In our continued election coverage, we have a pair of dueling New York Times' articles on which side of the political spectrum provides greater prosperity. Last year, Richard Florida of the Atlantic's Citylab looks at why "red states" may be providing short-term prosperity through rapid growth and low-cost of living:
Driven by oil, the fracking boom and exurban sprawl, many of the red state economies are experiencing a vigorous (if ultimately unsustainable) spurt of growth. Thanks to loose land-use regulations and low labor costs, detached, single-family homes can be churned out quite cheaply, generating more middle-wage, low-skill jobs. And since red states spend less per capita on education, infrastructure and social welfare than their blue state counterparts (and many of them receive more federal dollars than they contribute), their tax burdens are lower, too...
As long as the highly gerrymandered red states can keep on delivering the economic goods to their voters, concerted federal action on transportation, infrastructure, sustainability, education, a rational immigration policy and a strengthened social safety net will remain out of reach. These are investments that the future prosperity of the nation, in red states and blue states alike, requires.
Meanwhile, Yale's Jacob Hacker and UC Berkley's Paul Pierson argue that, even adjusted for cost of living, blue states are providing more prosperity:
Blue states dominated by Democrats do much more to maintain their investments in education, infrastructure, urban quality of life and human services — investments typically financed through more progressive state and local taxes. And despite what you may have heard, blue states are generally doing better...If you compare averages, blue states are substantially richer (even adjusting for cost of living) and their residents are better educated. Companies there do more research and development and produce more patents. Students score better on tests of basic science-oriented skills like math.
...Yes, there are fast-growing red state economies. But many, like North Dakota, look more like Saudi Arabia than Silicon Valley. Not all states are sitting on huge fossil fuel reserves, and tapping these reserves isn’t costless. It creates pollution and other problems — negative externalities — that go beyond states’ borders, notably the costs associated with carbon emissions.By contrast, the innovation-driven growth in blue states creates broad positive externalities. People educated in blue states can move to red states; technologies developed in blue states can be emulated in red states. In other words, blue state investments “leak out.” Yet these states are still producing high levels of prosperity.
Over at NPR, we have this story on which countries are the best at converting national wealth into citizen well-being, using analysis from the Boston Consulting Group:
This "wealth-to-well-being coefficient," as BCG has dubbed it, can highlight weaknesses in countries that otherwise appear to be in decent shape. In the latest annual scoring the U.S. outranks most nations on measures of both income and well-being. But its conversion coefficient is under par because the U.S. lags behind other comparably wealthy countries — such as Germany — when it comes to well-being indicators in areas like income inequality and education...
The conversion coefficient also underscores a challenge that's bedeviled worldwide efforts to eliminate extreme poverty: Many countries have managed to grow from low-income into middle-income or even upper-middle income status, but they're still home to a huge number of extremely poor people.
The Council on Foundations issued a new report on how U.S. philanthropies can help implement the UN's Sustainable Development goals, which are intended to ensure broader prosperity once a country is developed, reports UN Dispatch:
While most people view development as what the global south can learn from the global north, the report highlights that there is plenty the developing world and can teach industrialized nations when it comes to poverty reduction, community outreach and responsible consumption – all goals enumerated under the SDGs.
In particular, by using the SDGs as a framework for domestic programs, philanthropic organizations can better gear their programs to have more impact. Often times the funding and creation of domestic programs is fragmented, with each element existing in its own silo. What the MDGs, and now SDGs, demonstrate is that collaborating across seemingly disconnected fields can majorly improve the impact of programs.
It also allows different fields to learn through the failure of others in a way that helps reduce waste by not having each organization make the same mistakes for themselves.
You know who else kind of likes this idea of well-being? Charles Koch said, in an interview with the Washington Post's Jim Tankersley, he doesn't like the term capitalism and thinks corporate welfare is partially responsible for a lack of economic mobility (the entire interview is a must-read):
[I]t's not capital we are talking about; it's knowledge and creating well-being. Because I mean, that gets people on the wrong track when it's capital and how we allocate capital -- no. How do we create the Republic of Science here? How do we have a system of mutual benefits where people succeed by helping others improve their lives? So I don't like that at all...
