Economists have long taught this history to their undergraduates as an illustration of the growth theory for which Robert Solow won his Nobel Prize in economics: Poor places are short on the capital that would make local labor more productive. Investors move capital to those poor places, hoping to capture some of the increased productivity as higher returns. Productivity gradually equalizes across the country, and wages follow. When capital can move freely, the poorer a place is to start with, the faster it grows.... Or at least it used to....So, to fight inequality, encourage sprawl. Or, if you hate sprawling cities like Atlanta or Phoenix, accept that you're the problem when it comes to creating inequality. You're making it too expensive for the working man to come live and work where you do. That means he'll live in Atlanta, where he will make a bit less money, but he can afford to live better on it. Which, in turn, means you might rethink what "inequality" means. If I could earn $5,000 a month here, or in New York City, or in China, there's a significant "inequality" even at the same rate of pay. After expenses I'd be scraping by in New York, doing quite well here, and rolling in dough in China once I converted my pay into Renminbi.
In a new working paper, Shoag and Peter Ganong, a doctoral student in economics at Harvard, offer an explanation: The key to convergence was never just mobile capital. It was also mobile labor. But the promise of a better life that once drew people of all backgrounds to rich places such as New York and California now applies only to an educated elite -- because rich places have made housing prohibitively expensive....
[T]here are two competing models of successful American cities. One encourages a growing population, fosters a middle-class, family-centered lifestyle, and liberally permits new housing. It used to be the norm nationally, and it still predominates in the South and Southwest. The other favors long-term residents, attracts highly productive, work-driven people, focuses on aesthetic amenities, and makes it difficult to build. It prevails on the West Coast, in the Northeast and in picturesque cities such as Boulder, Colorado and Santa Fe, New Mexico. The first model spurs income convergence, the second spurs economic segregation.
In Praise of Sprawl?
What if a major reason for the income inequality that concerns many on the Left was anti-Sprawl aesthetics?
I'll tell you right now, I have long said that for me to afford to have my same standard of living as I do here in Augusta, I would need to make twice as much in Atlanta. And forget about New York or LA.
ReplyDeleteWhen W.B. and I decided to return to Hotlanta I realized something in the neighborhood of, IIRC, a 40% pay cut and the loss of a company car.
ReplyDeleteIt took a few years to get back to my prior income and perk levels but that nebulous quality of life factor was much improved from the get go.
And the profit made from selling a metro D.C. single family on some land in a rapidly appreciating real estate market didn't hurt too much either.
American by birth, Southern & country by the grace of GOD.
And don't even get me started on rent control.
ReplyDeleteAttempts to increase equality by any means other than breaking down non-merit-based barriers to entry never seem to work, do they?
Well, I can think of one mode that has worked well: Title IX was designed to encourage women's completion of college, and has done so. This was not by breaking down non-merit based barriers, but by instituting new merit-based opportunities.
ReplyDelete(Although, of course, the merit involved is sometimes debatable; the colleges might argue that the football player has more merit than the women's soccer player, because the football player is part of a team that brings the school a fortune in revenue. But that's to the side; the point is, women are now more than equal in terms of college graduation rates, and Title IX has a lot to do with that.)
Honestly, if that's the best example of non-merit-based equality boosting we can come up with, it proves my point.
ReplyDeleteA merit-based approach to opening up opportunities for women might be to focus more on the academic prowess of incoming students and less on their ability to inspire endowments by sports-crazed alumni. On the purely academic front, the women don't seem to have any trouble holding their own. The habit of slipping in a lot of exclusively male jocks with iffy grades always struck me as a way of putting a thumb on the scale, but Title IX was an unwieldy, expensive, and intrusive fix to that problem.
Well, not quite: it is merit-based. You have to have athletic merit. It's just not about dropping barriers, it's about creating new opportunities.
ReplyDeleteThis is really coherent with another of your arguments, which is that the best way to help the poor is not to provide them with handouts, but to provide them with opportunities for work. Handouts are non-merit-based, and don't reduce inequality; but arranging for their to be work can in fact do so.
If the government must do something about poverty, then, it ought to prefer CCC type solutions to welfare-style solutions.
Merit, but irrelevant merit, so it's not helpful. The problem started because people were preferring men in the college admissions and scholarship process for reasons that had nothing to do with academic merit, but denying the same gambit to women. I'd have preferred that they eliminated the gambit rather than expand it to include women. That way, we could still have sports institutions that admitted or excluded whom they liked, on the strict basis of athletic ability (or, probably to be more accurate, on the basis of ability to sell tickets and ads associated with the public competition spectacles) -- and women could compete fairly with men for limited slots at institutions of higher learning on the basis of brains.
ReplyDeleteMy approach is impractical, largely because the people willing to fund big endowments are rich alums obsessed with sports. Well, it's not something I understand, but it is their money.
Well, and also, if someone seriously proposed eliminating the Georgia Bulldogs football team, they would be in some peril from the torch-bearing mobs suddenly roaming across the state. Sanford Stadium seats almost a hundred thousand, and it is frequently sold out.
ReplyDeleteThe university may someday be allowed to wither away, but the football team is forever.
Exactly. So we ended up with a weird law trying to shoehorn women into what was supposed to be an educational system but instead was a minor adjunct to a male-dominated sports spectacle.
ReplyDeleteBut it worked! :)
ReplyDeleteIt worked to do what? Were you serious about claiming that its purpose was to get a few more women to complete their degrees? I think women have established their ability to compete effectively in school with or without making the varsity team.
ReplyDeleteYou might want to read the White House's celebration of the 40th Anniversary of Title IX earlier this week. It's actually a little broader than the athletics, but the athletics is a big deal, too: the number of women on athletic scholarships has grown from 30,000 to 190,000. That's 160,000 more women for whom the cost of college is not a prohibitive factor.
ReplyDeleteThe other aspects, I'm not sure how effective they have been. Still, it strikes me that this opened some opportunities for some people, and they stepped up and took advantage of it. (Of course, it may have done this by denying opportunities to other people; in which case it may be bad policy, even though it was successful in achieving its intended effect. When ranking government efforts, we have to give points for that. It's amazing that they manage to achieve an effect at all; it's too much to ask that there not be unintended consequences.)
...it's too much to ask that there not be unintended consequences.
ReplyDeleteThis is too much to ask in any event. Ay program that spends money, even with perfect efficiency, or that requires certain behaviors, even with perfect targeting, represents money that can't be committed to other enterprises, no matter how legitimate, or that reduces behavioral options, even those otherwise completely legitimate.
Not all of these can be foreseen. But their existence can be foreseen. Unintended consequences can't be predicted in detail, but their existence can be planned for.
It's that planning for dealing with the unintended that's sorely lacking. And this failure is exacerbated by the inherent inefficiencies in any real government program.
Eric Hines