Thomas Economics

Ian Bremmer author of “the End of the Free Market” at the New America Foundation

Thomas Economics

via [ visualizingEconomics ]

Thomas Economics, Information Graphics

Land use patterns in fence-line industrial communities are perfect examples of brand territory. The brand is a protected collector of profit. Infringe on potential future profits by dreaming of community focused development on adjacent properties, and industry will be quick to block development. For doing so could cap allowable toxic releases at lower levels.

However, the inverse practice of locating industries adjacent to incompatible community focused uses does not apply. That would require an interested party with deep pockets and broad influence.

Thomas Case Studies, Economics

Thomas Economics

Sometimes it takes a disaster like the Earth Day Disaster to realize our hometowns and our future have been colonized.

Thomas East Chicago Portrait Series, Economics, Energy, Environment, Infrastructure, Politics

The Center for Neighborhood Technology (CNT) has begun to map out housing costs by factoring in transportation. We are not far from indexing other costs associated the overhead that comes with choosing a community in the purchase of a home (property or sales tax, produce, local services, health care, education, industrial externalities - pollution, etc). It is only a matter of time that a rating system based on such indexes becomes widely adopted.

This doesn’t bode well for regions that continue developing along the last centuries model of outer suburban development. At some time a comprehensive index will be developed to help home buyers make informed decision. And once this occurs it will be much easier to make regional comparisons. Perhaps regional leaders ought to ready their communities for this new playing field on which to compete.

According to the H+T Affordability Index Lake and Porter counties in Indiana (where I call home) don’t measure-up so well.

In the lefthand map above, the yellow areas show where housing is less than 30 percent of average income and the blue areas show where it’s more than 30 percent. On the righthand side, the yellow areas show where housing costs plus transportation costs are less than 45 percent and the blue areas show where that combined measure is more than 45 percent. It’s an indirect comparison, but as you can see, a lot of places look cheap when you just look at housing (on the left), and that picture changes when you factor in transportation.

To make matters worse if you factor in the additional costs of living in Lake County, it simply doesn’t make sense for a home buyer to burden themselves with such overwhelming costs.

Additionally, how would Lake County measure-up if we also factored in costs associated with industrial pollution?

• Lake county’s air-shed ranks 9th of 3140 counties as the most polluted.
• Lake Counties waterways are also some of the most polluted in the country.

What if this index was combined into an Energy Performance Scorecard (EPS) for home buyers to make a more accurate assessment of the value of a potential purchase? Shouldn’t all costs associated with the purchase of a home be made available to the buyer as part of disclosure.

Thomas Case Studies, Economics, Energy, Environment, Information Graphics

via [ the Washington Note ]

Columbia University Professor and world renowned economist Joseph Stiglitz spoke at a New America Foundation/Economic Growth Program public policy forum about his new book, Freefall: America, Free Markets, and the Sinking of the World Economy.

Thomas Economics

[ Frontline ] The Warning

What’s the hidden history of the derivatives market? Who might have tried to stop the meltdown? What were the forces at play that created this rarified and for some highly lucrative financial space? After nearly 40-years of experimenting with this unregulated financial space what conclusions are free-market libertarian’s taking from this body of evidence? It appears to me that free-market economist were provided enough time to demonstrate their theory that markets correct themselves and that financial interests act in there own best interest.

The story of the President’s working group: Fed Chairman Allan Greenspan, Treasury Secretary Robert Rubin, Assistant Treasury Secretary Larry Summers and then there was Commodity Futures Trading Commissioner Brooksley Born.

With a $500 trillion black market in free fall and consequently the world’s economy what option does a new President have but the keep up front the major players to calm those within the black market and a world economy which is dependent on them. I wonder if Obama has some advisors watching over people like Summers. My concern moving forward is not that we won’t regulate these markets, but that these markets will move on and diversify, essentially creating black markets in all sorts of places.

I find it difficult to accept Allan Greenspan’s mia culpa. It wasn’t an ideology he was operating and protecting, it was a $500 trillion black market with hidden players and hidden rules he was operating and protecting.

