An excess of domestic assets in too little space

Every now and then the “Let’s move” virus infects us. We love our house, its amenities and location, but we are susceptible to the moving bug.

We didn’t move this time despite the fact this new place was a spectacular home on the river, modernized by an extraordinary owner and perfect for us in many ways. But, it was short on closet space and walls for our many family storage pieces.

In brief, we have too much stuff for the new place.

This is not just a personal problem, but one that faces many towns and many businesses.

Gradual but dramatic changes in business have been shrinking many small towns in Indiana and across the nation. “Big” thrives because of incredible economies of scale.

Larger businesses are able to operate more efficiently than smaller ones. Think Wal-Mart compared to the mom-and-pop store of memory. The big-box offers more goods at lower prices. So too Lowe’s, Menards and Home Depot challenge local lumber yards, gardening shops, hardware and appliance stores.

It’s been going on since the founding of A&P more than 100 years ago.

Wal-Mart and other businesses require large numbers of customers with healthy incomes to operate effectively. Smaller towns cannot support them. Yet it is hard for a small town to “go out of business,” just as it is hard for Detroit and other urban centers to downsize. They have too much stuff.

Once streets are built and lighting installed, once water and sewage systems are in place, it’s hard to stop maintaining them. Old buildings are allowed to remain standing too long and, if demolished, vacant lots do not bring in the property tax revenue necessary to support the services provided to fewer and poorer households.

Many businesses also find it difficult to downsize. The public is often alarmed, sometimes outraged, when an established factory or store closes down and lets it employees shift for themselves in today’s labor market.

We see this now in Lake County, where U.S. Steel is downsizing and releasing workers. Sometimes a company can sell off its assets, as in the case of GE and its financing unit.

Yet in Fort Wayne, the departure of GE’s manufacturing facility left a scar on the landscape and psyche of the city. Such wounds still fester in Evansville, South Bend and other cities across the state from events that should have been buried in history.

As we age, grow and prosper, we accumulate stuff: things (assets) and relationships. They become part of our identity. We know ourselves and are known to others by what we have and whom we know. This is true for people, places and businesses.

I don’t have solutions to resolve these issues, but they inhibit change. I do remember the advice a former dean at IU gave me when I complained about a budget cut. He said, “Managing requires that we learn to play the accordion, that is, make music while expanding and contracting.”

Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to dr-editorial@greenfieldreporter.com.