Comments on economics, mystery fiction, drama, and art.

Friday, January 04, 2019

An Economist Watches "Mary Poppins Returns"


This is why economists are no fun at childrens’ movies.

Near the end of “Mary Poppins Returns,” Mr. Dawes Jr. tells Michael Banks that the tuppence he invested with the bank 20 years ago has grown so that it’s now sufficient to pay off his loan to the bank.  And while we are not told exactly how much Michael owes the bank, we do know that it’s at least £100.  And so I’m sitting in the theater thinking to myself…Is that possible?  And when I got home, I worked it out.  (Of course, I did have to deal with the unlikelihood that Michael had three kids, a couple of whom appeared to be about 10 years old, and George would presumably be about 25…)

£100 is 24,000 pence (100x240).  So what rate of interest would the bank have to be paying on savings deposits in order for tuppence to grow to 24,000 pence in 20 years (and here I will assume a single annual interest payment)?  And the answer is:  160% per year.  Right. 

How long would it take for tuppence to grow to £100 if the bank pays 6% interest?
About 295 years.  (After 20 years, he’d have about six pence ha’penny.)

Either way Mikey Banks is still screwed.

Unless, of course, Mr. Dawes Jr. is just lying to Michael, and kicking in £100 so we can have a happy ending…

Saturday, December 22, 2018

The Decline of Rural Indiana


(I posted this earlier tonight as a comment on a blog.  Posting it here to save t for myself, mostly, but, in case anyone is interested...)
I think that this entire discussion (about urban/rural economic development issues) needs to be very much disaggregated, although there are issues that are common across rural areas. The problems in Indiana are, I would guess, very much different than those in (for example) Montana. Indiana is a relatively small state geographically, and many of the access problems might be different than those in Montana (e.g., simply getting to a hospital or urgent care facility). Indiana and the Dakotas might be more similar; Montana and upper Minnesota might be more similar.
I have a particular interest in Indiana, having lived here most of my life and worked here for nearly 30 years of my professional life. So, some numbers.
There are 3 (contiguous) counties in east north central Indiana that have lost population--consistently--since 1900 (Blackford, Jay, Randolph). Combined, 72,700 people lived in those 3 counties in 1900; 57,800 in 2017. Population loss has been pretty consistent over time; it declined by 19.6% from 1900 to 1950, and by 10.1% from 1950 to 2017. School-age population fell faster than did overall population, in both periods, and the difficulty of getting to and from school has increased (in one way)--the schools are now further away. Since 1950, the high school (and I mean that literally--there's 1 HS in each county now) has been shrinking, making it increasingly difficult to offer a range of elective courses from subject-matter qualified teachers. (This is not a problem confined to rural areas; I could tell a similar story about high schools in Indianapolis.) The average age of the population is now about 20 years older than it was in 1900, with a majority of the population being age 50 or older. Local retail/commercial activity has (unsurprisingly) declined; WalMart pretty much dominates (each county seat has one).
Each county has a small hospital; each is affiliated with a larger hospital system (2 are part of Indiana University Health; the other with St. Vincent Health--the two largest hospital operations in the state). All three counties are still relatively well served by primary care physicians. (Specialists, not so much, of course.) For many specialties, a drive to Fort Wayne--say an hour in each direction--would not be unusual.
Se we have a rapidly aging population. An economy still based heavily on agriculture (and the farmers are aging--according to the 2010) census, more than half of the farmers were over age 60 then). Some infrastructure still exists, but with only about 60,000 people in an area of 1000 sq. m. (60 people per sq.m.), it's pretty sparsely populated--only 30% of the areas population lives in the county seats (1 about 5,000; the other 2, about 6,000 each).
The reality of those three counties is that they house a population that is shrinking and aging; the number of younger people is declining. Economic activity is shrinking. While internet access is OK and cable /satellite TV may work to keep people somewhat connected, this is not an area that seems likely to be attractive to younger people looking for a place to live (and raise families and work). And there are several other clusters of counties in Indiana undergoing similar changes.
I've thought a lot about this over the years (I'm an urban/regional economist, among other interests), and I wish I had some ideas about what can be done. I keep coming up empty (which may be my imagination as well as a reflection of reality).





Wednesday, November 21, 2018

Crucifixion


What should I post on Thanksgiving?  On November 22?  Ordinarily, on TG, I’d just post “The Alice’s Restaurant Massacree” and that would be it.  But…this is another day.  I heard Phil once explaining this song, that it had taken him more than two years to write, that he had sung it, a capella, to Robert Kennedy, in Kennedy’s Senate office.  It is, for me, one of the most amazing songs I have ever heard (it’s on his album Pleasures of the Harbor, released in 1967).  And it’s Phil’s masterpiece.  I doubt if 1 in 10,000 people in America have ever heard it. 

