Wednesday, April 30, 2014

When Can Liberal Cities Tax the 1% Without Fear of Flight?

The NY Times reports that a subset of liberal cities (think of Seattle and NYC) are launching a set of progressive and expensive public policies.  Consider a spatial model of migration in which the U.S is a featureless plane such that every city's amenities are the same and the rich solely care about their own wages and rents paid.   In this model as the liberal mayor (think of Big Bill De Blasio) raises taxes the rich respond by selling their real estate and moving.  In this case, the property tax base will shrink in the liberal cities and the mayor will be frustrated that he can't finance his progressive agenda (unless the Feds heavily subsidize it).
This pessimistic logic may fail for 3 reasons;

1.  Cities are not identical.  The most beautiful cities (think of San Fran and NYC) are the liberal cities.  Whether liberal policies caused this beauty is worth some research.   An alternative theory is that liberals "capture" beautiful coastal places.  Randy Walsh and I have a new paper on this.  If the rich demand beauty then the liberal beautiful cities may be able to raises taxes without losing the rich through migration.

2.  Some of the rich may have a taste for redistribution and be willing to participate and live in a city that launches progressive experiments.

3.  The experiments themselves may make the city a more desirable place to live in the medium term.  The liberal innovative mayors could be right that their policies both are fair and contribute to long term urban growth by building up the next generation of human capital.

Note how the theme of urban political economy lurks here.   For young economists looking for new research topics, consider this one!

Sunday, April 27, 2014

2C or not 2C? Bill Nordhaus' Talk at the University of Chicago

At the 21 minute mark of this video of his Becker-Friedman Institute talk, Bill Nordhaus begins to discuss the impacts of climate change.  He stresses three impacts while emphasizing how difficult it is to predict future adaptation.  Overall, he appears to be an optimist but acknowledges the significant uncertainty!

1. The impact on agriculture ---- he points to the IPCC report and presents a nuanced view of the ability of farmers to adapt.  He presents a graph that farmers can take the heat with losing much output. He is highly optimistic about the ability of the farmers to adapt and slightly mocks the IPCC's doom and gloom.

2.   Species extinction --- here he is more pessimistic.  He notes that ecologists predict a major increase in extinction over the next 100 years relative to the previous 500 years.   For example, many snails are going to have trouble adapting to the heat.   Should we care?  Would Darwin care?

3.  Tipping points and catastrophic effects --- global effects such as melting of the Greenland ice caps and ocean acidification.   Nordhaus points out that his house would flood.   He argues that science finds that the melting of Greenland will take hundreds of years even at a 6 degree Celsius to melt.

At the 48th minute, Nordhaus says some very smart stuff regarding adaptation that Julian Simon and I both applaud.  He claims that adaptation is difficult to predict and then some guy at the 49th minute asks whether it is possible that "no adaptation" will occur and Nordhaus shoots him down.

Alan Dershowitz Ponders His Harvard Legacy

Alan Dershowitz has retired after serving for 50 years as a faculty member at Harvard Law School.  He talks about his legacy in this piece.   He is quite proud of his teaching accomplishments and his legacy for Jewish students at Harvard.

Every professor must confront the big question of what he/she has done for his institution.    Many of us are free riders who view ourselves as free agents who help the institution by narrowly pursuing our own private research goals.

While I will not serve for 50 years on the UCLA faculty (I've been here 8 years and I'm pondering retiring soon to the Midwest),  I have done a few things for the school.  First, I brought Dora with me and she has certainly had a positive treatment effect on this very unusual institution.   Second,  whenever possible I have tried to teach (both my students and my colleagues) about the power of free markets.  There is amazing hostility towards free markets and I could spend 12 hours a day debating everyone who wants to fight.  I focus my finite energy on those young students who I believe are open minded intellectuals.  UCLA has some terrific undergraduates and I try to identify them early and work with them through their time here.   Third, I have been active in Los Angeles in participating in numerous public events where I represent UCLA and try to convey what we do --- that the scientific approach informs public policy.   Fourth, wherever I travel --- I do say that I'm an "environmental economist at UCLA".  UCLA is more than sports, sun and jogging.  Fifth, I have learned the hard way not to get involved with UCLA politics.  Our Academic Senate isn't looking for new ideas for how to improve the institution.  Similar to other Universities, every department wants more money and space.  Priorities and budget constraints and departmental incentives are the forte of basic economics but economists have not been asked to play a role in designing "good rules".   UCLA has many interest groups defending their turf and the easy play is to declare that we are excellent at everything and make no hard choices.    So, this is a long winded way of my admitting that Dershowitz has done more for Harvard than I have for UCLA.    I do hope to make amends but I'm running out of time.

