Soccernomics: Timbers are Third Most Valuable Franchise, Who is Laughing Now?

There was some predictable guffawing round about the time Merritt Paulson was contemplating selling the Beavers baseball team and trying to get the city on board with the plan to convert Civic Stadium to a soccer-specific facility.  Soccer, they said, is never going to make it in America, what a stupid investment.

I defended him and the deal at the time and I have never regretted it.  But I was especially offended at the characterization of Paulson as a rich-boy rube that is going to take a bath on the MLS deal and take the city down with him.  Well, it has been a couple of years so let's take a look at where this whole cockamamy MLS-in-Portland thingy stands.

Forbes yesterday released its list of the most valuable MLS franchises and, yes, the predictable ones are at the top, Seattle and Los Angeles, but look which team is number 3:

The Timbers had an estimated revenue of $39 million in 2012 on operating income of $9.4 million.  If memory serves Paulson paid $20 million for the franchise fee for the Timbers, now the franchise is values at $141 million and on Tuesday MLS announced the newest franchise will be Orlando City who will pay $70 million.    Seems like a pretty shrewd investment - the Timbers could probably be easily sold for nine figures today - just four short years and a five fold return on investment (okay, there was a lot of other money spent on the stadium and such but still...).

Oh and on the field?  The Timbers are playing in the Western Conference Finals for a spot in then MLS cup on Sunday.  Go Timbers!

Picture of the Day: Life Expectancy

Form the OECD via the Wall Street Journal:

The US is a year and a half below the OECD average.  Given how much we spend per-capita on health care, this is surprising, but when you thing about our private system on top of an ever increasing unequal distribution of income, perhaps not.  Plus, we are fat and eat a lot of bad food.

Anyway, the really shocking aspect of this is the abysmal situation in South Africa - 13 years below even India.  

Oregon October Jobs Numbers

Oregon lost 500 jobs on a seasonally adjusted basis after posting two very solid monthly gains 3,300 in September and 5,600 in August.  Government employment continues to drag on the overall recovery with government jobs declining by 1,000.

The Oregon unemployment rate fell to 7.7% (there was a loss of over 9,000 from the labor force) which is only slightly above the national rate of 7.3%.

So, not much new to say, Oregon has had a sustained recovery for quite a while now but the recovery can't seem to get out of second gear.  The sequester, dysfunctional federal government and continues weakness in Europe are not helping.  But at least the trehttp://www.olmis.org/pubs/pressrel/1113.pdfnd is upward....

Commuting Alone: The Answer

Last week I posted a graphic from the Wall Street Journal about how much commuting alone has increased in the US since 1980.  This struck me as at odds with the narrative of the new urbanism and the reclamation of urban cores in the 21st century.   I lamented not seeing the 2000 numbers and posited that the big move in the graph was more about 1980s and 1990s sprawl.

Well, fortunately, friend of the blog Josh Lehner looked it up and...sure enough the big jump was in the 80s and 90s.  In fact, the public transportation percentage has actually increased since 2000 as has the telecommuters.

So now you know.  Thanks Josh.

Econ Careers: Mergers and Acquisitions

This AP story, picked up by OregonLive, made me think of the oft asked question from prospective Econ majors: "what can I do with an econ degree?"  The story is about how the US Dept. of Justice has reversed course and is now ready to give its blessing to the US Airways - American Airlines merger:

The Justice Department says it has reached an agreement to allow American Airlines and US Airways to merge, creating the world's biggest airline.

The agreement requires the airlines to scale back the size of the merger at Washington's Reagan National Airport and in other big cities.

In August, the government sued to block the merger, saying it would restrict competition and drive up prices for consumers on hundreds of routes around the country.

The airlines have said their deal would increase competition by creating another big competitor to United Airlines and Delta Air Lines, which grew through recent mergers.

The settlement reached Tuesday would require approval by a federal judge in Washington. It would require American and US Airways to give up takeoff and landing rights or slots at Reagan National and New York's LaGuardia Airport and gates at airports in Boston, Chicago, Los Angeles, Dallas and Miami to low-cost carriers to offset the impact of the merger.

What happened in the interim? Well, a lot of economists made a lot of money.  You see every big M&A gets scrutinized by the government and a lot of economists employed by the DOJ analyze the impact of the proposed deal on consumers and the companies themselves hire big economics consulting firms like NERA to do their own analysis.

