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“Wrong Way Nation”: The Growth Of The Sunbelt Isn’t The Kind Of Success Story Conservatives Would Have Us Believe

Gov. Rick Perry of Texas is running for president again. What are his chances? Will he once again become a punch line? I have absolutely no idea. This isn’t a horse-race column.

What I’d like to do, instead, is take advantage of Mr. Perry’s ambitions to talk about one of my favorite subjects: interregional differences in economic and population growth.

You see, while Mr. Perry’s hard-line stances and religiosity may be selling points for the Republican Party’s base, his national appeal, if any, will have to rest on claims that he knows how to create prosperity. And it’s true that Texas has had faster job growth than the rest of the country. So have other Sunbelt states with conservative governments. The question, however, is why.

The answer from the right is, of course, that it’s all about avoiding regulations that interfere with business and keeping taxes on rich people low, thereby encouraging job creators to do their thing. But it turns out that there are big problems with this story, quite aside from the habit economists pushing this line have of getting their facts wrong.

To see the problems, let’s tell a tale of three cities.

One of these cities is the place those of us who live in its orbit tend to call simply “the city.” And, these days, it’s a place that’s doing pretty well on a number of fronts. But despite the inflow of immigrants and hipsters, enough people are still moving out of greater New York — a metropolitan area that, according to the Census, extends into Pennsylvania on one side and Connecticut on the other — that its overall population rose less than 5 percent between 2000 and 2012. Over the same period, greater Atlanta’s population grew almost 27 percent, and greater Houston’s grew almost 30 percent. America’s center of gravity is shifting south and west. But why?

Is it, as people like Mr. Perry assert, because pro-business, pro-wealthy policies like those he favors mean opportunity for everyone? If that were the case, we’d expect all those job opportunities to cause rising wages in the Sunbelt, wages that attract ambitious people away from moribund blue states.

It turns out, however, that wages in the places within the United States attracting the most migrants are typically lower than in the places those migrants come from, suggesting that the places Americans are leaving actually have higher productivity and more job opportunities than the places they’re going. The average job in greater Houston pays 12 percent less than the average job in greater New York; the average job in greater Atlanta pays 22 percent less.

So why are people moving to these relatively low-wage areas? Because living there is cheaper, basically because of housing. According to the Bureau of Economic Analysis, rents (including the equivalent rent involved in buying a house) in metropolitan New York are about 60 percent higher than in Houston, 70 percent higher than in Atlanta.

In other words, what the facts really suggest is that Americans are being pushed out of the Northeast (and, more recently, California) by high housing costs rather than pulled out by superior economic performance in the Sunbelt.

But why are housing prices in New York or California so high? Population density and geography are part of the answer. For example, Los Angeles, which pioneered the kind of sprawl now epitomized by Atlanta, has run out of room and become a surprisingly dense metropolis. However, as Harvard’s Edward Glaeser and others have emphasized, high housing prices in slow-growing states also owe a lot to policies that sharply limit construction. Limits on building height in the cities, zoning that blocks denser development in the suburbs and other policies constrict housing on both coasts; meanwhile, looser regulation in the South has kept the supply of housing elastic and the cost of living low.

So conservative complaints about excess regulation and intrusive government aren’t entirely wrong, but the secret of Sunbelt growth isn’t being nice to corporations and the 1 percent; it’s not getting in the way of middle- and working-class housing supply.

And this, in turn, means that the growth of the Sunbelt isn’t the kind of success story conservatives would have us believe. Yes, Americans are moving to places like Texas, but, in a fundamental sense, they’re moving the wrong way, leaving local economies where their productivity is high for destinations where it’s lower. And the way to make the country richer is to encourage them to move back, by making housing in dense, high-wage metropolitan areas more affordable.

So Rick Perry doesn’t know the secrets of job creation, or even of regional growth. It would be great to see the real key — affordable housing — become a national issue. But I don’t think Democrats are willing to nominate Mayor Bill de Blasio for president just yet.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, August 24, 2014

August 26, 2014 Posted by | Conservatives, Housing Costs, Sunbelt | , , , , | 1 Comment

“Romney’s Jobs Pipe Dream”: His New Goal Isn’t Much More Realistic

In May, Mitt Romney responded to a modest jobs report showing the economy had created 115,000 jobs in April by saying that the U.S. should really be creating almost five times more. “We should be seeing numbers in the 500,000 jobs created per month. This is way, way, way off from what should happen in a normal recovery,” Romney told Fox News.

The press immediately jumped on his target of 500,000 jobs per month, noting that it was highly unrealistic. The economy had not created that many jobs in a single month since 1984, and just 10 times since 1950, mostly due to special circumstances like census hiring or strikers returning to work. “Every president makes statements as a candidate that he later comes to regret once he is in the White House. He finds himself held to a standard that sounded good on the campaign trail, but may not be realistic in office … If Mitt Romney is elected this fall, he may look back at his comment Friday as one of those,” New York Times reporter Peter Baker wrote at the time of the jobs target.

