In early June 2020, Baltimore's Democratic Primary will take place and the winner will be highly likely to be elected mayor in November.  Here is a profile of the key candidates.  In this brief blog post, I want to sketch out a few thoughts about Mayors.  What do Mayors do?  They are the city's leader but are they like a CEO?  What powers do they really have?

Perhaps surprisingly, urban economists have not written much about urban elections.  Joe and Fernando have done the best work (see here).    I co-authored a 2017 paper that examined how urban leaders affects the cost of public transit service.   

Candidates for mayor are "differentiated products" that on some abstract level resemble cars or yogurt.  Different cars (Tesla, Honda Civic) are substitutes but are not perfect substitutes.   Consumers who have never bought the car before can use the Internet to observe some attributes of the product such as its look and horsepower but there may be hidden and hard to observe attributes (i.e safety and comfort) that can only be known by driving it.

In the case of Mayors, the public has incomplete information about how the candidate will perform once he/she becomes mayor.   Each voter has a different perspective of what he/she hopes the mayor will achieve in office.

In the case of Baltimore,  should a mayor focus on;  reducing crime?  Attracting new firms to move to Baltimore?   Improving the public schools?   Rebuilding blighted neighborhoods? 

If a candidate announced her clear priorities, voters still need to decide how productive the Mayor will be in achieving a specific goal. A type of production function (that is hard to describe) lurks.   It is believed that Baltimore is not a well governed city.   The economics of management teaches us that leaders matter but how do they matter?   If Mike Bloomberg became the Mayor of Baltimore, how would he run the city?  Who would benefit from the changes he would make?  Four years from now in the year 2024, would poor people in the city believe that their quality of life improved from 2020 to 2024?

Going forward, Baltimore will be a stronger city featuring less crime and less poverty if new rules of the game can be crafted that encourage greater investment along four fronts;  young people must invest more time and effort in their human capital growth,  businesses must invest in the capital stock so that they have a physical presence in Baltimore, and real estate interests must rebuild the real estate stock for this shrinking city and the public sector must invest in the backbone of the city's infrastructure.

A poverty trap arises when at least one of these key actors does not invest.  The mayor helps to co-ordinate economic activity and thus can play a key role in helping an under-performing city to escape from a poverty trap.  Baltimore needs a new Mayor who seeks to boost economic growth.  As the federal government and state governments face large COVID-19 related deficits, local economic growth is the only sustaining strategy for reducing medium term poverty. 

At dinner tonight, my wife told me that between 1/3 to 1/2 of COVID-19 deaths have taken place at nursing homes. I asked her a Chicago Price Theory question.  I said; "If up to date COVID-19 Nursing home specific death rates are posted, won't private nursing homes devote more effort to reducing their death rate to better compete for customers?"   The net effect of this competition among differentiated products will be lower COVID-19 contagion risk for the elderly who live in these homes.   The children of the elderly have strong incentives to research the relative risk at these nursing homes and to transfer their elderly parents from the dangerous nursing homes.  The elderly could be brought home or transferred to another nursing home with higher quality conditions  Competition between nursing homes facilitates risk exposure reduction.

Do public nursing homes have equally strong incentives to minimize contagion risk?  In my co-authored 2017 paper, we discuss the benefits of privatization for reducing public transit costs. In this nursing home case, would  privatization of public nursing homes help to reduce the negative externality because the decision makers in charge would have stronger incentives to take more self protection steps to minimize the externality within the nursing home?   If a public nursing home loses money (because occupancy falls), who is the residual claimant? Does the management team get in trouble or do they get bailed out?

Here are the current New York State death counts by nursing home. I realize that a denominator is not included listing the current capacity at each nursing home.  Restaurants post calories on their menus.  In a similar spirit, nursing homes from now on can update COVID-19 information about their facilities.   Information regulation has proven effective in many settings.

My point is that nursing homes are differentiated products and competing on low contagion death rate should be another measure of quality.  If those nursing homes with higher death counts lose paying customers then this market discipline encourages risk minimization. Market forces will help to reduce the death count from this disease.

I realize that there are capacity constraints but these can quickly be relaxed over time.  In China, this hotel was built in 48 hours.  What scarce factors create an "inelastic supply" of safe nursing home beds?  A nursing home features beds, and staff and equipment.  At a time of high unemployment, which of these inputs is scarce?  A better answer is to focus on management. If Jeff Bezos operated a nursing home, how would he do it?  What safety precautions would be used and how would information technology be deployed?

As American cities enacted indoor anti-smoking laws, smokers responded by smoking outside.  If from now on, we are wearing masks outside --- smoking becomes more inconvenient and fewer people will smoke.  How much future mortality could be avoided by a reduction in smoking?  The CDC claims that smoking causes 480,000 deaths a year in the U.S.    From a rational addiction standpoint, will fewer young people start smoking? 

An alternative hypothesis is that the COVID-19 crisis creates anxiety and stress and increases one's propensity to smoke.   Thus, this is an interesting topic for new empirical work documenting how different people respond to the same macro shock.

Some evidence reports that sales are rising.