Revisionist History

[Jason Thurman]

In the June 15 episode of his Revisionist History podcast (titled "A Good Walk Spoiled"), Malcolm Gladwell examines the private golf clubs of Los Angeles and the economic and legislative factors that contribute to their sustainability in a city with overwhelmingly high property and property tax costs. I don't want to paraphrase too much here, but his argument is compelling and very unfriendly to golf, especially private golf.


It's the number one podcast on iTunes this week. Did anyone else listen? If so, what were your thoughts?

[John Foley]

Jason,


I have not listened to this one yet but I do enjoy his work other topics. I will add it to my listening list.

[Joe Schackman]

I listened. You could discuss this for hours but I'll give my two cents.

It was quite the hatchet job on golf. Gladwell comes out right off the bat and says he despises golf so that should tell you this is not exactly a journalist endeavor.

He made 3 main arguments:

1) Public vs Private Land Usage
2) CEO effectiveness
3) Tax payments

The first two arguments were pretty thin. Particularly the CEO thing. That was just bizarre. Essentially he talked to a grad student who did an analysis of CEO's who post scores to GHIN. He correlated that to performance of their companies and found a direct relationship between rounds played and the companies poor performance (the more they played the worse the company did).

I actually think his point on tax payments wasn't without merit but that gets into a whole political argument that I don't want to have.

BUT at the end of the day none of his arguments are actually against golf as a game. It is about poor urban planning and more importantly the power and influence of extremely wealthy people (oh and CEOs who are bad at their jobs...)

It was basically a take-down of the 1% but using golf as its frame.

[Michael Wolf]

Mostly agree with Joe.


The tax treatment is very hard to defend, particularly for clubs that allow almost zero outside play. But taxation vs use is always a black hole of arguments. Who should fund a Coast Guard, a game wardens salary, or snow plows to get to the grocery store in the winter?


Overall not a bad way to burn an hour listening while driving


Full disclosure - I take a hand full of free tees whenever I play someplace that has a cool unique color pattern

[Jason Thurman]

The tax argument is definitely the part of the episode that I find most compelling, and hardest to argue with. And it's also the part that I think may soon become part of a broader dialogue in communities all over the country.


On this forum, we've had roughly 4,692,586,281 discussions about the game's sustainability. We know the basic costs and revenue equation that courses have to deal with to stay solvent, and how factors like increased acreage, maintenance costs, and distance of ball flight contribute to that equation. But we've rarely discussed how that equation will change as tax codes beneficial to golf inevitably change if (when?) the 90% of the voting public that doesn't play the game starts paying attention and choosing sides.


I also think the solution Gladwell proposes is interesting. While I would change some of the details of what he suggests should happen to private clubs in Los Angeles that thrive thanks to beneficial tax arrangements, the basic concept behind his "solution" is strikingly similar to what we see all over the UK - that golf courses which essentially rely on taxpayer subsidization to survive should also be open to use by the average taxpayer. He's not advocating for public tee times, but rather advocating that golf courses which require tax help should essentially function as parks that golfers share with walkers and runners and birdwatchers and the like, at least on a part-time basis.


If that argument starts to catch on, I don't know what will happen. Maybe we'll see a rash of courses that can't make it and get plowed for development. Or maybe we'll see a much more economically sustainable version of the game take off in the US, as golf becomes a community vehicle for maintaining green space and providing fields for recreation. Or maybe something else will happen. But any game played primarily by affluent white men is going to be ripe for political scrutiny in the near future, and when that scrutiny gets dialed up, I suspect golf's economic model may change on a much shorter timeline than a lot of us have anticipated. Insert a "tipping point" reference here.

[Blake Conant]

the property tax issue was interesting, and In my opinion should be corrected, but it stretches well beyond golf courses. Start playing the blame game there and it's a slippery slope.



One issue I had was how he used a barren, narrow sidewalk to frame an argument that there is no space for the public to walk. In fact, San Vincente Boulevard is bisected by a median. A rather wide one at that. With mature trees and nice grass. Probably 30 feet wide. And it's well used by walkers and runners.

[Joe Schackman]

the property tax issue was interesting, and In my opinion should be corrected, but it stretches well beyond golf courses. Start playing the blame game there and it's a slippery slope.

That is kind of how I felt about the whole episode. This is not about golf itself. It is about some big compelling issues and golf is just the lens to view it through.