Thursday, April 24, 2014

Human Capital Formation and Capital Constraints is the Weak Link in Piketty's Inexorable Logic

Human capital is a funky capital stock.  In our diverse world, kids have a vector of cognitive and non-cognitive endowments.  As time passes, investments in own time, parental time and market inputs are made to increment the elements of these vectors.  These investments are actively made by investors (the parents and the person him/herself) who are aware of the market rate of return to these various attributes.  Human capital theory sought to recast investment in people as similar to any theory of investment with the exception that human capital is embodied in a living person and thus can't be transferred at death or sold except it can be rented in labor markets.  Risk neutral investors will undertake all projects with an expected present discounted value that they can finance.

Early on, Gary Becker and others recognized the key role of capital constraints in limiting access to "good projects".   If you can't pay Harvard's tuition and it doesn't offer you financial aid, then you won't go even though Harvard might be a great treatment for you.

To see some strange discussion about human capital in Slate read this.

In Piketty's race between "r" and "g", I don't see how he incorporates the non-linear returns to human capital.  One way for "g" to rise faster than "r" is to identify binding capital constraints that limit productive human capital investments.    Incomplete capital markets limit the ability of those who would greatly benefit from human capital investment from contracting with the "capitalists" to borrow from them.  If such trades could occur (and depending on the terms of the trade and on how aggregate growth increases as a function of our human capital stock), then it is possible that the economy would grow at a rate (g) greater than the market rate of interest (r).

For good theorists, is Piketty writing down a complete markets model or one in which there are incomplete markets for skill formation?  Without engaging in his global wealth tax are there other markets that if they were introduced would lead to g > r?   My intuition is that market structure matters and over time transaction costs are falling so the world's economy in the limit approaches the Arrow-Debreu ideal.


Incentives for China's Mayors to Pursue Blue Skies

Siqi Zheng and I are finishing a book on pollution progress in urban China.   Capitalism and Society just published a short paper of mine on this subject.

Wednesday, April 23, 2014

The Chronicle of Higher Education's Piece on Piketty and Modern Economics

The Chronicle has a lot to say about Thomas Piketty and modern economics.   Piketty has done a great job assembling new data sources to document long run trends in inequality.  As I understand it, his explanation hinges on how the returns to capital and the rate of economic growth evolve over time.   If the return to capital is greater than the rate of economic growth then economic inequality increases as the "rentier" capitalists become relatively richer.

At the University of Chicago, we were taught that human capital is the ultimate capital stock.  How does human capital fit into the Piketty framework?   When you die, your brain can't be handed to your children. You build up your brain during the investment period and then you earn a flow of income during your productive years.   Human capital investment offers both a high return and is risky.  If you get hit by tree branch, you lose your productive capacity.

Imagine an economy in which the market risk free interest rate is 3% and the economy is growing by 2%.  Piketty would say that because r > g  that inequality will rise.

If owners of physical capital invest in other people's human capital, then this would tend to flip the inequality (I believe that increases in the stock of human capital would feed through a Lucas or Romer growth model into a higher rate of g).   Why would owners of physical capital invest in people? They would do so depending on the risk/return frontier for the set of all assets they are considering investing in. Imagine if  a mutual fund that consists of a 10% stake in 1000 people's future earnings. Some of these people will succeed while others will fail but this portfolio would give the capitalist an incentive to "buy in".

