quite so neat. It falls to Frank A. Adams, a Timonium venture capitalist, to remind us that the fate of steel workers’ children lies less in their politics than in themselves.
“What it means to the steel worker is that his children need to stay in school and become computer-literate,” Adams said. “There are all types of spinoff jobs when you have a robust Maryland.”
Timothy J. Mullaney covers telecommunications and new media for The Sun.
Pub Date: 10/27/96
[Illustration]
PHOTO; Caption: Sparrows Point: Some 30,000 workers were employed at the spawling southeast Baltimore County plant during its heyday, but the figure has dropped to about 5,000.; Credit: 1993 : SUN STAFF PHOTO

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