In the end lots of economists and lawyers get involved and try to hash out a compromise.  Some times they can't and they try and hash it out in court, but usually this happens: the economists and lawyers agree to a plan that satisfies the DOJ that there will not be undue impacts on consumers.

Clearly in this case there DOJ was concerned that the merger would leave quite a few markets with too little competition and so a remedy was agreed on.

The economic consulting business is booming and the salaries are fantastic - something to think about if you are considering the Econ major.

Picture of the Day: Commuting Alone in a Car

The Wall Street Journal has a fascinating look at commuting trends.  Here is the graphic that shows how much driving alone has increased since 1980 and how much public transit has fallen (despite all the fixed rail investments during this period).  But the really striking decline is in carpooling - I wonder why?:

I wish, however, this graph was done for the period 2000 to 2012 as well.  I would like to know how much is 80s and 90s sprawl and how true is the theme of new urbanism  in reality.  Anyone want to link to such data?

Fred Thompson: Is your Property Tax Bill too High?

NOTE: I am in Brazil again for a short time to put a bow on the dual research projects I have going here - so once again the blog gets short shrift.  Luckily, Fred Thompson is back to save the day...

Recently our property-tax bills arrived. Many Oregonians were stunned by the increase from last year. There were two reasons for this year’s big jumps in property taxes, one legitimate, the other arguably less so. The legitimate reason is that a lot of homeowners (nearly 40 percent in Portland) are subject to Measure 5 compression. (Measure 5 compression sets in where combined statutory property tax rates for general government exceed 1 percent and/or statutory tax-rates for education exceed .5 percent and the property’s assessment ratio ≥ Measure 5 limit/STR.) Where that is the case, property taxes vary directly with real market values. If you’re subject to Measure 5 compression and the value of your home went up fifteen percent this year, your property taxes probably did too. Sorry about that! But your property tax bill is probably still a lot less than it would be if you were paying the statutory rate on your property.

The bad reason lies in how some county assessors have interpreted Measure 50. Among other things, Measure 50 stipulates that your assessment will be the market value of your property or 103 percent of last year’s assessment, whichever is less. You all know what has happened to home prices in Oregon over the last five years. According to the Case-Shiller home price index, median home prices maxed out at 187 in July 2007, dropped to a low of 130 in March 2012, and have subsequently recovered to 155 in June 2013. In many Oregon communities, the fall in house prices led to reductions in assessments.

Raw Case-Shiller Home Price Numbers 

For example, let’s say that in 2008 your home’s market value was $155,000 and its Measure 50 assessment was $125,000 and in 2009 its value dropped to $130,000. Consequently, your Measure 50 assessment would have increased to $128,750 and your tax bill would have gone up approximately three percent. Now let’s say that its value dropped to $125,000 in 2010 and remained there for three years. In that case, your tax bill would have gone down a bit in 2010 and stayed put in 2011 and 2012. Finally, let’s say your home’s value increased back to $145,000 this year. You would expect, given Measure 50, your assessment would go up three percent from $125,000 back to $128,750 and, therefore, your tax bill would too. That’s what the Oregon constitution says: “For tax years beginning after July 1, 1997, the property’s maximum assessed value shall not increase by more than three percent from the previous tax year.”

However, some assessors interpret the Constitution to mean that the maximum allowable assessment continued to compound at the rate of three percent per annum even when declining market values caused actual assessments to dip below that level. In which case, they reassessed your home to $144,900 and your tax bill went up more than 15 percent this year.

This outcome violates the logic of Measure 5, which sought to stabilize tax bills, fairness, since it penalizes property taxpayers with the highest effective property-tax rates, and the plain language of the law. It’s just not right.

Is Economics a Science?

Yes, says Raj Chetty:

But the headline-grabbing differences between the findings of these Nobel laureates are less significant than the profound agreement in their scientific approach to economic questions, which is characterized by formulating and testing precise hypotheses. I’m troubled by the sense among skeptics that disagreements about the answers to certain questions suggest that economics is a confused discipline, a fake science whose findings cannot be a useful basis for making policy decisions.

