I wonder if the economists in the government are taking freecycle into account? Freecycle, for those who don't know, is a no-cost classified ad concept implemented in Yahoo groups. For example, I'm in the Reston/Herndon freecycle group, so I get an e-mail digest containing "Offers" and "Wanted" postings. The Offers are of things still possibly usable but unwanted. For example, I just posted a series of offers, including an old (14 year old) PC and some homemade furniture. To my surprise, I've some interest from people.
Economically, the point is that freecycle (and craigslist.com, which operates slightly differently) lubricates the reallocation of assets, of "productive" stuff. By extending the useful life of products, it increases their value without requiring resources to produce. It's one of the rare instances where you can get something for nothing, or nearly nothing (since you do invest the time needed to coordinate the pickup).
Friday, October 28, 2005
Real Estate Bubble Ends?
I think it does. Yesterday I saw by the "for sale" sign in my townhouse cluster that they'd reduced the price on the house. Houses in the cluster have been selling for steadily climbing values since the millennium. Seems to me we started at about $100K, the most recent houses have been selling for $300+, and this house was priced for about $390K originally. It's in an area near the toll road in Reston--it's sort of on the fringe in an area with lots of townhouses and condos.
I've lived here for almost 30 years, buying back in a previous bubble in the 70's when land values and housing prices were taking off, before the crash that came with Reagan (a "crash" for ag land and office buildings, a leveling for houses). Back then the townhouses were good first homes, though there was a development of real small single family houses (like 800 sq. ft) that went for about $10K less. Over the years we've had problems with crime, lack of maintenance, renters, etc. (They seem to be over for the moment, although as people crowd multiple families into a single house and MS-13 becomes present, they may reemerge.) Prices took 25 years to double, which isn't a good return on investment, but now they've increased 200 percent more in 5 years.
It's sad--who can buy a house at $300K, much less the 900K for single family houses? It used to be a house was 2 1/2 times your gross. Today I think they're using a higher multiple, perhaps because basic living costs (food, etc.) take a smaller share of one's income. But still, a teacher who earns $50K has no hope. But with no kids I've only an academic interest in the health of the schools, but I've a greater interest in coffee. The local Safeway has big problems in hiring people for their Starbucks. Many of their clerks have worked there for a good while, so they're ensconced somewhere they can maybe afford. But Starbucks is new, takes a significant number of employees to staff, and the turnover has been tremendou. It's worrisome, because my coffee is essential to my health and sanity.
I've lived here for almost 30 years, buying back in a previous bubble in the 70's when land values and housing prices were taking off, before the crash that came with Reagan (a "crash" for ag land and office buildings, a leveling for houses). Back then the townhouses were good first homes, though there was a development of real small single family houses (like 800 sq. ft) that went for about $10K less. Over the years we've had problems with crime, lack of maintenance, renters, etc. (They seem to be over for the moment, although as people crowd multiple families into a single house and MS-13 becomes present, they may reemerge.) Prices took 25 years to double, which isn't a good return on investment, but now they've increased 200 percent more in 5 years.
It's sad--who can buy a house at $300K, much less the 900K for single family houses? It used to be a house was 2 1/2 times your gross. Today I think they're using a higher multiple, perhaps because basic living costs (food, etc.) take a smaller share of one's income. But still, a teacher who earns $50K has no hope. But with no kids I've only an academic interest in the health of the schools, but I've a greater interest in coffee. The local Safeway has big problems in hiring people for their Starbucks. Many of their clerks have worked there for a good while, so they're ensconced somewhere they can maybe afford. But Starbucks is new, takes a significant number of employees to staff, and the turnover has been tremendou. It's worrisome, because my coffee is essential to my health and sanity.
Wednesday, October 26, 2005
Ebbs and Flows--the Tide of Creative Destruction
The NY Times today has an article mostly on the scattering of the New Orleans labor force. However, it notes that some have migrated to New Orleans:
One of my platitudes is that there are always tradeoffs, and it's true here. The farming way of life has changed/been destroyed in many areas, but the loss here is focussed and more visible. But, as in the case of the closing of some military bases, the new may seem better on balance than the old.