[Steve_ Shaffer]

My one word description of him: "Gadfly"

[Matt Frey, PGA]

I listened to the podcast during lunch today. While the clubs in LA aren't doing anything illegal, I completely agree that clubs need to pay their fair share and shouldn't get special treatment.

This reminds me a bit of the lawsuit one Cincinnati golf course owner brought against the city courses, managed by a for-profit company, as they claimed to be exempt from property taxes.

I'm 100 percent for the game's health and certainly for healthy clubs as they provide many jobs within our industry. However, they're a business just like any other and need to pay their taxes, adjusted for time / inflation. They shouldn't get special treatment. If they can't survive in their ecosystem, isn't that just the work of capitalism?

Side note: I felt that the podcast it was a little unfair in regards to how much land golf courses take up, especially when they compared it to the size of basketball courts.

[Michael Whitaker]

Is this the same guy who did a commentary on the same subject on CBS's "Sunday Morning" ?

Here is an online link to the podcast:  http://revisionisthistory.com/episodes/11-a-good-walk-spoiled

[PCCraig]

I just listened to the podcast. All I kept thinking was "whatever, hippie." 

[Keith Grande]

So, I can see "Golf Clubs" converting to religious havens, tax exempt real estate.  The land can be the place of worship.  We can worship The Golf Gods, or MacKenzie, or Doak!

[Bill Seitz]

Man, I kind like Gladwell, but he kind of glosses over a lot of things here.  First, misstates how proposition 13 works.  He says people who bought before 1978 enjoy the benefits of Prop 13, but those who bought after do not.  That's just flat out wrong.  If I bought my house in 1980 (or 1985, or 1995 for that matter), I'm still reaping some big Prop 13 benefits, just not as much as someone who bought before Prop 13.  I think Gladwell is smart enough to know that what he said isn't true, so I have to think he's deliberately stretching the truth on this subject, which reflects pretty poorly on him.


For example, my parents bought their house in the West San Gabriel Valley in 1969.  My mom still lives there.  It has increased in value by about 35,000%, but is still assessed largely at what it's value was when the measure passed.  Her neighbors have been there about 15 years. Their property value has increased probably about 25%.  It would be wrong to state that they aren't benefiting from Prop 13.  Just not nearly to the extent that my mother is.  It's totally stupid and unfair, in that she pays far less than her neighbors for the same services. My family has always been pretty anti-Prop 13, but I wouldn't expect the law to be repealed any time soon.  Though I could potentially see a carve out for commercial property, I'm not sure that would cover private clubs.  You'd basically have to write a repeal that excluded residential property.  Good luck with the politics on that.


If his point about equity membership was germane, wouldn't those clubs, upon Prop-13's enactment, just formed a corporations and sold shares?  The corporation then owns the golf course, until that entity sells the asset, the ownership is unchanged, even if the individual shareholders are entirely different 50 years later.  Problem solved.


And I get the idea behind the "treat them as public parks" argument, but his foundation for that argument is that, through Prop 13, the public has been subsidizing those properties for years.  If that's the case, the public is subsidizing every taxpayer who derives any benefit from Prop 13 whatsoever.  To be consistent, you'd have to open every privately owned property in California to public enjoyment, which is pretty much the destruction of private property.  That sounds crazy to me, and I'm practically a socialist under today's definition.

[Howard Riefs]

Is this the same guy who did a commentary on the same subject on CBS's "Sunday Morning" ?

Yes. Here's that link:


http://www.cbsnews.com/videos/malcolm-gladwell-on-season-2-of-revisionist-history-podcast/


Shackelford weighs in...


http://www.geoffshackelford.com/homepage/2017/6/16/malcolm-gladwell-takes-on-golf-in-a-peculiar-way.html

[Michael Whitaker]

You have to remember that a podcast like this is presented to attract the greatest number of listeners in order to maximize advertising revenue. He doesn't care if you agree or disagree, just that you have listened. It's the classic "stirring a beehive with a stick" theory of radio programming. It's why guys like Limbaugh, Mike Gallagher and such say often outlandish things... not because they truly believe what they are saying, but because it gets them bigger numbers. I know... because I used to be in that business and sat in on programming meetings where these tactics were discussed.


Mr. Gladwell doesn't have to be 100% accurate... he just has to weave together a good enough story that it will resonate, positively and/or negatively, with enough people that he will maximize his income. At the end of the day everyone (individuals, governments, companies) do what is in their best interest. 'Twas ever thus.

[Tom_Doak]

It's a funny name for a podcast, really.  To me "revisionist history" usually means drawing a deliberately misleading conclusion.


