Q: The idea of Charter Cities originated from Hong Kong and Shenzhen, am I right?
Romer: The two most interesting precedents for Charter Cities are Hong Kong and Shenzhen, so it does have some origins here. They each played important roles in fostering reform of the Chinese economy. But it is an approach that can be used in any country that wants to implement reforms, even a developed country like the United States. It turns out that this is a unique time in human history when it is possible to start many new cities because there is an enormous, unmet demand for city life.
Shenzhen was China’s first Special Economic Zone, opening to foreign investment and free enterprise in 1980 under Deng Xiaoping. An earlier post (Brexit, Texit, Calexit, and the Future of China) looked at Shenzhen and Shanghai Pudong New Zone, China’s early open reforms designed to follow the success of Hong Kong.
These three regions are the freest and prosperous in China. Hong Kong is considered the freest economy in the world (Hong Kong story about Heritage Economic Freedom Index, and here is story of Fraser Inst. Economic Freedom of the World Index).
And now China has opened a new Special Economic Zone, “China’s new special economic zone brings back memories of Shenzhen“:
On April 1, President Xi Jinping announced plans to transform a little-known farmland called Xiongan into a glittering technology and innovation hub, complete with new businesses, universities and state-of-the-art transportation.
Special Economic Zone aren’t automatic. Some succeed and residents prosper, while others don’t. Lotta Moberg notes in “The political economy of special economic zones,” (Journal of Institutional Economics):
Policy makers introducing SEZs must overcome the knowledge problem to avoid misdirected economic planning. Yet, the scheme can only fulfill its purpose if it also prevents destructive rent-seeking behavior, both from businesses and from government authorities. The political economy framework of SEZs can be applied to judge their potential efficacy, something that orthodox studies of country features such as natural resources, infrastructure, and zone location fail to do. The Indian and Chinese experiences with SEZs illustrate these points.
“China’s new special economic zone brings back memories of Shenzhen,” (BusinessInsider, April 20, 2017) notes SEZ status raised Shenshen from a fishing village of 30,000 to today’s dynamic megacity with almost 12 million people:
The Xiongan New Area, which will eventually cover 2,000 square kilometers—more than twice the size of New York City—is intended to relieve congestion in the capital of Beijing and nearby Tianjin. Among other potential consequences include spreading the country’s economy northwest, away from the bustling coastal cities…
Like Shenzhen before it, Xiongan is expected to offer phenomenal investment opportunities. Remember, we’re talking about a brand new megacity literally built from the ground up. According to UBS estimates, the project will require as much as $580 billion over the next 20 years.
Lotta Moberg’s page links to a variety of articles on Special Economic Zones, including “Is It Time That America Adopted Special Economic Zones?” (Daily Caller, March 30, 2017) which looks at SEZs as a way to counter current protectionist and nationalist trends in the U.S. and around the world:
How do you solve a problem like protectionism? With a U.S. president threatening a trade war, populism dominating political headlines in Europe, and decreasing popularity of trade deals, think-tankers and political pundits are scrambling for ways to escape a vicious circle towards ever-higher barriers to trade. Turning this development around may take a long time. In the mean time, though, countries may still create spaces where the barriers do not apply.
Read more: http://dailycaller.com/2017/03/30/is-it-time-that-america-adopted-special-economic-zones/#ixzz4f35qgdOP
Policy debaters have a U.S./China policy resolution and Texas UIL has a Spring Lincoln-Douglas topic: RESOLVED: In matters of international trade, globalization ought to be valued above protectionism.
Last week I purchased a fire pit for a friend. It was $125 delivered by Amazon…from China. Should I have instead have tried to purchase a similar fire pit made in the U.S.A.? Well, money was an issue. “Fire Pit” wasn’t in my April budget nor in my friend’s budget. We could have dug a hole in the yard and lined it with bricks. But a portable fire pit for the patio seemed preferable.
Amazon kept part of the $124.94 to cover delivery costs, hosting item and transacting the sale. Plus Best Choice Products, a Southern California company (originally Sky Billiards) kept a slice to cover their costs and (hoped for) profits for importing this fire pit from somewhere in China.
