Picture of the Day: Drivers Becoming More Sensitive to Gas Prices

Source: The Wall Street Journal

Eco-nomics: Climate Change will Hit World's Most Vulnerable Hardest

From The Guardian:

Is is the contention that while rich, industrialised nations caused climate change through past carbon emissions, it is the developing world that is bearing the brunt. It follows from that, developing nations say, that the rich nations must therefore pay to enable the developing nations to both develop cleanly and adapt to the impacts of global warming.

The point is starkly illustrated in a new map of climate vulnerability (above): the rich global north has low vulnerability, the poor global south has high vulnerability. The map is produced by risk analysts Maplecroft by combining measures of the risk of climate change impacts, such as storms, floods, and droughts, with the social and financial ability of both communities and governments to cope. The top three most vulnerable nations reflect all these factors: Haiti, Bangladesh, Zimbabwe.

Click here to go to the Maplecroft report.

Picture of the Day: Investing in a College Education Pays

From the Federal Reserve Bank of Cleveland via The New York Times' Economix blog

The Eurozone Bailout in One Picture

This is an actual document that came out of the negotiations, reports Felix Salmon:

So now you know.

Picture of the Day: Consumer Spending

From The Economist.  One interesting aspect of this is the decline in spending on consumer durables: cars, furniture, appliances, housing, etc.  Eventually this spending will have to pick up as stuff wears out.

Portland Home Values: Case-Shiller August Numbers

Portland home values were flat in August (up 0.1%) and down 7.6% since August of last year.  Except for a couple of outliers, most of the 20 metro areas Case-Shiller tracks did not budge much.  

One interesting tidbit, home values are so low in Detroit that it actually had the biggest annual gain, increasing 2.7%.  In fact, only Detroit and Washington, DC (0.3%) were in positive territory.

The Wall Street Journal has their sortable table ready for your manipulation.

Businesses Big and Small

James Surowiecki in the latest New Yorker takes a look at the championing of small businesses - particularly timely now that the presidential primary is hotting up.

Given that the overwhelming number of American businesses are small, and that, as we’ve all heard, small businesses create most new jobs, this seems reasonable enough. But the truth is that, from the perspective of the economy as a whole, small companies are not the real drivers of growth. One can see this by looking at the track record of the world’s economies. The developed countries with the highest percentage of workers employed by small businesses include Greece, Portugal, Spain, and Italy—that is, the four countries whose economic woes are wreaking such havoc on financial markets. Meanwhile, the countries with the lowest percentage of workers employed by small businesses are Germany, Sweden, Denmark, and the U.S.—some of the strongest economies in the world.

This correlation is not a coincidence. It reflects a simple reality: small businesses are, on the whole, less productive than big businesses, and though they do create most jobs, they also destroy most jobs, since, while starting a business is easy, keeping it going is hard. This is true around the world. A recent study by the World Bank that looked at ninety-nine developing countries found that large firms had significantly higher productivity growth. And in the U.S. the connection between size and productivity is, as a 2009 study showed, especially close. In part, this is because big businesses are able to enjoy economies of scale and scope. Big businesses are also better able to make investments in productivity-enhancing technologies and systems; in the U.S., for instance, big companies account for the vast majority of R. & D. spending.

I think another way of thinking about this is that very successful small businesses tend to grow. So when you observe a cross-section the smaller ones are the ones that either are not good enough to grow (and here I am not talking about the little grocery store on the corner which serves a local market but ones where scale economies exist) or are on the path but haven't gotten there yet.  So I think the emphasis should not be on small versus large but on start-ups: a healthy economy produces many start-ups, most of whom will fail but a few will become the Googles of the future.  Here is a very interesting academic paper that I think makes essentially the same point (judging only from its abstract- it has been added to the pile of paper in my "to read" stack).

Picture of the Day: A Forecast of Job Growth by State

The Wall Street Journal today reports on a state-by-state job growth forecast by the firm IHS Global Insight.  Click here for the full interactive map. Oregon is forecast to have 1.8% growth over the 2011-2017 period.

Soccernomics: News and Notes

Aaron Ramsey scores the winer for Arsenal, but will the Welshman play for the Great Britain Olympic team?