Thomas Economics

via [ Newsweek ] by Fareed Zakaria

The great surprise of 2009 has been the resilience of the big emerging markets—India, China, Indonesia—whose economies have stayed vibrant. But one country has not just survived but thrived: China. The Chinese economy will grow at 8.5 percent this year, exports have rebounded to where they were in early 2008, foreign-exchange reserves have hit an all-time high of $2.3 trillion, and Beijing’s stimulus package has launched the next great phase of infrastructure building in the country. Much of this has been driven by remarkably effective government policies. Charles Kaye, CEO of the global private-equity firm Warburg Pincus, lived in Hong Kong for years. After his last trip to China a few months ago he said to me, “All other governments have responded to this crisis defensively, protecting their weak spots. China has used it to move aggressively forward.” It is fair to say that the winner of the global economic crisis is Beijing.

Almost every country in the Western world entered the crisis ill prepared. Governments were spending too much money and running high deficits, so when they had to spend massively to stabilize the economy, deficits zoomed into the stratosphere. Three years ago, European countries were required to have a budget deficit of less than 3 percent of GDP to qualify for EU membership. Next year, many will have deficits of about 8 percent of GDP. The U.S. deficit will be higher, in percentage terms, than at any point since World War II.

China entered the crisis in an entirely different position. It was running a budget surplus and had been raising interest rates to tamp down excessive growth.

China: The Recession’s Real Winner | Newsweek Voices - Fareed Zakaria | Newsweek.com.

Thomas Economics

Via [ Bitch Ph.D. ] by Taddyporter:

Remember a year ago, when capitalism was in full panicy retreat? Remember how we were told we had to give up our savings and our pensions and our 401K’s and our wages and our jobs and our homes and our health insurance and our kids’ college funds and we had to pledge our taxes to redeem all the bullshit schemes of the buccaneer bankers and brokers and hedge fund fools.

Remember how we were told how if we didn’t pay this ransom, things would get really, really bad and our whole vast and elegant free market economy would be lost to some unspecified enemy?

So we paid up.

I kind of expected there would be investigations, though. You know, since we own their asses, I thought we might have a look the books of the enterprises we paid for and see just what they’d been up to. Find out just what the fuck went wrong. And who was responsible.

And I expected there would be arrests. Mass arrests. And confiscations of property and bank accounts.

Not just ours. Theirs, too.

And clawbacks of bonuses and inflated salaries. And seizures of yachts and Bentleys and beach houses and Falcon jets. I expected they would be put up for sale at public auction. You know, like they do to our houses when we have a problem with our payments.

I expected a nice surtax slapped on upper incomes. I expected a tax on stock sales to pay back the working class for bailing them out.

Thomas Economics

[ Green for All ]

“When we think of a green economy, it should be an economy where we don’t have any throw away resources. We don’t have any throw away species. We don’t have any throw away children or neighborhood either. We don’t have any throw away nations either.”

- Van Jones

As a resident of East Chicago Indiana this message resonates with me.

Update (9-6-09): Van Jones resigns.

Update (9-5-09): Since the right has turned the heat up on Van Jones in an effort to discredit him and weaken the efforts he has championed, I thought it important to repost this video.

I live in an industrial fenceline community which is home to mostly poor minorities, and I have been apart of regional planning efforts that have not been too kind to them. If you follow this blog you will undoubtedly recognize that the population that lives here does not share in the quality of live most Americans have come to know.

Based on my experience I would say Van Jones’ criticism of industrial policy isn’t strong enough. Not only do East Chicago and Gary receive a disproportionate share of the negative externalities of industry (pollution, disinvestment, congestion, neglect, and the occasional explosion), they also receive a disproportionate share of the benefits. With a low industrial tax rate, these communities receive very little tax benefit. The political leadership has also awarded these industries with tax abatements (BP recently received a $165 million tax abatement in East Chicago). These communities also receive very little wage benefit to support the local population, as most wage earners and contractors choose to live in other less polluted middle-class communities. Most economic development dollars received by industry also go to other less polluted middle-class communities.

One other very important fact that needs to be better articulated is how these industries crowd out, or hold down other markets. This can be attributed to the negative externalities, and the general lack of quality of life.

One example of how this has effected other markets is what happened twenty-five years ago when BP, then Standard Oil, was forced to relocate there professional training facility from Whiting Indiana to Naperville Illinois. They simply could no longer attract professionals to the region due to quality of life issues. They ended up donating their whiting facilities to St. Joseph College. Today, BP’s Naperville facility is a LEED certified campus.