My point is that Piketty's argument hinges on market structure for investing in human capital and the general equilibrium incidence of such investment.   The rich can be a catalyst to a rising "g" if there are complete markets for investing in human capital of young people.   Jim Heckman should discuss how the Heckman Equation links to Piketty's argument.



Tuesday, April 22, 2014

Adaptation Entrepreneurship and Harvard Business School

"Years of Living Dangerously" was aired at Harvard Business School recently.  Of course, the creators of this Showtime Show hope to motivate voters to support a carbon tax.  I wish that they succeed.   But the HBS students offer a different pathway for coping with climate change. HBS is full of future corporate leaders in finance, entrepreneurship and management.  Many of these young men and women will work in developing nations where the growth is now taking place.  The crisis of climate change creates opportunities for creating products that help us to adapt.  The future economic growth directed towards building and distributing such products achieves a "double bottom line" of creating economic growth and shielding consumers (who purchase these products ranging from better housing to air conditioners) from the blows of climate change.

Showtime's impact is more likely to occur through encouraging adaptation investments rather than by accelerating the mitigation movement's political clout.   Intellectuals need to start thinking about men and women as voters (where they free ride) versus as self interested consumers and investors.

Monday, April 21, 2014

The Urban Economics of Climate Change Adaptation

I'm on a bus heading to Cornell University.  Tomorrow, I will give a talk titled; "Adapting to Climate Change: An Urban Economist's Perspective".  Click on the link to see my slides.   My optimistic talk poses some questions for macro modelers such Prof. Nordhaus and Prof. Weitzman.  For young scholars seeking exciting research questions, I pose dozens of riddles that I expect will set an agenda.  There is a lot of work that needs to be done on a range of environmental and urban economics issues focused on the system of cities and the role that urbanization will play in protecting us from climate change's blows.

Tuesday, April 15, 2014

The Silver Lining of Beijing Smog?

The China Daily  reports that foreign firms in China are seeking out 2nd and 3rd tier Chinese cities that feature blue skies because Beijing is just too polluted.  The introduction of a competitive system of cities would make urban China an even stronger nation.  The centralization of the powerful government in Beijing means that rent seeking firms have had strong incentives to locate in Beijing as they seek to curry favor with the central government.   Ades and Glaeser analyze the same issue in the case of South America.

An unintended consequence of decentralizing economic activity to 2nd and 3rd tier cities would be to create a system of cities in which firms sort across space based on the comparative advantage of different areas (i.e cheap land, cheap labor, cheap electricity, access to export markets) and workers sort across space based on their skills and their human capital.  In the U.S such sorting is common, if China can retreat from central planning then its economic growth will accelerate.

Monday, April 14, 2014

Liberal Cities and the High (Median Rent/Median Household Income) Ratio

The NY Times  reports that there are many liberal cities where the median rent divided by the median household income is greater than 30%.  The Times interprets this fact that the middle class can't afford to live in a series of cities ranging from Los Angeles, to Miami to San Francisco to NYC.   Interestingly, College Station Texas also has a high ratio.

Why might liberal cities be increasingly unaffordable?    Recall that the ratio has median rent in the numerator.  Liberal cities tend to be desirable places in terms of quality of life (in part because of all of those wise urban planning policies) and this raises demand but they are also very hard places to build in (because of all of those wise urban planning policies).  You do not need to be an A+ student in intro econ to know if demand is high and supply is low that market rents will be high.   What about the denominator?  Liberal cities have high a series of regulations that make it difficult for businesses to thrive and this may inhibit middle class income growth.

So, if the NY Times is serious that it is urgent for major cities to reduce their rent to income ratio then it should endorse a relaxation of restrictions on real estate developers and on local businesses.  This is how the free market would address this social challenge.  What is the NY Times' preferred solution?