Who is hurt when Americans buy portable fire pits or other products from China? People in China purchase iPhones and other name- brand goods from the U.S. Japan, and Europe and buy food from Kentucky Fried Chicken, Starbucks, and McDonalds. “Mapping China’s middle class,” (McKinsey & Co.) reports Chinese middle income consumers will soon expand to three-times the size of American baby-boomers:
China’s new middle class also divides into different generations, the most striking of which we call Generation 2 (G2). It comprised nearly 200 million consumers in 2012 and accounted for 15 percent of urban consumption. In ten years’ time, their share of urban consumer demand should more than double, to 35 percent. By then, G2 consumers will be almost three times as numerous as the baby-boomer population that has been shaping US consumption for years.
Economists over the last two hundred and fifty years have consistently made the case for open international trade and against policies of mercantilism and protectionism. Critics often label economists advocating international trade as pro-business or “corporate shills.”
Adam Smith argued much the opposite in “The Wealth of Nations.” Smith argued the benefits to consumers of international trade are fairly obvious: opportunities to purchase a wider variety of goods, often at lower prices. Smith
Taking a dark view of globalization is this post drawn from a recent “BBC broadcast, a ‘Dinner Party Conversation’ on the question of whether globalisation is dead?” The post offers counter arguments research arguing that international investment, trade, and migration are the reason world poverty has fallen so dramatically:
Moreover, while it is true that poverty has fallen worldwide, the phenomenon cannot be wholly attributed to financial liberalisation or globalisation, but instead to advances in e.g. medical science and scientific development. Indeed, the numbers of those living on less than $1 a day fell most rapidly, not during the period of financial globalisation, but between 1950 and 1970 according to Bourgignon and Morrison (see Our World in Data, on global extreme poverty).
This Cato Institute post, “What Globalization Isn’t,” (July 6, 2016) tried to separate out “false song globalism” from the decades of gains from market-based international trade and investment:
The Peterson Institute for International Economics estimates that past gains from U.S. trade and liberalization of investment range from $9,270 to $16,842 per household. Another study found that that “a 1 percent increase in trade raises real income by 0.5 percent.” Other research finds that the trade flowing from globalization has increased consumer purchasing power for middle-income households by 29 percent. As for the poor, they benefit most from the availability of low-cost goods, seeing as much as a 62 percent increase in purchasing power over what they would have in a world without trade.
Looking for downsides, the HBR article asks: “Did Trade with China Make U.S. Manufacturing Less Innovative?” (December 8, 2016). International competition can spur U.S. firms to innovate, but sometimes a cost cliff can be so steep, domestic firms just abandon markets to imports. The HBR article cites new research:
Was increased trade with China really pushing U.S. companies to become more innovative? For manufacturers, at least, they found that the answer was no. In fact, the relationship went in the opposite direction: U.S. manufacturers exposed to competition from Chinese imports became far less innovative. …
The first takeaway from this paper is that more competition, from trade or otherwise, doesn’t necessarily lead to more innovation. While competition can force firms to innovate to fend off rivals, it can also cut profit margins, leaving companies with less to invest in research and development.
So for both policy and Lincoln-Douglas debaters there are arguments, claims, and research on all sides of the globalization debate. It’s worth taking the long view though, international trade has extended for all human history and brought both benefits and costs. The Economists offers a nice overview: “When did globalisation start?” (September 23, 2013):
Some see globalisation as a good thing. According to Amartya Sen, a Nobel-Prize winning economist, globalisation “has enriched the world scientifically and culturally, and benefited many people economically as well”. …
Others disagree. Globalisation has been attacked by critics of free market economics, like the economists Joseph Stiglitz and Ha-Joon Chang, for perpetuating inequality in the world rather than reducing it.
After a discussion of economic history of global trade, The Economist takes a long view:
But it is clear that globalisation is not simply a process that started in the last two decades or even the last two centuries. It has a history that stretches thousands of years, starting with [Adam] Smith’s primitive hunter-gatherers trading with the next village, and eventually developing into the globally interconnected societies of today. Whether you think globalisation is a “good thing” or not, it appears to be an essential element of the economic history of mankind.
For LD debaters, is there a value in protecting U.S. fire pit manufacturers from global competition? With choices limited by fire pit tariffs, would people purchase a more expensive U.S. versions? Spending more on U.S. fire pits leaves consumers less to spend on other goods and services, and/or less to put aside as savings.