There's no doubt that clubs have lobbied for tax breaks ... just like practically every other business and private entity in America.  Generally, the richer they are, the more successful they are at their lobbying.



The part Mr. Gladwell leaves out of his report is that golf courses are part of the greenbelt in urban areas, and that has many positive effects for the community and the environment as a whole, whether outsiders can walk across the fairways or not.

[MClutterbuck]

I am sure this same guy trying to tax golf courses out of existence would vehemently oppose development of condos or office space that would be able to afford such taxes. He also forgets about externalities such as trees, views, sun, lower density and its favorable impact on roads, etc. He forgets as well that golf courses do not demand public schools, hospitals, or law enforcement. I don't know the guy but sounds like his ideology is blinding him. 

[Garland Bayley]

Man, I kind like Gladwell, but he kind of glosses over a lot of things here.  First, misstates how proposition 13 works.  He says people who bought before 1978 enjoy the benefits of Prop 13, but those who bought after do not.  That's just flat out wrong.  If I bought my house in 1980 (or 1985, or 1995 for that matter), I'm still reaping some big Prop 13 benefits, just not as much as someone who bought before Prop 13.
...

When you bought your house in 1980, did you begin paying the same amount in property tax that the previous owner did?

[Bill Seitz]

When you bought your house in 1980, did you begin paying the same amount in property tax that the previous owner did?

That was a hypothetical, to be clear.  The answer to your question is no, but it's also irrelevant to my point.  In 1980, or 1985 or whatever the time of purchase, the house would have been reassessed, then essentially frozen at that assessment.  So the new owner would be paying more in property tax than the prior owner, but less than their neighbor who bought a comparable property five years later, assuming the market has appreciated.  That difference is the Prop 13 benefit that the new owner receives, and it doesn't matter that they bought the house after Prop 13 passed. 


So Person A buys a house in 1970.  In 1978, it's worth $100k.  A pays property tax on that assessment (with small adjustments) going forward.  In 1990 A sells to B for $500k.  A was getting a $400k assessment benefit at the time of sale.  In 2000, C buys the an home identical to B's home right next door for $1MM.  C pays property taxes based on that assessment, while B is still paying on $500k.  B isn't paying on the value of the home at the time Prop 13 was passed ($100k), but it's false to say that B isn't benefiting from Prop 13 because he bought his house after 1978. 

[Michael Whitaker]

What is ironic about this situation, IMO, is that Mr. Gladwell is using Prop 13 to show how "rich white guys" are manipulating the system when the law was originally called "The People's Initiative to Limit Property Taxation" and was to protect homeowners who were facing escalating taxes due to the high property value inflation California was suffering in the 70's.

Wiikipedia has this to say about the origins of Prop 13:

There are several accounts of the origins of Proposition 13. The evidence for or against these accounts varies. One explanation is that older Californians with fixed incomes had increasing difficulty paying property taxes, which were rising as a result of California's population growth, increasing housing demand, and inflation. Due to severe inflation during the 1970s, reassessments of residential property increased property taxes so much, that some retired people could no longer afford to remain in homes they had purchased long before. An academic study found support for this explanation, reporting that older voters, homeowners, and voters expecting a tax increase were more likely to vote for Proposition 13.^[7]Another popular explanation is Proposition 13 drew its impetus from the 1971 and 1976 California Supreme Court rulings in Serrano v. Priest, which somewhat equalized California school funding by redistributing local property taxes from wealthy to poor school districts. According to this explanation, property owners in affluent districts perceived that the taxes they paid were no longer benefiting their local schools, and chose to cap their taxes.A basic problem with this explanation is that the Serrano decision and school finance equalization were actually quite popular among California voters.^[7] It is true that Californians who voted for Proposition 13 were less likely than other voters to support school finance, but Proposition 13 supporters were not more likely to oppose the Serrano decision, and on average they were typically supportive of both the Serrano decision and of school finance equalization.^[7]Another explanation that has been offered is that spending by California's government had increased dramatically during the years prior to 1978, and taxpayers sought to limit further growth. The evidence supporting this explanation is limited, as there have been no studies relating Californians' views on the size and role of government to their views on Proposition 13. However, it is true that California's government had grown. Between 1973 and 1977, California state and local government expenditures per $1000 of personal income were 8.2 percent higher than the national norm. From 1949 to 1979, public sector employment in California outstripped employment growth in the private sector. By 1978, 14.7 percent of California's civilian work force were state and local government employees, almost double the proportion of the early 1950s.^[8] In addition, during the early 1960s, there were several scandals in California involving county assessors.^[8][9]These assessors were found rewarding friends and allies with artificially low assessments, with tax bills to match. These scandals led to the passage of AB 80 in 1966, which imposed standards to hold assessments to market value.^[10] The return to market value in the wake of AB 80 could easily represent a mid-double-digit percentage increase in assessment for many homeowners. As a result, a large number of California homeowners experienced an immediate and drastic rise in valuation, simultaneous with rising tax rates on that assessed value, only to be told that the taxed monies would be redistributed to distant communities. The ensuing anger started to form into a backlash against property taxes which coalesced around Howard Jarvis, a former newspaperman and appliance manufacturer, turned taxpayer activist in retirement. 

