1. Gilles Duranton and Anthony J. Venables survey the literature on “place-based policies.”
2. Benjamin Austin, Edward Glaeser, and Lawrence Summers make the case for such policies in America’s heartland.
3. James Fallows says that some of these depressed areas are successfully reinventing themselves.
There is no problem so vast or complex that it cannot be made infinitely worse by an act of Congress.
Place based approaches will remain a difficult challenge, as long as communities with limited income potential are expected to adhere to the same (expensive) physical infrastructure formats and (expensive) variants of knowledge centered production as everyone else.
1. Still plowing through this but seems metrics heavy.
2. Raise the already indexed EITC again. Yawn.
3. Yes, many smaller communites around the country are not sitting around waiting for deliverance from on high.
Mercatus put out two studies this week that do a much better job of addressing the underlying issues.
Supply or Demand? What’s the Story Behind Men Leaving the Workforce (https://www.mercatus.org/essays/men-leaving-labor-force-supply-demand ) which says that the lion’s share of non-working prime age males are disabled or ill. It then goes on to suggest that SSDI is the culprit and needs to be reexamined. Googling “map prime age male SSDI” turns up a lot of images that resemble those in 2 with concentrations in the same areas. The Mercatus study recommendation to reexamine SSDI seems more fundamentally sound than any new special regional programs.
The other Mercatus piece looks at Regulation and Poverty across the states and finds that a 10 percent increase in the federal regulatory burden upon a state is associated with a 2.5 percent increase in poverty. In this context, the current administration’s regulatory reform efforts are the cutting edge in addressing the needs of depressed regions and may obviate the need for expensive federal interventions.(https://www.mercatus.org/system/files/chambers-regulation-poverty-mercatus-summary-v1.pdf )
Yes, they should get help.
The depressed states & counties should get a new “automatic wavier” of any Federal regulation that increases the costs to businesses operating there. Probably all the counties that voted for Trump…
In terms of heartland economic growth, I am still wondering what the long term ideas really are:
1) I did like James Fallow article showing the parallels today and 1980 – 2000 United States with China substituting for Japan. It is good reminder that we did have a significant Presidential run in 1992 with many of the same issues being debated. (I found it weird that Trump ran so hard on NAFTA being 20+ years old but it worked.)
2) I do believe one reason China growth can continue is they still have the most important resource: Cheap Labor while Japan ran out in 1985.
3) Probably the one aspect about the Heartland is a lot communities can thrive while others fail. So Minnesota and Iowa can continue go growth while WV still has issues getting as First Energy has filed bankruptcy. This fits your economy is a lot of micro decisions.
4) Of course if Trump continues his trade war and China cuts off the soybean trade, I really wonder what happens to Iowan economy. Soybeans and Corn are already 20% below 2012 values.
5) If we fall back to Fallows parallels there was a lot of great stuff in the Reagan Revolution (1983 – 2000 with it overheating in 2006) but the inner cities really did crash bottom in the late 1980s/early 1990s. So 90% of the country can do well while the 10% really collapses.
One progressive proposal I like is the Job Guarantee.
You can essentially eliminate many transfer payment programs serving the poor and those out of work if they have decent jobs available to them (SNAP, section 8, unemployment insurance, earned income tax credit), and you don’t have to worry about negative incentive effects of pure transfers. You could also eliminate a legal minimum wage as the Job Guarantee provides a reasonable wage and those who wanted to work at a private job for less for whatever reason could.
This would allow for a base of employment/income in depressed areas. If the job guarantee pays a good deal for that disability, that might also bring otherwise disabled people who aren’t completely disabled back into the workforce.
Progressives are pushing for a level of $15/hr but that seems excessive, I think $12.07/hr is more reasonable ($25,105.60/yr, just above the poverty line for a family of four), and most private sector jobs will pay at least $1-$2/hr above this level. I’d also limit the program to those 20 years of age and older, so that business models which don’t work with labor expenses that high would still be able to find employees.
Charles Peters of the old Washington Monthly was pushing this back in the 1970s and ’80s. But it was unalterably opposed by government unions, who feared it would undercut their wages. So the Democratic Party opposed it. And since Republicans weren’t thrilled with the idea to start with, it went nowhere.
Yes to jobs, jobs guarantees, rather than “welfare for not working”.
However, the metrics for each program need to be the gov’t cost & the number of low-wage workers working. There have been too many “jobs program” boondoggles to spend the money, not enough on getting people actual jobs.
Gov’t is lousy at this, and will remain lousy — but it’s still better to have a lousy job incentive than an effective no-work welfare incentive.
How, or in what ways (if any) does all this differ from the “constructivism” cited by Hayek?
Are some deciding (for others) **how** things should be?
What are we to make of the development of individual motivations in response to conditions (adverse or favorable) that will shape the occupying populace?
We’ve been giving extremely special help to Puerto Rico for decades. How is Puerto Rico doing?
who comprises the decision portion of the “we?”
The United States government.
Maybe the problem in West Virginia and other rural areas is that they are over populated and government transfer payments may be th main reason.
In 1950 there were 500,000 coal miners in the US. Now there are some 50,000 and those jobs will never come back. The solution is for the unemployed men in West Virginia is to leave and find work elsewhere. Many of them did, but obviously not enough.
The county in Kentucky my fathers family is from is similar. In the 1970s when I looked at the data, over half the income in the county came from government transfer payments– the soil bank for farmers, crop support payments, aide to dependent children, food stamps, social security, etc.. The county population peaked in the 1890 census–yes, 18 not 19 — and the only time it increased after that was in the 1930s when people like my grandfather returned to the farm where at least he could feed his family, even if it was not profitable to raise hogs. But now for over a century almost everyone with any get up and go have gotten up and left. So now you are left with the very poor who have become dependent on a federal handout.
I though of this when I read Hillbilly Elegy. Sure, his family had left West Virginia and were still having problems in Ohio because you may take them out of the hills, but you can not take the hills out of them. But at least their kids could work their way out of the poverty trap and dependence on welfare.
You get a lot more utility bang for the redistribution buck in places with cheaper costs of living. And that means in places without prosperous economies or much lucrative employment.
It’s not just for poor people or retirees with a fixed income deciding where to live. The military moved a lot of people out of the DC area to go work in cheaper places for the main purpose of saving a lot of money and an incidental benefit of providing a government-spending-dependent economic anchor to a local community that otherwise would evaporate. (E.g., Army Perscom used to be in Alexandria, but after BRAC was moved to Fort Knox.)
There were some recent proposals to try and spread all the agencies and offices of the Federal government around the country in a similar manner. Well, outside the military context, that’s not possible and wouldn’t work for a variety of reasons, but one might reflect on to what extent the country is already much more geographically decentralized than it would be absent huge amounts of transfers, and if the spigots were turned off it’s pretty clear to me that the “winner cities” domestic immigration pressure would skyrocket.
As it is, the majority of above-median-income prime-age workers live within commuting distance of just a few major cities, and the rest of the country will gradually empty out of prime-age affluent types and serve as a kind of giant “reservation” for transfer recipients of limited means.