U.S. fire pits could be manufactured less expensively if tariffs on steel from China were lower. “China upset at high US tariffs on steel imports: Punitive tariffs announced after conclusion of anti-dumping and anti-subsidy investigations,” (South China Morning Post, February 4, 2017):
The US Commerce Department announced earlier this week it would impose punitive tariffs ranging from 63.86 per cent to 190.71 per cent on China’s stainless steel products after concluding anti-dumping and anti-subsidy probes.
Also see “U.S. Steelmakers Press Their Luck With Price Increases,” (Wall Street Journal, April 10, 2017):
Domestic steel companies have raised prices by as much as 50% on popular types of steel in recent months. That has boosted their profits, but troubled customers who say they can’t afford the higher cost. Steel users say they are looking for cheaper alternatives from countries unaffected by the tariffs.
Prehistoric people likely brought fire and fire-making tools with them as they traveled the world. Post-historic people trade fire pits instead.
— Greg Rehmke
Should the U.S. encourage China to further decentralize economic and political authority? Soft or full partition has been advocated for Iraq, Syria, and Libya. The politically-decentralized canton-nation of Switzerland, and past and modern city-states show the success of devolving political authority.
Political decentralization is in the news with English voters choosing (just barely) to exit the European Union. Before the last election, when most expected Hillary Clinton to win, Texas citizens and politicians openly called for a similar Texit (see: “From Brexit to Texit? Renewed calls for Texas secession after EU vote,” (CBS News,” June 25, 2016).
Donald Trump unexpectedly won, which led many in California to call for “Calexit” instead: “‘Calexit’ movement says Trump win helps their calls for California to secede,” (LA Times, November 9, 2016).
Stephen Greenhut, though against ‘Calexit,’ outlines reasons for smaller Californias: “California break-up idea won’t go away — for good reason,” (Orange County Register, April 9, 2017):
California’s approximately 39 million population equals the total combined population of the nation’s 22 smallest states. I can regale you with geographic trivia, but the closer you look, the harder it is to fathom why talks of breaking up California are not taken more seriously. California is too large in size and population to be governed fairly.
Though he is a libertarian, Greenhut argues the problem is one of political philosophy not political ideology:
In California, we have one Assembly member for every 483,000 residents. That’s the worst ratio in the country. In New Hampshire, which has the best ratio, there are approximately 3,200 residents for every member of the statehouse. What are your chances of influencing or even reaching your legislator — or even his or her staffers — in California?
In a state as big as ours, only the big guys — the political parties, labor unions and other special interests — matter. Breaking up one mega-state into multiple reasonably sized states, where people with like-minded interests can better govern themselves, is a great idea that gives voters more power. If that won’t happen, then we at least need more representative districts.
Breaking up California or Texas into smaller states offers many political and economic advantages. Texas already has an okay to break itself up. “The Five States of Texas,” (D Magazine, July 2009) notes Texas can’t draw on the U.S. Constitution to succeed, but:
What Texas could do, however, is divide itself into as many as five states, a privilege given to it as a unique condition of its annexation to the Union in 1845. For Dallas-Fort Worth, this is a no-brainer: North Texas produces a disproportionate amount of revenue for the state, and it would get to keep that money in a state where Dallas is the capitol.
Economically, then, it would be a huge benefit to the area. But politically, what would Texas as a whole look like if it chose to do this? Would dividing a large, red state into five smaller, reddish states benefit Republicans in the Senate? In the Electoral College?
Back to political decentralization in China, this page, “China’s Special Economic Zones,” offers a valuable outline and history of China’s SEZs. And here is 2011 World Bank post on SEZ Success and Challenges.
Just this month China launched a new SEZ, “China to launch special economic zone in province hit by layoffs,” (April 3, 2017):
The Xiongan New Area, about 100 kilometers from Beijing, will house “non-capital functions” moved from the capital city. This is part of a wider initiative to support the economy, and to integrate Hebei with the capital city and nearby Tianjin, according to state media. …
Ones that have fared better were in Shenzhen and Shanghai. Established in 1980, the Shenzhen special economic zone helped jumpstart reforms and turned the fishing village into today’s manufacturing and high-tech center, while the Pudong area in Shanghai is now a major financial center.
See also, “China Hopes Xiongan New Area Will Relieve Pressure On Congested Beijing,” (Forbes, April 9, 2017)
This Economist article is skeptical of SEZs: “Political priority, economic gamble,” (April 4, 2015):
Special economic zones (SEZs) are all the rage among governments hoping to pep up their trade and investment numbers. Such havens are appearing even within havens: the Cayman Islands has a new one. “Any country that didn’t have [an SEZ] ten years ago either does now or seems to be planning one,” says Thomas Farole of the World Bank.