Timbers Success:

The Timbers have had a great first season in terms of success in the stands.  [I would argue that they have had a great first season on the field as well: an entirely new team that had never played together before, primarily made up of modestly paid youngsters still have an outside shot at the playoffs coming into their last game] But this is not that surprising - Portland is a pretty big city with just one major sports franchise that plays in the winter, the novelty of a new franchise with a revamped stadium was almost bound to draw people in for the first season.  But now something truly remarkable has happened, the Timbers have announced that 97% of season ticket holders have renewed for next year.

This is a testament to three things in my mind:  One, the team itself has struggled at times but the players and coach have connected with fans in a way that most modern sports stars don't.  They are modestly paid, approachable and passionate.  Two, the Timbers Army has created the most unique atmosphere in all of sports.  I used to think nothing could top big time college football for atmosphere in the US, but the Timbers, while different, are just as exhilarating. Three, the Timbers front office has done everything right. This is remarkable considering Civic Stadium is a very difficult venue from a customer service standpoint - inadequate bathrooms, crowded concourses and cramped seats - but the Timbers have had very good attention to detail and have been good at addressing problems.

In addition these three things, and perhaps most importantly, the economics of renewal are right.  The Timbers themselves have shown that the ticket price is good value for money: a great night's worth of entertainment, camaraderie and fun.  And with complete sell-outs and a 5,000 person waiting list, the secondary market for tickets is very strong - thus renewal carries almost no risk.

What is 'British?':

The Great Britain Olympic football team is not going well.  Recall that the countries of the United Kingdom are not that united at all.  In fact, the Guardian newspaper recently ran a series, along with conducting a poll, on what it means to be British in the UK and found that notions of Britishness are fading (I suspect that this is a consequence of the collective memory of the WWII generation fading).  Because of its unique historical place in football, England, Scotland Wales and Northern Ireland are all recognized as separate footballing nations by FIFA - allowed to compete internationally independently as well as have their own national football leagues.  But FIFA and the Olympic movement are not the same thing and the Olympics only recognizes Great Britain as a single country.  So what to do in football?  The answer, since 1972, has been to not compete at all.

But now with the 2012 Olympics coming to London the push is on to create a Great Britain team.  The England FA is all for it, but unfortunately this doesn't sit well with the other national federations.  One fear is that this will eventually lead to FIFA no longer allowing separate national teams despite assurances to the contrary.  But more than that is the fierce nationalism felt in the other countries, most notably in Scotland where an England loss in football is second only to a Scotland win.

On the Pitch:

The Timbers produced a gutty display last night in DC that wasn't pretty and at times relied on luck but got the road point.  Now we are all Philadelphia Union fans!  The Timbers showed once again that when they get to the final third of the field, they run out of creativity and attacking prowess.  Dwyane DeRosario showed just how much difference a quality striker can make when he is on form.  DC could have easily scored three goals all because of DeRo's quality.

Arsenal gutted out an got a quality win in Marseilles in the UEFA champions league last night as well.  They are playing a pale imitation of the possession and quick passing game Arsenal is known for under Wenger right now, but perhaps this will teach them how to win ugly when the beautiful game is not on.  Defensively they were better, and Koscielny was in great form, but there were one or two heart stopping blunders.  And never, ever leave Merteasacker uncovered when he is one-on-one with a winger.  Still, things are improving slowly.

So What Percent Are You?

Leave it to the Wall Street Journal to help you find out:

If you are high enough you could follow Scott Adams' advice and move to the sea - where you will be free of taxation but also of any meaningful law and order. Good luck.

I base my prediction on the fact that the country is out of money, poor people don't have any, rich people do, and the middle class has almost figured out how voting works.

In the old days, every member of the middle class thought he or she had a chance of becoming rich. In that sort of optimistic environment, you don't want to urinate in the pool that you hope to someday swim in. But lately there's more fatalism in the air, thanks to our crushing debt and the hobo militias that I assume are forming all over the country. The middle class will soon trade their unrealistic dreams of wealth for the opportunity to transfer money from total strangers to themselves—a process often referred to as fairness. That's when the rich will get serious about an escape plan, just like the brave little sea creatures billions of years ago.

But where can the rich go? Their choices include nations that have swarms of malaria-infested mosquitoes, bad TV, deadly climates, decapitation issues, French people, bland food and other signs of inhospitableness. When you consider these factors plus wars, pollution, terrorism, floods, droughts, earthquakes and tornadoes, I think you'll agree that most of the surveyed land on Earth is unfit for fancy people.

But wait is this really that fanciful?