I worry about [inequality and a lack of mobility] when it is caused by corporate welfare. It's like we treat employees here. We want to reward you not only monetarily, but including the value you create here, because we want you to create more value. We don't want to put a ceiling on it because we don't want you to put a ceiling on the value. And that's what we want in society. If somebody is doing more and more to make other people's lives better, have them make all they can, if that's what drives them, because that's what we want.
If they make it through by rigging the system, then that's horrible, and that's a good part of the disparity we have.
In Bloomberg, George Mason's Tyler Cowen examines whether negative-bond yields are actually a sign of prosperity because it represents a type of wealth insurance:
[I]f you buy securities at a yield of negative 1 percent a year, and equities are yielding 4 percent on average, your insurance cost on the safer securities is roughly 5 percent of the upfront investment. So on $10 trillion of safe securities, that is an insurance premium of roughly $500 billion -- a relatively small chunk of the $300 or $400 trillion of total global wealth. In percentage terms it is cheaper than the homeowner’s insurance many of us pay for every day... The world does face some serious risks, but negative yields might just be a sign that you should be less scared rather than more.
Think the mortgage-interest tax deduction largely benefits the middle class? You might be interested in this analysis from Priceonomics.
In this report from new think tank The Third Way, Daniel Alpert argues that we need to rethink how we approach the future supply of work in the United States by first understanding what it is and what it isn't:
1. It is not a supply-side issue. Well, it is an oversupply issue—but that is not how economists and politicians typically speak about the supply side. Cutting taxes and creating subsidies to encourage investment by the private sector is not effective in an environment in which the world is bedeviled by excess supply relative to aggregate demand, and the U.S. has experienced a shift abroad of the jobs involved in the production of that excess supply. For the same reason, extraordinarily low interest rates have proven unable to spur expansion of private, primary investment.
2. It is not a minimum wage issue. Raising the minimum wage may, but is not certain to, serve to improve the share of production obtained by our lowest paid workers (some of whom may find themselves displaced by substitution of technology). But it will not serve to absorb the un- and under-utilized pool of labor in the U.S.
3. It is not an issue of labor’s bargaining power. Yes, the union movement has been decimated in the U.S., and collective bargaining as an established right has been whittled away over the past 30 years. But as long as there is a substantial excess of labor, a revitalized union movement—as welcome as that may be—is not likely to emerge, and where it does, it may result in a displacement of jobs to non-unionized jurisdictions or abroad.
In the National Review, Kevin Williamson asks if vagueness of job is tied with higher earnings and that maybe this emerging lifestyle of high six-figure earners will trickle down:
What really seems to drive people bats about finance — and what’s behind a great deal of our resentment-driven “inequality” politics — is that same question: “What do they do?” It’s the mysteriousness that vexes people, the sense that there exists in these United States a class apart whose ways and means are alien and incomprehensible.
The real story of inequality in the early 21st century isn’t one of the lower classes’ sinking into penury and misery. In purely material terms, they’ve never had it so good. By any quantitative measure — calories eaten, square footage occupied, energy consumed, disposable income after basic food and shelter, real purchasing power — lower-earning households are far, far better off than they were during the so-called golden age of the 1950s or 1960s, that magical postwar period for which we still feel a paralyzing nostalgia.
This is part of a long-term trend in which indulgences once reserved to the very wealthiest make their way down through the market to the merely high-income, and then on to people of more modest means. As late as the 1960s, airline travel was rare enough and expensive enough that the term “jet set” meant something, whereas today it is hopelessly retro-sounding. The fact that people who are merely rich rather than super-rich can now travel relatively easily by private jet may not sound like progress to people whose household finances would be upset by an unexpected $200 car-repair bill, but that progress is in fact one of the most common avenues of economic advancement.