That view is unfair and uninformed. It makes demands on economics that are not made of other empirical disciplines, like medicine, and it ignores an emerging body of work, building on the scientific approach of last week’s winners, that is transforming economics into a field firmly grounded in fact.

He then compares economics to medicine, which is a good example of another field fueled by scientific inquiry but with similar probelms of using 'social' data where cause and effect are hard to isolate.

Health researchers have worked for more than a century to understand the “big picture” questions of how diet and lifestyle affect health and aging, yet they still do not have a full scientific understanding of these connections. Some studies tell us to consume more coffee, wine and chocolate; others recommend the opposite. But few people would argue that medicine should not be approached as a science or that doctors should not make decisions based on the best available evidence.

He then goes on to talk about the advances in empirical economics that are driving the quest to find answers to these questions.

I think he is mostly correct though he overstates our ability to isolate causal links in data and over-sells the promise of economics experiments like those of Esther Duflo that are a lot different than in medicine as they are always in a specific context where the generalizablilty can easily be questioned.  [For example, you can easily question how applicable a specific educational intervention is to the rural northeast India villages in which it was conducted but the results of a test of a new drug among the same population is much harder to question]

On the other hand I think we are much easier to accept the limited evidence we have for health issues and act on the best available evidence.  In economics we suffer the delusion that we can find the real answer and only when we convince ourselves that we have do we feel comfortable to offer policy advice.

Picture of the Day: Welching

Via NPR:

Are Asset Markets Rational? The Economics Nobel

Eugene Fama, Lars Peter Hansen and Robert Shiller are this year's Nobel Prize winners in economics [insert here the snark about how economics Nobels are not real Nobels].  From The New York Times:  

Three American professors — Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller — were awarded the Nobel Memorial Prize in Economic Science on Monday for competing theories about the movements of asset prices. The three men, who worked independently, were described as having collectively illuminated the financial markets by showing that stock and bond prices moved unpredictably in the short term but with greater predictability over longer periods. The prize committee said these findings showed that markets were moved by a mix of rational calculus and human behavior.

None of these folks is a surprise but the fact that Fama and Shiller have shared the prize is a surprise becuase in many ways Fama and Shiller are polar opposites. Fama is a died in the wool Chicago efficient markets type (aka freshwater - where markets are rational, forward looking and where bubbles don't exist, Shiller is a real saltwater type that challenges the idea that markets are always rational and efficient.

 That said the two are not contradictory. In large part Fama is correct about markets quickly incorporating information so that if you try to trade on what is on today's Wall Street Journal front page you are a sucker. Shiller's research could be described as challenging the notion that markets are operating with full information not that they process it badly.  For example the speculation on housing prices was part and parcel of a lack of a true understanding of the junky mortgages that were being written and the financial vehicles that were created with them.  In this sense traders might be boundedly rational: doing the best they can with the information available to them but having to make imperfectly informed decisions.

So in many ways it could be said that this Nobel prize is both a recognition of the seminal work of Fama that taught us that markets are incredible efficient at incorporating new information and Shiller's work that taught us to appreciate the lacuna in the informational environment in which markets operate.

Oh and what about Hansen? His contribution is more on the empirical side, allowing us to study asset price movements in data.  But almost all students of economics will have heard of his major contribution: the Generalized Method of Moments (GMM).

Kudos to all.

Default Would be Bad

From the IGM Forum at the University of Chicago's Booth School of Business a question asked of 36 prominent economists, 31 of whom responded:

Question A: If the United States fails to make scheduled interest or principal payments on government debt securities, even as an unintended consequence of political brinksmanship, US families and businesses are likely to suffer severe economic harm.

[HT: NY Times Economix Blog]

Obamacare a Boon for Small Business?

Yes, or so says James Surowiecki of the New Yorker:

Of the countless reasons that congressional Republicans hate the Affordable Care Act enough to shut down the government, the most politically potent is the claim that it will do untold damage to the economy and cripple small companies. Orrin Hatch has said that Obamacare will be “devastating to small business.” Ted Cruz argues that it is already “the No. 1 job killer.” And the vice-president of the National Federation of Independent Businesses called it simply “terrible.” So it comes as some surprise to learn that Obamacare may well be the best thing Washington has done for American small business in decades.

