Greed’s perfect storm

It is said that family businesses classically go through a rise and decline cycle of succession, memorably termed, “Thunder, Blunder, and Plunder.” Thunder, the company’s founding generation, typically sets the standard for energy, courage, leadership, and innovation. Blunder is the generation befuddled by their inherited responsibility and lacking the courage or vision to live up to it. And Plunder is the generation, with no grounding, that takes advantage of all that is left to them for purely personal gain. If they don’t manage to kill the enterprise, the next generation—just to survive—has to muster the character to cycle back to a Thunder level of leadership.

In the last century or so, homebuilding in America has gone through an analogous pattern of rise and decline. The Thunder era is evident in buildings where trade mastery, construction durability, and architectural integrity were evidently a common standard. While the Blunder era still built some wonderful homes, a need for speed began to supersede the requirement for longevity and building trade mastery. In that era, the influence of some very good builders slowly gave way to other interests and market forces. And Plunder? We have lived with that era during the last half of the 20th century through today. Until the current recession, plundering the housing marketplace had become the very raison d’etre for much of the industry. There’s nothing wrong with profiting from building; builders have been doing that for centuries, but the distinguishing characteristic of plundering is that good standards of workmanship and construction quality become the specific obstacles to be strategically undermined in pursuit of other objectives, such as good quarterly reports. Quality building requires skill, takes time, and costs money – all anathema to those bent exclusively on paying less and getting more.

In larger cities, you can often see Thunder, Blunder, and Plunder played out in concentric circles around the older town center. In Colorado Springs, where I grew up, the Thunder era of building was roughly from 1875 through the 1920s. The old parts of the city have excellent, varied architecture and rich displays of building craftsmanship. Even the old working class neighborhoods were simply smaller house and lot versions of the upper class neighborhoods. They still reflected the variety of typical, early 20th century architectural styles, built with good materials and apparent care. This era was stalled by the Great Depression and ended with WWII. Outside of that old Thunder zone, you can see what was going on in the Blunder years. I don’t know what actually happened, but it appears it might have unfolded this way: the designers and developers did their best to strip the houses down to the bare essence of functionality, but good carpenters and builders (probably many of whom had worked on homes from the previous era) couldn’t help but maintain at least the fundamental aspects of their accustomed building standards. Here, bad design and some cheesy developments were legitimized and upgraded by some pretty good builders. Apparently, though, not enough skilled tradesmen were left to stem the backsliding when the real plundering began, between 1960 and 1970, as the Colorado Springs metropolitan area grew 64%, from 144,000 to 236,000. It has gone unabated since, with the population now rising to about 600,000. Therefore, in the case of Colorado Springs, the Plunder ring is the big sprawling suburbia that now houses most of the population, the Blunder ring defines a thin boundary area including the old core, and the Thunder area is now quite small in comparison. Of course, there are exceptions in each zone, but the highest concentration of well-designed, well-built homes can be found at the Thunder builders’ core, and the very worst homes, along with most of the crime-ridden slum neighborhoods, are out at the Plunder builders’ fringes. Nearly every growing city in America has a similar story to tell.

I’ll admit to being an optimist, but I believe the Plunder era of homebuilding is coming to an end. The sub-prime disaster was greed’s perfect storm, fueled by the converging influences of blind and fast money, butt-ugly developments, and really bad builders. It was a cacophony of shills propping up a ruse. And now that the economic tide has gone out – to paraphrase Warren Buffet’s wise remark – we can now see quite clearly that all the players in those bad business deals were swimming naked.

With the truth revealed, there will be an opportunity to help establish new mindsets and new standards, as we eventually emerge from this recession. Could it be the beginning of the next cycle, and the beginning of a new Thunder era?

I think it’s possible.

Leave a Reply

Your email address will not be published. Required fields are marked *