Category: Economics

Would it make sense for cities to hire homeless relocation concierges?

by philg

From the Los Angeles Times, “Councilmen weigh legal action, saying other cities are pushing homeless into L.A.”:

Councilmen Mike Bonin and Joe Buscaino called Wednesday for City Atty. Mike Feuer to explore “legal steps” that L.A. could use to compel those cities to comply with a federal court decision on homelessness and sidewalk camping in Boise, Idaho. The proposal, they said, would stop nearby cities from pushing homeless people into L.A. city boundaries.

The U.S. 9th Circuit Court of Appeals ruled last year that homeless individuals may not be held criminally responsible for sleeping on government property when no alternative shelter is available.

Bonin, whose council district touches Santa Monica, Culver City and El Segundo, said he believes many cities in the region are not complying with that decision.

“Instead of allowing people to sleep on their sidewalks, they are encouraging people, or compelling people, to move to the city of Los Angeles to do that,” he said.

I’ve occasionally wondered in these pages why people who are homeless in a place with a cold and/or wet climate, e.g., Seattle, do not relocate to Santa Monica. Readers have put forward various theories about the challenges faced by the homeless. The LA Times article shows that at least some cities are eager to see homeless residents move to other places (but they also want to provide sanctuary to undocumented low-skill immigrants?).

Would it make sense for cities to hire concierges for their homeless populations? The concierge El Segundo, for example, would organize luxury bus tours of nearby California cities, would know the best places to camp out and receive services in each of those places, etc. Instead of an arms race of hostility, seeing which city can make life miserable for the homeless, try to facilitate their moves.

[The article also contains a comparison of homeless to trash that, had Donald Trump made it, would have been newsworthy:

Councilman Jose Huizar and several colleagues called for increased enforcement, fines and rewards, along with the expansion of a program that allows homeless and formerly homeless individuals to work on cleanup crews.

“I have long said that downtown Los Angeles needs an emergency, triage-like response when it comes to addressing homelessness,” Huizar said in a statement. “But that is also true for the amount of trash that is illegally dumped on our streets.”

]

Readers: What do you think? Cities already provide a lot of services to the homeless. Why not a concierge to help with moving?

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Don’t hire American college graduates (says Harvard Business School)

by philg

“Dismissed by Degrees; How degree inflation is undermining U.S. competitiveness and hurting America’s middle class” (Harvard Business School) is a 2017 report recently brought to my attention by a reader.

It is worth reading because it corroborates the minimal improvement in skills described in books such as Academically Adrift (my review). Today’s typical college graduate doesn’t perform much better on tests of general research/thinking/writing than he or she did on finishing high school. HBS:

The results of our survey were consistent across
many industries—employers pay more, often
significantly more, for college graduates to do jobs
also filled by non-degree holders without getting
any material improvement in productivity.

Results vary by major, but our funding and investment in college educations is, unlike Chile’s, not conditional on major.

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Evil corporations put profits before human life

by philg

One of my virtuous neighbors was talking about evil corporations that prioritize profit over human life, not making products as safe as possible.

Of course I had to agree that this was, shall we say, Deplorable.

I asked “What about our own town?” We don’t have Danish-style bike infrastructure, in which a curb separates an automobile road from a bike lane and a second curb separates the bike lane from the pedestrian sidewalk. A cyclist was killed in our town recently, an accident that wouldn’t have happened with a Danish-style system.

I then pointed out that we have several busy roads through town that aren’t divided, thus inviting a deadly head-on collision. Since we do not want to put a price tag on human life, wouldn’t it make sense to raise property taxes sufficiently to widen these roads and insert a concrete divider in the middle?

Had he stood up at town meeting (at which recently the good townsfolk voted to spend $110 million on a new school for about 440 town-resident K-8 students) to demand these initiatives for safer roads?

The corporate critic was horrified at these ideas: “That would cost a fortune,” he said, “to acquire the strips of land and build the barriers. It would never make sense.”

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Ubernomics

by philg

A recent Sunday afternoon trip to Boston’s Logan Airport:

There was plenty of time to chat with the Uber driver:

He was a 24-year-old U Mass Lowell graduate with a business degree and he’d figured out that revenue was $20-25 per hour before car expenses. He had a day job. Why also drive Uber?

Everyone my age that I know is living for the weekend. They’re on autopilot Monday through Friday and miserable. Even the computer science graduates who did everything right and are working for Raytheon are living paycheck to paycheck.

He volunteered that most of these folks should not be broke. They were spending on Starbucks and other unnecessary luxuries in his opinion. He subsists primarily on Soylent and says a week’s nutrition costs less than one meal out in a city restaurant. The Uber project was partly insurance against an uncertain W-2 market: “Being a white male in corporate America is career suicide.”

The next opportunity to learn from a young person came at the Intercontinental Hotel at the Minneapolis Airport (to make a long story short, I now know that it takes Americans 2.4 hours to perform a Chinese fire drill from a broken Airbus to a working one and this is incompatible with making one’s connection to San Diego). A ripped tatooed guy at the gym offered the workout tip of immediately switching to progressively lighter weights after doing max reps on heavier. Repeat until down to 5 lbs. dumbbells. He volunteered that he was a former meth head. Why the gym passion? “I’m a loser so I have to look good.”

