In Dubious Battle- Steinbeck (1936)

After the first of the year, I wrapped up the novels I was reading and made a promiss to myself to be a little more selective. To only read high caliber writing. That’s how I came upon In Dubious Battle. I wasn’t aware of the buildup to an apple pickers’ strike until I was bending back the binding so the pages eased open in my hands. And strikes are turning out to be very good scenarios for expressions of the social economic side of the economy.

Take what Mac says here to Dr. Burton, who has been brought in to be on hand to mend any of the strikers who get caught up in a tussle. Mac’s trying to figure out why Burton keeps showing up when he doesn’t get paid, nor does he seem interested in the cause. In other words Mac can’t figure out the ambitions for what he refers to as ‘work’ when it falls neither in the private or public sphere.

“Yes, you. You’re not a Party man, but you work with all the time; you never get anything for it. I don’t know whether you believe in what we’re doing or not, you never say, you just work. I’ve been out with you be fore, and I’m not sure you believe in the cause at all.”

Dr. Burton laughed softly. “It would be hard to say. I could tell you some of the things I think; you might not like them. I’m pretty sure you wouldn’t like them.”

“Well, let’s hear them, anyway.”

“Well, you say I don’t believe in the cause. That’s like not believing in the moon. There ‘ve been communes be fore, and there will be again. But you people have an idea that if you can establish the thing, the job’ll be done. Nothing stops, Mac. If you were able to put an idea into effect tomorrow, it would start changing right away. Establish a commune, and the same gradual flux will continue.”

“Then you don’t think the cause is good?”

Burton sighed. “You see? We’re going to pile up on that old rock again. That’s why I don’t like to talk very often. Listen to me, Mac. My senses aren’t above reproach, but they’re all I have. I want to see the whole picture as nearly as I can. I don’t want to put on the blinders of ‘good’ and ‘bad,’ and limit my vision. If I used the term ‘good’ on a thing I’d lose my license to inspect it, because there might be bad in it. Don’t you see? I want to be able to look at the whole thing.”

Burton turns out to be a bit of a philosopher. He’s there putting in the work so he can understand the why of it all. He and I agree the flux will continue. That the whole pricing mechanism is always in motion, and for that reason time must be understood. He also is indifferent to the ‘good’ of it. He isn’t going to shuffle through the risks versus the rewards, he is there trying to understand the beams that turn the wheel and the flow of the water that pushes on the buckets.

In the following few pages Dr. Burton talks about group-men. “I watch these group-men, for they seem to me to be a new individual, not at all like a single man. A man in a group isn’t himself at all: he’s a cell in an organism that isn’t like him any more than the cells in your body are like you. I want to watch the group, and see what it’s like.”

I’m looking forward to reading what else Burton observes.

Hospitality

I have been a fan of Walter Russell Mead’s Yule Tide Blog since back when he wrote at The American Interest (now the American Purpose). His annual recap of the Christmas Story has something to offer both steadfast Christians as well as those simply curious about the faith and what it entails. Today’s entry starts:

The Christmas story suggests that we can somehow try to be loyal members of our nations, our families, our tribes—and to reach out to the broader human community of which we are also a part.

Just because we all belong to groups, doesn’t preclude us from reaching out to others. In fact there is a desire to do so. Yet a tension arises.

It’s a puzzle. Human beings need roots in a particular culture and family, and those roots shape them; at the same time, human beings have values (like freedom and democracy) and ideas (like the Pythagorean theorem and the laws of thermodynamics) that demand to be recognized as universal. We seem perpetually torn between “cosmopolitan” and “local” values: universal ideas and the customs of the country.

Importantly, within the faith there an obligation to welcome and help strangers.

We think of the trade-off between local identities and universal values as a modern problem, but it is deeply rooted in human experience. In the ancient world, where tribal and family affiliations were very strong, many cultures shared a strong belief in the moral duty of hospitality to strangers, whatever their tribe. Day-to-day life revolved around your own group of close associates, but the duty of hospitality required a willingness to look beyond these limits to recognize the common humanity and worth of all people.

And this is hardly unique to Christianity. The tradition of hospitality runs throughout Islam. Read adventurer Dervla Murphy‘s account of her solo bicycle trip from Ireland to India in 1963, as detailed in Full Tilt.

Her dedication reads: “To the peoples of Afghanistan and Pakistan with gratitude for their hospitality for their principles and with affection for those who befriended me.”

You can be true to your tribe, true to your group within your group, and still reach outside that structure for all sorts of interactions. Not only can this be true, it is the best form of social commerce. And not everyone has to play. This show-stopper-outrage that has controlled our dialogue, the one that holds up the one offending example, sidesteps the reality that a few bad apples (racists, sexists or otherwise horrible people) don’t monopolize the ability for the rest of us to extend a hand where they won’t.

One doesn’t have to practice in a faith community to believe in the goodness of human nature.

Primer Podcast for Affordable Housing

Lots of great topics covered in this Econ Talk podcast with Katherine Levine Einstein. Russ Roberts and the assistant professor of Political Science at Boston University tackle the obstacles developers face in building higher density homes, as well as affordable housing units.

Katherine explains that the title of her new book, Neighborhood Defenders, comes from the notion that people who show up at city council meetings feel they are speaking on behalf of their neighborhood; they view themselves as representatives of that public.

So, first on the motivation side, the term NIMBY implies sort of a selfish motivation. It implies, Not In My Backyard, a very individually motivated view. And, in our research, we actually find that the folks who show up to oppose the construction of new housing often view themselves as representing their community’s interests and are motivated by protecting their neighborhood, their surroundings. Right? So, their motivations are not so individualistic.

The conversation flushes out the reality that people who have time to devote to the work of public affairs do not necessarily reflect the width and breath of the constituency. In fact there are noticeable groups missing from these planning and approval meetings. As Russ says:

So, talk about that tension between the idea behind saying ‘a public hearing.’ Wouldn’t you want a public–I mean: Let the public be heard. And yet it’s not really the public.

Groups are further delineated in the failure of the California legislature to approve SB 50 which would have streamlined the approval process for developers. It seems that the environmental folks found common ground with NIMBY’s.

So, one set of interests, which doesn’t surprise anyone, would be opposed to something like this is communities like Beverly Hills. Like, very privileged places with lots of white homeowners who are strongly opposed to the construction of new housing. So, those folks were like, ‘No, we do not want to have fourplexes all over the place here.’ So, they were a natural oppositional constituency.

But, other groups also came out in opposition. So, Sierra Club and a few other environmental groups were strongly opposed because they thought this would lead to the degredation of sort of existing green spaces.

And, that I think, and this is the oppositional group that was to me most interesting, is sort of left-leaning tenants’ rights organizations and some of the socialists organizations in California that are quite powerful, especially in Los Angeles and San Francisco.

Those groups worried that this up-zoning would actually lead to gentrification. If we think about areas in Los Angeles that are near transit stops, that many of those are less -privileged areas with larger Latin X or black populations. And, that those were places that might face development pressures, and, you know, the construction of new luxury housing, should zoning codes be relaxed.

And, so those really diverse constituencies all came together. Both times they killed SB-27 and they essentially killed SB-50 as well.

As they pull apart the thorny issues around community support for affordable housing, they not only talk groups, interests and work, but also how the public’s impact on timeframes have economic consequences.

