Wrap Up for April '15

Baltimore. Only the latest example which makes me ask: why do we abandon people? The dreams of productive employment? Neighborhoods? Main Streets? In this instance, it appears people and neighborhoods have both been neglected. I have never lived in an area where entire rows of houses stand empty, and in reading about Baltimore, I was reminded of the continuing hope for a chance to travel, visit and talk to people where this has happened. However I've witnessed plenty of forgotten buildings on Main Streets, and some aspects of the abandonment process seem similar.

Two articles early this month, one from the Economist and one from Adam Ozimek, finally started me reading a book by Henry George, "Progress and Poverty". While the book is quite interesting and the idea of land tax has its merits, my main problem is that in developed countries, many of the more important land parcels are presently occupied by enterprise of a non profit nature. If these organizations already benefit from governmental redistribution, why would anyone make the process even more complicated by requiring the landowners to pay land taxes? Same principle applies for all that capital which is presently "tied up" by homeowners...

Another aspect of economic life that was so different in 1879, was the fact that labor was still moving towards traditional manufacture and prodution, rather than away from it as has been the case for decades in the U.S. Since life was quite different back then, Henry George spent a lot of time in the first chapters of his book attempting to separate labor from its common associations with capital. Among the many problems with this approach, is the fact that labor also became disassociated with human capital as well - a mind boggling problem which continues to this day.

How long does a business have to live? The Santa Fe Institute takes a closer look and find some surprising results.

The fact that establishments are not necessarily the same as firms, probably skews statistics in some unexpected ways.

An isolated community reaches out to the world for ideas re a dramatic 21st century transformation.
http://gizmodo.com/the-most-isolated-town-on-earth-needs-a-radical-redesig-1694550855?google_editors_picks=true

Spatial mismatch between jobs and people ties into poverty, in ways that require coordinated solution sets among those affected. The geography of jobs greatly affects unemployment. Those who establish compensated knowledge use systems need to consider multiple transportation patterns, that are within the resource means of the residents who would be using them. http://www.richmondfed.org/publications/research/econ_focus/2014/q3/feature2.cfm

Dani Rodrik argues that development isn't a one size fits all matter, and of course the same holds true for the kinds of housing and infrastructure options that are also needed for lower to middle income level U.S. citizens. http://www.richmondfed.org/publications/research/econ_focus/2014/q3/interview.cfm

Chris Blattman responds to the Rodrik interview and adds,

One trouble I have is that I think even very smart and experienced people are profoundly bad at knowing what the problems are in an economy, where the political winds are blowing and what will work. This needs to be said out loud as well.

Something that is too often missed, is the degree to which local and state struggles impact national economic circumstance. In spite of the fact national budgets are different from household or state budgets, people were already wrestling with limits on state and local budgets before the Great Recession occurred. Hence the mindset of diminished options. Yet there's a paradox, because states seek to restrain monetary growth at the national level, even though they need national assistance for resource maintenance at local levels.

An earlier post from Shane Parris on strategy, a new post on strategy traps, and a video from the (first referenced) book author, at LSE. From the initial post:

Coordination is hard because it fights against the gains to specialization, the most basic economies in organized activity.

How do cities end up reliant on fines and forfeitures? http://taxvox.taxpolicycenter.org/2015/04/08/ferguson-city-finances-not-the-new-normal/

If there is real economic distortion to be had, look for it here...10 massive federal tax breaks

"The peak that has the Saudis more worried is peak demand: http://www.bloomberg.com/news/articles/2015-04-12/saudi-arabia-s-plan-to-extend-the-age-of-oil

This WP article from last year which shows how a lot of trust disappeared over four decades: http://www.washingtonpost.com/blogs/the-fix/wp/2014/05/31/watch-americans-trust-in-each-other-erode-over-the-last-three-decades/

(Catherine Rampell) Presently, capping federal funding and giving states more control, would mean abandoning the poor, bankrupting the states, or both. http://www.washingtonpost.com/opinions/passing-the-buck-and-hurting-the-poor/2015/04/16/c1f3a28e-e476-11e4-905f-cc896d379a32_story.html?wprss=rss_opinions

New voices for 2015 - Scott Sumner makes the list: http://www.washingtonexaminer.com/new-voices-for-2015/article/2563183

All of these books would be helpful to have on one's bookshelf: http://www.enlightenmenteconomics.com/blog/index.php/2015/04/the-joy-of-gdp-and-beyond/

Wages over time - some things to consider (Scott Winship) http://www.forbes.com/sites/scottwinship/2014/10/20/has-inequality-driven-a-wedge-between-productivity-and-compensation-growth/

The 2.5 million dollar patient: what happens when knowledge use for mental and emotional needs are left to knowledge use patterns which are still being pared back from city, state and national budgets. "Any cuts the state makes, simply means someone else has to pick up the costs." http://www.wbez.org/news/emergency-room-visits-mental-health-skyrocket-chicago-111890

I'm not sure why the benefit of jobs remains so controversial, but another study points to the benefits for this group: http://blogs.wsj.com/economics/2015/04/24/summer-jobs-program-for-poor-youth-saved-lives-lowered-incarceration-in-nyc/?mod=marketbeat

Unfortunately, hospitals have little choice now but to seek cities and towns which can support them. The challenge is to create new service formations and knowledge use structures which are viable in areas with less money. For the ongoing costs and intense resource use of a hospital, geography is destiny, given budgetary circumstance which now exist in primary equilibrium. http://www.theatlantic.com/health/archive/2015/04/when-hospitals-move-who-gets-left-behind/391412/
And this related article from last year: http://www.theatlantic.com/health/archive/2014/08/why-wont-doctors-move-to-rural-america/379291/

An ongoing problem for decades already - good to see Megan McArdle tackle it: When deadbeat Dads can't catch a break, "Communities are capable of making fine distinctions--between, say, a man who could pay but won't and a man who is doing his best but just can't earn enough to cover his obligations." Right now, communities aren't getting the chance to do that.

More Great Recession evidence of decreased family formation: http://blogs.wsj.com/economics/2015/04/28/just-how-much-did-the-recession-make-20-somethings-delay-children/?mod=WSJBlog