Tag: economy

Let the Federal Reserve buy up MTA Infrastructure Bonds

86th Street

The most obvious source of funding for these projects would be for the Federal Reserve to purchase public infrastructure bonds instead of the $40 billion a month of mortgage-backed securities it has been buying. The housing market is important, and keeping mortgage rates low is useful, but investing in public infrastructure is much more important for the nation now. This approach would require a small legislative change to Section 14(b) of the Federal Reserve Act, which currently only allows the Fed to purchase of municipal bonds that mature in six months or less. These infrastructure bonds must be issued with maturities extending from 30 to 50 years, because the assets they fund will last at least that long. In two months, the Fed could buy $80 billion in infrastructure bonds. That would build some very important public infrastructure.

– Can the Port Authority and MTA afford repairs after Sandy?

In Manufacturing Shift, Made in U.S. but Sold in China

Brooklyn Bridge

After generations of manufacturers in New York and across the United States folded because they were unable to compete with imports, Watermark, with its only factory in the East New York section of Brooklyn, has managed to crack the code. Instead of trying to make Watermark’s products cheaper, Mr. Abel has prospered by first making them more expensive — offering custom-made fixtures unique to each building — and then figuring out how to do that at lower cost. The company has supplied thousands of fixtures to six new luxury hotels and condominiums being built in Shanghai, Macau and Hong Kong.

“The days of mass producing in New York City are gone,” Mr. Abel said. “If you were producing nuts and bolts by the tens of thousands 50 years ago, you’re not going to do it today. But creativity, or uniqueness or design is definitely something that can flourish in New York.”

via In Manufacturing Shift, Made in U.S. but Sold in China.

Henry Ford, When Capitalists Cared

This:

At the same time, corporate profits were booming. In 2006, the year before the Great Recession began, corporate profits garnered the largest share of national income since 1942, while the share going to wages and salaries sank to the lowest level since 1929. In the recession’s aftermath, corporate profits have bounced back while middle-class incomes have stagnated.

Today the prevailing cut-to-the-bone business ethos means that a company like Caterpillar demands a wage freeze and lower health benefits from its workers, while posting record profits.

Globalization, including the rise of Asia, and technological innovation can’t explain all or even most of today’s gaping inequality; if they did, we would see in other advanced economies the same hyperconcentration of wealth and the same stagnation of middle-class wages as in the United States. But we don’t.

In Germany, still a manufacturing and export powerhouse, average hourly pay has risen five times faster since 1985 than in the United States. The secret of Germany’s success, says Klaus Kleinfeld, who ran the German electrical giant Siemens before taking over the American aluminum company Alcoa in 2008, is “the social contract: the willingness of business, labor and political leaders to put aside some of their differences and make agreements in the national interests.”

In short, German leaders have practiced stakeholder capitalism and followed the century-old wisdom of Henry Ford, while American business and political leaders have dismantled the dynamics of the “virtuous circle” in pursuit of downsizing, offshoring and short-term profit and big dividends for their investors.

via Henry Ford, When Capitalists Cared – NYTimes.com.

U.S. population in cities growing faster than in suburbs – Let’s Rebalance Our Funding

Manhattan Skyline

Those who are following the resurgence of urban centers, this won’t be a surprise – the population in cities growing faster than in suburbs:

For all 51 metro areas with a million or more people, cities as a whole grew by 1.1% from 2010 to 2011, while suburbs increased 0.9%. That’s a big change from the last decade, in which suburbs expanded at triple the rate of cities.

“This can really be seen as a milestone,” said William Frey, a Brookings Institution demographer who analyzed the census data to be released Thursday. “What’s significant about it is that it’s pervasive across the country.”

via U.S. population in cities growing faster than in suburbs – latimes.com.

The Sacramento Area Council of Governments has an interesting white paper entitled Changing National Demographics and Demand for Housing Types which reinforces this larger trend:

Myers and SungHo Ryu argue [in Aging Baby Boomers and the Generational Housing Bubble: Foresight and Mitigation of an Epic Transition – ed.] that the future population and age structure will lead to differences between age and home buying and selling. The aging, retirement and lifestyle patterns of the 76 million baby boomers will likely shape U.S. housing markets and trends for decades ahead. They conclude that there will be an oversupply of homes offered for sale by aging baby boomers – many of which may not be of the housing type that young buyers want. The researchers raise the idea that where decline once occurred as housing moved from the central city to the suburbs, it may now be reversed as the suburbs will see surpluses of large-lot single-family housing.

The suburbs have long enjoyed subsidies many magnitudes greater than central cities, which is a travesty when you rank the productivity and economic output of denser central cities to suburbs. It isn’t even close according to the New York Fed in Management of Large City Regions: Designing Efficient Metropolitan Fiscal Policies:

Among the 363 MSAs [ed. what’s an MSA?] defined by OMB, just fifty had populations over one million. Yet the output of these fifty cities accounted for nearly two-thirds (65%) of national GDP of $11.5 trillion (in $2001).

I can’t talk about others whom champion cities, but I think there is a place for hyper dense cities such as Manhattan, merely dense cities such as Brooklyn or even Boston and the suburbs. But the fact that the suburbs are given subsidies over and above cities is just wrong from a moral point of view (unless you are buying land in West Virginia as future oceanfront property) but also from an economic point of view. Investing in multimodal transportation – high speed rail and local mass transit – not only makes sense from an economic viewpoint, but increases individual liberty by allowing people to chose to walk, take the train or buy and drive their personal car.