Usually it would take like three to six months, I assume, to build a grocery store–I don’t know, maybe. But, for some reason it takes forever. And, of course the answer is, ‘They didn’t get the permit yet. They’re working on it.’ But, talk about–these things, some of them are ten years. And, after the 10 years, they get a building of four units down to three. But these are often 90 units of affordable housing were planned and they end up with, like, 40, ten years later.

In addition to these public sphere definitions and mechanics, they talk externalities and corruption. Well worth a listen!

Book Club

One of the benefits of raising a child is that you get to follow them through their interests and endeavors. My college sophomore was required to tackle two novels for his class on colonialism: The Poor Man’s Son and God’s Bits of Wood. Feraoun is the product of French Algeria and Ousame is from Senegal, part of Afrique Occidental Francaise (AOF) until 1958. Both tell stories of the struggles of their countrymen and women during the era of New Imperialism.

Unlike the conversation of today, both authors describe many more groups than the simple division of colonial power and the colonized, of oppressor and oppressed, or of those who take what is not theirs and those who are left without. How exactly the goods, services and resources are shared and divided between all the players is a preoccupation for both men.

Details such as, 180 francs– the amount of Feraoun’s scholarship to Ecole Primere Superieure, and 100 francs–the amount he turns around and sends back to his family in Kabylia. Then there is 25 francs and a container of barley–the amount that shows his family’s extreme financial distress. And 600 francs–the amount the headmaster hands over to allow him to continue his education.

Both authors detail workplace struggles. Feraoun’s father leaves for a time to be a laborer in Paris. When a workplace accident lands him in the hospital he is able, after two attempts, to secure a settlement of $3000 francs along with a quarterly stipend. Ousame describes the 1947 railroad worker strike with specifics on pensions and wage scales and family benefits.

There is a counting amongst the women as well in the home life of the railroad workers. There is the rice that the local grocer is forbidden to sell them, and a fight with the french soldiers over a leg of mutton. Feraoun finds his financial obligations to his northern Algerian family growing as his sisters’ husbands leave them for greener pastures. He counts thirteen dependents on his teacher’s salary.

There are many groupings in these stories; there are the workers, and the women, and the missionary, and the soldiers, and the french educators, and the French who show up to help with the strike, and the elders who feel disregarded–all pulling in many different directions for people’s time, talent, and assets.

It’s as if these authors are trying to sort through two spheres of economic activity, particularly set in contrast by private affairs and public affairs, by looking after the individual and being obliged to the family, as well as by outsiders and insiders. And the good and the bad make an appearance in every cluster.

Without a doubt, the richness of these detailed accounts of choices is far more interesting than the conversations of today.

Doing Laundry–Real Estate Edition

The November 2020 tally of Realtor members of the National Association of Realtors totaled 1,460,397, making it the largest trade association in the U.S. There are just shy of 21,500 Realtors in Minnesota alone. The group is nonpartisan with a stated “mission … to empower REALTORS® as they preserve, protect and advance the right to real property for all.”

Maintaining property rights, so that their clients can buy and sell homes and investments, is an unwavering shared value amongst this group. Not only because it facilitates their clients’ and in turn their own private interests, but also because stagnant unproductive real estate becomes a drain on public interests in the form of crime, blight, and inefficient use of public infrastructure.

The good and the bad of it is that once you build an open and reliable system, everyone wants to use it–including the criminals.

Globally, real estate is one of the “laundromats” of choice for criminals seeking to legitimize their ill-gotten funds. Using shell companies and other shady venues, they annually funnel more than $1.6 trillion into real estate investments around the world. Despite federal efforts to crack down on the illegal transactions in the United States, money launderers continue paying top-dollar for purchases, driving up real estate prices in many cities. 

NAR and other housing groups are urging Congress to stem the tide of dirty money by passing effective anti-money-laundering legislation. The organization is also launching an education campaign to help Realtors® identify the risks to their businesses and use best practices to protect themselves against liability.

MN Realtor

More dollars chasing real estate means higher prices. Since a pricing system is dynamic and interdependent throughout an entire network, it means higher prices across the market, not just in apartment buildings or the venue of choice for foreign or domestic racketeers. So we could say that money launders are externalizing unaffordability to lower income homeowners, while internalizing the benefits of our property rights institution–including the work done by NAR and its members.

Wouldn’t it be interesting to know the tranche of the value that illegal activity adds to the price of a home, apartment or investment property? Even if it were only an estimate. Across a metropolitan area this maybe a small amount say half a percent, or around $1500 on the Twin Cities’ median priced home. Barely perceptible with all the other costs and expenses involved in a home.

But if the criminals did their business primarily in one neighborhood, (a neighborhood where people don’t have time to wonder why a property is left vacant, nor know where to file a complaint for snow covered sidewalks) their stake could have an outsized impact. It is in these locations that a large number of REIT’s and creatively named groups tend to appear, especially since the recession of 2009. If a large sell-off of their position swung pricing, say ten percent, it would have a destabilizing effect, especially if that neighborhood was already experiencing a variety of negative externalities.

Note the groups. There is the overall housing group of buyers and sellers (personal or investors) who are buying real estate to be used as places to live. The pricing system is a reflection of the value property commands as places of residence. The criminals are not participating in that market. They bring money into the market because it is reliable environment to launder their funds. While the criminals internalize this as profits, first time buyers in the large group can no longer afford to buy a home.

The presence of washermen (and women) in the marketplace also necessitates an increase in the stream of funding used to subsidize those of the larger group who are unable to provide for their own housing. It would be useful to know some of these numbers. Knowing the financial drain of the money launderers on our real estate market tells us how much the Justice Department can spend to pursue and capture these ne’re-do-wells. This is the housing justice we need to see happen.

Graffiti and Barricade Building

In a recent paper, Balancing Purse and Peace:Tax Collection, Public Goods and Protests, Benjamin Krause from UC Berkley evaluates state capacity in Haiti. From the abstract:

Strengthening state capacity in low income countries requires raising tax revenue
while maintaining political stability. The risk of inciting political unrest when attempting to increase taxes may trap governments in a low-tax equilibrium, but public goods
provision may improve both tax compliance and political stability.

The author predictions are very intuitive: 1. decreasing pubic goods (in this case garbage collection) and fines decreases tax collection. 2. increasing public goods increases tax collection. What is interesting to me are the variables he chooses as benchmarks. The research measures the public willingness to pay taxes while tracking their voice as expressed in graffiti and the amount of time some members may spend on barricade building.

… I introduce two novel metrics for independently measuring political
unrest. First, to measure political speech, I conduct a census of and geo-tag the graffiti
across the city. I then use the presence, prevalence, and tone of political graffiti specifically
as outcomes of interest. Second, to measure the most violent or destructive political unrest,
I track the construction of barricades in neighborhoods which are built, and often lit on fire,
as a form of protest in this setting. Tracking both where these are constructed and which
areas are affected provide additional outcomes of interest. As a result, I am able to provide
novel experimental evidence of the effects of both tax collection and public goods on political
unrest – and on violent or destructive unrest in particular.

In my model I propose that in the public sphere, goods are provided when the voice of the group expresses a need and people are willing to do work on behalf of the objective.

In this paper the author measures voice by tracking graffiti. Lack of graffiti speaks to an endorsement of the state or a sign of favorable response to provision of garbage collection. And he measures work as the number of hours spent building barricades to protest against the state. Where lack of work is an endorsement of the state.

Exciting to see something similar appearing in an academic paper.

The externality of overdoses

Externalities can be difficult to calculate. What is the cost per person to a community exposed to smog, or the damages from water laced with lead in Flint? Often times these figures are settled in court. But management consulting companies can also be in on the game. Take this story about Purdue Pharma as reported in the New York Times.