Sunday, April 13, 2014

An Explanation for Why the IPCC's Reports are Increasingly Ignored

An old literature in economics states that only "new news" moves markets.  Do the recent IPCC reports say anything new?  Those who know that climate change is a major challenge "learn" that they were right.  Those who deny that climate change is happening or believe that we will adapt to these new challenges learn little from these reports.  Who is at the margin who might learn something from these consensus documents?  

 The IPCC would be wise to engage in much more geographic specificity where they should have country experts speak about specific regions within each nation to discuss challenges that the region faces, is climate change causing these challenges?  What adaptation strategies can be used to protect the place and the people?  Is the free market up to the challenge? Are government officials taking action?  The answer that will appear again and again is poverty and corruption is inhibiting adaptation.  So, this suggests that economic development, educational attainment, and political competition are needed to help the poorest nations to adapt.

Why are the IPCC's Reports Increasingly Ignored?

While the NY Times covers new IPCC reports with front page stories,  Google Trends reveals that the rest of the world isn't listening.  Look at this graph below.  From 2007, do you see a time series trend down? Why?

Friday, April 11, 2014

Why Does UCLA Now Have Two Institutes of the Environment?

My tenure at UCLA is at the Institute of the Environment.   This Institute conducts research and offers many undergraduate classes focused on the intersection of environmental science and environmental policy.   Yesterday, it was announced that the UCLA School of Law is launching the Emmett Institute on Climate Change and the Environment.   Everyone at UCLA is grateful to Dan and Rae Emmett for their generous gift to UCLA.

But, I'm an economist and I ask questions about the use of scarce resources and the incentives of a non-profit organization to optimize.    Why does it make sense to have two Institutes on the same campus that study the same issues?  Yes, I understand that the Emmett Institute has a legal focus but at the end of the day their researchers are really talking about economics and policy.  

I could go a step further and ask why does UCLA have three Institutes of the Environment?  The Luskin Center for Innovation is doing excellent work on related topics.    


A good sociology study could be written on universities and the coincidence of wants.  Donors want to create something new.  Entrepreneurial faculty want to be Kings and recognized for what they created.   As these "marriages" between donors and individual faculty take place, new centers continually pop up.


Rather than creating just a few centers of excellence and building them up (like the University of Chicago), it appears that UCLA continually  expands in terms of breadth. Are there costs to such "horizontal growth" (which is sometimes called sprawl)?


Thursday, April 10, 2014

Some Comments on the New LA 2020 Report

Civic leaders in Los Angeles have released a reasonable new report listing action items for improving the city's economic performance and quality of life.  Here is a link to the LA Times article about it.

I must say that the report's first two policy proposals are goofy.  Here is the first one

1. Create an independent ‘Office of Transparency and Accountability.’

What do these words mean?  This entity already exists and it is called UCLA and USC.  Both strong universities have a number of urban scholars who could be paid small amounts of money (perhaps $10,000 to commission a data driven report on how the city is performing.   This would be a better use of money than hiring 10 new government employees at $100,000 each and each of them does not have a Ph.D and doesn't know how to analyze "big data".  Such professors would be "arm's length" from the politicians and wouldn't have a conflict of interest.   The Luskin School has plenty of faculty who do contract work for the state of California, why aren't these scholars doing contract work for the city?  There would be ways to design such research contracts so that the researchers would have their autonomy and would not be punished for "bad" findings.  Through competitive research the truth will emerge and accountability can be achieved.  

2.  Create a truly independent oversight and rate-setting body for DWP.

DWP is a public sector job maximizing sluggish institution.  This agenda is very good for its incumbents but not good for its customers, tax payers, or the environment.   DWP's union leaders are smart people who know they have a very very good deal. They are not going to allow anyone to mess with that.

Wednesday, April 09, 2014

.7 Miles Away from My House in Little Holmby

Could you live happily in this home?  It is .7 miles away from my house and you can live in this 27,000 square feet of interior space for just $25 million bucks.   If you are considering being my neighbor, click here for a virtual house tour.