Phil Ochs, Crucifixion,
(From the album, released 10/31/67) https://www.youtube.com/watch?v=-dGDYM-kYec
(Live in Montreal, 10/22/66) https://www.youtube.com/watch?v=bPXi49dWTE4

Images of innocence charge him go on
But the decadence of destiny is looking for a pawn
To a nightmare of knowledge he opens up the gate
And a blinding revelation is laid upon his plate
That beneath the greatest love is a hurricane of hate
And God help the critic of the dawn.

The US and the "Military-Civilian Divide

This is something I never expected to have to worry about, to think about: "...in a society with a dramatic and troubling cultural divide between civilian and military communities..."
As an economist, I concluded that the use of a draft to provide for a large percentage of the enlisted members of the military effectively operated to hold the wages of those folks down--because they could be compelled to serve. And that a voluntary military would require that we pay even the lowest-ranking folks with decent pay and benefits and living/working conditions.
Frankly, that conclusion seems to have been wrong. The base pay for the lowest-ranking military personnel is barely above the minimum wage (about $18,000 per year) and the promised post-enlistment benefits (education, specifically, which comes with both tuition/books, but also with a stipend--which is how my father afforded college after WW2) seem not to be funded, or provided in an expeditious manner. And (although I never wanted to be in the military, not then, not now, in retrospect), it's increasingly the case that the people in the military (a) come from families with generations of service, and largely through the service academies and (b) through heavy recruitment aimed at people whose other prospects are not appealing.
(In fact, I recently read, in the Indianapolis Star, that the military has been unable to meet its recruiting quotas in urban areas, with the consequence that the effective labor pool is becoming even more dominated by southern and rural northern enlistees.)
I have begun to wonder if we need to make changes (once again) in how we staff the military. Raising compensation so that military service becomes more attractive to more people? Reinstating the draft (which I would accept only if we also substantially increased compensation for those drafted)? I don't have an answer. And part of the question has to be what our real needs for military personnel are; are we trying to do more than we ought to be doing (are we, in the words of the old Phil Ochs songs, trying to be "the cops of the world")? But if the premise up there a the top is correct--if there is "a dramatic and troubling cultural divide between civilian and military communities", then we need to do something, and we need to do it now.

Monday, November 19, 2018

"People" or "Places"?

When I was in grad school--at West Virginia University--one of the major local and regional development issues had to with what was then called the "people or places" approach.  The "people"-based approach emphasized helping people acquire skills and then, id necessary, helping them move to a place in which those skills would pay off.  The "place"-based approach involved providing support for local infrastructure, for attracting new businesses, and supporting local businesses.

In the context of where I was, one aspect of that was that coal mining was a (rapidly) declining source of employment and of local income.  So a "place" approach had to confront the decline of a large, declining, but high-wage (then--the United Mine Workers managed to keep wages and benefits high) industry.  And so the research group at the Regional Research Institute (I was not a part of that, and at the time really wanted to be) developed a plan for the development of a "high-tech" corridor, running along the general route of where I-79 is today (from Morgantown to Charleston), which would also feature a high-speed rail link.  The cost was in the billions, and federal money was not forthcoming.

And the "people" approach took the form of the higher-skilled people, with more education, were leaving, which only made things worse for WVA.

Later, when I was working for the city of Indianapolis, largely in identifying training opportunities for low-income, low-skilled people, we were taking basically a "people" tack.  But we also (wrongly, in my estimation) focused on jobs which appeared to be in relatively high demand (and therefore tried to push people into jobs that may have failed to maximize their chances in life.

Economic history told me that migration was one of the major causes of the dynamism of the US economy, from its earliest days through at least the 1920s.  The Great Depression, in addition to its other consequences, generated a large number of "place"-based economic development programs.

This whole issue has not gone away as this (https://www.brookings.edu/blog/up-front/2018/11/19/americans-arent-moving-to-economic-opportunity/) piece of work indicates.  It's a very difficult issue, to say the least.  In Indiana, population has increased by about 70% since 1950 (to 2017).  15 of Indiana's (92) counties have experienced population decline over that period.  Another 18 counties have grown at about 1/3 the rate of the state as a whole.  So something like 1/3 of the state's counties have grown little, if at all.  Those counties accounted for 27% of Indiana's population in 1950, but only 16% in 2017.