When Purdue Pharma agreed last month to plead guilty to criminal charges involving OxyContin, the Justice Department noted the role an unidentified consulting company had played in driving sales of the addictive painkiller even as public outrage grew over widespread overdoses.

Documents released last week in a federal bankruptcy court in New York show that the adviser was McKinsey & Company, the world’s most prestigious consulting firm. The 160 pages include emails and slides revealing new details about McKinsey’s advice to the Sackler family, Purdue’s billionaire owners, and the firm’s now notorious plan to “turbocharge” OxyContin sales at a time when opioid abuse had already killed hundreds of thousands of Americans.

Later in the article they tally those deaths up to 450,000 since 1999. Those, of course, are just the fatalities. There are no numbers offered for the hours that went into counseling the addicts before they OD’ed, or all the lost productivity an addict can bear on their support group. Neither of these costs were the costs concerning the McKinsey accountants. The number crunchers were concerned with the amount necessary to buy Purdue Pharma’s distributers, the local pharmacies like CVs or Walgreens, out of the discomfort of grieving mothers.

The presentation estimated how many customers of companies including CVS and Anthem might overdose. It projected that in 2019, for example, 2,484 CVS customers would either have an overdose or develop an opioid use disorder. A rebate of $14,810 per “event” meant that Purdue would pay CVS $36.8 million that year.

I’m not sure how one of the most prestigious consulting company in the world came up with $14,810. I’d truly be curious to know what went into the formula to calculate this externality. What dollar transfers were tracked between the group of heartbroken survivors and their pharmacies following an overdose that added up to $14,810? How did the rebate get summed up and presented to Pharma’s management as a viable expenditure in the form of a rebate?

Maybe the point is that an accounting of this nature is already in play. If a market price was calculated for a social cost buyout in this scenario, most probably it is a frequent calculation. So what is the McKinsey method? Inquiring minds want to know.

Coming together

Politically outstate Minnesotans and Twin Cities urbanites maybe diverging, but demographically there are converging trends. Here’s #4 from MN Compass:

One theory offered to explain the tight housing market is that Covid has made it more precarious for this age group to complete a move; boomers who may have relocated to a new stage-of-life housing have stayed put. If true, then there should be a wave of availability coming up here in a few years in Roseville, Edina, Golden Valley and Mendota Heights.

Brass and Tin Pots

My son is an engineering student, but for his liberal arts requirement he is taking a course on Imperialism. The course work tells the tale of western European economies growing so that they ventured past their countries boundaries to extract resources from Africa and Indo China and the Caribbean. The model describes a dominant group taking hold of a subservient group to help themselves to resources for commercial gains. Extraction isn’t just for the history books. Consider this fictitious story.

Let’s say there is a fairly large association for a trade group. It has a sizable staff and a fair number of members volunteers. There is also a multi-decade volunteer–let’s call him/her Jo Johnson– who through time and understanding has proven agile in eliminating dissenting voices and bullying staff. There are also dues, and committees, and boards, and political action.

The associational group has clout in a community due to its size and ability to organize. It also has some resources to pledge toward those seeking local office. Jo Johnson’s influence at the association serves to direct funds to candidates who, in turn, respond with business referrals. This action of using a group resource and trading for a private commercial gain describes a process of internalizing a public asset into a private, fungible transaction.

Now some may say–this shouldn’t be so! There are ethics to think about.

But– this judgement, this evaluation of the trades in play, is best evaluated by members of the group–not outsiders. Some members maybe thrilled that Jo Johnson is able to devote countless hours wage-free to the association, and thus, any extracting done is small compensation. The members of the group may feel the clout of the group is maximized in this very fashion, giving each member the best possible slice of the overall pie.

It is really all about transparency. If members knowingly make the decision to defer to Jo, then all is right in the world. If decisions have been made for them because Jo Johnson has become so skilled at shaking loose the opposition by throwing up all sorts of meeting delays and rescheduling (it is a volunteer activity after all), and has the power to develop allegiances by promising titles like a board position (a dusty old king of sorts selling titles), then the peasants should revolt.

The process of extracting value from a group and in doing so moving a resource from a public sphere to a private transaction occurs all the time, in many different scenarios. It is a trade. Whether a trade is in equilibrium requires, not moral judgement, but transparency and an ability to evaluate the options at hand.

Judging tin pots from afar is a risky business.

A model to consider

Given this is my 55th post I’d like recap the home-economics model. As explained on the About page, this site addresses the mechanics of value creation in the pursuit of pubic goods. In order to show these features, I must persuade you to shrug off a few established notions. The first is that the nature of goods is not public, nor club, common, or private (the purpose of the What is Public-What is Private posts). All goods can be employed in either the public or the private sphere. The second is that there is no such thing as market failure.

To start at the beginning, all of economic life is restricted by the resources this crusty old orb offers us along with what we can make of them with our time and talents. Limited resources applies both to goods employed in a private environment as well as those contributed toward community needs. Within these confines there are two types of activity creating a public sphere and a private sphere. One looks inward, behaving with a public (non-exclusionary) nature and the other activity looks beyond the group behaving in predatory fashion. This private sphere is well studied.

Let’s work backwards on some posts. Yesterday’s topic–Money and Safety— centered around the city’s approval process to fund more police force hours. Consider the groups. The defunders would argue that city money for police has resulted in providing safety for the racial majority (Gr 1) of the citizens (Gr 3) yet is failing to do the same for the minority groups (Gr 2). In light of this objection these city council members refuse to fund the police.

As an aside, this claim does not hold true. For the past five months the political climate in the city has severely limited the police’s capacity to maintain peace. The result has been a tragic loss of life primarily in Gr 2. This a new set of data contained in Gr 3 shows that it is group Gr2 which reaps greater (despite severe flaws) benefits than Gr 1. In addition to loss of life, Gr 2 has also disproportionately experienced a loss to businesses, where it is estimated 200 businesses burned or were damaged during the riots. The businesses suffered an externality from (lack of) services from the public sphere.

Consider the post A table set for adversaries. The outdoors women and men (Gr 1) are often at odds with urban arts people (Gr 2) over issues like gun control which increases the cost to own firearms without a clear benefit in reduction in crime, and funding for cultural events which requires subsidies to be viable, and outstate regulation of the environment which cuts jobs. Although Gr 1 and Gr 2 are often competing for resources they hold together in conjunction with all Minnesotans (Gr 3), by showing where Gr 1 and Gr 2 had a common interest, a funding stream was extracted from two very different associational groups.

Fire Station 2 speaks to the structure of firefighters (Gr 1) who devote their time and expertise at a reduced rate to protect the lives of property of their community (Gr 2). They get paid a below average hourly rate, which is a private transaction. The firefighters’ extra wage potential is community (Gr 2) work. Their services are made available to everyone (Gr 2) which makes this a public service.

Having established the need to look for groups, and identify whether the groups are engaging public or private economic activity, I’ll be posting more on externalities and internalizing. Both of these terms describe the appearance of positive or negative effects which show up in one sphere from a transaction in the other (Ex. private corporation pollutes the water causing a negative expense to a public good owned by the surrounding community). Then we can get to the fall of market failure.

A table set for adversaries

Today is the last day of Minnesota’s gun deer season. My husband texted me an update from his deer stand a week or so ago. The warm weather has made the pre-dawn wake-up calls tolerable and allowed for an extended time hunkered down in camo gear. He reported seeing over fifty deer, almost all does and fawns.