Its Work Force Scattered, New Orleans Wrestles With Job Crisis - New York Times: "Large numbers of workers who lived in New Orleans are now scattered throughout Louisiana or neighboring states, unable to return to flood-damaged houses and leaving hundreds of businesses unable to reopen or operating below capacity. Many are out of contact, or have settled elsewhere to enroll their children in schools.
Some positions are being filled by people from other states looking for new job opportunities in construction or, as in the case of the Five O'Clock Grille, service jobs."
One of my platitudes is that there are always tradeoffs, and it's true here. The farming way of life has changed/been destroyed in many areas, but the loss here is focussed and more visible. But, as in the case of the closing of some military bases, the new may seem better on balance than the old.
Gift That Keeps on Giving, or George Will Misleads
What is the gift that keeps on giving? For social commentators, otherwise known as the chattering class (thanks G. Will), it's the concept of the social ladder. Why? Because it works for both left and right and it's so vague you can make anything of it, as George Will does here
"America's economy is so dynamic that in any five-year period, approximately 45 percent of Americans move from one income quintile to another. Twenty percent move up from the bottom quintile in any 12-month period, and 40 to 50 percent move up over 10 to 20 years."
What are the ambiguities? Let me count the ways:
"America's economy is so dynamic that in any five-year period, approximately 45 percent of Americans move from one income quintile to another. Twenty percent move up from the bottom quintile in any 12-month period, and 40 to 50 percent move up over 10 to 20 years."
What are the ambiguities? Let me count the ways:
- The distinction between "income" and "wealth/assets"--the former is more variable, due to bonuses, separation pay, lottery winnings, commissions, etc. while the latter is more stable and usually more socially significant. (I've seen reports of research that says when you compare black and whites of equal family wealth, differences in test scores evaporate.)
- Using quintiles, or deciles (or whatever) means that every move up is matched by a move down which is why I say it works for both left and right. Mr. Will here uses "up"; in her recent book, Bait and Switch, Barbara Ehrenreich focuses on the "down".
- The difference between individuals and society. The modal individual in our society has an income curve that starts low, based on entry level pay in his or her occupation, then rises to a peak, then falls, rapidly or gradually depending on retirement benefits, etc. If you could visualize society over time, it's rather like seeing a school of fish: some leaping into the air, some in the water, some unseen below the surface, lots of activity and churning.
Learning by Doing--Military and FEMA
One of this blog's themes is learning. Here's another example, from today's Times:
Simple but a product of learning. My point here is that you need the bureaucracy to incorporate such lessons. As long as the Guard in Florida is called out regularly, they'll have the institutional memory of how best to organize water/ice deliveries (assuming people have cars and gas). But if there's a gap of years, it will be lost because, I strongly suspect, there's no bureaucracy in place to capture "lessons learned" and put them into circulation and no training mechanism in place to spread experience to other places.
Millions Are Still Without Power and in Need of Basic Supplies - New York Times: "Across the state in Naples, just north of where the hurricane made landfall early Monday, ice and water distribution appeared to be going more smoothly. At one station, members of several National Guard units were operating with assembly line precision. By 9 a.m., hundreds of cars, from Mercedes Benzes to jalopies, had lined up on a road leading into the parking lot of Barron Collier High School.
A National Guardsman in camouflage fatigues waved cars forward, and as each rolled up to a squad of soldiers, one sang out, 'Pop the trunk.' Other soldiers stepped forward with cartons of bottled water and plastic bags of ice, putting them in the car, tapping the trunk shut and motioning the driver on. Each delivery was over in seconds.
'We've done this so much over the last two or three years that we're getting pretty good at it,' said Sgt. First Class Tim Harper of the 265th Air Defense Artillery of Sarasota."