Mr. Gladwell doesn't just want the private golf clubs to pay their fair share of taxes (with which I don't have a problem) he wants them to open their gates and allow anyone and everyone the opportunity to jog, throw a frisbee, picnic, etc. He used the Old Course in St Andrews as his example because it is closed to golf on Sunday, but open to the public for recreation. He fails to mention, however, that the Old Course is a municipal course owned by the community and, therefore, a public space... not private property. Makes for a good story, though! 

[Garland Bayley]

When you bought your house in 1980, did you begin paying the same amount in property tax that the previous owner did?

That was a hypothetical, to be clear.  The answer to your question is no, but it's also irrelevant to my point.  In 1980, or 1985 or whatever the time of purchase, the house would have been reassessed, then essentially frozen at that assessment.  So the new owner would be paying more in property tax than the prior owner, but less than their neighbor who bought a comparable property five years later, assuming the market has appreciated.  That difference is the Prop 13 benefit that the new owner receives, and it doesn't matter that they bought the house after Prop 13 passed. 


So Person A buys a house in 1970.  In 1978, it's worth $100k.  A pays property tax on that assessment (with small adjustments) going forward.  In 1990 A sells to B for $500k.  A was getting a $400k assessment benefit at the time of sale.  In 2000, C buys the an home identical to B's home right next door for $1MM.  C pays property taxes based on that assessment, while B is still paying on $500k.  B isn't paying on the value of the home at the time Prop 13 was passed ($100k), but it's false to say that B isn't benefiting from Prop 13 because he bought his house after 1978.

My uncle from California explained prop 13 to me and how it affected people. Since you had to pay probably significantly higher property tax than the previous owner, you did not get the benefit of that tax rate. Your new rate set your future benefit as it wouldn't go up as fast as property values. At least that is how I understand it.

In other states, you buy a house means you will pay about the same property tax the previous owner did. So you see by having to pay more in California, you got shafted.

[David Sucher]

I thought it was a terrific episode though a bit tired of the ageist racist sexist "old white guy" routine.

I hope that Gladwell does a whole talk on how the Public Day (Sunday) at St. Andrews came to be as it is a terrific model.

[Carl Nichols]

You have to remember that a podcast like this is presented to attract the greatest number of listeners in order to maximize advertising revenue. He doesn't care if you agree or disagree, just that you have listened. It's the classic "stirring a beehive with a stick" theory of radio programming. It's why guys like Limbaugh, Mike Gallagher and such say often outlandish things... not because they truly believe what they are saying, but because it gets them bigger numbers. I know... because I used to be in that business and sat in on programming meetings where these tactics were discussed.


Mr. Gladwell doesn't have to be 100% accurate... he just has to weave together a good enough story that it will resonate, positively and/or negatively, with enough people that he will maximize his income. At the end of the day everyone (individuals, governments, companies) do what is in their best interest. 'Twas ever thus.

That's what made it so disappointing to me.  I thought he was better than that.  That's not to say that there shouldn't be a real discussion about the tax treatment of private clubs in California (or wherever), but this podcast wasn't that. 

[corey miller]

Maybe Mr. Gladwell could have focused on President Trump's course in Westchester where the local residents seem to diverge with the Trump Organization on what the taxes should be.  Of course, since it most likely is his least desirable golf property (he has learned a lot in this regard ). I think he is better off "losing" and then litigating for housing under the current law.

As for Prop 13...I think Bill explained it well though what may be unmentioned (as I understand it) is that the cost basis can be passed down through trusts to children.  Doesn't that sound a little "misguided" to my progressive friends?

[Steve_ Shaffer]

A response to Gadfly Gladwell:


http://thefederalist.com/2017/07/07/malcolm-gladwell-wants-hate-golf-can-steal-private-property/