Category Archives: Economics

01:11, 01/11/11

Later this year, if you use a European date system and military time, we will have 20:11, 20-11-2011.

Somewhat relatedly, Tyler Cowen discussed government policy (in terms of taxation and subsidization) for time travel research today. Here’s an out of context excellent sentence:

“On the plus side, the human race will die out anyway.”

Check it out.


Summer Road Trip … to Detroit?

Detroit is the butt of jokes by many people, including (especially?) people who have never visited the city. “That’s so Detroit.”

These jokes, in one way or another, of course refer to Detroit’s rapid decline over the past several decades. Economies tend to evolve in the following order: natural resource/agricultural based economy, transition to manufacturing based economy, and finally transition to a service/ideas based economy. Unfortunately for Detroit, it is a manufacturing city in one of the wealthiest nations in the world. The rise of the service and idea based economy has coincided with the decline of the automotive industry and manufacturing in general. Detroit has gone down with it. Unlike some other manufacturing cities, for a host of reasons it has utterly failed to transition into providing some other service to the global economy.

In the past couple years the city and its plight have popped up in discussions and things I have read and watched. I really enjoyed Gran Torino and its treatment of Detroit’s changing social fabric as a result of the manufacturing decline. That it wasn’t nominated for Best Picture given its competition was bizarre. Frost-Nixon was nominated? Really?

I also enjoyed David Byrne’s post about his experiences in the motor city, including his bike tour. He gives what I believe to be a fair interpretation of the forces that have shaped Detroit in the past fifty years, even if he views it as more of a centralized process (i.e. “man-made”) while I believe it to be more decentralized (i.e. economic development). The pictures alone warrant giving it a glance. Below is the Michigan theater, in it’s glory and now … as a parking lot (Click to enlarge. Note the marquee: “Acre of Seats.”)

A month ago one of my classmates told a couple wild stories about the city. One was that there were no grocery stores within a half hour drive of downtown Detroit. A more absurd story was about people making money shooting raccoons. When I later read Byrne’s story, including the bit about pheasants in city limits, I re-classified the raccoon story as “less absurd.” When I read the scariest sentences Ezra Klein read yesterday, namely that there isn’t a chain grocery store in city limits, I was even more inclined to believe it.

None of these things have positively changed my opinion regarding Detroit as a fun, beautiful, or uplifting city. In fact just the opposite. If possible, I now think of it as even more dirty and dangerous than I did before.

But something has changed. The social scientist in me has (perhaps fittingly) joined forces with the small part of everyone who wants to long-neck it when passing a car-crash: I want to see what a deserted major city looks like. Where before I only thought of the superficial drawbacks of Detroit (e.g. high murder and other crime rates, abandoned buildings, etc), I now view the city as a case study in creative destruction. The same forces that have made so many people in other parts of the world (and in this country) so much better off have caused the abandonment of a former industrial center. It’s the side of the economy and global community that some people focus on exclusively and others neglect completely. But what does it look like? How does it feel to stand in grand, empty, and utterly neglected man-made spaces?

I think this summer I will drive the 8 or 9 hours from DC to Detroit and find out, perhaps with some fly fishing and camping thrown in if I have time.

Subsidized (sometimes intranational) Emigration

They are flown to Paris ($6,332), Orlando ($858.40), Johannesburg ($2,550.70), or most frequently, San Juan ($484.20).

They are not executives on business trips or couples on honeymoons. Rather, all are families who have ended up homeless, and all the plane tickets are courtesy of the city of New York (one-way).

The Bloomberg administration, which has struggled with a seemingly intractable problem of homelessness for years, has paid for more than 550 families to leave the city since 2007, as a way of keeping them out of the expensive shelter system, which costs $36,000 a year per family. All it takes is for a relative elsewhere to agree to take the family in.

That is from the NYT. Relatively few families take part  in this program annually, suggesting stringent qualifications (the most stringent being the relative requirement), limited available funds (it appears to be about $500,000), or lack of interest in relocation.

Questions and Answers

1. Do the latest statistical methods beat a simple moving average? (Robin Hanson).

2. Is Congressional oversight of the Fed a good idea? (Mark Thoma).

3. Is suicide expensive? (Tyler Cowen).

Rhetoric and Reception

Anyone who regularly reads newspaper columnists or political economic blogs has read Paul Krugman. In his New York Times column he takes complex issues and presents them in a manner laymen can understand, albeit from an unabashedly liberal perspective. While Krugman is no doubt an excellent economist, his popularity stems from his brilliance as an essayist.  In particular, he commonly employs a rhetorical method that casts participants in a debate as good or evil, questioning motives and sincerity. His opponents, Greg Mankiw in particular, attempt to “wear the mantle of civil discourse” as a commenter on Brad DeLong’s blog put it.  But do most people appreciate such (superficial?) even-handedness? Probably not.

Cases can be made for an individual’s bias in any direction, so why not abandon wishy-washy, leave all options open economist-speak? Krugman mixes technical analysis with passion, conviction, suspicion, and over-confidence, advancing his arguments beyond what is warranted by their intellectual merit alone. He often argues more like a lawyer than an economist. Certainly he does not have a monopoly on such tactics as other economists and commenters frequently attempt to use the same methods. It’s just that Krugman, for better or worse, seems to have mastered the trade.

Somewhat tangentially, see this paper by Daniel Klein and Harika Barlett for an analysis of Krugman’s evolution as a columnist.