All but two of the Uber drivers whom I met in San Diego were immigrants, but not from Mexico as one might expect given the proximity of the border. Drivers were from Afghanistan, Brazil, Eritrea, Ethiopia, etc. The native-born drivers believed that their hourly earnings would be approximately double if not for the inexhaustible supply of immigrants.

A San Diego weekday afternoon, described by the driver as featuring lighter-than-usual traffic:

And they can do this with gasoline that costs less than $5 per gallon:

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Crony capitalism ends when immigrants try to become the cronies?

by philg

The NYT did an interesting analysis of the declining fortunes of government cronies (holders of NYC taxi medallions).

But the methods stripped immigrant families of their life savings, crushed drivers under debt they could not repay and engulfed an industry that has long defined New York. More than 950 medallion owners have filed for bankruptcy, according to a Times analysis of court records. Thousands more are barely hanging on.

It turns out that as soon as the assets had been sold to recent immigrants, politicians decided that the profits of the cronies did not need to be carefully protected (in this case against Uber and Lyft, though even without them it would have been tough to keep the medallion price bubble inflating).

Of course Donald Trump is at least partly to blame, according to the NYT! No article on malfeasance would be complete without his name appearing.

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Malthus was right in rural America too?

by philg

In https://philip.greenspun.com/blog/2019/04/03/malthus-was-right-but-it-is-real-estate-not-food-that-is-limiting/ we looked at data from cities around the world. “Housing’s hidden crisis: Rural Americans struggle to pay rent” (CBS) says that a lot of Americans can’t afford housing even in thinly populated areas of the U.S.

Since there is plenty of land in rural areas, I’m wondering if high costs can be partly explained by high materials prices due to demand from a growing economy worldwide. The 25th percentile American worker can’t afford cement for a home foundation because a 75th percentile worker in China or Mexico has purchased the cement instead.

Related:

  • “Bay Area Housing Struggles Extend To Farm-Rich Salinas”: “Salinas families earn a median income of $69,000, while the region’s 90,000 farmworkers bring in far less. They face a median home price of nearly $550,000 and two-bedroom apartments costing roughly $1,800 a month, according to Zillow.”
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Wouldn’t sending migrants to sanctuary cities enrich them?

by philg

“Trump claimed Oakland’s mayor doesn’t want released immigrants. Her response: We welcome all.” (Washington Post):

President Trump threw more fuel on the flames of the immigration debate Saturday night in a series of tweets that singled out Democrats and news outlets that had reported on his administration’s plan to relocate migrants to so-called “sanctuary cities.”

Trump specifically singled out the mayor of Oakland, Libby Schaaf (D), who had criticized a proposed policy to relocate detained immigrants to sanctuary cities as an “abuse of power and public resources.”

Then the president claimed that the mayor does not actually want the detained immigrants to be released into her city. In fact, Schaaf’s administration strengthened Oakland’s sanctuary policy in 2018 and had warned residents last year of an upcoming raid by U.S. Immigration and Customs Enforcement.

On Saturday night, she responded to Trump’s attack with a clear message: “Oakland welcomes all.”

In a federally funded welfare state such as the U.S., aren’t poor people an asset for a lot of the politically influential folks within a city? Migrants should be entitled to Medicaid, right? That helps the local health care industry. Migrants should be entitled to food stamps. That is a boost to local supermarket owners. Migrants should be entitled to housing subsidies and/or will have to do some work to pay rent. That’s a boon to anyone who owns an apartment building.

California funds schools centrally. Every migrant child who shows up for a day in an Oakland school, for example, will result in a transfer of funds from Sacramento to Oakland. There should also be federal funds for every new student from a low-income or no-income family.

Might it be an economically rational strategy for political and economic elites in Oakland to pursue a leadership position in the hosting of migrants?

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Malthus was right, but it is real estate, not food, that is limiting?

by philg

From my 2008 post about A Farewell to Alms:

[economics professor Gregory] Clark starts with a defense of Malthus. In most societies at most times in human history, Malthus was right. The population expanded until everyone was living at a subsistence level. Given an improvement in technology or health care the long-term result was not that people on average had an improved standard of living, but rather a population of increased size living at an even lower material standard. You had to be robust in filthy Europe to survive infections, but even an underfed weakling was relatively safe from disease in hygienic Japan and China. The consequence was that China and Japan were more densely populated and strikingly poor by European standards right up to the Industrial Revolution.

Population growth combined with personal income growth is an anomaly, according to Malthus and Clark. The U.S. population has been growing steadily in recent years and our average inhabitant is no better educated than before. Politicians stand up and angrily ask why average personal income hasn’t grown. The real question is why average personal income hasn’t shrunk.

The past 100 years hasn’t fit Malthus well, perhaps due to the Green Revolution and tapping into fossil fuels on an industrial scale for the first time. But maybe Malthus is being proved right by the real estate market?