Indeed, Romney quickly abandoned the number. Now, responding to today’s jobs report, Romney has set a new target. He slashed the old number in half and is now aiming to create 250,000 a month, or 12 million jobs in his first term. It’s a far more reasonable goal than his previous one in that it’s at least theoretically attainable, but it’s still very ambitious. Bill Clinton presided over one of the biggest economic expansions in history and only saw 11.5 million jobs created during his first term. And Clinton comes closest to Romney’s goal. Ronald Reagan, Romney’s free-market icon, created only 5.3 million jobs in his first term, and 16 million over two terms, when Romney would presumably be shooting for 24 million. Lyndon Johnson, the next biggest job creator going back to Harry Truman in the 1940s, according to the Wall Street Journal, created 11.9 million jobs — about Romney’s goal — but over his six years as president.

Using the Atlanta Fed’s job calculator to get a rough estimate of what Romney’s plan would do to the unemployment rate, we see that consistent job creation at 250,000 per month over the 48 months would drive unemployment down to 3.4 percent, a rate we haven’t seen in over 40 years. (Clinton hit a low of 4.0 percent in 2000.)

Romney economic adviser Glenn Hubbard put out a white paper yesterday explaining the goal, but as the Huffington Post’s Jon Ward notes, “The paper was less actuarial work with raw data and specific numbers, however, and more of an economic philosophy argument based largely on the premise that simply by undoing much of what President Obama has done since taking office, the economy would recover at a faster pace than it has been from the recession that began in late 2008.”

Still, the paper states that “history shows that a recovery rooted in policies contained in the Romney plan will create about 12 million jobs in the first term of a Romney presidency.” Notably, the paper does not provide much historical evidence to support this claim, and where it does look at history, it focuses on unemployment rates, not job creation numbers.

 

By: Alex Seitz-Wald, Salon, August 3, 2012

August 4, 2012 Posted by | Election 2012 | , , , , , , , | Leave a comment

“Inescapable Truth”: Obama Has A Jobs Plan, Romney Doesn’t

It’s no secret that the presidential election will be decided by the state of the economy and which candidate has a better plan for creating jobs. So, toward that end, consider a few relevant numbers:

+ 1.4 million to 3.3 million—that’s how many jobs were created or saved by the American Recovery and Reinvestment Act, otherwise known as the stimulus, according to the Congressional Budget Office.

+ 1.9 million—that’s the number of new jobs the American Jobs Act, unveiled by President Obama in September 2011, would create, according to Mark Zandi of Moody’s.

– 4.1 million—that’s how many jobs Paul Ryan’s budget, which Mitt Romney called “an excellent piece of work,” would eliminate through 2014, according to the Economic Policy Institute (EPI).

+11.5 million—that’s how many jobs Romney claimed last September he would create in the first term of his administration. But true to form, Romney never said how he would create that many jobs, nor has any reputable economist backed up his claim. “Nowhere in the 160 page plan could I find a stated job creation number,” wrote Rebecca Thiess of EPI. “The math doesn’t just appear to be fuzzy—it appears to be nonexistent.” Added David Madland of the Center for American Progress: “It is a plan from the Republican candidate for president designed to maximize corporate profits. What it doesn’t do is help the middle class or create jobs.” Even the conservative editorial page of the Wall Street Journal called Romney’s fifty-nine-point economic tome “surprisingly timid and tactical considering our economic predicament.”

Following last month’s disappointing jobs report, Romney offered six specific ideas to lift the flagging economy. Reported Greg Sargent:

He said he would tap our energy resources to “put a lot of people to work in the energy sector.” He said he’d repeal Obamacare, which is “scaring small businesses from hiring.” He said he’d balance the budget so people know “investing in America is going to yield a return in dollars worth something.” He vowed to “open up new markets in American trade.” He said he’d revamp the National Labor Relations Board and lower tax rates on employers, both of which would make it easier to hire people.

Sargent asked a few top economists whether Romney’s ideas would actually create jobs. “On net, all of these policies would do more harm in the short term,” responded Mark Hopkins, a senior adviser at Moody’s Analytics. “If we implemented all of his policies, it would push us deeper into recession and make the recovery slower.”

Hopkins’s quote might just be the most important one of the campaign so far. Every story about the candidates’ positions on the economy should mention this essential dynamic: Obama has a jobs plan. Romney doesn’t. In fact, according to economists, Romney’s prescriptions for the economy would only make a bad situation significantly worse.

By: Ari Berman, The Nation, June 12, 2012

June 14, 2012 Posted by | Election 2012 | , , , , , , , | Leave a comment

“Invested In Economic Misery”: The GOP’s Job-Killing Election Strategy

The Republicans’ 2012 election strategy is perversely brilliant: Sabotage President Obama’s job-creation efforts, then blame him for the wreckage.

This strategy was in action the other day, when Mitt Romney assailed Obama on the stump. Romney said that “with America in crisis, with 23 million people out of work or stopped looking for work, he hasn’t put forth a plan to get us working again.”

Romney conveniently omitted the fact that Obama put forth such a plan last autumn. The American Jobs Act would have put as many as two million construction workers, cops, teachers, and firefighters back to work — so said economic forecasters — if only congressional Republicans hadn’t dynamited it.