London Low Emission Zone

Low Emission ZONE

News to me: besides having a Congestion Charge zone, London also has a Low Emission Zone

The Low Emission Zone (LEZ) was introduced in 2008 to encourage the most polluting heavy diesel vehicles driving in the Capital to become cleaner. The LEZ covers most of Greater London. To drive within it without paying a daily charge these vehicles must meet certain emissions standards that limit the amount of particulate matter (a type of pollution) coming from their exhausts.

The low emission zone started operating on 4 February 2008 with phased introduction of an increasingly stricter regime until 3 January 2012, and as shown below, covers pretty much all of metropolitan London (the congestion charge zone is shaded orange).

The LEZ is monitored using Automatic Number Plate Reading Cameras to record number plates checking vehicles against the records of the Driver and Vehicle Licensing Agency to enable Transport for London to pursue owners of vehicles for which the charge has not been paid.

It would come as little surprise to my reader that I am a proponent of the London Low Emission Zone; much like the congestion zone, the low emission zone prices (ever so bluntly) an externality: particulate matter which is being dumped into the air by commercial vehicles. A charge both prices in this externality and will drive innovation to reduce vehicle emissions.

I also love the graphic sensibility of the advertising and communication on their website and in collateral, examples shown below.

House Republicans to Big Data: “HULK SMASH”

Besides going back on their debt ceiling promise (and wanting to raise taxes on poor families) House Republicans voted to end the American Community Survey, which isn’t part of the decennial census, but is a yearly survey which records supremely useful survey charting what exactly it is that we Americans do, ranging from where you work and how you get there to your family and relationships. This is wonderful data and everyone from researchers to the business community uses this data to help craft products and services for Americans.

But to House Republicans, it is EVIL:

The House voted Wednesday to eliminate the detailed surveys of America that have been conducted by the Census Bureau since the nation’s earliest days.

House Republicans, increasingly suspicious of the census generally, advanced a measure to cut the American Community Survey. It passed 232 to 190.

The survey is not part of the constitutionally mandated population count, but some version of it has been done by law as part of the decennial survey since the time of Thomas Jefferson to assess the needs of the nation. It’s generally considered a vital tool for business.

Republicans, acknowledging its usefulness, attacked the survey as an unconstitutional invasion of privacy, arguing that the government has no business knowing how many flush toilets someone has, for instance.

“It would seem that these questions hardly fit the scope of what was intended or required by the Constitution,” said Rep. Daniel Webster (R-Fla.), author of the amendment.

“This survey is inappropriate for taxpayer dollars,” Webster added. “It’s the definition of a breach of personal privacy. It’s the picture of what’s wrong in Washington, D.C. It’s unconstitutional.”

via House Votes To Cut Census Survey Done Since Thomas Jefferson.

Too bad that the data is anonymized and individual records are not shared with anyone, including federal agencies and law enforcement entities. By law, the Census Bureau cannot share respondents’ answers with anyone, – not the IRS, not the FBI, not the CIA, and not with any other government agency. Rep. Webster should please review the meaning of “unconstitutional” before using those big words.

Luckily this bill has no chance of passing in the Senate.

Update 12 May 2012

Via Atlantic Cities blog post, What Killing the American Community Survey Would Actually Mean comes this article from Census Director Groves entitled, A Future Without Key Social and Economic Statistics for the Country:

The ACS is our country’s only source of small area estimates on social and demographic characteristics. Manufacturers and service sector firms use ACS to identify the income, education, and occupational skills of local labor markets they serve. Retail businesses use ACS to understand the characteristics of the neighborhoods in which they locate their stores. Homebuilders and realtors understand the housing characteristics and the markets in their communities. Local communities use ACS to choose locations for new schools, hospitals, and fire stations. There is no substitute from the private sector for ACS small area estimates. Even if the funding problems were solved in the proposed budget, the House bill also bans enforcement of the mandatory nature of participation in the ACS; this alone would require at least $64 million more in funding to achieve the same precision of ACS estimates.

Not to mention that many government programs are by statute dependent on data derived from the ACS. Conservative Republicans often complain that government isn’t as efficient as the private sector (a point I don’t agree with after working with many Fortune 100 companies), so how might we make government more efficient? Their solution is to cut any customer reporting and steer the ship blind. Thus creating a self-fulfilling prophecy.

Madness.

Update 21 May 2012

In even more ACS news, the New York Times thinks Rep. Webster is heralding the The Beginning of the End of the Census:

“This is a program that intrudes on people’s lives, just like the Environmental Protection Agency or the bank regulators,” said Daniel Webster, a first-term Republican congressman from Florida who sponsored the relevant legislation.

“We’re spending $70 per person to fill this out. That’s just not cost effective,” he continued, “especially since in the end this is not a scientific survey. It’s a random survey.”

In fact, the randomness of the survey is precisely what makes the survey scientific, statistical experts say.

Each year the Census Bureau polls a representative, randomized sample of about three million American households about demographics, habits, languages spoken, occupation, housing and various other categories. The resulting numbers are released without identifying individuals, and offer current demographic portraits of even the country’s tiniest communities.

It is the largest (and only) data set of its kind and is used across the federal government in formulas that determine how much funding states and communities get for things like education and public health.
…
Other private companies and industry groups — including the United States Chamber of Commerce, the National Retail Federation and the National Association of Home Builders — are up in arms.

Target recently released a video explaining how it used these census data to determine where to locate new stores. Economic development organizations and other business groups say they use the numbers to figure out where potential workers are.