Fine 99%-ers, you can have America - I'm going on my own...suckers! Oh wait, I am one of the 99%. S%#t.  And it looked so nice too - I could have started my own international crime ring and called it SPECTRE.  That would have been cool...

On Inequality and Its Discontents

Greg Wahl Stevens / Associated Press

Nouriel Roubini has written an essay on a subject that I have wanted to write on for some time now: the impact of inequality on society. Recall the Elizabeth Warren post I wrote asking about the appeal of the populism in her stump speech. What I was interested in, and remain interested in, is how much the increasing inequality is really starting to capture the attention of the average middle-class members of society. Obviously economic crises bring problems like inequality to the fore and to me the Occupy Wall Street movement is about a general sense of deep unease with a system that has such unequal outcomes and seems to reward not the noble and true but the devious and cunning.

Here is Roubini:

This year has witnessed a global wave of social and political turmoil and instability, with masses of people pouring into the real and virtual streets: the Arab Spring; riots in London; Israel’s middle-class protests against high housing prices and an inflationary squeeze on living standards; protesting Chilean students; the destruction in Germany of the expensive cars of “fat cats”; India’s movement against corruption; mounting unhappiness with corruption and inequality in China; and now the “Occupy Wall Street” movement in New York and across the United States.

While these protests have no unified theme, they express in different ways the serious concerns of the world’s working and middle classes about their prospects in the face of the growing concentration of power among economic, financial, and political elites. The causes of their concern are clear enough: high unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalized world; resentment against corruption, including legalized forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.

The question is whether this is just an artifact of the economic crisis or is this really a theme that will start to change our view of government and markets?  Has history really ended or are will still living history?

Roubini points out the European approach that was more balanced perhaps between the market and the society:

Even before the Great Depression, Europe’s enlightened “bourgeois” classes recognized that, to avoid revolution, workers’ rights needed to be protected, wage and labor conditions improved, and a welfare state created to redistribute wealth and finance public goods – education, health care, and a social safety net. The push towards a modern welfare state accelerated after the Great Depression, when the state took on the responsibility for macroeconomic stabilization – a role that required the maintenance of a large middle class by widening the provision of public goods through progressive taxation of incomes and wealth and fostering economic opportunity for all.

Thus, the rise of the social-welfare state was a response (often of market-oriented liberal democracies) to the threat of popular revolutions, socialism, and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued, from the late 1940’s until the mid-1970’s, a period when inequality fell sharply and median incomes grew rapidly.

But we all know of the malaise of the 1970s and 80s and the ensuing Thatcher revolution in the UK which dramatically scaled back the roll of the state in the economy, which did usher in a period of growth and prosperity in the UK that had been largely absent since the industrial revolution.  This experience is something, no doubt, that the Cameron government has been very successful in using to justify the recent austerity measures.

But Roubini has reservations about the dismantling of the welfare state in Europe:

Any economic model that does not properly address inequality will eventually face a crisis of legitimacy. Unless the relative economic roles of the market and the state are rebalanced, the protests of 2011 will become more severe, with social and political instability eventually harming long-term economic growth and welfare.

This is precisely what I am unsure of. Are these protests really going to last and grow until there is fundamental change? And if so, will it be for the better or worse? What exactly is the causal link between our very free-market approach and the amazingly innovative, creative, transformative economy we have developed?

I don't know the answers, but I have this sense that tectonic shifts are taking place that is going to rearrange the landscape if for no other reason but that we cannot sustain the entitlements we have and change is inevitable - the question is in which direction will we move?

Wonkiest Signs at the OWS Protests

Doesn't really fit on a bumper sticker, but it is pretty smart...  See all at Ezra Klein's Wonkblog.

Why Can't We Be More Like Canada?

I tried hard to come up with some humorous Bob and Doug McKenzie reference that only us 40+ folks would get, but unfortunately I have a 40+ mind, and I'll I can remember is "hoser" and "take off!"

Alas.

Anyway, I am desperately trying to get some stuff done before the weekend so I'll farm this post off to Josh at the Oregon Office of Economic Analysis who has an excellent post about Canada's economy outperforming the US.  The point is beautifully illustrated here:

Beauty, eh?

Does the NBA Lockout Hurt the Portland Economy?

Recently, The Oregonian ran an article about the potential economic damage to the area economy if the NBA season were delayed or cancelled.  Since they have already cancelled the first part of the season it is worth thinking carefully about how big an impact it will have.