In some happy news, four Georgia teens trying to avoid gang recruitment were hired for summer work by the La Grange Housing Authority, reports Huffington Post:
Dylik Smith, 13, Jalen Parham, 13, and twin brothers, Desmond and Deion Woodard, 14, now tend to a community garden, pass out flyers and perform other odd jobs around LaGrange Housing Authority for $7.25 an hour.
Using a law allowing for the recruitment of any member of the bar, the head of Missouri public defenders has called on Governor Jay Nixon to come to court to represent an indigent defendent after a series of budget cuts gutted the program, reports NPR's Camila Domonske:
According to one study, the newspaper wrote, "public defenders were spending an average of 27.3 hours less than deemed sufficient to provide reasonably effective counsel in various cases. For example, the study determined attorneys should expect to spend about 63.8 hours on a sex-related felony. Missouri public defenders spent an average of 25.6 hours."
Turnover and burnout is said to be high, and not helped by the salaries Missouri offers. Last year, the average salary for a three-year veteran public defender in Missouri was $50,341, the newspaper reports. In Iowa, a three-year veteran would, on average, make more than $65,000 — and have a smaller caseload.
Meanwhile, the number of cases is increasing — even though the state has "one of the strictest eligibility guidelines in the country," the Post-Dispatch wrote. "Missouri guidelines match the federal poverty guidelines, meaning an individual with a salary of $11,000 a year would not be considered poor enough to receive a public defender.
"Put another way, a person could qualify for food stamps but not legal representation in Missouri."
Check out this story of one family's struggle with rural homelessness, which features substandard housing, eviction and living in a tents:
My family’s experience isn’t unique. On any given night in 2015, 32,800 Americans in rural familiesexperienced homelessness. What’s more, the practical challenges of counting homeless people in rural areas means we may be underestimating the true size of the rural homeless population.
Structural issues—such as higher poverty rates; inadequate transportation; and limited access to shelters and services like health, mental health, and child care—make people and families who live in rural areas particularly vulnerable. This helps explain why rural homeless families are disproportionately likely to go without shelter: in 2014, rural families accounted for 15.7 percent of all homeless families, but almost 27 percent of all unsheltered homeless families (families without access to service shelters who usually live in cars, in tents, or on the street).
The rural housing crisis is not intractable. Policymakers should start by improving data collection on rural homelessness, so that they have a complete picture of the issue. They should also increase efforts to document and reduce discrimination in renting, and improve access to affordable legal services so that families stand a fighting chance when they risk losing their homes. To support the families who become homeless, policymakers should improve accessibility to shelters and other services in rural areas. Additionally, the U.S. Department of Agriculture (USDA) should reinstate Section 515 grants to build more affordable rural rental housing, and increase the direct loan program funding under USDA Section 502 to provide more assistance for rural homeowners.
Meanwhile in Forbes, philanthropy advisor Jake Hayman discusses why he thinks "social investment" is a threat to charity:
In a world where charities are already pitted against each other by funders looking to procure impact, using tools of social investment over grants makes a lot of sense. In a world where we move beyond charity competition into a collaborative one, it becomes much less interesting...
[S]ocial investment [can be] a distractive play-thing for charitable foundations that are harming the world. There is a growing list of foundations that have a social investment “pot” and see no irony in the fact that they use the majority of their endowment at any given time to make as much money as possible without a care for the harm they are doing in the world. Dinner party conversation is in danger of getting lost in chitter-chatter about small social investments when the over-arching approach to investment is anything but social.
The essential values of the social sector should be around openness, honesty and a commitment to providing platforms to those most in need, to help shape the support they need. Every penny of the money we deploy – grants, social investments and endowment funds – should work to fulfil those values. At present they rarely do.
Social investments normally amount to no more than a “nice to have” and the danger of further mainstreaming them and of more donors asking to see an impact bond, a patent or path to trade surplus is a dangerous one.