A tale of two kinds of cities

By David Stanley Willenski
web posted April 1999

The United States is the greatest society ever on earth. Nowhere else has there ever been achievement on the scale that has occurred here. It was Americans who invented the electrical circuit, the semiconductor, Blues, Jazz, and Rock and Roll music, countless medicines and cures for diseases, and who eventually sent men to the moon. Although Americans didn't invent the automobile, an American invented the method by which they could be made cheaply enough for almost anyone to have one. There are countless other examples of achievements by Americans, which all help to give the United States the greatest standard of living the world has ever known.

Yet despite all this, there is a strange situation existing in the world today that warrants some explanation. While cities in other developed countries seem to be charming, vibrant, lively, exciting and convenient places in which to live and work, many American cities seem sterile, worn, deteriorated, and inefficient. For example, Travel and Leisure magazine took a poll of its readers as to their favorite city; Sydney, Australia topped the list. London, Paris and Rome have long been known as hot spots for romantic getaways. The Ginza in Tokyo is probably the world's single most vibrant commercial spot, bar none. Toronto, a medium-sized city as world cities go, is more cosmopolitan than many far larger American cities. From what most people tell me, the most beautiful urban environment in North America isn't in the United States; it's Vancouver, British Columbia. In contrast, Los Angeles, though it is home to many of the world's most productive people, has been described more times than I can remember as a cumbersome place that people love to hate, a place where one "wakes up in the morning, puts on his car, and goes". (The same could be said for many other American cities, i.e., Phoenix, Dallas, Houston, Detroit, Atlanta, Tampa, Kansas City, Orlando, and Minneapolis, just to name a few.) In fact, in all of my dealings with people throughout the world, I found a disdain and disgust for American cities even though also I almost always found at least general awe -- if not approval -- of Americans and America in general (San Francisco was an exception, and some people liked Manhattan in New York City).

Based on my own observations I tend to agree. Cities in Canada and western Europe -- at least all the ones that I've seen -- are charming and convenient. Downtown areas are densely developed and are lively much of the time, with a good mix of stores, offices, and residences. The outlying neighborhoods tend to be compact, close to downtown in all but the biggest cities, and are well-taken care of, with a good mix of housing types. Mass transportation is good, allowing easy access to downtown and to other parts of town; in many cases one does not even need to use a car at all to get to most places. In short, life in such places, though nowhere near as satisfying overall as it is in the United States, is strangely better in at least this one aspect.

In contrast, American cities seem awkward. Downtown areas are sterile and lifeless, particularly after dark, in all but a few of the largest cities (i.e., New York, Chicago, San Francisco, D.C., etc.). They also tend to be unattractive places pockmarked by vacant lots and surrounded by vast parking areas. There are few stores and even fewer residences. The outlying neighborhoods closest to the downtown tend to be desolate and dangerous ghettos full of poor people, particularly poor blacks. Outlying neighborhoods further from the downtown often consist overwhelmingly of single-family homes, and commercial developments built at very low densities. Everything is far apart and mass transit service is meager to nonexistent; what little mass transit there is tends to be concentrated in inner cities and is used for the most part by only very poor people (New York is again an exception, as are some of the larger east coast cities). A car is necessary in most cases to get around, leaving anyone who cannot drive at a serious disadvantage.

This all seems to be the opposite of how things should appear. After all, it is the United States, rather than Canada or Europe, which overall has the higher standard of living, and it is the United States where on balance most people would rather live if they could. So what accounts for the incongruity?

Modern intellectuals are quick to attribute the disfigurement of American cities to the greater degree of egoism and capitalism found in American society. For example, they claim that it is individualistic to want to live in single-family homes and drive private automobiles (hence the bromide about Americans' "love affair" with the private automobile). They also allege that capitalism causes Americans to shun poor people and racial minorities and live far from them in distant suburbs. Improvement of American cities, they claim, does not require more political freedom, but rather less-in the form of strict land use regulations, to curb what they call the "excesses of runaway capitalism".

Up until now the modern intellectuals have essentially gone unanswered on this issue. In truth, however, the problems of American urban areas are not the result of individualism or of "runaway capitalism" or any other kind of capitalism. They are actually the result of statism -- a unique kind of statism the particulars of which were never replicated in other developed countries, but statism nonetheless. All of the negative attributes previously cited -- the sterile downtowns, desolate ghettos, spread-out suburbs, poor mass transit, racial segregation, and automobile dependence -- are not the result of capitalism and the free market, but rather of their opposite: they are products of arbitrary government interference in the economy, American- style.