From Joe Freeman's article in The Oregonian:

"The value of the Blazers team to this community is measured in the millions," said Drew Mahalic, CEO of the Oregon Sports Authority. "Their absence will, quite frankly, be devastating to the Portland regional community in that it impacts so many different businesses when they play."

A lot of the revenue generated from Blazers games -- gate receipts, parking dollars, food and concession funds -- pads the wallet of billionaire owner Paul Allen and helps pay for the multimillion-dollar operation of running the team.

But Blazers home games also funnel money throughout the community. TriMet ridership increases on game nights. Business booms at local restaurants and bars. Hotels house visiting NBA teams.

Also, to help host a Blazers game, the Rose Garden contracts with up to four vendors, including Ovations Food Services, which oversees the food and beverage operations for the Rose Quarter and employs 900 people every game night.

The specific examples are all relevant but let's think through the overall claim that the impact will be huge. The key to thinking about this is to do a little off-the-cuff aggregate demand (AD) analysis - will the absence of the Blazers be a big hit to the area economy's AD?  It is here that we have to think about where AD comes from: the total income in the economy which is, of course, governed by the value of the total output. Yes the Blazers do produce something of real economic value - a game's worth of entertainment has value just as a hamburger does or some other tangible consumption good - but is it really a significant part of the local economy?

The evidence suggests that it is not. Here is a nice synopsis from Neil deMause at Slate:

...Robert Baade, Robert Baumann, and Victor Matheson tried a different tack. That trio of economists zeroed in on the state of Florida, looking at how sales tax receipts changed during every MLB, NFL, NBA, and NHL labor stoppage since 1982. Baade, a Lake Forest College professor who's spent the better part of three decades studying the impact of pro sports teams, explains that they picked Florida because it reports sales tax data on a monthly basis. "You're really looking for a needle in a haystack," he says of trying to divine economic effects on a whole city from a single sports team's absence. "But if you're looking at something like tax revenues, you're reducing the size of the haystack."

The new study delivered the same results as [an] earlier one: When leagues shut down, sales tax receipts keep chugging along. In Miami, the disappearance of the Heat during the 1998-99 NBA lockout showed an extremely weak 0.00987 correlation with sales tax figures; the 2004-05 lockout of the Florida Panthers has an even slighter effect, at 0.00739. And almost as often, the direction of the signs ran the opposite way: The 1994-95 NHL lockout had a negative correlation of 0.00353 with sales taxes—if anything, people in Miami appeared to be spending more as a result of the Panthers being on the shelf.

"If professional sports have a positive impact on a region’s economy, then one should expect a consistent pattern of increasing taxable sales following franchise expansions and the construction of new stadiums and a pattern of decreasing taxable sales ratios during periods of labor disruptions," the three economists reasoned. Instead, "no statistically significant effect on taxable sales is found from the sudden absence of professional sports due to strikes and lockouts."

Why is there such a negligible effect? The key is to imagine what people do in the absence of a Blazers game - do they stuff their money in their mattresses or do they find other things to spend their money on?  And, if they don't spend on the Blazers - where a not insignificant portion of their money goes out of the local economy (into the coffers of Vulcan and the paychecks of visiting team players and coaches, etc.) - do they spend it on things that represent fewer of these leakages (like local restaurants, for example)? The research suggests that to a large degree people shift their spending to other things and that to the extent that they don't the counter-leakage effect compensates.

Now, of course, there are specific businesses that are pretty dependent on the Blazers, sports bars and restaurants within a short walk of the Rose Garden, that will take a significant hit, but the overall effect to the Portland metro economy is likely to be minimal.

Still, the whole thing sucks and I want the Blazers back!  And, while we are on the Blazers, am I missing something or has there not been a peep about Greg Oden?  I'd like to know how his rehab is going.  If the season started on time, would he have been ready to go?

Why Should Oregonians Care About Greece?

I received an e-mail from a reader about the Greek and EU situation and, in particular what it will mean for Oregon.  I can only give some general thoughts, but let me first start with a bit of a primer (the letter writer clearly understands the situation well so this is for those that don't).  This is all a bit of an over-simplified synopsis and please feel free to add/subtract/comment.