The point is that private insurance market for health care, plagued by adverse selection was a huge obstacle faced by small businesspersons.  My brother is an example.  He ran is own Silicon Valley business for years until the cost of insuring himself, his wife and his kids was simply too costly to continue so he went to a corporate salaried job that came with an employer-provided health plan.

How big an effect will this be for the US economy?  Hard to say, but Surowiecki claims it will be large:, "our small-business sector is among the smallest in the developed world, and has one of the lowest rates of self-employment."  It is often argued that entrepreneurialism is a key factor in economic growth, if so this could have a substantial impact.  I am not equipped to judge.

To me, this was a interesting little historical tidbit that had heretofore escaped my attention:

The fact that most Americans get their insurance through work is a historical accident: during the Second World War, wages were frozen, so companies began offering health insurance instead. After the war, attempts to create universal heath care were stymied by conservatives and doctors, and Congress gave corporations tax incentives to keep providing insurance. The system has worked well enough for big employers, since large workforces make possible the pooling of risk that any healthy insurance market requires. But small businesses often face so-called “experience rating”: a business with a lot of women or older workers faces high premiums, and even a single employee who runs up medical costs can be a disaster.

I had not read this account of employer-provided health care. Not that it matters much for the current debate - it is pretty clear that we have an inefficient patchwork health care system whatever the origin.

View from the Ground

A close friend who works for the VA counseling vets with PTSD and other mental health issues sent this outraged text yesterday (edited for content):

I'm working all day at our Portland "Stand Down" outreach for homeless veterans and other disabled veterans in need.  All our Veterans' Benefits counselors are furloughed at home with no pay.  We literally cannot process benefits claims...even for my suicidal patients!  People are going to die.  

Brutal.

Leadership

Say what you want about the grand bargain it demonstrates what a governor can do when he/she exhibits strong leadership.  After eight years of largely tepid leadership from Ted Kulongoski, John Kitzhaber has shown himself to be a masterful leader.

And yes, there is lots for everyone to dislike in this grand bargain but as a advocate for school funding I am largely pleased (and in saying this I recognize that I have come a long way in accepting the political realities that distort good policy).  Public education in the state needed a strong champion and in Kitzhaber the state has found one.  Kudos.

Fred Thompson: Property Tax Assessment in Oregon

Another Dispatch from the desk of Fred Thompson:

Reliance on an ad valorem property tax is, perhaps, the most distinctive feature of the American tax system. Most students of public finance appreciate property taxes. Indeed, our foreign counterparts frequently view the US property-tax system with envy (although not our system of land registration). This is because property taxes are both fairer and more efficient than other taxes and also because high property taxes tend to promote high levels of civic engagement.

Unfortunately the comparative advantages of the property tax depend upon the strength of the relationship between tax payments and real property values. Where the linkage is strong, the tax does a really nice job of matching local tax burdens to the benefits that result from local public spending. Where this relationship is severed, the tax is neither fair nor efficient. Once upon a time, or so the City Club of Portland claims, Oregon had a property tax system that was the envy of the world, but as the result of a series of initiatives and referenda (Measures 5, 47, and 50), it is now a mere shadow of its former self. Is this claim correct? As will be seen, not entirely.

What Measure 5 did was cap property tax bills at 1.5 percent of market value (RMV) and reform the assessment process so that assessments accurately reflected market value. (The measure also shifted responsibility for school funding from local government to the state, but that is another story.) Measure 5 was enacted in 1990 and was scheduled to be fully operational in the 1995-96 tax year. Measure 50 was enacted in 1997,. It rolled residential tax assessments back to whichever was less: the last pre-Measure 5 assessment, that of 1994–95, or 90% of the 1995–96 assessment and limited future increases in tax assessments, except for new construction or additions, to 3 percent per year. We call this quantity ‘Measure 50 assessed value’ (M50AV); it is currently ≤175 percent of 1995 market value, which is on average about 60 percent of current market value. The actual assessment used for tax purposes (TAV) is the lessor of M50 and RMV. Currently the average statutory property tax rate in the state is about 2.2 percent. Consequently, Measure 5 limits are binding only where the ratio of M50AV/RMV is greater than 65 percent.