There are four government programs that have caused much of the disfigurement of American cities. These four are: Public Housing -- Federal Housing Administration -- Urban Renewal -- Interstate Highway System.

The earliest of these programs, the Federal Public Housing Program, was a major cause of the desolate ghettos surrounding the downtown areas of many American cities. Public Housing was created as part of the New Deal legislation of the 1930's, on the premise that poor people could only afford housing that was so unprofitable that nobody would build it (or at least not in a habitable fashion) without the government actually stepping in and doing so. Another excuse used to justify public housing, which influenced the barracks-like designs of public housing projects, was that the kind of housing the private sector would build would be crowded, unhealthful tenements which lacked light, air and open space. Under the public housing program, local governments would receive federal handouts to build, and then own and manage, housing for extremely poor people.

Construction of public housing projects in the United States occurred for the most part between the New Deal and 1970. Typically, a project was a neighborhood-sized development consisting of a large number of barracks-like apartment units, sometimes numbering in the thousands, in buildings which were usually two or three stories high and surrounded by parklike open spaces. In very large cities such as New York and Chicago, mid- and high-rises were built as well. The projects were most often constructed on the sites of former slums ringing downtown areas, and sometimes further away from the downtowns in working-class neighborhoods. The apartments were available, at least de facto, only to very poor people, since they were the only ones who qualified for a government rent subsidy; because the costs of constructing public housing projects were much higher than for privately-built dwellings, it made no sense fiscally for anyone to live there except with a rent subsidy.

What happened to many American public housing projects was that over time they became, unlike the slums they replaced, ghettos that never improved. This is because, unlike in the slums they replaced, only poor people lived in the projects. A normal process in cities everywhere in free countries in the world is for neighborhoods to deteriorate and revive in a dynamic fashion, as people's values change. For instance, South Beach in Miami is an example of a formerly deteriorated neighborhood that has revived recently. One reason why such neighborhoods revive is because, while they may be predominantly poor, they are by no means monolithically so; rather, they tend to have some wealthy residents who, for whatever reason, chose to locate there. For example, wealthy children of poor parents who grew up in the area may be able to afford to live elsewhere but choose not to, so as to be close to their families and friends; they instead set up their businesses -- and sometimes their residences -- in the ghetto. Or, a deteriorated area may have some other attribute, for example a beach, a park, or unique architecture, cultural facilities, etc., which makes it appealing to new, more affluent residents who move in and revive the area economically. Neighborhoods such as Greenwich Village in New York City and Society Hill in Philadelphia are examples of this process, known as 'gentrification'. But regardless of the reasons of how they ended up there, these affluent ghetto residents are the ones who very often improve the neighborhood overall, with the economic resources at their disposal -- i.e., the jobs they provide, and the capital they invest. If there are enough such residents, the neighborhood slowly improves.

But this process didn't occur in neighborhoods where large public housing projects were built. The policies under which the projects were created had the effect of straining out the more productive members of the neighborhood, much like water and pasta in a spaghetti strainer. The result was that, unlike the ghettos that preceded them, the projects lacked the productive people who gave the neighborhood the means to improve. Without the affluence generated by these residents, the projects began to stagnate, eventually blighting the neighborhoods around them and causing even more widespread deterioration. Meanwhile, to escape this deterioration the productive people who remained in the adjoining neighborhoods moved further and further from them, increasingly isolating the poor from the economic activity necessary for them to escape poverty.

The wide-open design of public housing projects itself caused them to deteriorate further. In the slum neighborhoods prior to the projects, buildings crowded over narrow streets that, while they were dank and dreary, were also safe-because the residents, from their houses and tenements, could look out and see whether strangers were coming, whom they did not know and who might cause trouble. They could then call each other or the local police to speak to the newcomer and find out his purpose. But given the design of the projects, with buildings standing out in the middle of large no-man's lands of impossible-to-patrol open space, such surveillance was impossible. As the projects became more and more destitute over time, the open spaces in them were dominated by drug dealers, prostitutes, and street gangs from outside the neighborhood who preyed on the despair of the local residents. The governmental housing authorities who managed the projects, inept at addressing the ideological issues involved and always strapped for cash, were either unable or unwilling (probably both) to stop the trend.