When the Euro was created there were a lot of observers (like myself) that wondered how you could possibly make a system work where monetary policy was aggregated to the European Central Bank (ECB) but fiscal policy was left to the member countries.  Having your own currency is an important constraint on fiscal mismanagement for if you become overly indebted, investors start to flee and dump your currency thus devaluing it.   The devaluation of the currency has the effect of making imports more expensive, but making exports more competitive, but it also have the effect of easing debt burdens because it tends to spark inflation (along with the high interest rates that arise as a result of how much the government has to offer to borrow money).  There is also an incentive problem: when Greece adopted the Euro, they suddenly could borrow money much more cheaply than they had previously been able to, and so they borrowed.

The solution to the fiscal v. monetary policy problem in the Euro zone was strict guidelines on fiscal management.  Which is fine as long as everyone plays fair.  Greece did not.  In essence the Greeks cooked the books and hid massive government debts for years.  When the extent of the malfeasance came to light, suddenly Greek bonds (government debt) were a much more risky assets than was thought to have been the case.  Unfortunately the exposure to Greek debt among European banks, already rocked by the banking crisis of 2006, is very high.  Already Greek bonds have been downgraded, meaning they do not count the same against banks' reserve requirements, and the moment the Greek government starts to default on its debt they become essentially worthless.  So teetering European banks already struggling to re-capitalize will be at risk and it will be 2006 all over again.  Not to mention that a default in the Euro zone would do damage to the Euro itself and that there are other EU countries that are in pretty bad shape that could get walloped if Greece defaulted and spooked investors.

So this is why this is a true global crisis, not just a problem for the Greeks.

Now, what does this mean for Oregon?  Nothing directly but a lot indirectly.  A massive European crisis with failing banks and defaulting countries would once again send the global economy into a tailspin just as the US centered banking crisis of 2006 did.  Though we largely bailed out banks and kept the system from collapsing and whether there is enough collective will in the EU to do the same is the $24,000 question of the day.  I think, in the end, the answer is yes as German banks are pretty badly exposed as well to Greek debt and Germany is the linchpin in all of this.

Anyway, such a collapse would hurt the US economy and thus Oregon.  Trouble for a major trading partner and market for our goods would hurt the US and Oregon.  Even though a lot of our trade is with Asia, much of it ends up in consumer goods that ship globally.  Asian trade is a buffer for Oregon, certainly, but I don't think it would be enough for Oregon to escape the effects of a European crisis.  In addition, an already difficult credit situation would be made worse by the European banks plight. So that will affect the US economy and thus the Oregon economy.

My e-mailer also asks about the muni bond market.  Here I think it is hard to know what will happen.  US muni bonds are under duress right now due to the recession's impact on state and local budgets and the massive pension obligations that are locking up big slices of muni budgets all over the US.  I don't think Greece will affect this market directly, but will indirectly if it causes another US recession.  Capital, however, has been flowing in to the US as a safe harbor so this might have a countervailing force.

So there you have it, my off-the-cuff observations on why even Oregonians should care about what happens to Greece.

Picture of the Day: Declining Household Income

From the NY Times:

The Economics Nobel

Goes to Chris Simms and Tom Sargent. From the Nobel announcement:

The art of distinguishing between cause and effect in the macroeconomy

How are GDP and inflation affected by a temporary increase in the interest rate or a tax cut? What happens if a central bank makes a permanent change in its inflation target or a government modifies its objective for budgetary balance? This year’s Laureates in economic sciences, Thomas J. Sargent and Christopher A. Sims, have developed methods for answering these and many other questions regarding the causal relationship between economic policy and different macroeconomic variables such as GDP, inflation, employment and investments.

The economy is constantly affected by unanticipated events. The price of oil rises unexpectedly, the cen- tral bank sets an interest rate unforeseen by borrowers and lenders, or household consumption suddenly declines. Such unexpected occurrences are usually called shocks. The economy is also affected by more long- run changes, such as a shift in monetary policy towards stricter disinflationary measures or fiscal policy with more stringent budget rules. One of the main tasks of macroeconomic research is to comprehend how both shocks and systematic policy shifts affect macroeconomic variables in the short and long run. Sargent’s and Sims’s awarded research contributions have been indispensable to this work. Sargent has pri- marily helped us understand the effects of systematic policy shifts, while Sims has focused on how shocks spread throughout the economy.

Being primarily a microeconomist I don't regularly interact with their work. However, I learned the technique of overlapping generations in dynamic models (which I still use all the time) from Sargent's book, and in my limited time-series econometrics training, Sims' vector autoregression was probably the most important and useful tool.

