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

Monday, November 28, 2016

People and Places

At Vox Tim Lee has a useful, but incomplete, interview with Adam Ozimek, about migration from "dying" small towns to elsewhere.  I encourage you to read it, because it does make some useful points.  But it misses some other points that need to be emphasized.

When I was in graduate school (in economics) in West Virginia (studying, among other things, regional economics), the issue of the decline of small towns was a live topic for us.  It remains, for me, a topic of interest now that I am living (in retirement) in Indiana. 

Ozimek and Lee both begin with the very standard argument that people in economically declining towns (or regions) might be better off to move, and there is indeed a lot of outmigration--much of the population loss these places might experience is motivated precisely by the efforts people make to recover from the losses (of jobs, especially) in those declining places.  But the migration literature has also emphasized that migration is both costly and risky.  Those who move incur the costs of moving and of resettlement.  But they also incur social costs--the disruption of family and community ties, for example.  And migration is risky--migrants may not succeed in the places to which they move (indeed, back-migration is quite common).  All this is well known, and economists concerned with regional change have worried a lot about both the costs and the risks; it's not like these factors have been ignored.

Here, though, what I want to do is look at the declining small-to-medium sized cities and towns in Indiana.

In Indiana, there were, according to the 2010 Census, 64 cities or towns with populations between 10,000 and 50,000.  Of these, 24 more than doubled their populations between 1960 and 2010 (while the state population increased by about 40%.  Of these 24 cities and towns, 9 were within the Indianapolis metropolitan area and 8 were in northwest Indiana.  The other 7 were scattered around the state.  The "gaining" places in central Indiana grew by about 170,000 people; in northwest Indiana, they grew by about 134,000.  Overall, these 24 cities and towns gained about 442,000 in population between 1960 and 2010, an increase of about 125%.

Conversely, there were 11 cities and towns that lost population over the same time period.  Two of those--Michigan City and East Chicago--lost about 33,000 residents.  (But two large cities in northwest Indiana--Gary and Hammond--lost 129,000, about 45% of their combined 1960 populations.)  Overall, the declining cities and towns lost nearly 75,000 people between 1960 and 2010, a population loss of about 21%.

I want to look at the cities and towns that lost population, to see what, if anything we can learn from them.  I'll take that up in a subsequent post.

Friday, November 18, 2016

America and Immigrants

This provoked what follows:

I'm teaching US economic history this semester, and we've been talking a lot about immigration historically. But it means that I have had to look up some numbers, and here's one of them:

Between 1985 and 2014 (the most recent year for which I have data, the total number of people admitted to the US as permanent residents (these are all legal immigrants) amount to 36% of the increase in the population of the US between 1985 and 2014. (Note that this does not include any children of those legal immigrants; it obviously does not include any other immigrants--those on tourist or student visas, those who have entered the country in other ways).

Over 1/3 of out population growth in the last 30 years is directly attributable to legal immigration.

Now I look at this, and I look at what we know about the population and employment dynamics of the US economy, and I would say "Thank god for those immigrants" (if I believed in god). Because the percentage of the US population over age 65 (or 70, or 75, o8 80...) has risen, and will continue to rise, rapidly. And many of those immigrants are employed caring for people my age and older--in many cases, the parents or grandparents of people who so vocally condemn immigration in all its forms. Purely out of self interest, they (and I) should welcome those immigrants.

We've also talked about how immigrants--beginning with the Irish int he 1840s, and continuing with immigrants from eastern and southern Europe later in the nineteenth century, and immmigrants from Asia as well, were regarded as dangerous, or degraded, or not "really" human or good enough to be here. Now, the rhetoric is the same, but applied to a different group of people, people who are coming here for the same reasons--because this is a country where hope and opportunity have been beacons to people from countries where hope has been lost, and opportunity is, well, a dream.

So the anti-immigrant rhetoric and posturing--and policies--are a retreat from what truly did make America great--our welcoming of people who want to be here, who have over the last 200 years sacrificed to be here, and have made this a better, richer, more complex, and more interesting country.