How can U.S. policy reforms best embrace and encourage the advantages of political and economic decentralization, innovation, and competition? For students debating the U.S./China resolution, could U.S. policy reforms engage Chinese SEZs is ways similar to US policy toward Chinese city-states like Hong Kong. Taiwan, and Singapore?
The Independent reports “Ford to launch plug-in electric car in China as Beijing lays out strict air pollution rules to combat smog,” (April 6, 2017). (See also: “Ford to Make Electric Cars in China Amid Green Drive,” Wall Street Journal, April 7, 2017).
Electric cars offer many advantages, but reducing pollution isn’t always one of them. Instead, electric cars shift the point of pollution to the electricity source. So electric cars charged in the Pacific Northwest draw power from very clean hydroelectric dams. Electric cars in California can require importing more power from coal burning plants in other states.
Electric cars sold in the U.S., China, and E.U. receive significant government subsidies. Yet “Electric cars and the coal that runs them” (Washington Post, November 23, 2015), notes:
…Thanks to generous tax incentives, the share of electric vehicles has grown faster in the Netherlands than in nearly any other country in the world.
But behind the green growth is a filthy secret: In a nation famous for its windmills, electricity is coming from a far dirtier source. Three new coal-fired power plants, including two here on the Rotterdam harbor, are supplying much of the power to fuel the Netherlands’ electric-car boom.
A Wired article on Tesla’s electric cars (March, 31, 2016) explains:
Your electric car doesn’t need gas, but it still might get its energy from burning carbon. It depends on how your local grid generates electricity. “If you use coal-fired power plants to produce the electricity, then all-electrics don’t even look that much better than a traditional vehicle in terms of greenhouse gases,” … But if your local grid incorporates a fair amount of renewable solar and wind energy, like California, your electric vehicle is pretty clean.
So electric cars in California can be clean on sunny, windy days, and less clean when the grid draws power from out-of-state sources (up to 50% from burning coal). California doesn’t generate much energy from coal, but does import a lot. “UPDATE: California’s quiet market for coal,” SNL (October 12, 2015):
In 2014, less than 5% of California’s total energy demand was served by coal and petroleum coke-fired plants, nearly all of it from plants outside the state, according to an Oct. 12 report from the California Energy Commission. By 2026, California will end virtually all its reliance on coal.
But at times, as much as 50% of Southern California’s electricity still comes from coal-fired plants, Steve Homer, director of project management for the Southern California Public Power Authority, or SCPPA, told SNL Energy.
Back to the China story, generating electricity from coal in United states power plants is far less polluting than electricity from coal in China. “In Coal-Powered China, Electric Car Surge Fuels Fear of Worsening Smog,” (Reuters, January 27, 2016) reports:
A series of studies by Tsinghua University, whose alumni includes the incumbent president, showed electric vehicles charged in China produce two to five times as much particulate matter and chemicals that contribute to smog versus gas-engine cars. Hybrid vehicles fare little better.
“International experience shows that cleaning up the air doesn’t need to rely on electric vehicles,” said Los Angeles-based An Feng, director of the Innovation Center for Energy and Transportation. “Clean up the power plants.”
The key policy point is the upgrade power plants before pushing (subsidizing) electric cars:
Tsinghua’s studies call into question the wisdom of aggressively promoting vehicles which the university said could not be considered environmentally friendly for at least a decade in many areas of China unless grid reform accelerates.
In addition to the problem of electricity source pollution are infrastructure challenges. “California bets on electric cars, at ratepayer risk,” (San Diego Union Tribune, February 7, 2017), asks:
Should all utility consumers subsidize the wealthier few who like to drive electric cars?
It’s hardly a fair question. Yet that’s what the California Public Utilities Commission will eventually have to decide, now that utilities have proposed a $1 billion plan to build and effectively own the state’s retail charging network of tomorrow.
New charging stations cost money, and so does the renewable power generation grid:
… a second problem created mostly in California, a serious glut of renewable energy. Starting in 2006, lawmakers ordered utility consumers to subsidize rapid increases in wind and solar energy production.