Some public housing projects became so squalid that local governments openly acknowledged the program's failure by physically tearing them down. This is exactly what the St. Louis Housing Authority did with that city's infamous Pruitt-Igoe housing project in the 1970s.

Like public housing, the Federal Housing Administration (or FHA) has its roots in the New Deal. Simply put, the FHA was a series of programs under which the federal government essentially subsidized single family home ownership by insuring long-term mortgages for homebuyers who qualified for such insurance under its criteria. As such it was an important cause of the spread of single-family homes one sees surrounding American cities today. In addition, the criteria used by the FHA were a major cause of the racial segregation in American cities. he arbitrary premise used to justify the FHA was that social stability depended on as large a part of the population owning their homes as possible, and that such high degrees of land ownership could not be achieved via the free market; only the government, through intervention in the economy, could make it possible.

The FHA worked as follows: a homebuyer would apply to the government for FHA insurance on a long-term (often 30 years), self-amortizing mortgage to be issued by a bank. The government would then determine whether or not it would insure the mortgage based on its criteria. If the government then chose to insure the mortgage, the bank would then issue the mortgage to the buyer if the bank was satisfied with the buyer's credit. If the purchaser then later defaulted, the federal government would make the mortgage payments to the bank and would work out a repayment schedule with the buyer. The advantage to such a long-term mortgage for middle-income people was (and basically still is) that, unlike with shorter-term mortgages, the monthly payments and downpayments were low enough so that middle income people could afford to make them.

Supporters of the FHA like to point out that, if it weren't for the federal government's mortgage insurance, there wouldn't be the long-term, self-amortizing mortgages that we have today. And it is true that, before the FHA, long-term mortgages were viewed by lenders as risky, so few were made. This made it difficult for anyone but the very wealthy to purchase land. Yet this is all really just a side issue, since there was probably nothing preventing private lenders other than inertia from discovering the profitability of long-term mortgages for themselves and then taking the lead without any government involvement at all. Today, lenders make long-term, self amortizing mortgages all the time, with or without FHA insurance.

In any event, the evil effects of the FHA on American cities didn't result so much from the mortgage insurance as they did from the arbitrary criteria the government used to determine whether or not to insure a mortgage. These criteria included a large number of irrelevant factors, including the style of the residence, with single-family detached homes being vastly preferred, and few homes of other styles being insured. This caused residents of many older, denser cities, such as New York, to lose out on mortgage insurance, since such cities had few single-family homes or land on which they could be built. The criteria also included whether the neighborhood had zoning or not. The FHA was a major vehicle for the promotion of zoning ordinances; rarely could purchasers get a long-term mortgage insured by the government in an area without such an ordinance.

But perhaps the most vicious criteria were those involving race. In short, black people were viewed by federal bureaucrats as a destabilizing force in a neighborhood and, though they were never denied mortgage insurance de jure, they were denied it de facto. This was because any neighborhood which had black residents was 'redlined' for mortgage insurance on properties located within that neighborhood (the term 'redlining' coming from mortgage insurers' and lenders' practices of drawing red lines around areas on maps within which the federal government wouldn't insure mortgages). The stigma of being redlined was immense: once a neighborhood was redlined, private lenders automatically thought that the neighborhood was declining and often refused to make any loans there, government insured or not. So while a black person could technically apply for mortgage insurance and move into a new, all-white area where the federal government was insuring mortgages, that black person's mortgage would likely be the last mortgage insured in that area, since the area would subsequently be redlined. This practice of the federal government caused white residents to put racially restrictive covenants into the deeds for their properties to keep their neighborhoods from being redlined, until such covenants were ruled unenforceable as against public policy by the U.S. Supreme Court in a ghastly decision in 1948.

It is interesting to see how Public Housing and the FHA worked in tandem to create the emographics of most modern American cities. While one program warehoused the poor and blacks in the city, the other gave the wealthy and middle-income whites a subsidized ticket out. The effect is what one sees all over the place today: poor, heavily black, and economically stagnant inner cities, and spread-out, affluent suburbs that are almost completely white and comprised of single-family dwellings.