As noted previously here, a friend said that his daughter was “making a ton of money” at Goldman. It then transpired that the young woman couldn’t afford an apartment on her own, even spending half of her after-tax income. The “ton of money” was entirely captured by Manhattan landlords, reducing the young lady to the same standard of living as an entry-level office worker in Manhattan circa 1960.

“Affordable Housing Crisis Spreads Throughout World” (WSJ, April 2, 2019):

Across 32 major cities around the world, real home prices on average grew 24% over the last five years, while average real income grew by only 8% over the same period, according to Knight Frank, a London-based real-estate consulting firm. Economists say it is striking that affordability has worsened even during a period of global prosperity over the last six years. But income growth has been unable to keep pace with a rapid run-up in home prices.

Americans often blame local policies, e.g., zoning regulations, for the inability of today’s median-income urban residents (among a population of 330 million) to afford what would have been considered a normal-sized apartment back in 1970 (U.S. population 205 million). But the WSJ article shows that the trend is consistent almost everywhere in the world. Tokyo is a notable exception, which the authors attribute to a free market in housing (why not to the lack of Malthusian population growth? Japan has roughly the same number people today compared to 30 years ago).

Readers: What do you think? In 1910, Haber and Bosch came up with a clever trick for a dramatic boost in agricultural production. So it looked like Malthus was wrong. But there haven’t been any clever tricks for boosting the production of housing, so we’ll have 8 well-fed urbanites sharing a 2BR apartment originally built to accommodate 1-2 people. Can we rely on robots to get us out of this? Human population can expand exponentially while maintaining a high standard of living because solar-powered robots will be able to build residential skyscrapers at ridiculously low prices?

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It is madness to want to leave the E.U., but it doesn’t make sense to join

by philg

“The United Kingdom Has Gone Mad; The problem with holding out for a perfect Brexit plan is that you can’t fix stupid.” (nytimes) is by Thomas Friedman, a guy whom nobody can accuse of being stupid (he married the daughter of a billionaire and lives (large) in Maryland, an awesome jurisdiction for divorce litigants who can claim to be the less wealthy spouse).

What I can’t figure out how it is logically consistent for Americans to criticize the Brits for wanting to be independent and fully sovereign. We spend way more money on our military than would be necessary to prevent an invasion from Canada or Mexico. Why are we spending that money if not to preserve full sovereignty and not have to listen to anyone else in the world?

From a strictly dollars and cents point of view, if being part of the E.U. is so great,why doesn’t the U.S. seek to join? In our age of telecommunications, container shipping, and air travel (preferably by Airbus!), geography should not be a barrier.

If we want to say that anyone in the UK who opposes EU membership is “stupid”, as the giant brains of the NY Times have concluded, shouldn’t we also be trying to become part of the EU ourselves?

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Germany reparations at 200% of GDP were unpayable; national debt of 200% is no problem

by philg

An Economic History of the World since 1400 by Donald J. Harreld takes the conventional view that the reparations Germany was obligated to pay following World War I were so large that they forced the company into an economic death spiral. The professor says that Germany was to pay $30 billion over a 70-year period that this was roughly 2X the German national income (a book that I reviewed in 2011 puts the number at 83 percent of GDP) at the time. Germany could “never hope to pay” this amount and the debt made World War II more likely.

The lectures also say that Germany made things worse by printing money to meet government expenses. [Though the Germany government stopped making reparations payments in 1933 after Hitler was elected.]

What are Americans’ best ideas in the econ department lately? Pushing government debt from its current 106 percent of GDP (already more than the Germans owed, according to the 2011 book) up and over 200 percent so that we can pay for things we want such as the Green New Deal. At the same time we will apply Modern Monetary Theory so that we can simply print more dollars whenever we need to buy something. (I like this idea, but I think it would work even better if we ask Zimbabwe to print Zim Dollars to pay for the stuff that we need/want. They’re already doing a lot of printing so if we send them some paper and ink they shouldn’t mind printing more.)

The professor himself seems unaware of this apparent contradiction. He is a Big Government, Keynesian Spending, and Welfare State enthusiast. He does point out the Keynes said that governments should spend less during boom times and that modern governments never implement this part of the theory. But he never explains why it is obvious that Germany could never pay an amount comparable to its GDP while it is simultaneously obvious that modern Welfare States can meet their debt and entitlement obligations (closer to 500 percent of GDP for the U.S. when you add in Medicare and Social Security; see this 2010 chart in the New York Times in which Greece owed 875 percent total while the U.S. was at 500 percent (i.e., the U.S. owes 5 years of GDP)).

Separately, the professor notes that the U.S. and Germany had the longest and deepest economic depressions during the 1930s and pursued similar economic policies:

The two countries hardest hit by the Great Depression were the United States and Germany—countries that hadn’t left the gold standard. And both Germany and the United States adopted several practices to stabilize their domestic economies in the 1930s that were amazingly similar. … Both countries used similar strategies to combat unemployment and poverty in their populations, including poor relief and public works programs. Both governments also set up work camps for young men from rural areas, primarily to keep them from migrating to the industrial workforce.

Countries such as England that relied on market economics came out of the Depression much faster, according to the class.

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