Today the state has as much as 50 percent more power available than needed on a sunny, windy winter afternoon. And then, when the sun goes down or weather causes production to drop, fossil-fuel plants fire up because batteries are too expensive.
China where average incomes are much lower than California, has more severe infrastructure problems for charging electric cars. “What’s Driving The Electric Car Trend In China?,” (NPR Morning Edition, December 14, 2015 ) reports on government subsidies in boosting electric car sales in China. Yang Zhou discusses his new car:
ZHOU: I bought a hybrid model from a Chinese carmaker called BYD. And it stands for Build Your Dreams. I paid $24,000 for the car. And that’s 30 percent off the sticker price. But I paid no purchase tax. And the best thing that comes with the car is a free Shanghai license plate, which is worth $13,000.
Zhou explains that this special license plate allows him to rush-hour access to less-congested elevated Shanghai highways. But he also complains that charging his car is difficult:
ZHOU: I have to admit that charging the car is really a hassle. Every time I do it, I have to lower an extension cord from my apartment, which is on the 11th floor. …
ZHOU: Oh, yeah, it’s very long. And it’s really heavy (laughter). It takes seven hours to charge the car. And the car can drive 40 miles on one charge. But fortunately, I don’t have to charge the car every day. But I do expect that the infrastructure for these kind of vehicles will get better over time because China’s government has planned to build 12,000 charging stations by the year 2020.
Building 12,000 charging stations will be another expense, and money that could have been used to modernize Chinese coal power plants instead of catering to already-subsidized electric car buyers.
Shanghai does have a showcase clean coal plant. “China hopes Shanghai clean coal plant sets example,” (PEi, August 23, 2016) and “China’s drive to clean up its coal power, one plant at a time,” (New Scientist, August 22, 2016).
Yet coal still accounts for about two-thirds of China’s energy provision, and more than 200 new coal plants have been given the go-ahead. Globally, too, coal demand and production are forecast to grow until at least 2040.
Technology that improves coal-burning efficiency could be useful for retrofitting older power plants, and cut down their emissions.
Even with expanded wind and solar power in China, coal will continue to be a major power source for its expanding electric car users.
Charles C. Mann’s “Renewables Aren’t Enough. Clean Coal is the Future,” (Wired, March 25, 2014) looks at high technology coal power development in China:
GreenGen is a billion-dollar facility that extracts the carbon dioxide from a coal-fired power plant and, ultimately, will channel it into an underground storage area many miles away. Part of a coming wave of such carbon-eating facilities, it may be China’s—and possibly the planet’s—single most consequential effort to fight climate change. …
China, like most of the rest of the world, “pretty much has to use coal,” says Dean, the fuel analyst. “Or, I guess, leave people in the dark.” And since coal is not going away, coal plants around the world will need to find a way to capture and store their emissions. “It’s just crazy not to develop this technology.”
An earlier post “For Still-Poor China, Coal Pollution from Home Heating,” reviewed the challenges of China’s antiquated coal-power plants, especially those for home heat.
From China Daily (March 24, 2017), “Dynamic national spirit drives China’s growth,” a discussion of The Complacent Class: The Self-Defeating Quest for the American Dream:
Tyler Cowen’s latest book has struck a nerve in the United States. He sees a failure of spirit underlying the many worrying trends his country has seen over the last 40 years – the lack of wage growth, declining life expectancy in some groups, increased inequality, growing monopolization of the economy, increasing racial and income segregation in schools and housing. …
Cowen, a frequent visitor to China, is a well-known free-market-oriented professor of economics at George Mason University in Fairfax, Virginia, near Washington, D.C. His book – The Complacent Class: The Self-Defeating Quest for the American Dream – has provoked widespread discussion and has been reviewed and analyzed in all the leading newspapers and policy journals.
Cowen contrasts complacency in the U.S. with continued dynamism in China:
In contrast to his worries about the US, he writes: “Even with its recent economic troubles, China has a culture of ambition and dynamism and a pace of change that harkens back to a much earlier America. China, even though in the midst of some rather serious economic troubles, makes today’s America seem staid and static. For all its flaws, China is a country where every time you return, you find a different and mostly better version of what you had left the time before.”
Cowen sees a “make China great again” spirit than unifies elites and everyday people across China. Chinese people know the distant history of their country as leading the world in culture, agricultural productivity, and technology.