330-Mapleton-Dr-50

A Southern Economist

I will be in Virginia next Thursday and in Georgia on Friday.   I'm grateful to my friends at James Madison University's Economics Department for giving me the chance to speak about my Climatopolis book.  When I published it back in 2010, it wasn't cool to be thinking about the micro economics of climate change adaptation.   Watch this video for a taste of my thinking.   On Friday at GSU, I'll have the chance to talk about my work on public transit buses.      People have very different reactions to this paper.  I presented it at UCLA and people really liked it.  I presented it at the Harris School at the University of Chicago and there folks were less impressed.  Live and learn!  

The Future of Middle Class Jobs in Los Angeles

The UCLA Anderson Forecast's report about the dismal conditions in the City of Los Angeles' labor market is of interest to the Wall Street Journal.     As the new Mayor reads this article, what will he think?   What he won't want to acknowledge is that a combination of pro-labor union regulations and land use regulations combine to create a stagnant local labor market.   Because LA is so wonderful,  land prices are very high here. Any business that needs land as an input in production is going to find it to be very costly to do business here.  Labor protection only compounds this issue.  The key to revitalizing Los Angeles is to go vertical and to allow parcel after parcel to be rezoned for much higher densities.  While the Mayor is a very smart guy, he can't anticipate what hipsters and idea thinkers will choose to rent the new space in these new buildings.  Drive along the Wilshire corridor in West LA and into Santa Monica and you will see an enormous waste of space. There is building after building of 2 story and 3 story buildings.  If zoning was not a binding constraint, would a 25 story building be there? Who would be in the building? What new trades and vitality would take place in a 15 million person compact LA where people walk and use the subway?

As the vibrant food trucks in LA show, when you liberate the free market from red tape --- funky new things happen. Yes, there are winners from preserving the status quo but sluggish organizations such as LADWP are not the future.

Tuesday, April 08, 2014

A NY Times Piece Examining When Green Nudges Backfire

This NY Times piece about motivating both liberals and conservatives to engage on climate change is worth reading.   Back in the 1990s, applied economists wrestled with the general issue of what exogenous variables have a monotonic impact on raising the probability of taking a given action.  See page 1343 of this paper for an example from health economics.  In the case of environmental policy, the same "treatment" (i.e hearing about Al Gore's new thoughts) may have different consequences for different people.   Some people who are sympathetic to his world view will be "turned on" by his new ideas while other people may be "turned off". A more sophisticated environmental movement would figure out how to motivate rather than demonize political conservatives.  Dora Costa and I explored some of these issues in this 2013 JEEA paper.     

Monday, April 07, 2014

The Wall Street Journal on the IPCC's New Report

Now that it is acceptable to talk optimistically about climate change adaptation, the WSJ's editorial writers are having some fun.  In today's piece, they throw some tough punches.    A more nuanced view would point readers to take a look at the IPCC's report and to Weitzman and Wagner's preview of their forthcoming book.    My view is simple;  while I'm not happy about this --- I predict that global GHG will continue to rise so that carbon dioxide levels probably reach 500 ppm in the next 25 years.   We will need to adapt to this reality. Given that the world's population will be highly urbanized at that time, the idea of the "system of cities" will become crucial.  I discuss these issues in my 2010 book Climatopolis.   We will grow our food in new places, using new technologies and international trade will play a key role in protecting specific areas from idiosyncratic shocks.  The world will learn a good lesson about how free market capitalism and the invisible hand diversifies risk.   What about fat tail risk?   I reject the view that climate change will strike every inch of the globe will equal force.  Within every continent there is "higher ground" and we will collectively retreat to those areas living in high density.

Sunday, April 06, 2014

The $1 Environmental Economics Textbook

I have updated my Amazon Book titled Fundamentals of Environmental Economics and have lowered the price to $1.  My goal here is for everyone from high school students, to university students to interested adults to be exposed to basic ideas in incentive theory applied to environmental and urban economics.  While the popular media often doesn't appear to appreciate the benefits of free markets, I want to nudge my readers to think for themselves.