Folks who never leave the urban centers and only experience gun ownership through violence and crime, view hunters as an odd breed. They are a blaze orange part-of-their-problem, an obstacle in tamping down the waywardness of youth. Hunting, however, barely contributes to MN mortality rates. The numbers show that fatalities from car collisions with deer are several times higher than death by fire arm while hunting. In 2019 there were 3 deaths on the roads, yet no deaths amongst the 841,063 individuals who bought deer hunting licenses.

The sport is safe enough to be conducted on a limited bases amongst the old growth oaks and quaking aspen in the 136,900 acres of parkland in the greater Minneapolis/St. Paul metropolitan area. Most of the deer hunts in the urban parks are for archery hunters (including crossbow if you are old enough, seniors get the priveledge of extra power). It is noted that the parks and trails remain open except during the few opportunities to rifle hunt, in which case the entire park closes.

It is the fortieth anniversary of the Minnesota Deer Hunters Association which attracts 20,000 members throughout the state. They “ensure that the culture of deer hunting in Minnesota is being upheld by improving opportunities through: Habitat, Education, Legislation/Advocacy.” Their on-line calendar is full of meetings, 7-gun raffles and holidays parties across the 400 chapters with names like Snake River, Crow River, Sturgeon River and Smokey Hills.

You wouldn’t think these gun toting outstaters would find themselves politically aligned with folks who wish to fund the MN Opera, Walker Art Center or Guthrie Theater. You wouldn’t think that they would sit at a table with earnest faced, clipboard toting environmentalists. But politically these two groups aligned on the matter of the health and welfare of our lakes and streams.

Minnesota voters approved the Clean Water, Land and Legacy Amendment to the state constitution in 2008. Beginning in 2009 and continuing through 2034, the Amendment increases the sales and use tax rate by three-eighths of one percent. Amendment dollars are dedicated to four separate funds, one of which is the Clean Water Fund.

The amendment was passed with 56% of the vote. The hunters weren’t going to let the deer herd drink from contaminated ditches, even if they think regulations on other commercial concerns are a bridge too far. And the urban activists simply had to put their resist impulses away for awhile and ignore their other objections to their fellow Minnesotans.

In the first year following the approval, the cash infusion was a little over $213 million, and to date the Minnesota Legacy has appropriated $2.9 billion. Basically there have been very few controversies with the implementation of the fund which allocates money into four pools: Arts and Cultural Heritage, Clean Water, Outdoor Heritage and Parks and Trails. All of the projects are listed for the public to see by the legislature.

So how do you find the adversaries to invite to your next dinner party? Look to where your guests spend their time and efforts. Don’t only invite the vocal ones, the emphatic chirpers. Look for the quiet ones too, doing the work of community. When the cause at hand intersects their activities, a stream of resources can be engaged, even among long standing rivals.

The Judge vs. Embrace

Alex Tabarrok recognized the passing of WV Judge Richard Neely on his blog site today. He credits the judge’s candor with getting his first paper published in 2003 in a good journal. His paper, written with Eric Helland, argued:

We argue that partisan elected judges have an incentive to redistribute wealth from out‐of‐state defendants (nonvoters) to in‐state plaintiffs (voters). We first test the hypothesis by using cross‐state data. We find a significant partisan effect after controlling for differences in injuries, state incomes, poverty levels, selection effects, and other factors. One difference that appears difficult to control for is that each state has its own tort law. In cases involving citizens of different states, federal judges decide disputes by using state law. Using these diversity‐of‐citizenship cases, we conclude that differences in awards are caused by differences in electoral systems, not by differences in state law.

But it is the judge’s very own words that confirm his economic motivation in his rulings.

As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone’s else money away, but so is my job security, because the in-state plaintiffs, their families, and their friends will reelect me. (Neely 1988, p. 4).

So what does this have to do with a post I recently wrote about Embrace, a women’s shelter in Wisconsin? The shelter’s director set up a GoFundMe page after she alienated local police by prominently advertising BLM signs around the facility. The goal was to replace $25K in funding that was pulled by the county. As of this morning the kitty is over $100K with a stated goal of $112K. I’m not sure how she picked that number, if there has been some sort of marketing strategy, to keep ratcheting up the goal as long as donors respond.

What I want people to see is the structure of the groups and the motivations for the economic activity between them. (It’s all about the group) In both cases there is a greater federal group. In both cases there is a smaller group; for judge Neely it was comprised of the citizens of WV, for the shelter it is the community which is within their service area. Both the judge and the director are extracting money from the larger group. One is unabashedly leveraging the law for the benefit of his constituents.

I question whether the other is providing full disclosure about the economic transaction that is still underway. Is there an assumption on the part of the greater public that their dollars are supporting an organization which serves a public effected by the concerns of BLM (whereas only a fifteenth of one percent of the population in this county is African American)? Or does the greater group understand they are funding a director who simply shares a similar ideology but has no power to actively contribute to the welfare of BLM?

In order to detect deceit or inefficiencies one must delineate the groups. One must also acknowledge the public nature of the motivations which drives the activity within the group–that anyone within the group receives access to the benefit. The judge, for example, rules in this way for all his constituents who found themselves in a similar conflict. That the services of the shelter are open to anyone within its service area.

Neither the judge nor the director evaluate whether the taking of resources from the greater group harm or diminishes services in some way to other members of the greater group. Their pursuit for funds is fulfilled under the nature of a private transaction, no different than how a corporation pursues funds for their services. This mode of competitive behavior happened recently when states bid against each other for PPE’s in the early days of the covid-19 crisis. Although they work as agents for a public, their obligation for such is only to the inner group.

Judge Neely was one of those confident individuals who scoffed at the traditional method of holding group norms behind a cloak of anonymity. For this we can be thankful, as his words confirm this social economic group structure and the motivation that drives its behavior.

Buildings that walk and roll

In Shanghai a five story primary school building walked to its new location some 200 meters away.

Back in 1985 the Fairmount Hotel was moved in San Antonio. The clip is 17:47 minutes in length but contains lots of details including a two week halt to dig up artifacts from the Battle of the Alamo, maps, bridge crossing, groups involved ( and great 80’s theme music!). Take a look at the renovated Fairmont Hotel.

I remember when the Schubert Theater was relocated, lifted and rolled, in downtown Minneapolis in 1999. It took twelve days to move the 5.8 million pound structure, originally built in 1910. But it took a decade more and upwards of 38 million dollars (not all public), to transform it into the Cowles Center for Dance and the Performing Arts. How a city comes to terms with spending that kind of money involves achieving multiple objectives. The Star Tribune explains:

Meanwhile, restoration of the Shubert will create 150-plus construction and permanent jobs, bring tens of thousands of dance patrons downtown, complete the performing-arts vision for the successful Hennepin theater district and alleviate a loitering and crime problem that has moved from busy Block E to the lonely stretch of the avenue on which sit the Shubert and the Hennepin Center for the Performing Arts. At least that’s the official pitch. The cops and the new urbanists say having people on the street trumps crime. The arts crowds frequent local bistros and they don’t make trouble.

In 1995 Minneapolis was nicknamed Murderapolis after the New York Times wrote a story pointing out that the city had a higher murder rate per capita than New York. This particular spot in downtown struggled with crime. The jobs were also successfully filled by minority tradespeople.