You can find many examples in the housing and retail markets…

Thomas Economics, Energy, Environment

clunk·er (clngkr)

The Clunker Stimulus and Emerging Markets

Could the Obama administration be seen as a major turning point in environmental and economic history because of something called the “Cash for Clunkers” Program? 

“In virtually no time, the clunker program has become a national pastime. It has captured the public’s imagination in a way that no other federal stimulus has. Everyone is talking about it. And I truly believe that consumer spirits have been buoyed by the prospect of going out and buying a new car — even with federal assistance, and even under the duress of federal mileage standards. After a very dreary year or two, people might just have fun trading in their clunkers and buying something new,”

- Larry Kudlow

Now that everyone seems happy with Obama’s Clunker Program, it’s time to look at maximizing the benefits. A very clear and obvious question has to do with using tax payer money as a loss leader to finance the program. Certainly the program was meant to kick start a faltering auto industry, and begin to replace older inefficient and environmentally suspect products, but if we take this opportunity we could kick start emerging markets as well. By privatizing the clunker programs we could potentially open a number of new cradle to cradle markets to incentivize the reuse and recycling of materials. 

Granted this model wouldn’t replace the regime of “design obsolescence,” but it would replace basing design obsolescence on the production of inferior materials, manufacturing processes, and technology, with superior materials, manufacturing processes, and technology. This is exactly what we accomplished in the computer industry these past thirty years.

Yesterday I heard on NPR how “Clunkers” are being “killed” and then recycled. As it turns out only the ferous metals are being recycled back into production, everything else is sent to land fills - not a very sustaining prospect for an ecologically minded Administration.

In my mind, it no longer makes sense for governments to clean up behind dirty and wasteful industries to maintain the balance of a sustainable earth. We have lived through the abundance of managing scare resources to having few remaining resources, and now we must manage through a determination of risk. The public burden of excess pollution and waste has become too large to be sustainable. The costs of clean-up projects and waste storage facilities are too taxing on the public wallet, and for those who would like to see lower taxes and a smaller government, they may find shrinking what we put into our land fills as one way to go. 

Beside expanding the salvage market a Clunkers market could lead to the creation of a whole new manufacturing model that incentivizes the design of materials and processes for their life-cycle use and reuse, while limiting waste. In so doing auto manufacturers have the opportunity to expand the resell and reuse of materials from used vehicles. Who knows, some one may even develop a business plan to mine our land fills for used raw materials. 

Thomas Economics, Energy

via [ Treehugger ]

[ RecycleBank ] sets up pilot program in Chicago. 

The idea is simple - instead of mandating recycling, or charging people for throwing out trash, RecycleBank offers rewards for what and how much you recycle.

Starting in wards 5, 8 and 19, recycling bins will be retrofitted with an ID tag that will be scanned each time a pick up is made - with credits appearing on the household’s RecycleBank account depending on how much they recycle. Points can redeemed for rewards, gift cards, groceries, and products at more than 1,900 local and national RecycleBank Reward Partners, including Coca-Cola, Kraft Foods, Target.com, Ruby Tuesday’s and CVS/pharmacy, as well as local participating Chicago businesses, such as Leona’s, Moo and Oink, ‘city sponsor’ Carson Pirie Scott, County Fair, Treasure Island, the Chicago White Sox and the Children’s Museum. RecycleBank Points can also be donated to local school environmental programs, charities and non-profits. If that weren’t incentive enough, the White Sox are giving away 2 free tickets to the first two hundred households to activate their RecycleBank rewards account - which should prove a popular incentive in the windy city.

Of course the deep greenie in me worries that folks are still getting rewarded for the amount of trash they produce - even if that trash is recycled - and those rewards are redeemable for more consumer goods which will in turn generate more trash. But sometimes I have to tell the deep greenie in me to shut up. As with most things, this program is not the answer in and of itself, but it is a step in the right direction. The more we can get our markets and social structures to reward and encourage more sustainable behaviors, the sooner we’ll get to where we need to go.