Yes, sabotage was indeed required. Republicans knew their prospects for beating Obama would be damaged if they signed on to a plan that got more Americans working again. They’re far too invested in economic misery to let that happen. Working with Obama on job creation is not their top priority; as Senate GOP leader Mitch McConnell candidly remarked in 2010, “The single most important thing we want to achieve is for President Obama to be a one-term president.”

Fortunately for the GOP, voters typically pay scant attention to the parliamentary play-by-play in Washington. Fortunately for the GOP, we are a nation of amnesiacs. What happened last autumn, when Senate Republicans successfully blocked debate on the jobs plan, is ancient history. That episode, yet another example of obstruction by filibuster, has vanished down the Orwellian memory hole — which allows Romney to pretend the bill never existed.

The 2012 election may be a cliff-hanger, much like 2000 and 2004, and the sabotage strategy just may be clever enough to work.

The GOP saboteurs deserve a share of the blame for our stalled economy, but politics is a shorthand business — and the shorthand is that presidents take the hit when times are tough. When the latest jobs report tallied only 69,000 new jobs during May and put the jobless rate at 8.2 percent, Obama got the brunt of the blame. People tend to believe the maxim that sat on Harry S. Truman’s desk — “The buck stops here” — even though power is widely dispersed in a system that cannot function without at least a modicum of bipartisan comity.

 

By: Dick Polman, The Philadelphia Inquirer, June 10, 2012

 

June 12, 2012 Posted by | Economy, Election 2012 | , , , , , , , | Leave a comment

“Government Is The Solution”: Healing The Economy For The Common Good

Why don’t Democrats just say it? They really believe in active government and think it does good and valuable things. One of those valuable things is that government creates jobs — yes, really — and also the conditions under which more jobs can be created.

You probably read that and thought: But don’t Democrats and liberals say this all the time? Actually, the answer is no. It’s Republicans and conservatives who usually say that Democrats and liberals believe in government. Progressive politicians often respond by apologizing for their view of government, or qualifying it, or shifting as fast as the speed of light from mumbled support for government to robust affirmations of their faith in the private sector.

This is beginning to change, but not fast enough. And the events of recent weeks suggest that if progressives do not speak out plainly on behalf of government, they will be disadvantaged throughout the election-year debate. Gov. Scott Walker’s victory in the Wisconsin recall election owed to many factors, including his overwhelming financial edge. But he was also helped by the continuing power of the conservative anti-government idea in our discourse. An energetic argument on one side will be defeated only by an energetic argument on the other.

The case for government’s role in our country’s growth and financial success goes back to the very beginning. One of the reasons I wrote my bookOur Divided Political Heart” was to show that, from Alexander Hamilton and Henry Clay forward, farsighted American leaders understood that action by the federal government was essential to ensuring the country’s prosperity, developing our economy, promoting the arts and sciences and building large projects: the roads and canals, and later, under Abraham Lincoln, the institutions of higher learning, that bound a growing nation together.

Both Clay and Lincoln battled those who used states’ rights slogans to crimp federal authority and who tried to use the Constitution to handcuff anyone who would use the federal government creatively. Both read the Constitution’s commerce clause as Franklin Roosevelt and progressives who followed him did, as permitting federal action to serve the common good. A belief in government’s constructive capacities is not some recent ultra-liberal invention.

Decades of anti-government rhetoric have made liberals wary of claiming their legacy as supporters of the state’s positive role. That’s why they have had so much trouble making the case for President Obama’s stimulus program passed by Congress in 2009. It ought to be perfectly obvious: When the private sector is no longer investing, the economy will spin downward unless the government takes on the task of investing. And such investments — in transportation and clean energy, refurbished schools and the education of the next generation — can prime future growth.

Yet the drumbeat of propaganda against government has made it impossible for the plain truth about the stimulus to break through. It was thus salutary that Douglas Elmendorf, the widely respected director of the Congressional Budget Office, told a congressional hearing last week that 80 percent of economic experts surveyed by the University of Chicago’s Booth School of Business agreed that the stimulus got the unemployment rate lower at the end of 2010 than it would have been otherwise. Only 4 percent disagreed. The stimulus, CBO concluded, added as many as 3.3 million jobs during the second quarter of 2010, and it may have kept us from lapsing back into recession.

So when conservatives say, as they regularly do, that “government doesn’t create jobs,” the riposte should be quick and emphatic: “Yes it has, and yes, it does!”

Indeed, our unemployment rate is higher today than it should be because conservatives blocked additional federal spending to prevent layoffs by state and local governments — and because progressives, including Obama, took too long to propose more federal help. Obama’s jobs program would be a step in the right direction, and he’s right to tout it now. But he should have pushed for a bigger stimulus from the beginning. The anti-government disposition has so much power that Democrats and moderate Republicans allowed themselves to be intimidated into keeping it too small.

Let’s turn Ronald Reagan’s declaration on its head: Opposition to government isn’t the solution. Opposition to government was and remains the problem. It is past time that we affirm government’s ability to heal the economy, and its responsibility for doing so.

 

By: E’ J’ Dionne, Jr., Opinion Writer, The Washington Post, June 10, 2012

June 11, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

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