Tuesday, November 15, 2016

Paul Ryan's Plan to Gut Medicare

Now that we have Republican majorities in both the House of Representatives and the Senate, and a Republican president-elect who seems likely to sign almost any domestic policy bill that Congress sends him, it’s worthwhile to look at what Paul Ryan wants to do with Medicare.  This ( and this ( are starting places.

More to the point, I thing, is this:  Medicare is explicitly an inter-generational social compact.  From the beginning, it has promised that if we support—by paying a Medicare tax as a part of our Social Security taxes—health care for our elders, the next generations will do the same for us.  And that is exactly how it has worked for 60 years.  My taxes paid to support Medicare benefits not only for my parents, but for everyone who became Medicare eligible between the mid-1970s and 2012.  People working today are paying Medicare taxes to support my health care (and those who will, I hope, follow after me).

What Paul Ryan proposes to do is to break that social compact.  He seeks to raise the age of eligibility to about 67, which will cause serious problems for people who have pre-existing chronic conditions, or who have worked for years in physically demanding jobs (coal mining, steel mills, nursing homes, and a multitude of others).  He seeks to make Medicare mostly into a private insurance scheme, run by for-profit insurance companies.  What I have been able to find does not make clear whether those policies will require coverage for pre-existing conditions, whether companies will be required to issue such policies.  It is clear, though, that participation by seniors will be voluntary.  So we run, once again, into the problem know as adverse selection.

Seniors with few (initial) health problems may have the option of not participating, leaving insurers with a less healthy, and probably an older, base of insured.  This will cause premiums to rise.  And the premium subsidies Ryan’s plan appears to offer are capped, and capped at a level well below what the premiums are likely to be.  Older, poorer, and sicker seniors will pay for this, with less access to health care, with a lower overall standard of living if they do buy private health insurance, and with almost a certainty of shorter lives.

If you are rich, no problem.  If you are not, this is a major problem.  It’s a big enough problem that I might be forced to join AARP—if that organization is opposing Ryan’s plan.

Monday, November 14, 2016

Worth reading.

I've been saying for years (nigh on to 45) when I have taught comparative advantage and the gains from (international) trade, that it is essential that we realize that "The US gains from international trade" is not the same as "Everyone in the US gains from international trade." (I occasionally drive by an empty lot on East Michigan Street in Indianapolis that used to be--and was, when I was in high site of the largest television assembly plant in the world; it is now, and has been for years, a vacant lot. Not only has everything associated with making TVs gone away, there's a site that has to be more than 100 acres of urban land sitting empty.)

The US gains from international trade. But we have to use those gains so as to make sure that the economic activity that is displaced is *re*placed, and the people whose livelihood has been taken away, are assisted. What does that mean? It means thinking carefully about how we can develo/redevelop new economic activity--how can we create a climate (everywhere, if possible) in which new businesses can start up, and the successful ones flourish? How can we help people who might look at what happened to their last job, and who think they can create something? How can we help people whose skills (and experience) have lost some of their value develop new skills, or find new places to work? (Yes, relocation assistance.)

What we have done is say, "The US gains from international trade. But you guys--you women and men--whose jobs have gone, you women and men whose businesses have been rendered unprofitable--you are on your own."
We are a richer country, as a whole, because we have been willing to trade.
We need to be a country that makes sure that, insofar as possible, we all benefit from those gains.
And the political leadership of this country--Republican and Democratic--has failed here. (My own opinion is that the Democrats have at least tried to develop programs that work, but that's a different rant.)