The most rapidly growing counties have largely clustered around major cities, or have major universities (IU, Purdue).  What policies *should* the state of Indiana pursue?  "People"- based, or "place"-based?  Through the high school years, education is largely controlled locally.  "Should" Benton or Vermillion (both of which have seen population declines greater than 20% since 1950) devote a lot of resources to improving K-12 education, if all that means is that their "best and brightest" will find it even easier to move away?  Lake County's population has grown by about 1/3 since 1950, while its major cities (Gary, Hammond, East Chicago) have suffered extraordinary population declines (from a combines 276,000 in 1950, to 181,000 in 2017--it's even worse if we look at 1960 to 2017:  down from 348,000 to 181,000--almost a 50% decline.  From 1960 to 2017, EC has declined by 50%, Gary by 60%, and Hammond by (only) a third.

"People" or "places"?  Or do we try to do both?  And if we focus on "people," how do we return to high rates of migration to places that are booming?  How do we keep the lives of those who can't move, or have local roots that are too strong to sever, from cratering?  I wish I knew.  And if I were 30 again, I know what my life's work would be...

Sunday, September 30, 2018

Some questions for Supreme Court nominees

The most recent process of nominating and confirming a new Justice to t he Supreme Court somehow got me to start thinking about federal appeals court judges and Supreme Court justices... What I began to wonder about was what, on average, the legal background of these folks looks like.  Do they have substantial experience as a practicing lawyer?  How often have they represented a client in court, either as a plaintiff's attorney or as a defense attorney?  What experience do they have in criminal matters, again, on both sides of the issues?  Have they drafted any complex legal documents (these would, in general, but not always--generation-skipping trusts come to mind--deal with corporate legal issues, I think)? For appeals court judges and SC justices...How many cases have they argued in front of an appeals court or the SC?  How were their arguments received?  (And although this is less important, how well did they do in terms of outcomes?) Specifically for SC nominees...What does their appeals court record (if any look like?  How well reasoned were their published decisions?  If the cases they were involved in at the appellate level were appealed to the SC, how well were their decisions treated by the SC? Again, I think this is a set of questions that any consideration of any SC nominee might expect. 

Monday, July 16, 2018

A Letter to 2 Senatora and 1 Member of Congress


To Joe Donnelly and Todd Young (Senators) and to Susan Brooks (Member of Congress)
I have just read President Trump’s response, at his meeting with President Putin, when asked whether he believes his own intelligence agencies or Mr. Putin, as to whether Russia interfered in the 2016 U.S. Presidential election.  And, as well, this comes in the wake of Special Counsel Robert Mueller’s indictments of 12 current Russian intelligence agents, for a variety of offenses committed during that election.

Mr. Trump responded: 

"President Putin says it's not Russia. I don't see any reason why it would be."
(https://www.bbc.com/news/world-europe-44852812)

I find this response all but impossible to believe.  Mr. Trump is explicitly disavowing the conclusions drawn both from extensive investigations by U.S. intelligence agencies and by a Special Counsel who has documented that Russian interference in great detail.  He prefers to accept a denial of that interference by the man who almost certainly either ordered or approved it, a man whose interests are served by discrediting both U.S. intelligence agencies and the U.S. criminal justice system.

I do not pretend to know, or to understand how or why Mr. Trump refuses to recognize the conclusions noted above. I do not pretend to know why he prefers to accept the word—which is almost certainly a lie—of a man who is responsible for these actions.

But by disavowing the efforts and conclusions of U.S. intelligence agencies and of a Special Counsel in the U.S. Department of Justice, his words and actions advance the interests of Russia, not the interests of the United States.  I strongly encourage you to speak out, publicly, against Mr. Trump’s words and actions, and to consider carefully whether what he has done either is directly, or reflects indirectly, the commission of “High Crimes and Misdemeanors” against the United States.

Saturday, April 07, 2018

Why I Tend To Use Year-to-Year Changes, Instead of Month-to-Month Changes

The following chart shows the (black line) annual percentage changes (January-to-January; February-February; etc.--shown in black) and the month-to-month (January to February, February-to-March; expressed as an annual percentage change--shown in yellow).  Month-to-month changes are much more volatile, and thus tend not to be representative of what's happening.  In this chart, I've used the percentage changes in payroll employment (which is a monthly series), seasonally adjusted.  I think looking at the year-to-year changes is a more accurate way of depicting how employment has been changing, and is a much clearer representation of those changes.


Of course, if your point is to point out how volatile month-to-month changes are, that's different.  Usually, my concern is to capture more clearly whatever underlying patterns exist.