This is a pretty complicated arrangement and it has obviously attenuated the linkage between local property values and tax burdens (under Measure 5), but like most things the relevant questions are how much and compared to what? Fortunately, every exit is an entrance somewhere else. Oregon’s idiosyncratic property-tax arrangements have left us an extremely accurate system of measuring property values (RMV), a system of assessment that has held relative values constant for 17 years (M50AV), and a cap on property tax bills. These data allow us to answer several important questions: how good are current assessments, why aren’t they better, how fast do assessments degrade in the absence of reassessment and what drives this process?

Moreover, when measure 50 was enacted, it is unlikely that anyone thought about how it would operate in a recessionary environment. Although Oregon’s economy went through a deep slump from 2002-2004, housing inflation continued, steadily widening the gap between M50AV and RMV. But, as in much of the rest of the United States, home prices fell sharply after 2007. This had two effects. It narrowed the gap between M50AV and RMV, but, more importantly, it made Measure 5 limits binding on an increasing portion of homes. At present, Measure 5 limits go into effect when M50AV > 65 percent of TMV. The same data that allow us to understand the dispersion of MAV with respect to TMV over time and the direction and bias associated those measures, also allows us to assess the relationship between market valuation and tax payments over time and from the peak to the trough of the business cycle under Oregon’s property tax system.

Finally, these data would allow us to simulate the effects on dispersion and tax fairness of various policy modifications, including most importantly reassessment to RMV at title transfer, but of other policies as well, although we haven’t done that.

Looking at these data the first thing we learn is that most of the discrepancies between M50AV and RMV were present at the creation. Rolling assessments back to 1994-5 wiped out the gains in assessment uniformity from the more accurate methods mandated by Measure 5, as well as the capitalized increases in market values that Measure 5 triggered. As a result, the discrepancies we see now in TAR/RMV ratios from residence to residence largely reflect discrepancies that existed prior to the implementation of Measure 5. The figure to the right shows average assessment ratios by zip code from 2003 to 2012 (the shallow U shape reflects the fact that the numerator was growing at a more or less constant rate of 3 percent per year, while the denominator grew faster than nominator prior to 2008 and slower after or in many cases actually fell). Clearly the difference between zip codes is greater than the difference within codes, although how clear may not be apparent until you see the next figure). Consequently, it follows that most of the departures from assessment quality wrought by Measure 50 resulted from the rollback and not from post-enactment price movements.

This conclusion is reinforced when we look directly at the variance in the ratio of all TAVs to RMV and the coefficient of dispersion (CD) over time.  Again, the bottom line is that assessment quality didn’t degrade very much between 2003 and 2012 (the period for which we have data in individual residences). The standardized variance was 20 percent in 2003 and 22.5 percent in 2008; it deteriorated only a little faster after 2008, to >27 percent in 2012, Price depreciation has evidently been slightly more uneven than the earlier appreciation, when a rising tide did apparently lift all boats. Using the CD, assessment quality declined overall from 14 percent in 2003, to 18 percent in 2008 and 22.5 percent in 2012. Even so, overall assessment quality in Oregon is not measurably worse by this standard than it was prior to Measure 5 and is much better than in many earlier periods.

Moreover, looking at Multnomah County, the within zip code CDs are remarkably consistent over time and reflect good assessment quality. Across all zip codes, 1997 CDs explain 2/3 of the variation in 2012 CDs. The actual CDs ranged across zip codes from four percent to 26.3 percent in 1997 and from 5.7 percent to 25.7 in 2012. In 1997, CDs in two of 31 zip codes exceeded 15 percent, the standard established by the National Association of Real Estate Appraisers; by 2012 that standard was topped by only five.

The box and whiskers chart (above) shows the mean (the solid bar), the standard deviation (the box), and the range (the whiskers) of residential assessment ratios for each year from 2003 to 2012. Clearly, there was a fair amount of dispersion in assessments and, apparently, after 2008, the dispersion increased. One of the questions raised by this observation is whether or not assessments favor one class of residences or another. The Multnomah zip-code data tell us that there are substantial neighborhood effects. Does this imply, for example, that deviations from mean assessment ratios were or are biased in favor of high or perhaps low-value residences? Property appraisers use an instrument called the price-related differential (PRD) to measure this bias. A PRD equal to 1 indicates no bias; a PRD greater than 1 indicates a bias in favor of higher valued properties. From 2003 to 2010, the PRD was slightly less than 1 (.98 to .99); in 2011 and 2012, slightly greater than 1 (1.006, 1.014). This shift can be seen in the following figure; the assessment ratios of residences in the lowest quartile of value started lower or faster than did those in the higher value quartiles; more recently they have evidently lost value faster.