And there is already a lot of fighting about whether this is a freshwater (rational expectations - Chicago and Minnesota) or a saltwater (new Keynesian - Cambridge and Berkeley) prize.  I think it is explicitly neither. Neither of the economists was wedded to a particular camp and what might distinguish them is a search for truth without philosophy.  Perhaps this is the message the Nobel committee is sending.

Picture of the Day: Computing Costs and Apple

From Felix Salmon:

Just another example of the remarkable increase in productivity in consumer electronics.  And it is industries like this that, when comparing them to industries like symphony orchestras, gives us the concept of cost disease.

Are Agglomeration Externalities Antithetical to Conservative Ideology?

A fascinating blog post by Felix Salmon yesterday got me thinking about the intersection of economics and politics in a new way.

[T]wo of the biggest and most daunting long-term problems facing the US economy are (1) the fact that Americans aren’t as well educated as their counterparts elsewhere in the world; and (2) the fast-growing obesity epidemic.

Both of these problems are caused, in large part, by America’s very high levels of child poverty.

So if you fix the child-poverty problem, you’ve made a serious dent in both the education problem and the obesity problem.

What’s more, the child-poverty problem really is one of those problems which can be fixed quite easily just by throwing money at it. Give enough money to children in poverty, and they’re not poor any more. Problem solved — at least to a first approximation.

***

Is there a conservative way of addressing such issues? I don’t think there is — I think that conservatives will simply say that questions of education and nutrition are a matter of individual choice, and that the government should not concern itself with such things. But if we continue down that road, I fear that the unemployable underclass will only continue to grow. And that anger at the powers that be — whether it comes from the Tea Party or from Occupy Wall Street — will only continue to grow along with it.

What Felix is talking about here is essentially an externality problem, what we in economics call agglomeration externalities. The easiest way to explain is to talk about what is perhaps the most common one: education. The idea is that the more educated people there are in a society the more society benefits as a whole. So an individual's education not only benefits themselves but also has an added benefit to the society as a whole.  We call this social returns to education.

Health problems are another potential example: sick people create a drag on both productivity as well as on the health care system which, in turn, creates a drag on the economy.

Assuming these types of externalities exist, they create a role for government to help promote the activities with positive externalities and restrict the activities with negative externalities.  And indeed governments do: we build bike lanes and tax cigarettes for example.

Whether such agglomeration externalities exist is a question that becomes political for these very reasons.  I recently had a editor of a top journal reject a paper for assuming social returns to education.  I had defended the assumption with what I thought was a pretty convincing set of empirical studies, but his conclusion was that the verdict had been decided the other way. I am not sure his judgement was a political one, but perhaps - he was from a certain school that has become synonymous with conservative economics.

But what Salmon makes me wonder is if the very idea of agglomeration externalities is somehow incongruous with the whole individualist philosophy of some conservatives.

I don't really have an answer here, just a question: suppose that for some activity agglomeration externalities are real, positive and large for economic growth - does this mean necessarily that government should be involved with actively promoting the activity?  And if so, does this undermine the idea of individual self-determination in favor of collective action?

Bike-o-nomics: Okay Portland, the Bar has Been Raised

Nobels: Young and Old

I realized my view of the Nobel prizes has been biased by the Economics Nobel (yes, I know, not really a Nobel) which is generally given to an economist well into his or her august years.  Perhaps it is a function of our quasi-science (pseudo-science?; quackery?) that it takes a long time to develop a body of research that means anything truly useful.  So when I saw the face of physics Nobel laureate Adam Reiss my immediate thought was of how young he looked and, in fact is: he is 41.

So it got me thinking about how young the youngest Nobel laureate of all time was and what are the average ages for the prizes.  And wouldn't you know but the Nobel organization themselves has a handy se of tables for such things.

Here are the youngest ever:

Here are the oldest ever:

It looks like physicists are well represented among the youngest, while the geezers are from all over.  But my impression of economics is basically correct, the youngest ever is 51 and it also has the oldest laureate (which I guess means that economists lead long lives):  

Two things come to mind in looking at this: one is the old adage in math that mathematicians are essentially washed up by 35; and the other is that as the economics prize is relatively young, it has been playing catch-up - trying to award the big contributors before they croak and become ineligible.  The really youngest on the list are the physicists from the golden age of physics - what a great time it must have been! Notice how among the oldest are physicists who won the prize in the 21st century.  The truly big discoveries in physics are bloody hard now and take a lifetime perhaps.