Friday, November 11, 2016

Thoughts on the electoral college/popular vote discussion

You all do know that originally the "electors" in the electoral college were not elected by the voters in a state? They were selected by the state legislature in some cases and the governor in others. Each elector had two votes; the candidate receiving the largest number of votes was to be elected president & the candidate receiving the second largest number of votes, VP. In 1800, Jefferson & Burr tied (73 each) and the election was thrown into the House of Representatives. That only took 36 ballots to resolve. (It also resulted in an amendment to the constitution, which made the votes for president and vice-president separate. In 1824, four candidates received votes for president (Jackson, 99; JQ Adams, 81; William Crawford, 42; Henry Clay, 37). So we're back to the House--the second time, in 10 elections. This time, it only took 1 ballot, as Clay threw his support to Adams. In 1876, the vote in four states was contested, leaving the election in doubt. A "compromise" was reached, in which all 20 of the electoral votes (Florida, Louisiana, SC, and one elector from Oregon) to Hayes, with the payoff being the end of Reconstruction and the withdrawal of troops from the south. Oh, and in 1860, there was not a problem in the electoral college, because one party managed to run three candidates...
And, almost always (since we began counting popular votes--in 1824), the candidate with a plurality (usually a majority) of the popular vote won in the electoral college. The exceptions:
1824 Elected: Adams. Plurality: Jackson
1876 Elected: Hayes . Plurality: Tilden
1888 Elected: Harrison. Plurality: Cleveland
2000 Elected GW Bush. Plurality: Gore
2012 Elected Trump. Plurality H. Clinton

So switching would not, historically, have made much difference (although, in my opinion, four of those winners were not so good). And in all 5 cases, the popular vote was pretty close; it's not clear whether the results would have been different had the election been based on the popular vote--because campaign tactics would have changed.

Also, from the perspective of those who oppose the electoral college system, the current method essentially means that votes cast in a state only "matter" if your candidate wins the election. Which sort of leads to an obvious question: Why are electoral votes assigned on an all-or-nothing bais, except in two states? In 2000, for example, allocating the electoral college votes between Bush and Gore as a percentage of their popular votes in the states (rounding up if the allocated vote was, for example 6.51 and down if it were 6.49), Bush would still have won--with the same 271 EV total, but very differently distributed.

Note that if you allocate EV as a % of the popular vote, you give candidates a very strong incentive to compete in every state. "Writing off" a state will reduce your share of the EV in that state, but without a necessary gain in another state. 
(Personally, I think that the same thing applies if you just use the popular vote. Right now, Republicans tend to write off New York and California and Oregon and Washington instead of contesting them. Democrats tend to write off much of the south and plains states. If their vote totals in those states mattered, we might see truly national campaigns from both parties.)

Wednesday, November 09, 2016

Voting trends

So I became curious about voting patterns, if any, and tried to put together a consistent set of population and presidential election voting numbers for the recent past. I could not find a data source that had estimates of the age 18 and over population, so my population data is age 16 and over. (That shouldn't make much difference.) And I looked at the percentage of the population that voted, back to 1948, because I was curious about the effect of extending the franchise to 18-year-olds (1972 was the first presidential election in which 18, 19, and 20-year olds could vote.  My expectation was that there would be a noticeable drop in the percentage of the population age 16 and over in 1972, with the voting percentage rising at least for a while.  Here are the numbers:

% of Population Age 16 + Voting

Voting had been edging downward following the 1960 election, and, contrary to my expectations, it continued to fall through 1980 (or, really, through 1988, as the small bump upward in 1984 didn't constitute a reversal in trend).  The jump up in 1992 is not a particular surprise, given the interest aroused by Ross Perot's strong support.  The jump in 2004 is a bit surprising, given a reasonably popular incumbent and a not terribly exciting challenger.  What is striking is that the 2016 election has had the lowest second lowest turnout since 18-20 year-olds got the vote.
I'm not a political scientist, I'm an economist, but the low turnout this year seems surprising (in one way), but unsurprising in another.  It was a very unusual election, featuring the first woman to head a major party ticket and a reality TV star/famous guy heading the other major party ticket.  A reasonable expectation would have been a larger turnout, maybe not as large as 2008, but a lot larger than it was.  The confounding factor, or course, is the extended (and continuing) effort by one of the major parties to create new standards for voter registration; this effort, it seems to me from these data has worked remarkably well.  Voter turnout simply at the 2012 level would have meant roughly 9 million additional voted cast this year.  As it was, the total number of voted declined from about 129 million to about 125.5 million, instead of rising by al all, even though the population of eligible voters rose by about 10 million.
If my suggestion that the decline in voting was in large part caused by  restrictions on registration, then we have, I think, even more reason for concern.

Tuesday, November 08, 2016


Is the U.S. officially a banana republic now?