Note this does not necessarily mean that the owners of low-valued residences face significantly higher effective tax rates (where property taxes are concerned, the effective tax rate is found by dividing the tax bill by RMV) than the owners of higher valued properties. This is because more than half of the owners of low-value residences (the first quartile) are now subject to Measure 5 tax limits. In absolute terms, some have even seen a decrease in their tax bills as the result of Measure 5 tax compression.

Economist's Notebook: On Ronald Coase and Joe Rose

Nobel prize winning economics Ronald Coase passed away recently leading to many eulogies and explanations of his work and, in particular, his eponymous theorem.  I did my part as well.  I have always enjoyed teaching the Coase theorem because it is not obvious until you really think about it and it usually stirs up passions, especially if you use environmental pollution as the example.  But there are many others and one came to mind the other day when reading Joseph Rose's column in The Oregonian about who is at fault when a door opens up an whacks a car or bicyclist (or even, I suppose, a very fast runner).  

Joe explains that it is the responsibility of the opener of the door to avoid whacking people.  This makes sense and is probably uncontroversial, but for me the point is how property rights more or less solves the whacking problem and how it didn't really matter to whom you gave the right - this is what the Coase theorem tells us.  You see you could have given door openers the right to adequate space to open doors and held the bicyclists and other cars at fault for not yielding enough space to do so safely and the same 'efficient' solution would have resulted: folks would be careful not to get too close and no whacking would be done. 

This is just as efficient a solution as giving the cars and bicyclists the right to pass by closely and not be whacked.  Either way the important thing for efficient outcomes is that everyone knows how the property rights are assigned and acts accordingly.  No matter to whom the right was given, efficiency would result from the clear assignment of rights.   

Which is why it is good to have places like the Oregonian and reporters like Joe Rose to make sure people know to whom the right belongs so that efficiency can result.  For it only takes on driver who thinks that they have the right to open their door whenever they want for someone to get whacked.  

NB: This is also why I hate the unsigned intersection which are a plague in Portland. 

Fred Thompson: Cooperating with the IRS to Collect Delinquent and Liquidated Debt

Another dispatch from Fred Thompson:

Yesterday we hosted a National Association of State Auditors, Controllers, and Treasurers webinar on the IRS’ Treasury Offset Program (TOP) at Willamette University for interested state officials. TOP intercepts federal tax refunds and other payments to delinquent debtors prior to their disbursement on behalf of state governments and provides access to the Treasury’s Do Not Pay program. This year TOP has recovered nearly $7 billion in delinquent child support obligations, supplemental nutrition assistance program (SNAP) debts, income tax debts, unemployment insurance compensation debts, and other federal and state debts, including penalties and fines due to the state courts.

Oregon participates in this program, although currently only to collect child-support and personal income tax (PIT) arrears. In FY 2012, Oregon recovered $43.8 million for these programs ($15 million in PIT delinquencies).

Nevertheless, there is a lot more that we could do. Currently, Oregon sits on a backlog of nearly $4 billion in delinquent and liquidated debt. Moreover, this stock is growing at a rate of about $300 million per annum. If we had done no more than collect our fair share of recoveries, we would have grabbed an additional $30 million.

In addition, the state could potentially take advantage of TOP to collect hundreds of millions of dollars in PIT and business taxes that are evaded or avoided when taxpayers file incorrectly or fail to file, especially from those who choose to file in states other than Oregon. Oregon is a big tax exporter (net). Consequently, its taxpayers pay a lot more taxes than Oregon collects, mostly to states with lower PIT and business tax rates. Much of this borderline tax evasion could be preempted if the state had the capacity to monitor and analyze income flows promptly and more accurately.

More than anything else, what’s needed here are information system upgrades at Oregon’s Department of Revenue. As noted in a recent blog, those are on their way.

Indeed, these upgrades are needed to fully participate in TOP. A case in point, where the social security number (SSN) or employer identification number (EIN) of a TOP debtor matches the SSN or EIN of a payee, but the names do not match, the state lacks the capacity verify or falsify the match. Consequently, such offsets aren’t pursued. The situation is even more fraught in the case of non-tax delinquencies.

