Wednesday, July 01, 2009
Uh-oh, bad news for stimulus optimists
Yestreday's WSJ included "Only the Employed Need Apply ... With unemployment at 9.4% and rising, it's a buyer's market for employers that are hiring. But many employers are bypassing the jobless to target those who are still working, reasoning that these survivors are the top performers."Near the top of the disingenuous sweepstakes have been the stimulus advocates who live in a world where only the unemployed are hired when new government programs and projects swing into action. In other words, opportunity costs are zero -- as are any wage inflation effects.
Just as it costs government more than a dollar to spend a dollar, many of those dollars have less than a dollar's worth of impact on the demand side.
Tuesday, June 30, 2009
Bulletins from the gender wars
"Parents Won't Say if Tot is a Boy or a Girl ... because they believe gender is a social construction. ... A Swedish couple's decision to keep their toddler's gender a secret is stirring debate, especially now that the parents are expecting a second child...'Pop' is 2 ½ years old, but so far only those who change the child's diapers know whether the youngster is a boy or a girl." The kindest thought that comes to mind is that we have all heard of perfectly mainstream parents who have also messed up their kids. And I am still convinced that procreating should not be subject to licensing or other state sanction.
In the June, 2009 Journal of Economic Literature, there is Rachel Croson and Uri Gneezy's "Gender Differences in Preferences". The authors survey the evidence from a large number of controlled economic experiments and report "robust differences in risk preferences, social (other-regarding) preferences and competitive preferences."
Many of us had thought all along that men and women are different. Croson and Gneezy cite nature and nurture influences.
Sunday, June 28, 2009
Perfect storm means many weatherfronts
I have now seen a few timelines that recap the history of current economic downturn. These are always useful, but all miss the important role that local conditions play. Local supply and demand differ drastically from place to place. In the U.S., coastal and sunbelt places are where the demand is and (often) where permitting is toughest and supply most constrained. Home price "bubble" effects differed hugely from place to place.This morning's LA Times includes "Hard times? Depends on where you live ..." Of course. Here is an early warning.
There is already reason to worry that the histories that are (or have been) written will miss the role of the local regulations weatherfront in the perfect storm.
Friday, June 26, 2009
Strange competition
The President has promoted the idea of a new "Public Company" health insurance provider option as "a little competition" that all those market crazies should embrace.All I recall is that the audience did not laugh. Medicare is a public company with an unfunded liability that runs into the trillions of dollars.
But those on the left like to dismiss trillion-dollar unfunded liability talk as politicized hysteria. Don't the worry warts realize that the power to tax and the power to inflate are available to rescue the public companies that we already have?
Competition? But not on a level playing field.
Wednesday, June 24, 2009
Give me land, lots of land
Wendell Cox reports that recent census data show continued population exurbanization -- for the period 2000-2007. That's where the land is, where permitting is (mostly) simpler, and where most people want to be. It's an old story. Our research (with colleagues Harry Richarsdon and Soojung Kim) considered employment decentralization for the years 1969-2004 (using the BEA's REIS data file). We examine county-level data aggregated into broad categories that include the relatively recent metro-micro area designations. We look at differences, local less U.S. growth, filtering national cycles. Figure A (below) shows job growth (five-year moving averages, dark line) trends for the "large" (over one-million pop.) metro areas; the other figures show the concurrent trends for "small" (less than one-million) metro areas, micropolitan areas adjacent to large and small metros as well as non-adjacent micropolitan counties and finally adjacent as well as non-adjacent non-core (not metro, not micro) counties. Very roughly, these represent the urban-rural hierarchy.
What do we see? First, there are cycles but no discernible trends. The rise of the Internet, for example, is not observable. Second, for private employment growth, the cycles become more pronounced as we move down the urban hierarchy. Third, the larger areas consistently do better in terms or proprietor employment growth. Fourth, the two types of micropolitan areas display very similar growth paths, but with the one exception that the ones adjacent to the large metros have stronger proprietor employment growth in the late 1990s, perhaps reflecting the beginnings of the boom in tech start-up firms. Fifth, the remaining three areas show similar growth patterns with the most remote ones (non-core nonadjacent) experiencing slightly sharper fluctuations.
The pulses are the reverse mirror image of the large metros -- and they extend ever more sharply down the urban hierarchy.
REIS_FIGS.doc
Saturday, June 20, 2009
Foxes watching over chicken coops
In today's WSJ, Abraham Verghese writes about "The Myth of Prevention". With respect to Medicare (and the President's chiding of his AMA audience last week), the writer notes that:Cut, poke, sew, burn, insert, inject, dilate, stent, remove and you get very well paid; if you learn how to do this efficiently, maybe set up your own outpatient center so you can do it to more people in a shorter time (which is what happened when this payment system was put in place in 1989) and you are paid even more. If, however, you are a primary care physician, and if, just like the young doctor who saw my parents yesterday, you spend time getting to know your patients, and are willing to play quarterback when your patient enters the hospital, so that you can herd the consultants and guide the family through a bewildering experience that gets surreal if you are in the intensive care unit, then you may have great personal satisfaction but you will make five to tenfold less than your colleagues in the doing-to disciplines.
In the same newspaper, Jason Zweig writes approvingly of the proposed financial sector regulations.
Over at The Austrian Economists, Peter Boettke sums up the insights of James Buchanan as "Don't let the fox guard the chicken coop."
That's the problem. In the old dueling-economists days at Newsweek, when Milton Friedman and Paul Samuelson went at it, I recall one of them writing that they agreed on the lessons of economics, except that one of them applied them to public policy questions. That was a clarifying moment.
Suspend disbelief, ignore public choice, and you enlist foxes to watch over chicken coops. How could it turn out any other way?
Friday, June 19, 2009
Curses
There really is a "curse of oil." And I am a great admirer of William Easterly's writings. Combine oil with aid and you get the likes of Omar Bongo. "Mr. Bongo made no distinction between Gabon and his private property. He had ruled for so long, 42 years, that they had become one."I was in Mexico in (I think) 1976 when Pres. Lopez Portillo was sworn in. I recall his address to the nation and he boasted that there are two kinds of countries, those that have oil and those that do not. He paused and then said: "And we have it." And there were wild cheers.