CEO Louis King of Summit Academy OIC on the North Side, which trains dozens of young minority folks for good-paying jobs in the construction trades, is near agreement with McGough Construction and the city. Up to one-third of the workers on the Shubert project will be women, minority apprentices and skilled minority craftsmen. The jobs will pay $18.50 to $40 an hour for months. That’s a good thing.

Wouldn’t it be interesting to see some sort data estimate and geographic tie-in to how the public investment performed? What proportion of the presence of a renovated and vibrant building on that section of the block helped with crime reduction? Did the minorities and women who worked the jobs progress in their profession? Is there an index to say x- proportion of the investment was preservation, and x-amount inflated into other community value?

7 Billion for a Transportation Revolution

That’s the election news from Austin, Texas. A pretty hefty purchase for a metro of 2.2 million people. More on the deets from the local Patch:

The project came in two separate parts for voters, Proposition A and Proposition B — both of which gained support from the majority of registered voters. The former, which passed with 59 percent of the vote, calls for an 8.75-cent increase per $100 valuation to the city’s property tax rate, resulting in around a 4 percent increase to the total bill, toward a high-capacity transit system known as Project Connect. Prop B, which passed with 68 percent of the vote, provides for $460 million in debt issuance toward transportation improvements —sidewalks, bikeways, urban trails, safety projects and the like.

This wasn’t the first run at a rail transportation package in the capital of Texas. It wasn’t for lack of need. The urban’s center’s population growth for the decade ending in 2018 was 37%. Yet two prior funding attempts had failed. This time things were different.

“There were three main arguments that were made,” says Austin mayor Steve Adler. “One was congestion. One was climate change. One was mobility equity in our city.”

This time the city was all in. The focus was not only on light rail to improve commute times and to connect various parts of the city, goals which appeal to those who could better use the hour from a daily commute, and to those who prioritize emission reduction. But the plan also provides for “transportation infrastructure including sidewalks, transportation-related bikeways, urban trails, transportation safety projects (Vision Zero), safe routes to school and substandard streets.”

Let’s count the public objectives: transit, health, environment, access to jobs, recreation, safety. And lest you think they forgot about housing:

The plan, funded by an increase in property taxes, also includes $300 million to help make sure that as transportation improves in some neighborhoods and housing values rise, residents aren’t displaced from their homes due to gentrification. They’ll do this by offering rent subsidies, building more affordable housing, and giving financial assistance to home buyers. 

Austin’s business success and hence population boom has put it in the enviable position of having a need for all these public projects as well as the financial ability to fund them, which they have tied directly to the assessed values of real estate.

But what about cities that just need one of those amenities, or even just a leg of light rail, or upgrades to a suite of bridges, or replacement of a water treatment facility? What are the standard pricing mechanisms and what are they tied back to in such a way that is financially acceptable to all those who support the improvement? What are the combinations that upsell a project and close the deal, such as this one in Austin?

Minnesota passed a 1.87 billion bonding at the fifth special session held in 2020. Two years of touring and evaluating worthy projects, and still the delays and posturing and addon’s. The beauty of a standardized pricing mechanism is that the crazy haggling is reduced to more amenable swings. And more importantly people don’t feel the hazy disbelief that I did when I walked away from a souk off the central square in Marrakesh after paying $20 for two sad sticks of incense.

Links to Textiles

Cute Scott in a beret shows how to make linen fabric from flax seed. Join 1.3 million viewers of this video.

Acrylic on Textile, by Novikov, $25,000.

The Weavers Guild of Minnesota is the largest of its kind in the US.

Barkcloth is a textured woven, usually printed cotton fabric that was popular in the 1930s-40s and 50s as an interiors fabric. It is great for upholstery and drapery.

Redlining’s Reappearance

The Milwaukee Journal Sentinel reports:

A popular online real estate brokerage service has engaged in racially discriminatory practices akin to modern-day redlining in Milwaukee and other cities across the country, according to a new federal lawsuit.

Redfin is a Seattle based company which entices, sellers in particular, with discounted fees.

In Milwaukee, Redfin was about eight times more likely to offer no service at all in extremely non-white ZIP codes and did not offer its “best available service” for homes in extremely non-white ZIP codes, an investigation by the local fair housing council found.

And concluding with this:

“This is a practice of racial segregation which diminishes access to wealth, access to quality of life opportunities for African Americans,” said William Tisdale, president and chief executive of the Milwaukee Fair Housing Council.

Follow the money

For those who follow the blog you know that I’ve been harping on the distinction between public and private, club and common goods, here, here and here. In my view goods are not sorted in this manner. A hammer is a hammer. If it is used to fix my deck it is in service to me privately, if it is used build a Habitat for Humanity house it is providing a public service to house the unsheltered.

The reason it is necessary to resort this understanding is because it is how we can see corruption. Corruption is not just up to politicians. A system can be corrupt and individuals, small groups and so on. When a set of rules are put into play, but then through cloaking and shading people (or groups of people) pursue other objectives, there is corruption.

Take the case of Embrace, a domestic violence shelter, that’s been in the news. The local police in Barron’s County Wisconsin objected to the posting of BLM posters around their building. And felt this posting calling out police violence, discredited their service. As a result public funding for the shelter was revoked. Here are the Huffington Post, Wisconsin Public Radio and the Washington Post articles.

Embrace states their core mission

To end violence, inspire hope and provide unwavering support to all people affected by domestic and sexual violence by engaging our community in safety, equality and partnership.

Now remember domestic violence persists when the normal social catches fail. When there are no close family members to pull their daughter, son or elderly parent out of an abusive situation. When there are no neighbors who notice excessive bruising and quietly offer the victim a way out. Domestic violence requires a formal force intervention because no other means of social exchange has worked or been available. And from what I understand, these types of calls are frequent and precarious for the police.

Given the necessity of the police to intervene in order to get the abused to their doorstep, you would think the shelter would consider this public agency as a core part of their workplan. As to why the shelter declined to remove their signs, Katie Bement the shelter’s executive director told the Huff Post:

“We were approaching it from an accessibility standpoint,” she told HuffPost over Zoom on Thursday. “We needed to show that we’re safe for those communities of color.”

Yet Barron county’s black population is .14% (a fifteenth of 1 percent) of all residents. I’m not sure how many of those 62 people would be drive by the shelter first before making a call for help or finding them on-line. I don’t have the statistics from police response rates or the shelter’s service records, but I suspect the demographics of those receiving aid lines up with the 97%.

As much as the shelter would like to merge the work they do in Barron County with the objectives of BLM the demographics seems to deny them this reality. The group they provide services to are overwhelmingly, if not completely unaffected by the concerns of BLM. In fact the two missions are at odds with one another as the later has diminished the abilities of police to provide security nationwide. Which is undoubtedly why the county pulled funding.

Now back to corruption.

Within a day of the Huffington post article being run, a GoFundMe page was set up for the shelter. Before dinnertime they had surpassed their $25K goal. As of this morning (screen shot included) the page is reporting a kitty of over $69K. Would the shelter have been able to raise this funding without the BLM story behind it? By accepting these donations has the shelter’s mission changed?

If you publish one set of objectives yet acquire funding for another, it seems that you are at odds with your group. It’s not that groups can’t change their rules or objectives, its just that you have to be clear about them so people know what they how their resources are being invested.

Fireworks

In a recent post, which challenged whether national defense is a public good, I suggested that sunlight was a public resource. Then I got to thinking about height restrictions in new construction, and in particular about a luxury high-rise development that was squashed by neighboring residents. A few years ago plans were underway for two residential towers on the west side of Southdale Center which is in an up-scale suburb of the Twin Cities. When over 200 folks filed into the city council chambers, there were more opposed than in favor.