Simple but a product of learning. My point here is that you need the bureaucracy to incorporate such lessons. As long as the Guard in Florida is called out regularly, they'll have the institutional memory of how best to organize water/ice deliveries (assuming people have cars and gas). But if there's a gap of years, it will be lost because, I strongly suspect, there's no bureaucracy in place to capture "lessons learned" and put them into circulation and no training mechanism in place to spread experience to other places.
Tuesday, October 25, 2005
In Defense of Bureaucracy
Though Secretary Powell's former Chief of Staff, Mr. Wilkerson, is receiving press attention for his speech at the New America Foundation which attacks the administration's foreign policy, I'd like to focus on his defense of bureaucracy, as follows:
"but fundamental decisions about foreign policy should not be made in secret.
It's true that human nature, and bureaucrats are mostly human, says that participation in a decision means energy in execution (assuming the decision went mostly your way). But a good leader is more than just the head of a bureaucracy. IMHO the leader needs to respect the abilities and needs of the bureaucrats, but know how to maneuver them. In other words, it's the "foist" in the above quote that is key, not the lack of participation. If you don't participate, it's easy to feel unenthusiastic, but a good leader can get acceptance. (Of course, it helps if the decision is right.) If I remember correctly, Lincoln's Cabinet opposed the Emancipation Proclamation and the Marshall Plan didn't come from the bureaucracy. In fact, they had to develop a new bureaucracy for it, which is a lesson in itself.
Perhaps the best metaphor is a lion tamer with lions? Once the bureaucrats smell weakness, they can turn on you, witness the media over the last couple weeks.
"but fundamental decisions about foreign policy should not be made in secret.
Let me tell you the practical reason – and here I’m jumping over really into both realms, the practical reasons why that’s true. You have probably all read books on leadership: “The Seven Habits of Successful People,” or whatever. If you as a member of the bureaucracy do not participate in a decision, you are not going to carry that decision out with the alacrity, the efficiency and the effectiveness you would if you have participated. When you cut the bureaucracy out of your decisions and then foist your decisions, more or less out of the blue, on that bureaucracy, you can’t expect that bureaucracy to carry your decision out very well. And furthermore, if you’re not prepared to stop the feuding elements in that bureaucracy as they carry out your decision, you’re courting disaster."It's certainly true that things go more smoothly if the bureaucracy has weighed the various policy options, sent them up to policymakers, and gets a decision back. That's the way the textbook says it should be done. But smoothness in decisionmaking and execution is not the end-all and be-all of policymaking.
It's true that human nature, and bureaucrats are mostly human, says that participation in a decision means energy in execution (assuming the decision went mostly your way). But a good leader is more than just the head of a bureaucracy. IMHO the leader needs to respect the abilities and needs of the bureaucrats, but know how to maneuver them. In other words, it's the "foist" in the above quote that is key, not the lack of participation. If you don't participate, it's easy to feel unenthusiastic, but a good leader can get acceptance. (Of course, it helps if the decision is right.) If I remember correctly, Lincoln's Cabinet opposed the Emancipation Proclamation and the Marshall Plan didn't come from the bureaucracy. In fact, they had to develop a new bureaucracy for it, which is a lesson in itself.
Perhaps the best metaphor is a lion tamer with lions? Once the bureaucrats smell weakness, they can turn on you, witness the media over the last couple weeks.
Monday, October 24, 2005
Accountability or Stooping Low?
I often wonder about our standards, compared to God's (assuming there is a god). The Old Testament God is St. Peter's patron, and a relative of Santa Claus, keeping a list of all one's sins for eternity. That implies that you are accountable for your misdeeds, no matter your age or the situation. Sometimes that's the standards endorsed by conservatives, particularly when liberals are involved. Take this bit from PowerLine, a small part of a discussion of Secretary Rice's return to Birmingham with Jack Straw, British Foreign Minister:
But (many) conservatives don't believe in change, or forgiveness. They don't believe in rehabilitation of prisoners or parole. Some are starting not to believe in a President who says, "when I was young and irresponsible [although older when Byrd when he left the Klan], I was young and irresponsible." Any change is dangerous to these folks, who apparently were born right and never erred, never grew, and never learned.