The third of these programs, Urban Renewal, was a federal program started in 1949 with the goal of clearing large slum areas in and around the downtown areas of American towns and cities through the government's coercive use of eminent domain and replacing the slums with new commercial development. The arbitrary premise behind Urban Renewal was that, if left alone, developers in the free market would not rebuild or renovate slum properties, without the government helping them to do so by first condemning the properties. The program was to allegedly work as follows: a real estate developer would propose to redevelop a run-down area, and the local government would then condemn the land with its power of eminent domain, destroy the buildings on it, and sell it to the developer. The developer was then supposed to redevelop the land with new, upscale commercial development.

In actual fact the program usually ended up working differently. Many developers did propose new developments, in response to which governments condemned large areas of cities. But very often the process ended there. The existing buildings were not immediately torn down nor were new projects constructed. Instead what happened was the condemned areas were redlined by lenders for new investment, just as were areas in which minorities lived under the FHA. In addition, because of the prospect of their buildings being demolished by the local government at any time, property owners in the condemned areas wouldn't maintain their buildings. Over time, urban renewal areas became slums even more fetid than they were before condemnation. Eventually many such areas became bulldozed anyway, not to make way for shimmering new emerald cities, but simply because they became nuisances. As for the new projects, many never materialized, usually because there was no demand for them (or the developers' initial proposals were shams to begin with).

Urban Renewal disfigured cities because of the introduction of eminent domain into the land development process. Normally, developers demolish buildings only after the developers have acquired the properties on which these buildings are located, and only after they know demand exists for more profitable developments in their place; thus, there are normally few properties in economically healthy cities which end up vacant as a result of market forces, and those that do normally don't stay so for long. But with eminent domain, governments suddenly became able to arbitrarily condemn far more land than was ever demanded for new development, whether demand existed for such development or not. With this ability, it became possible for a government to literally tear down an entire city.

The lasting effect of urban renewal is the large number of vacant lots that one sees in the downtowns of almost all except the largest or fastest- growing American cities; many have since been turned into parking lots for interstate highway commuters. These large amounts of vacant land are not only eyesores; like the open spaces in public housing projects, they are no-man's lands that are hard to patrol, and become hangouts for the undesirables who cause many downtowns to develop reputations for being dangerous.

Proponents of urban renewal attempt to justify the program on the grounds that a few urban renewal projects did actually materialize as proposed, with the construction of new, upscale developments on the sites of former slums. Examples include Constitution Plaza in Hartford, Government Center in Boston, and Embarcadero Center in San Francisco. However, these projects were all built in office markets that were so active at the time these projects were constructed that they would've been built anyway, with or without Urban Renewal.

Perhaps the most disfiguring of the four programs ultimately was the Interstate Highway System. The interstates are a national network of limited access highways extending between, and then through, all major American cities. Many of them are the freeways we all know and love so well, labeled with numbers and an "I" before them, such as I-95 or I-75. The program was created in 1956, with most of the actual construction occurring between 1960 and 1980. The stated reason behind the interstate system was that, given the cold war hostilities between the superpowers at the time, a large network of limited access highways which sliced through cities was necessary to evacuate them in the event of a nuclear attack (!)12 and that, consequently, construction of such a highway system was a vital government function to save the future of the country. In truth the reason for the system was very different.

The interstate highways were essentially the result of extensive lobbying by the American Road Builder's Association (ARBA). It's easy to see why ARBA was eager for such a road network, given the industries whose employees were its constituents: the asphalt and concrete industries, whose products would actually be used to construct the highways; the automobile industry, whose products would be used on the highways; the coal, steel, glass, and rubber industries, whose products would be used to make automobiles; and the trucking industry, whose industry would become much more useful due to the highways. In fact, ARBA was the second largest lobby in the United States at the time, after the petroleum industry (which was also in favor of the interstate system, for obvious reasons).

To understand the magnitude of ARBA in terms of votes, think of the populations of the states of Pennsylvania, West Virginia, Ohio, Indiana, and Michigan, whose labor forces worked overwhelmingly in these industries; then, throw in significant numbers from Alabama, Kentucky, California, Illinois, New Jersey and New York. That's a lot of voters who believed their interests were furthered through an alliance with ARBA. In short, the interstates were never the result of some individualistic, egoistic 'love of the private automobile', but rather of mixed-economy politics straight-up: the initiation of physical force for the sake of the greatest good for the greatest pressure group.