But dozens of residents spoke against the towers, listing issues with everything from its height to the shadows it would cast.

So you see sunlight can be privatized. The owners of the 50’s built one-level homes to the west argued that the new apartments would steal their sunlight. The two towers would privately claim the warm beams, leaving them in the shadows. In economic terms, the new high rise would externalize shade.

There is a cost to shade. If you sell condos you know that southern exposures are more desirable than northern (though thankfully some feel a south view is a tad too warm). Being that there is more demand for this exposure these condo garner a higher price than those pointed north.

Here’s my original post challenging the breakdown of goods into public, private, club and common. Today I’m challenging the idea that fireworks are a public good. One would think that no-one could be excluded from seeing the fireworks. At least, once you already assume that you really mean no-one who is already close enough in the first place, can’t be excluded. An assumption which in itself, makes it a private good when you live one county over.

Realizing it has this private good, say the city lures people to move to their downtown by advertising an amazing fireworks display on the Fourth of July, shot from a bridge over the Mississippi. By fall the new residents have moved into a beautiful condo overlooking the stone arch bridge which spans the mighty river. By the following summer, however, a new condo building has been built which blocks their view.

Mr. and Mrs. NewRes show up at City Hall hotter than a hornets nest and demand compensation for being denied their access to a public good. After all it was the city that approved the permit that allowed the building to steal their view of the fireworks.

Here’s where I say be careful to identify your public, be careful to know your groups. The fireworks are public to those who show-up in a public space within sight of them. And you say I am splitting hairs. But am I?

When we tell families their children have access to a uniform public education for grades K-12, are we offering fireworks that can’t be seen by everyone? We all know that there are different levels of school performance all across the districts. At least a portion of that performance can be attributed to work done in the neighborhoods which support the learners and the educators in ways that are not supported elsewhere. So when the state says all learners will be provided ‘the same’ public good, is the state committing to make-up for the difference in the neighborhood support? Because that would tally quite a hefty tab.

The Nobel Prize

Today the Nobel Prize in economics was presented to Paul Milgrom and Robert Wilson who developed auction theory and auction design. The Nobel Prize site provides an excellent background for understanding their work. Interestingly, this includes a differentiation between the common value of a good and the private value as a key feature. Where the definition of a private value is defined as one achieved when the bid decision is made independently of any other bidder in the auction.

The 1996 Laureate in Economic Sciences, William Vickrey, established auction theory in the early 1960s. He analysed a special case, in which the bidders only have private values for the good or service being auctioned off. This means that the bidders’ values are entirely independent of each other. For instance, this could be a charity auction for dinner with a celebrity (say a Nobel Laureate). How much you are willing to pay for such a dinner is subjective – your own valuation is not affected by how other bidders value the dinner. So how should you bid in this type of auction? You should not bid more than the dinner is worth to you. But should you bid lower, perhaps getting the dinner at a lower price?

The explanation goes on to describe the theory of common value.

Entirely private values are an extreme case. Most auction objects – such as securities, property and extraction rights – have a considerable common value, meaning that part of the value is equal to all potential bidders. In practice, bidders also have different amounts of private information about the object’s properties.

The portion of the bid that is devoted to the common value is based on a projection of what the bidder feels others will pay. Thus to have better knowledge is advantageous. Here the familiar diamond trader example if used.

Let’s take a concrete example. Imagine that you are a diamond dealer and that you – as well as some other dealers – are contemplating a bid on a raw diamond, so you can produce cut diamonds and sell them on. Your willingness to pay only depends on the resale value of the cut diamonds which, in turn, depends on their number and quality. Different dealers have different opinions about this common value, depending on their expertise, experience and the time they have had to examine the diamond. You could assess the value better if you had access to the estimates of all the other bidders, but each bidder prefers to keep their information secret.

Now if the diamond traders are from a tight knit community, say of the Jewish faith, than all those in the faith are included in the advantageous bidding environment. The information is public information within the group, private to those at the exterior. This type of diamond trader group is used by sociologist James S. Coleman in his famous treatise from 1988, Social Capital in the Creation of Human Capital.

Wholesale diamond markets exhibit a property that to an outsider is
remarkable. In the process of negotiating a sale, a merchant will hand
over to another merchant a bag of stones for the latter to examine in
private at his leisure, with no formal insurance that the latter will not
substitute one or more inferior stones or a paste replica. The merchandise
may be worth thousands, or hundreds of thousands, of dollars. Such free
exchange of stones for inspection is important to the functioning of this
market. In its absence, the market would operate in a much more cumbersome, much less efficient fashion.

Coleman stresses the benefits of assurances. Assurance which can be given due to the greater knowledge of the stones, their quality and source of origin. Coleman says:

Observation of the wholesale diamond market indicates that these close
ties, through family, community, and religious affiliation, provide the
insurance that is necessary to facilitate the transactions in the market. If
any member of this community defected through substituting other stones
or through stealing stones in his temporary possession, he would lose
family, religious, and community ties

Coleman concludes that there is value in this. He’s view is that the value lies in the social ties, or the social network, which parties to the transaction are able to access.

Another more recent use of the Jewish diamond traders appears in a paper by Barack D. Richmond, How Community Institutions Create Economic Advantage: Jewish Diamond Merchants in New York. In this case the value retained by the group are derived from an ability to enforce contracts. Here’s an excerpt from the paper, bolding is mine:

The particularly interesting feature of this system is the economic role
of ultra-Orthodox Jews. The ultra-Orthodox provide critical value-added
How Community Institutions Create Economic Advantage 415
services that add significant efficiency to the system of exchange. They work
as skilled diamond cutters whose polishing increases the sale prices of stones,
and they play the essential role of middlemen brokers who match certain
stones with the buyers who most value them. Their unique credibility provides
the Jewish merchants with a comparative advantage over rival merchant groups
that lack such community foundations, and their role identifies limitations
to public contract enforcement that persist even in developed economies.

When courts fail, community institutions can arise to fill their place.

Here’s what we know from these three uses of the Jewish diamond traders example. All three feel the group has created some type of value—not to anyone individual but a blanket of value across the group. This value has something to do with how the group is connected, how the information flows through its membership. And that there is a commitment to maintain a standard of enforcement.

What is exciting about Milgrom and Wilson’s differentiation of private and common value is that there is a tie-in to price. An auction bring buyers and sellers into a marketplace. And the values that these two new Nobel Laureates observed reflect activity of a private nature and that of a common nature.

As pointed out in previous posts the categorizing of goods as either private or public (or club and common) is inadequate. My first post here introduces the idea that a haircut can have a public (common) component. And I also wrote a post about national defense as there are many examples of how this public good was used to the benefit (privately) of a sub-group. The long and the short of it is that goods are goods. It is how they are employed, by what types of groups, which determines the portion of their price derived from a private sphere and that derived from a public sphere.

What is Public- National Defense edition

National defense is the most common example cited as an economic public good. It is certainly the oldest public good, harking back to the times of kings and round tables, and even before. Allegiances were made, city walls built. But let’s see if it always meets the economists’ definition of providing a service that is non-excludable and non-rivalrous.

The name alone gives away that it is already a different something than, say, sunlight. Right off the bat the precursor ‘national’ tags the defense to a nation. So it is a service to one nation, excluding all outsiders. In this case being non-excludable really means the service cannot exclude citizens of the nation in question.