Some critics have claimed that the book is light on "formalism".  That claim is incorrect. The book shows how to take basic linear regression methods and to test environmental economics hypotheses using statistical methods. The book also shows what a powerful framework basic supply and demand is and it teaches the reader how to use simple models of uncertainty to predict how decision makers will respond when they face risk.  The book also introduces the reader to dynamic tradeoffs as it teaches readers about present value calculations.   Relative to its $100 per copy competitors, I promise that this $1 is worth the investment!

Saturday, April 05, 2014

Suburbanites Vote Against Carbon Pricing

Here is a sensible letter published in the Sacramento Bee that argues that a carbon tax bundled with a recycling of the revenue back to households would achieve the "win-win" of incentivizing behavioral change without penalizing suburbanites for their high fossil fuel use for driving and generating electricity.   The author glosses over the point that the refund of the revenue collected from a carbon tax would be likely to be a per-capita refund and so suburbanites would still be transferring income to their center-city counterparts.

I would like to make a new point.  Folks should read my new NBER paper joint with Matt Holian.  We study the voting patterns on Prop 23 in California in the year 2009.  This proposition would have ended California's AB32.  We use block-group level data and document that suburbanites oppose this regulation. So what?      AB32 is the nation's major "green guinea pig" effort to demonstrate that low carbon regulation can simultaneously lower a state's carbon emissions while still allowing economic growth to continue.  No other state or even nation is running such a field experiment.  While liberal greens often hint that the green economy is a "free lunch", we don't know whether this optimistic statement is true or not. To its credit, California is now running this field experiment but the politicians in charge need suburban support for these programs and we find that such support is tenuous.

Permit me to make several points.

Point #1:  In AB32's current cap and trade, revenue collected is not recycled back to the public. Instead, the California treasury keeps a chunk of it and much of the revenue actually goes back to the polluters themselves to incentivize them not to leave California to areas that don't have carbon pricing.

Point #2;    Our finding that center city residents are much more likely to support AB32 (and thus to vote against Prop 23) is robust even controlling for the block group's average income and the fact that liberals disproportionately live in center cities.   So, we find that Republicans oppose AB32 and we find that suburbanites tended to oppose AB32.

Point #3: While my paper with Matt Holian only focused on California voting, my work with Mike Cragg and co-authors found that at the national level that Representatives in high carbon districts (which often are in the suburbs) are more likely to vote against national carbon mitigation legislation.

Point #4:  It is not a law of physics that suburbanites must oppose carbon pricing but the rational voter will compare the benefits versus the costs.  Liberal center city residents are likely to have higher personal benefits from supporting the regulation (i.e visions of saving the world) and to be exposed to lower costs from carbon pricing (they are already eating tofu and riding public transit) than their meat eating, SUV driving, air conditioning blasting suburban peers.  The suburbanites are likely to perceive lower private benefits and higher private costs from cap and trade policies and thus vote against it.  The center city liberals should thus consider paying the suburbanites to join their coalition.  This is Coasian logic once we agree on the initial property rights.

Here is the conclusion of our paper, take a look at the final sentence and think about it.


Conclusion

In recent years, California’s voters have had the opportunity to repeal the low carbon AB32 regulation and to choose whether to go forward with investing in costly High-Speed Rail.  In both cases, the voters chose the low carbon choice but there was significant spatial variation in the support for these measures.  Controlling for standard demographics such as ethnicity, education and income, we have focused on the role of political affiliation and geography as correlates of low carbon voting.  We find that political liberals consistently support low carbon initiatives. 
All else equal, those who live further from the city center are more likely to oppose low carbon policies.   The U.S is a suburban nation with the median metropolitan area resident living 9.9 miles from the city center and 25% of the population living at least 17.1 miles away from the city center in the year 2000.   Relative to nations with more urbanized populations, people in the U.S drive more, live in larger homes and consume more electricity.  This fossil fuel driven lifestyle raises the short run price of voting in favor of carbon mitigation regulation.   
 Our findings mirror nationwide findings concerning the correlates of Congressional voting on low carbon legislation such as the 2009 American Clean Energy and Security Act concludes that Representatives whose districts are rich, liberal and low carbon are much more likely to vote in favor of carbon mitigation (Cragg et. al. 2013).  
            Together these results highlight that even within a well known “Blue State” such as California that there is both an ideological divide and a city versus suburb divide on carbon mitigation policy efforts. While economists have stressed the insurance benefits from avoiding “known unknown” fat tail risks (Weitzman 2009, Pindyck 2011), subsets of voters are rejecting this vision.  
Past political economy studies have stressed that voters will oppose environmental regulations that threaten their jobs (Kahn and Matsusaka 1997).   This paper has presented new evidence on the role that residential lifestyle choices and ideology play in determining low carbon voting patterns.    Given existing technologies, our results suggest that the suburbanization of the median voter poses a challenge for policy makers who seek to have the United States lead in international efforts to sign a global carbon treaty.   