The interstates were designed as a grid, extending between and connecting all of the major cities. Around and within cities they were designed as wheel- and-spoke arrangements of radial highways which met in the downtown area and beltways encircling the city a considerable distance out from the downtown. Even numbered highways were to run east-west, with higher numbers further north. Odd-numbered highways were to run north-south, with higher numbers further east. Hence, I-5 runs the length of the west coast, while I-95 runs the length of the east coast; I-4, I-8, and I-10 run across the south, while I-90 and I-80 run across the north; I-10 and I-5 intersect in Los Angeles, near the southwest corner of the country; I-90 and I-5 intersect in Seattle, near the northwest corner; I-90 and I-95 in Boston, in the northeast corner; and I-10 and I-95 in Jacksonville, near the southeast corner. (For an illustration of the designs, I invite anyone to thumb through a copy of Rand McNally's North American Road Atlas, and compare the amount of expressways in American cities with those in Canadian and Mexican cities.)

The effects of interstate highways on American cities are as profound as they are numerous, so all I can hope to do here is give a brief summary. First, they gave the white middle class in the market for new homes a subsidized means to get away from the redlined ghettos of the inner cities and beyond the reach of mass transit, and out into the rural hinterlands where land was available for the FHA to insure mortgages on new single-family homes. But they also did much more. The highways hastened the decline of the inner cities not only because of this escape valve but also because of the physical nature of the highways themselves, given the way they sliced through neighborhoods, turning them into dusty, congested no-man's lands during their construction. The threat of condemnation for an interstate highway by governments in inner cities also had the effect of making investing in inner city properties risky, so investment there dried up for that reason as well, in addition to the redlining resulting from the FHA and the deterioration due to public housing and urban renewal.

Furthermore, since most of the suburbs to which the middle class moved were beyond the reach of mass transit, the radial design of the interstate highways in effect eventually became the mass transit system for the new suburbanites, much the way trains and buses were in the inner cities. Soon it became more convenient for suburbanites to simply use their cars wherever they went, regardless of whether they went somewhere served by traditional mass transit or not. Most suburbanites stopped their use of mass transit altogether, leaving it to the poor, elderly, minorities, and others who were trapped in the inner city. Because most of the suburbs did not have mass transit, and thanks to the FHA were laid out in a low-density spread of single family homes, distances between stores, workplaces and homes there became so great that one couldn't live there very effectively without having a car. Thus, suburbanites became automobile dependent to an unprecedented level. When they all took their cars to work downtown via the spokes of the interstate network, they caused traffic nightmares on inner-city streets that were never designed to handle the incredible number of cars. When they wanted to park their cars downtown, they found vacant lots everywhere, thanks to urban renewal's most lasting, most visible, and most ironic legacy: provision of parking lots for interstate freeway commuters.

While these programs differed in their specifics, they all started with the same statist premise: that the free market is inferior to government intervention, which ultimately is derived from the poisonous notion that man should live according to the arbitrary, rather than according to reality. Consequently they were all miserable failures, drastically disfiguring the United States.

The free market is inferior to nothing. It cannot be inferior to anything. It is the only moral arrangement for urban development, as it is for all commerce, because it is the only possible consequence of the only moral political system: laissez-faire capitalism, where people are free to pursue the values of their choice so long as they do not violate the rights of others; in this system the government is not a builder or producer of any other values, but rather is only a protector of the rights of those who do produce and partake in the system. In such a system, people must live by reason and egoism, choosing their values by their own thought and then figuring out how to achieve these values. They do not live by blind obedience to the arbitrary whims of a Kantian authority figure dictating from above.

In the context of land development, laissez-faire capitalism means that developers produce buildings so as to sell or lease out the space they contain. It means that they are free to produce buildings that will maximize the amount of such space, so that they can maximize their returns. This means a tendency towards high density development in sought-after locations, such as downtown areas. When an area is so densely developed that congestion hinders access to the area, developers start building up less-developed areas on the periphery. Meanwhile, other developers come in and build mass transit systems in the overcongested areas, to improve access so they can further squeeze even more marketable space into these areas. What ultimately results is a vibrant, exciting, inspiring environment in which to live. This -- and not the low- slung, low-density desolation of most American cities -- is how cities can and ought to develop. And all of the greatest cities in developed countries, such as London, Paris, Hong Kong, Tokyo, Rome, Toronto, as well as the large American cities which developed before the four programs such as New York, Chicago, and San Francisco, developed in this fashion (though the newer suburbs of these American cities definitely did not).