However, there also seems to be all sorts of exceptions to this rule. Take the Japanese Americans that were locked up during WWI. Around sixty-two percent of the internees were US citizens and yet a global conflict thrust them at odds with their nation. Recently Mike Pence criticised the President Obama Administration for not rescuing ISIS hostage Kayla Mueller. The claim being that this US citizen did not receive the protections of national defense that she and her family deserved.

Like any definition it only takes one counter example to throw the statement into question. Let’s consider whether the good is non-rivalrous: that the use of it by one consumer does not diminish the use of it by another. This seems right. Everyone in Philadelphia received the same protections against terrorism when Navy Seals took out Osama Bin Laden, as folks in Albuquerque. This mastermind of evil would do harm to any American which means his demise makes all Americans safer.

Yet, our history is riddle with military involvement in countries in efforts to preserve business interests abroad. In the early part of the twentieth century the US defense forces were repeatedly used in Nicaragua to protect business interests. Declarations against such activities include objecting to the use of a national resource to benefit a sub-group, the business community. (excludable) And since the military is run on a budget, the occupation of Nicaragua from 1912-1933 undoubtedly took away from expenditures on other national defense initiatives. The end goal of defending all citizens is rivalrous as there is always a menu of possible national pursuits that could drain the national purse.

It seems to me that there are no such things as goods that are solely for the public benefit. There are only goods, or rather goods and services. And those goods and services can be used by individuals or groups, for private or public objectives. Some goods, by nature, are more prone to be shared within groups. Some are more productively produced while strongly preserving private property rights. Groups with shared interests decide how to employ goods and services, where the groups can be as large as the human race all the way down to a couple.

Changing Priorities in the Neighborhood

Crime has been on the rise since May of 2020. In Minneapolis more than 400 people have been shot and 64 killed so far this year. It’s common to hear residents say they know more people that have been carjacked in broad daylight than have contracted Covid-19.

One neighborhood is organizing to do something about it. When a building in their neighborhood was slated to become a Salvation Army run women’s shelter, the moms went into high gear. Their priorities had changed and the folks in Near North weren’t going to have bureaucrats telling them what they needed.

Residents were vigorously opposed. A Mother’s Love went door-knocking in a multi-block radius of the Gordon Center and found no one knew about the proposal. The Northside Residents Redevelopment Council—the official neighborhood association—filed an injunction to halt the process.

Council member Ellison showed up. Elected in 2017 on the promise “to imagine a future for the North Side authored by North Siders,” he apologized for poor public engagement and encouraged constituents to lay out their concerns. “I don’t at all take skepticism of this project as, like, an attack on homeless women,” he assured them.

Frustrated residents pulled no punches. There were already three homeless shelters within a mile of the Gordon Center, yet the North Side had been without a sanctuary for at-risk youth since the 1980s, they said. Many community-led proposals for the Gordon Center had been rejected over the years.

The residents, who were organizing on their own time, objected to the shelter not because they weren’t sympathetic to the cause. It’s just that in the ever changing landscape of neighborhood needs, the effect of increased crime was more damaging to the youth than the needs of the women.

“I’ve lived here for 43 years,” said Willard Hay resident Esther Adams. “I’ve seen kids shot on this corner, I’ve seen kids killed on this corner. We’re just trying to help the kids here.”

In addition to the granular differentiation of need, the resources necessary for a youth center is thought to be considerably less than the homeless shelter.

The Gordon Center (homeless shelter) will cost more than $4 million to convert into a shelter, but peace activists like Clemons’ group, A Mother’s Love, believe it would cost considerably less for a youth center because of the way the building is designed. For one, it already has a playground.

In this case the system worked. The neighborhood did the work to voice a preference between services for their group. It was close though. The building permit had already been approved for the homeless shelter. If the moms had been too busy to put in the time, or their council member too distance from his constituents or the county’s ambition too strong, there could have been four shelters and no youth center.

It just seems like there should be some general tracking of these things by neighborhood. A hospital wouldn’t go into an area with three other hospitals. Even a McDonald’s wouldn’t have four franchisees within a mile of each other. Some sort of indexing of the mix of services provided to not only serve residents, but also to be sure that various age groups and household formations are being supported.

Is it Public or Is it Private?

Marginal Revolution University is an incredible source of economic knowledge. In addition to the course work there are videos and games. Here’s one designed to help distinguish between public goods, private good, common goods and club goods. At the end of the game there is a cheat sheet of how to classify these goods and services.

Pure Private Goods/Services (excludable, rival)
● Haircut
● Pizza
● Website design
● Table service at a restaurant
● Snuggie
● House


Club Goods/Services (excludable, non­rival)
● Netflix
● Amusement park
● Uncongested toll roads (highway)
● The movies
● YMCA membership


Common Goods (non­excludable, rival)
● Busy city street
● Hospital E.R.
● Tuna in the ocean
● The meadow where your sheep graze
● Wildlife
● Forests


Pure Public Goods/Services (non­excludable, non­rival)
● Wikipedia
● National defense
● Uncongested city street
● City fireworks
● Air to breathe
● Google
● Asteroid defense

To understand the economic arrangement I talk about in this blog, these categories have to be rearranged. I ask people to consider that there are two natures to every product: public and private. The nature is dependent upon who, or which group, has access to the goods.

Let me give you an example. A haircut seems like a pretty straightforward private good. The exchange is between two individuals where the customer clearly owns the hair. But what if the haircut was given to disadvantaged kids in an elementary school by a barber who was providing the service as a gesture of community involvement?

The purpose of the activity is to enhance a child’s self esteem and in doing so increase their productivity at school. The barbers work for free so no money is exchanged to make this a private transaction. There are no production reports, nor does this get measured as a part of GDP. This service is done as a public service not a private transaction. Mind you not just anyone can get the free haircut. Only the kids at the elementary school in question. Everyone else must pay. So the public nature has to be attached to that grouping: it is a public good for the elementary school kids.

This is the reason a haircut cannot be classified exclusively as a private service. In due time, I will sort through this whole list of goods and services to convert you to the new classifications of public and private! In due time.

Notorious RBG

Like everyone else, I’ve been consuming the articles about the life and work of Ruth Bader Ginsberg who recently passed away after 27 year on the US Supreme court. I’ll admit that I didn’t know much about her until recently. But there are three things I will take away from how she lived her life.

After graduating from Cornell in 1954 she married her husband of 56 years. A few years later she followed him to Harvard Law School.

The law dean reportedly invited the nine female students in the class to dinner and asked, “How do you justify taking a spot from a qualified man?” Ginsburg said she gave “the answer he expected”: “My husband is a second-year law student, and it’s important for a woman to understand her husband’s work.”

She was willing to make the sacrifice of sucking up a personal assault if it’s that what it took to get where she wanted to go. What if she had stormed out and held a protest and rallied a march? Would women be better off today? Instead she bowed to the expectations of her time, in order to forge ahead. She was strategizing a war plan where emotion pull many people into a street fight.

After she graduated with a law degree from Columbia, she had a difficult time landing a job with a law office. It is apparent that claims of a meritocratic system was (and still is) constrained by social norms. But Ruth Bader Ginsberg must have looked at the employer pool as a group where not each and everyone had to want to employ her. She just needed one job, one employer. And that was a courtship with the U.S. District Court.

Once again, instead of being distracted by an individual or a small set of individuals that blocked her path, she had faith in the larger community. She kept looking for where she could trade her skills instead of trying to convert each objector. She was an optimist.