Personally I find Powerline's linking of Byrd and bombers to be despicable.
"I noted in the Standard column that the bombing of the 16th Street Baptist Church in 1963 had been the handiwork of former members of the Ku Klux Klan -- brothers under the hood to former Ku Klux Klan Grand Kleagle and current Democratic United States Senator Robert Byrd. Byrd of course opposed Rice's confirmation as Secretary of State. "Byrd has apologized for his Klan membership, though perhaps in a Clintonian manner if my memory serves. In the course of a long (too long) Senate career he's migrated leftward (or maybe Congress has moved to the right) and become much more partisan. There seems to be an inverse relationship: the more pork he's gotten for West Virginia the further from the center he finds it safe to be.
But (many) conservatives don't believe in change, or forgiveness. They don't believe in rehabilitation of prisoners or parole. Some are starting not to believe in a President who says, "when I was young and irresponsible [although older when Byrd when he left the Klan], I was young and irresponsible." Any change is dangerous to these folks, who apparently were born right and never erred, never grew, and never learned.
Personally I find Powerline's linking of Byrd and bombers to be despicable.
More on Thomas C. Schelling and the Madman Theory
I recommend the History News Network for anyone with an interest in history. I blogged before on new Nobelist Thomas Schelling. This piece, Did Thomas C. Schelling Invent the Madman Theory?: by Jeffrey Kimball" discusses his work in the context of the late 50's.
Sunday, October 23, 2005
Housing Changes
The Washington Post has a column, It's a Change, Not a Conspiracy, from a black resident of Takoma on the changes he's seen over the years. Recommended, but the bit I'd like to focus on is this:
"In the 16 years that I've lived in Takoma, I've seen three houses that were, arguably, sold out from under black owners who'd been there for decades. Two of the homes had been owned by couples whose children and grandchildren developed problems with drugs and alcohol. By the time the original owners died, the properties were heavily mortgaged. The heirs were forced to let the banks take the houses."
I'd pair this observation with data from New Orleans where the lower Ninth Ward had a very high home ownership rate. We, the mobile, college-educated elite, tend to assume that home-ownership is the result of buying. Thus it's important for the government to subsidize home-ownership, by allowing mortgage interest to be deducted on tax returns. What we forget is lots of homes are acquired by inheritance. Just like lots of farms are acquired by inheritance.
The old phrase about rags to riches to rags in x generations applies. Hurricanes like Katrina and epidemics like crack both result in the loss of status, the loss of inheritance. It's my belief that such things affect the social margins and the lower classes more heavily than the upper classes--there's just less margin of error and reserves available.
"In the 16 years that I've lived in Takoma, I've seen three houses that were, arguably, sold out from under black owners who'd been there for decades. Two of the homes had been owned by couples whose children and grandchildren developed problems with drugs and alcohol. By the time the original owners died, the properties were heavily mortgaged. The heirs were forced to let the banks take the houses."
I'd pair this observation with data from New Orleans where the lower Ninth Ward had a very high home ownership rate. We, the mobile, college-educated elite, tend to assume that home-ownership is the result of buying. Thus it's important for the government to subsidize home-ownership, by allowing mortgage interest to be deducted on tax returns. What we forget is lots of homes are acquired by inheritance. Just like lots of farms are acquired by inheritance.
The old phrase about rags to riches to rags in x generations applies. Hurricanes like Katrina and epidemics like crack both result in the loss of status, the loss of inheritance. It's my belief that such things affect the social margins and the lower classes more heavily than the upper classes--there's just less margin of error and reserves available.
Saturday, October 22, 2005
USDA Flinches
It didn't take long for the Administration to back off the plan to close FSA offices. See this from House Ag Committe: News from the House Committee on Agriculture: "Goodlatte Supports Delay of FSA Office Closures "
Subscribe to:
Posts (Atom)