I don't intend in this article to impugn the single-family residence or the private automobile. These are both very worthy values. A single family home gives one space and privacy that multifamily condominiums and townhouses rarely offer; this is useful for certain living arrangements, such as large families. And private automobiles are extremely convenient in many situations because they give people an unprecedented freedom of mobility for any purpose whatsoever. Both of these are highly desirable and certainly should be sought after.

But just because private automobiles and single-family homes are desirable does not mean that one's desire for them implies an obligation on the part of someone else to provide them. This is true for all values. To paraphrase Ayn Rand: just because one has freedom of speech does not mean he has a right to a podium from which to speak. Just because, for example, one owns a car does not mean that he has a right to a space in which to park it, or an interstate highway or any other road on which to drive it. Space for roads and parking facilities is a money-loser for developers because it ultimately means less space that can be constructed for uses which are much higher revenue generators, such as retail or offices; developers therefore shy away from building them. Consequently, densely-developed areas of cities are by their very nature not friendly for private automobiles. The solution to this problem is not to disfigure cities by burrowing interstate highways and shoehorning parking lots into them, or forcing developers to ultimately do the same. Rather the solution is to realize that by its nature the private car, as good as it is in some contexts, has its limitations, with its lack of usefulness in central cities being one of them. In sum, to find the answers one must not seek the arbitrary; one must understand reality.

Interestingly, in the last two decades American cities have been making great strides towards becoming more like cities in other developed countries in terms of being pleasant, vibrant places. Baltimore's Inner Harbor development and Miami's Bayside Marketplace have made headlines, as have the gentrified neighborhoods of inner cities nationwide. Cities have built clean, new mass transit systems out into suburbs (though they should be built privately). Economic prosperity has meant new skyscrapers on the sites of vacant urban-renewal parking lots downtown, while new shopping centers and office developments have given once-sterile suburbs a more urban flavor. And revitalization of older buildings and neighborhoods is occurring everywhere. Intellectuals are all too eager, in support of statism, to attribute American cities' comeback stories to some government intervention or another.

When some skyscraper or well-designed commercial development is built on an urban-renewal lot or in a former slum, for example, they are quick to credit not the developer who conceived the idea but rather the local government for having the foresight to permit it; they then prattle on about how great the government and private sector work together, and consequently how government and business should form partnerships to renovate our cities.

But this babble is nothing but a bunch of cowardly face-saving. The real reason for the comeback has not been anything affirmative in terms of government action or 'partnership' with business, as much as it has been something negative: all four of the above programs are all but dead de facto. Just under a decade ago, President Bush declared the Interstate System complete; very few interstates are being built anywhere today. Virtually no new public housing projects are being built either, and those that do exist are slowly being sold by governments to private non-profits who do not have the patience to put up with the riff-raff that government housing authorities tolerated. As for the FHA, the government no longer has the lock on long-term, self-amortizing mortgages. Today, private lenders, convinced of the profitability of such loans, make them on any type of dwellings, not just single-family homes, and without the arbitrary criteria formerly used by the federal government. Consequently, redlining is no longer the problem it once was. And urban renewal turned out to be so unpopular it spawned a backlash movement: historic preservation, in which governments, instead of initiating physical force against property owners to tear their buildings down, now initiate it against them to keep their buildings standing-even when there's no demand for them to do so, and there is demand for new development on the sites of such buildings.

Sadly, there are few places today where one can get the real story regarding the true causes of American urban decline during the twentieth century without doing a fair amount of research. Instead, what we get from the media and the universities is that the excesses of capitalism produced the decline, and the arbitrary influence of government, through extensive regulation, planning, and control of the land development industry, is slowly 'bringing the excesses into line'. But whenever you hear this kind of gibberish, just remember that it was the government who made the mess to begin with -- and don't let anyone ever say that American cities are evidence that socialism is superior to capitalism.

David Stanley Willenski is an attorney living in Florida.  He has also lived in Hertfordshire, England. © 1998 by David Stanley Willenski.




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