When it came time to converting opinions in the court room, where she had earned stature and prominence, she used perspective. She brought the claims before the male judges in the form of claims made by men, that way they would not be biased by gender. She wrote the story in a way that they could see the work for what it was.

There’s been some really interesting work done by the scholar Cary Franklin about the men Justice Ginsburg represented when she was at the ACLU, and how when she was bringing them before male justices, the male justices had trouble believing that these guys actually wanted to take care of their elderly mothers or their children, because it was so foreign to them. So in some ways what she was doing was quite challenging to them. But at the same time, being a canny strategist – showing that men had skin in the game, and that they too were harmed by gender inequality – enlisted a broader range of allies for her.

Ruth Bader Ginsberg was a women who played the long game. And it has paid off in spades for all women to benefit. She is a true feminist.

Here is a nice photo essay of her life.

Pop quote

Name the author, title and page number (if applicable) for pop quotes and you will receive a grand prize!

On my return home, as I passed the relatively genteel playground near where I live, I noted that its only inhabitants in the late afternoon, with the mothers and the custodian gone were two small boys threatening to bash a little girl with their skates, and an alcoholic who had roused himself to shake his head and mumble that they shouldn’t do that. Farther down the street, on a block with many Puerto Rican immigrants, was another scene of contrast. Twenty-eight children of all ages were playing on the sidewalk without mayhem, arson, or any event more serious than a squabble over a bag of candy. They were under the casual surveillance of adults primarily visiting in public with each other. The surveillance was only seemingly casual, as was proved when the candy squabble broke out and peace and justice were re-established. The identities of the adults kept changing because ferent ones kept putting their heads out the windows, and different ones kept coming in and going out on errands, or passing by and lingering a little. But the numbers of adults stayed fairly constant-between eight and eleven- during the hour I watched. Arriving home, I noticed that at our end of our block, in front of the tenement, the tailor’s, our house, the laundry, the pizza place and the fruit man’s, twelve children were playing on the sidewalk in sight of fourteen adults.

It’s all about the Group

Amy Finkelstein’s video for MRU about the economics of mammograms just popped into my email. She and her colleagues are wondering about the efficacy of the present policy for screening for breast cancer. The blurb following the video explains.

One in eight women will be diagnosed with breast cancer. The current recommendation is that women should receive annual mammograms starting at age 40. But who is actually following this recommendation, and does that affect the test’s efficacy? MIT’s Amy Finkelstein and two of her coauthors, Tamar Oostrom and Abigail Ostriker, explore this question in this video. This video is based on the following paper: Screening and Selection: The Case of Mammograms Liran Einav, Amy Finkelstein, Tamar Oostrom, Abigail Ostriker, and Heidi Williams https://economics.mit.edu/files/20062

Past studies suggested dividing women into two groups in order to tackle a public health response to cancer: those under age 40 and those over age 40. Once over forty years of age, women are considered at a higher risk and thus were encouraged to have mammograms on a regular basis. The Susan G Komen organization provides data on how screening has saved lives. “From 1989-2017 (most recent data available), breast cancer mortality decreased by 40 percent due to improved breast cancer treatment and early detection [60]. Since 1989, about 375,900 breast cancer deaths in U.S. women have been avoided [60].”

It wasn’t long, however, that the drawbacks of misdiagnosis became apparent. False positive tests were causing patients unnecessary mental and physical costs. The fear and treatment associated with a false positive took time, energy and resources away from women who were in fact not likely to acquire the disease.

Amy and her MIT colleagues found that grouping by age was not specific enough. They observed that women who comply, and get screened, share habits that actually make them less likely to be prone for a positive test. Based on information from the medical community, women who disregarded screenings were more likely to eventually experience breast cancer.

By regrouping the women in consideration of their norms and lifestyles, the MIT professors are acknowledging that the public health of women in regards to breast cancer is multidimensional. They do not propose a new public policy but rather further insight into how the topic should be considered. Tamar Oostrom voices in the video: “our paper brings an additional dimension” to the issue.

When you think of the nature of people who would follow the recommendations and comply with regular testing, they are probably folks who can afford to be tested, both in the sense of the medical services expense and in the time it takes out of their lives. They probably have access to transportation to be tested. They have the willpower and ability to prepare and eat a healthy diet and exercise. It’s interesting to note that many if not all of these activities are tied into access to other public goods.

This video confirms a couple of things. Putting public resources towards a problem reaches a point of no additional returns, and can cause additional costs to the targeted group. Secondly, solving for the optimal amount of screening involves an understanding of how to distinguish groups and there access to other public goods markets.

Here’s the deal 101

Our local NBC news outlet recently ran a story about an elderly couple receiving help from neighbors after being criticized for not keeping up the exterior paint on their home. It totaled $67,000 worth of help. There is no name given to this transfer of money. When a private party helps themselves to $67,000 from their employer it is called embezzlement. When a politician helps themselves to $67,000 from their campaign fund it is called corruption.

The old school explanation for this activity is to denote it as a form of charity. But is it really a gift? Neighborliness is a term that shows up on surveys. But what does that mean? I see this exchange between the neighbors of Gloucester is the most basic transaction in a economy of groups. Let’s pull it apart.

It all started with an anonymous note left for the couple which read, “Please Paint Me! 😦 Eye sore – Your Neighbors. Thanks.” Although clearly written by one individual, the message is presented as a community concern. Signed, your neighbors. You’ve probably heard this type of chatter before. A house on a main road is dilapidated, or decorated with eccentric siding. Comments like, ‘I really wish someone would do something about that place.’ Or, ‘Some people are bringing down the neighborhood!’ So although one neighbor wrote the note, thoughts of this nature were undoubtedly mulled over by many a passerby.

A personal residence is deemed the bastion of private property, and property rights are a keystone feature of our economic system. But the note indicates that there is a hazy area not reflected in the legal deed, filed in the county records, which spells out the owners names. The area residents feel they have a right to demand that the exterior meet their expectations. This is not a novel idea. In fact cities even have ordinances which address the exteriors of properties regarding thresholds for debris removal and grass mowing.

The couples’ daughter took to social media to voice her response to the note. She points out that her parents had lived in community for the past 50 years. And that during this long history they had maintained their home, and hence contributed many years of service towards an acceptable streetscape. “My family for many years took care and maintained this house as best they could…” 

The reason for the disrepair could happen to anyone, it was an act of nature. The article reports that “Marilyn, 72, developed multiple sclerosis about 30 years ago and is mostly confined to her bed, and Jimmy, 71, recently recovered from a quadruple bypass…” Health concerns take time and resources away from the couples ability to comply with the norms of the neighborhood.

Once the word got out about the need, once demand for goods and services was established, a voluntary response from the community resulted in a $67,000 balance in a GoFundMe account. Currency is very liquid, yet these funds are not fungible. As the report confirms the money is “to be used for new siding on their home, new windows, roof and stairs.”

There is no reporting of free riding or extortion, even though funds are seemingly extracted from a greater group to a private party. Nor is this activity portrayed in a religious or moral sense. The voluntary transfer of resources to improve the exterior of the home is held together by a communal objective, one that the recipients contributed to over. This transparent and voluntary activity is the most basic transaction in economy of groups.

“People look out for each other in Gloucester,” he said. “If somebody needs some help, we just get together and do it. It’s all just very heartwarming.” What I hear him saying is that Gloucester is a town with a free an open economy. And yes, that is heartwarming.