Why you should find this interesting is beyond me but I am tired of writing about how bad the world economy is tanking....

Score one for Brady: The Mayoral Candidates and the Leaf Fee

Roger Jensen/The Oregonian

I have been underwhelmed by the current crop of candidates for the Mayor of Portland: Hales has come across as a crass opportunist; Smith seems far to eager to be a politician and thus do stuff to make a name for himself regardless of whether stuff needs to be done; and Brady has played the businessperson card which always makes me suspicious that they don't get the difference between markets and market failures.

What I mean by that last statement is that running a business that operates in a private goods markets is all about understanding how free markets work, appreciating the discipline of the market and so on.  And, indeed, early on Brady made a statement about understanding the hard realities of the market as an attribute that would make her a good Mayor.  But government is all about what economics calls market failures: instances in which the free market does not reach an efficient outcome because of things like public goods, asymmetric information and externalities.  In these situations government has a role to play so that efficiency can be achieved, think providing police for example.

So it is not at all clear to me why having been a businessperson is such a positive trait for a Mayoral candidate in my view.  It also seems there are as many examples of businesspeople-turned-politicians failing as succeeding.  Though I will say that Portland's crazy system of government with the stove-piped bureaus causes residents and businesses fits and any reform would probably be a positive thing. And it may be that a former businessperson would be more likely to push for reform.  Though the other crazy thing about the governance of Portland is that the Mayor has almost no power to achieve meaningful reform.  Still I would rather a Mayor pined for reform than embraced the current system.

When asked recently by The Oregonian about Portland's new leaf removal fee, however, Brady nailed it and in so doing revealed an understanding of market failures and incentives that trumped the other candidates:

"Leaf collection is a basic city service that should be funded through existing revenue streams," Brady wrote in an email. "And frankly, I want citizens to have incentives - not disincentives - for planting trees. As mayor, I will put an end to the leaf collection fee."

Wow, I couldn't have said it much better myself. In fact, I did. City streets are a public good and the maintenance of them is, rightly, a public problem. Once you start to carve out private responsibility you distort incentives and cause new problems.

Disappointingly, Hales responded thusly:

"The goal is to have storm drains free from clogs, not filling the city's coffers from homeowners who already pay a lot in property taxes. That being said, I think that the city has done a good job in trying to work the kinks out as they gear up for this year's collections. A streamlined opt-out system and the new addition of being able to rake all your leaves into the street seem like a good thing to try. Again, the goal is a public safety one, not a revenue-production one -- if this new system doesn't work then we need to explore other options."

Yes the goal is to have safe and navigable city streets: a public good.  But no, the proper response is not to make the provision of such streets a private responsibility. Economics 101.

The worst response is Smith's non-response.  This gives the impression at least that he wanted to know what the best political answer was before responding.  Boo.

And good call by the O, by the way, for getting a response to this specific policy.  It is in the details that we begin to really learn about candidates.  Just reporting on their campaign rhetoric does no one any good.

Wonder Why the Recovery is not Taking Off? It's the States Stupid

Michael Lewis has another nice piece in Vanity Fair magazine about state and, particularly, local finances focusing on California.

It is Michael Lewis so it is, of course, good reading.  But delves a lot into personality at the expense of the basic message: state and local governments are on the rocks and the deep cuts are going to get worse before they get better.  All this is incredibly damaging to a national economic recovery that is struggling to gain any traction at all.  Wonder why the recover is faltering?  It's the states stupid.

Because of course these budget problems are not isolated to California.  For example, Chris Gregoire in Washington state has asked all state agencies to prepare for a significant all-cuts budget reduction.  Kitzhaber has done something similar in Oregon.  Lewis writes a lot about the pension obligations that municipalities face and have not adequately prepared for and Oregon's municipalities are no different.  Portland, for example, has a pension bubble a-coming that it has only partially addressed.

The point of all of this is that any hope of a quick recovery is pretty much dashed when you start to contemplate the collective force of almost all states slashing budgets.

Depressing.

NB: Oh and in a little fact-checking exercise, Felix Salmon debunks a Lewis claim that obesity and indebtedness are highly correlated across states.  It is a wonderfully evocative literary device: the lack of self control in both debt and diet...  But alas, it is also exactly wrong - they are negatively correlated.