China has an advantage similar to America in the 1950s and 1960s where so many grew up poor and focused on working to get ahead. America’s Great Depression from 1929 to 1939 impoverished tens of millions and was followed by World War II.
After World War II, incomes and productivity improved across the U.S. economy through the 1950s and 1960s much as income and productivity across China has grown over the last three decades.
The China Daily on Cowen’s book continues:
He says that his experience at George Mason University leads him to believe that much of China’s dynamism comes from the opportunities it offers to non-elite young people.
“It is striking to me how many of the good Chinese students in the US come from rural areas and do not have very wealthy parents. They are not typically from the poorest families, but they are not just from the elite families in Shanghai.
“Part of it is the exam system. I think that for all the talk of corruption, China is fairly meritocratic in the sense that a smart person from a middle-class or poor family really can rise a great deal.”
Lincoln-Douglas debaters already have a right to housing along with the benefits and constraints. Free housing comes with strings attached.
He (or she) who “pays the piper calls the tune.” When we turn the music up too loud, parents, siblings or both complain. In our parent’s home we can be told what to do and when to do it. We can be told not to drink or smoke. Parent housing policies are paternalistic, as expected when we live in our parent’s home.
Children and teenagers have housing rights and responsibilities provided primarily by parents, and secondarily by extended family or various local and state government housing agencies and foster care programs. And like a “right to life” that makes suicide a crime, students exiting their “right to housing” can be pursued by police and returned home.
For the March/April LD topic, students are asked to discuss and debate housing rights for the broader public:
Lincoln-Douglas Debate – 2017 Mar/Apr
Resolved: The United States ought to guarantee the right to housing.
How can affirmative debaters advocate a right to housing without creating (or expanding) a paternalistic system? Online definition of paternalism:
the policy or practice on the part of people in positions of authority of restricting the freedom and responsibilities of those subordinate to them in the subordinates’ supposed best interest.
“Eye on Ethics: The Challenge of Paternalism in Social Work,” (Social Work Today, January/February 2005) addresses the challenge of trying to help without exerting too much social control:
To what extent do clients have the right to engage in seemingly self-destructive courses of action? How should social workers respond … To the homeless individual who prefers sleeping in subfreezing temperatures to temporary housing in a shelter?
Such circumstances force social workers to balance their commitment to clients’ right to self-determination and their instinct to protect clients from themselves, or what moral philosophers refer to as paternalism. Paternalism occurs when social workers interfere with individuals’ right to self-determination to protect them from self-harm. The concept of paternalism has been debated at least since Aristotle’s time. Perhaps the best-known statement on paternalism appears in John Stuart Mill’s 1859 essay “On Liberty,” where he argued that individuals have the right to assert sovereignty over their own lives so long as they do not pose a threat to others.
When housing is free or subsidized, freedom to do what one wants is limited by parents, landlords, government agencies, or housing nonprofits. Consider the challenge of offering free or heavily subsidized housing to single-parent families. Society wants to help children especially, and it’s difficult for single mothers to both care for young children and work full time. A grandparent, boyfriend, or husband can make life easier, but can also abruptly end housing and other subsidies.
Housing and other benefits can create a “welfare cliff” where better wages can make families poorer. “Making Work Pay in Illinois: How Welfare Cliffs can Trap Families in Poverty,” (Illinois Policy Institute, a conservative state think tank), notes:
For single-and two-parent households in Illinois, there is a significant welfare “cliff” where the household may become worse off financially as they work more hours or as their wages increase. That is because the available welfare benefits decline by a greater amount than the increase in earned income.
This study analyzed a potential welfare benefits package for single- and two-parent households, both with two young children, in Cook, Lake and St. Clair counties. The potential means-tested benefits included tax credits, cash assistance, food assistance, housing assistance, child-care subsidies and health care.
Critical of the “welfare cliff” narrative is: “Ryan’s “Better Way” Poverty Plan Is Based On Myths From Right-Wing Media,” (MediaMatters, June 8, 2916), offering links to articles critical of claims that less state and federal benefits would incentivize and thereby help poor families. From “Federal Programs Are Working, But Growing Economic Inequality Strains The System”:
Bernstein reported that War on Poverty programs had successfully reduced poverty rates for tens of millions of Americans — especially the elderly, who were particularly susceptible to elevated poverty rates before the creation of Social Security and Medicare. He also noted that growing economic inequality — among other factors — was increasing the strain on the programs and causing poverty rates to remain artificially high, making them seem less effective than they really are.