Thomas Economics, Environment

If you view capitalism as a simulacrum of reproducing oneself then Floyd Norris’ chart of Durable Goods Production from the U.S. economy may help clarify the American identity. The military side of the American economy appears to be expanding enormously, while nonmilitary production and exports have been in steep decline. It appears America is relying on the Military Industrial Complex to pull it out of this recession. 

[ NYT: "Why a Recovery May Still Feel Like a Recession" ]

Thomas Economics

For the past five years I have repeatedly spoken about the correlation between Education Attainment and the Unemployment rate and what that means for East Chicagoans. But first some data on East Chicago:

• Today <2% of East Chicagoans hold a college degree, well below the national average of 24%.
• ~40% of the Adult population is considered functionally illiterate, with ~70% of adults incapable of attaining a professional job based on reading attainment.
• Today the unemployment rate in East Chicago is >24%. Despite the efforts of the city to employ ~12% of those in the workforce, serving ~18% of households with a paycheck and ~28% of the electorate with a city job.

For a community like East Chicago the data presented in the graphs below are especially poignant. What I find rather remarkable about the graph is that you can clearly see, in the last 17 years, as educational attainment increases the less vulnerable you are to market fluctuations. You can see how the red line is so much more eradicate with a steep increase in reaction to todays recession. This may begin to flatten out as America rededicates more of it economy to manufacturing. Yet, unlike 20 years ago manufacturing has become an educated affair, requiring at minimum an associates degree.

Forty years ago when nearly 70% of jobs were found in unskilled labor, most East Chicago graduates were able to go to the Mills for one of a 100,000 steel or steel related jobs in East Chicago. Today 70% of jobs are found in professional services that require a College education. With the advances in technology and globalization East Chicago now employs less than 5,000 workers in steel and steel related jobs, all while production has increased a hundred fold. So, if you are preparing a population for where the vast majority of the jobs are (70%), then you are preparing them to receive a College education. That is the easiest solution towards employing a population. The more difficult solution is to find jobs for the under-educated.

via [ Calculated Risk ] In today’s employment market:

• Those without a High School Diploma face an unemployment rate of ~16%
• Those with a High School Diploma, but no College face an unemployment rate of ~10%
• Those with some College or Associates Degree face an unemployment rate of ~8%
• Those with a Bachelors Degree and higher face an unemployment rate of ~5%

Based on the BLS 2008 data: Education pays

This data does not bode well for East Chicago’s education system (here, and here) which ranks last in the state of Indiana on multiply measures. Indiana has also instituted a Core-40 program to track students and to ensure they receive the necessary skills to succeed. However, Core-40 will leave most East Chicago students without the proper credentials to apply to universities such as Purdue or Indiana University which now require Core-40 Honors. Despite the efforts of non-government agencies most parents of East Chicago freshmen are unaware of these requirements and the process for applying into the proper program. The Challenge is to set up an education system that incentives populations like East Chicago.

Thomas East Chicago, Economics, Misc

[ Green for All ]

“When we think of a green economy, it should be an economy where we don’t have any throw away resources. We don’t have any throw away species. We don’t have any throw away children or neighborhood either. We don’t have any throw away nations either.”

- Van Jones

Living in East Chicago this is a message I can believe in and it is exactly what regional leaders need to hear.

Thomas Economics, Environment

Sometimes economics is not that difficult to decipher. Unless of course you lack memory as CNBC seems to. This kind of comedy is too simple, all you have to is put in the time to review tapes.

Every one knows that much of economics is a confidence game and business is built on relationships of trust. Today confidence and trust have been decoupled from empirical evidence and facts. It has descended into tribal alliances. This poses two problems:

1. American Business leaders have accomplished based on a system of tribal alliances over evidence (power ponzi scheme) and are now incapable of running their business’ based on sound evidence. They need to be replaced. Quickly! 
2. No one losses credibility but rather are permitted to rewrite past events and continue to control policy. This was the modus-operandi of the Bush administration. If public figures, whether in politics or the media, were threatened with the loss of credibility and a livelihood may be they would be more careful with what they put in the public domain.

Thomas Economics

Thomas Economics

What strikes me about this video is the apparent overall level of comfort these victims live. In the whole scheme of things I would expect this class of people to get justice and some sort of reparation from Madoff. A class of people who believe “America always helps the victim.” 

I wonder if they ever lived in Gary or East Chicago. Just wondering.

Thomas Economics