Centralizing the state’s debt portfolio and payment streams would facilitate working with TOP, not only because TOP accepts only one or two points of connection with a state, but also because duplicating the capacities to pursue delinquencies would be very costly. Finding the funds to upgrade the Department of Revenue’s collections capacity took ten years. It make no sense to try to duplicate this capacity for the courts, DHS, etc.

At the same time, nearly everyone agrees that the legal requirements governing collections programs need a second look. Debt collection laws quite properly require that debtors be given notice prior to intercepting funds owed to them: 60 days notice before a tax refund may be offset, 30 days notice for most other debt collection actions. However, the requirement that notice be given by certified mail seems entirely obsolete. That Federal law requires the IRS to charge a fee to cover its costs of running the TOP program, but does not permit it to pay a fee to the states when the state offsets a payment to collect a federal debt, also appears to be open to question. Possibly these examples are only the tip of the iceberg.

Are People the Problem or the Solution?

The debate about humans and the self-destructive deterioration of the environment in which they inhabit is one that has continued since Thomas Malthus started worrying about it in the 18th century.  Malthus famously predicted that humans would quickly overwhelm the carrying capacity of the earth.  Then we had the Population Bomb in which Paul Ehrlich predicted, again, that population increases would soon lead to the end of humanity.  Of course the Green Revolution soon followed the population bomb and completely discredited it - not that it hurt Ehrlich's reputation at all, it seems one is always safe predicting the worst, because every one is happy and ready to forgive if it does not come to pass.

And then we had this ridiculous tautology: that humans themselves were more impactful on the environment than any one individual action.  (This is tautological because humans can be thought of as a collection of actions and thus the sum is greater than the parts).  This is a particularly pessimistic view of humans and the view that humans represent a problem and not a solution to me is dangerous. As birthrates and poverty are closely related, environmental scolds in rich countries are in danger of blaming the world's poor for the world's environmental problems.

Anyway this is all a long lead in to this interesting and (in my mind) quite correct essay on how to think about humans and their place on earth in The New York Times by Earl Ellis. Here is an excerpt:

The science of human sustenance is inherently a social science. Neither physics nor chemistry nor even biology is adequate to understand how it has been possible for one species to reshape both its own future and the destiny of an entire planet. This is the science of the Anthropocene. The idea that humans must live within the natural environmental limits of our planet denies the realities of our entire history, and most likely the future. Humans are niche creators. We transform ecosystems to sustain ourselves. This is what we do and have always done. Our planet’s human-carrying capacity emerges from the capabilities of our social systems and our technologies more than from any environmental limits. 

Two hundred thousand years ago we started down this path. The planet will never be the same. It is time for all of us to wake up to the limits we really face: the social and technological systems that sustain us need improvement. 

There is no environmental reason for people to go hungry now or in the future. There is no need to use any more land to sustain humanity — increasing land productivity using existing technologies can boost global supplies and even leave more land for nature — a goal that is both more popular and more possible than ever. 

The only limits to creating a planet that future generations will be proud of are our imaginations and our social systems. In moving toward a better Anthropocene, the environment will be what we make it.

I think this is quite correct. And as I think about the impact of a new baby on the earth I prefer to think of the possibilities: to invent the next sustainable energy technology, to help solve world poverty, be a leader and lead people forward to a better future. I reject the pessimistic view of humans as only resource-suckers leading us to our doom. Our future is us and we need to figure out how harness the power of human potential rather than dismiss the world's poor as an overly reproductive cause of our problems rather than a symptom of a system that we have created.

Oregon Adds 4,500 Jobs but Unemployment Rate Climbs to 8.1%

Oregon's jobs picture keeps playing the same old song.  Decent jobs growth, but not great.  Unemployment stuck at an unacceptably high rate, though not as bad as the worst days of the recession.  And Oregon's economy showing signs of life but not really springing back to full health.  

So the long slog continues but at least things are still in the positive direction.

Well, I suppose we can rejoice that we are now five years since the financial crisis and thus halfway through our lost decade!

The Gilded Age, Redux

From Emmanuel Saez:

Welcome to the roaring 10s!