Friday, April 04, 2014

REPEC Rankings For Research Productivity Over the Last Ten Years

I see that I'm UCLA #1 REPEC ranked economist for research conducted over the last ten years.   I like that.  What have I gotten done?  Click here.  REPEC doesn't count books or papers published in non-econ journals.  Now that I'm #1, I look forward to some competition. It will only make UCLA stronger.  I can't claim that any perks or university wide influence come bundled with this distinction but my self esteem is now 8% higher.  For the overall lifetime ranking, I'm #6 at UCLA behind Sebastian Edwards, Ivo Welch, Ed Leamer,  Richard Roll and Gary Hansen.   I'm predicting convergence.

Why are Stenographers Still Used in the Court Room?

Jobs, jobs, jobs.  The NY Times reports a sad story about a court room stenographer whose drinking impeded his ability to do his job and many court cases are now uncertain because the courtroom record doesn't exist.    Consider the following analogy;  ATM machines are to bank tellers as  Voice recorders are to stenographers.  Why haven't voice recorders and digital transcribers replaced the stenographers?  Here is what the New York Times has to say;

"Several states — Alaska, Indiana, New Hampshire, Oregon, Utah and Vermont — have adopted digital recordings as the main record of a trial, and New York uses digital recordings in Family Court and some lower-level civil courts. But efforts to expand their use have met resistance from unions representing court reporters, court officials said."

Do unions successfully thwart innovation and the introduction of technology that might reduce the demand for their services?  What is the aggregate impact of such self interested efforts for overall U.S productivity and long term growth?

What tasks can people do better than machines? What work is there left for us to do?  Do computers write better blog posts? 

Thursday, April 03, 2014

The UCLA Anderson Forecast's Quarterly Event

Yesterday, I went to downtown LA to participate in this event.  Can you spot me in this photo?  In my brief remarks, I argued that LA's unique quality of life is our economy's "golden goose".  While the two guys on the left worried about the challenges for manufacturing firms of doing business in LA,  our quality of life is actually improved by deindustrializing.    The unspoken discussion in my panel is how union rules and wages raise the cost of doing production in LA.   An alternative path for the local economy is to celebrate that this is paradise and to work the tourism angle hard and celebrate the local multiplier effect.     In this age of kicking the 1%, it is perhaps time to thank them for paying their property taxes and increasing local demand for a large number of goods and services they purchase locally.

(Left to Right) Jim Tortorelli, John Husing, Matthew Kahn and Miguel Santana participate in a discussion on job availability at the UCLA Anderson Forecast event on April 2, 2014.

The property taxes collected from the expensive homes of the 1% can be spent on worthy programs such as pre-K for all kids to build the next generation's skills.  Skill accumulation is the ultimate source of wealth in the modern economy.  Study the Heckman equation and explain to me how you are going to finance its policy ideas.


Tuesday, April 01, 2014

A Public Intellectual?

My mom always has hoped that I would evolve into becoming a minor league Galbraith as a public intellectual. In truth, my goal is to become a minor league Stigler.   Tomorrow I will be part of the UCLA Anderson Forecast's team talking about the Future of Los Angeles.   Big think!  Policy relevant!