Americans on average enjoyed tremendous economic gains through the 1950s and 1960s. The U.S. economy expanded steadily and as Social Security benefits increased for the elderly and Lyndon Johnson’s Great Society programs launched the “War on Poverty.”
Americans on average enjoy much larger houses than in the past. How is it that housing options for today’s poor (who though poor then to be wealthier than poor people in the past), lack access to housing?
An article on “Housing” (Concise Encyclopedia of Economics) reports:
The average U.S. consumer now enjoys a larger and higher-quality home than ever before. In 2001, the average home was 1,693 square feet, while in 1960 it was less than 1,200 square feet. In 2001, 58 percent of homes had three or more bedrooms, and 57 percent had 1.5 or more bathrooms. Compare that with 1970, when fewer than half of homes had three or more bedrooms and only 30 percent had 1.5 or more bathrooms. Housing amenities have also improved.
in 1970, only 36 percent of homes had air conditioning and 11 percent had central air. Housing has improved almost across the board. … The improvement has been especially dramatic for low-income households. University of California at Berkeley professors Quigley and Raphael (2003) report that the percentage of homes occupied by the poorest one-fifth of income earners that have incomplete plumbing declined from 40 percent in 1963 to essentially zero today.
The authors argue that regulatory restriction constrain low-income housing options:
In addition to land-use restrictions, governments drive up housing prices for lower-income families by dictating improvements in housing quality that the families might not otherwise choose. Governments do this by, for example, setting minimum lot sizes. Also, the federal government’s urban renewal program between 1949 and the early 1970s destroyed more than 600,000 low-income dwellings, replacing them with 250,000 homes that were mostly for middle- and upper-income buyers (O’Sullivan 1996). Martha Burt’s 1992 study found that urban renewal’s destruction of low-quality, low-cost residential hotel rooms in U.S. central cities contributed to the rise of homelessness.
Single-Room Occupancy (SRO) hotels have mostly disappeared. “A shifting SRO scene: When the housing of last resort disappears,” (Chicago Reporter, December 27, 2013):
As housing demand accelerates on Chicago’s North Side, another trend has emerged: Single-room occupancy units are being converted into upscale hotels and apartments, pushing out longtime low-income residents who have few other housing options.
ONE Northside, an Uptown community-organizing group, estimates that 14 North Side buildings that once provided affordable housing to low-income people have been sold since 2011. That’s a net loss of around 2,205 affordable units, which are designed to cost low-income renters no more than 30 percent of their income.
San Diego and other cities have tried to reduce regulations and zone restrictions to allow new SRO hotels to enter the marketplace for low-income residents. “San Diego looks to revive SRO housing,” (Public Square, June 1, 2004):
Facing a worsening shortage of inexpensive housing, officials in San Diego are devising a plan aimed at spurring construction of tiny, single-room occupancy units known as SROs.
Susan Tinsky of the San Diego Housing Commission says development of SROs surged in the late 1980s and early 1990s. “Probably 30 to 40 developments” containing a total of 3,000 units were built, she says. The best of them became exemplars of walkable, mixed-use urban design. Though the units are small and austere, without full kitchens, and in some instances with bathrooms down the hall, the typical downtown SRO building “really fits with the historic architectural designs that already existed,” Tinsky says. “It doesn’t stand out.”
The reason San Diego SROs surged in the late 1980s and early 1990s was that special waivers were passed allow developers options to build smaller and less expensive housing (without parking and 220 volt electricity, for example).
This article from 1988 tells the story. “In San Diego, the Developers Profit As Homeless Get Low-Cost Housing,” (New York Times, September 6, 1988):
By relaxing its building codes and offering low-interest loans to builders, the city has made it profitable again for private developers to build and operate single-room occupancy hotels, S.R.O.’s, long reviled as flophouses and shut in New York and other places. Such hotels are making a comeback not only in San Diego but also in Pittsburgh, Atlanta, Los Angeles, Chicago and other cities across the country as a remedy for the growing problem of homelessness.
”We used to say tear down S.R.O. hotels,” said Judith F. Lenthall, a senior planner for the city of San Diego. ”Now we are saying they are not so bad. This is last-rung housing. If you lose that, you are on the street.” Rents Begin At $220.
And Seattle’s later story of regulating away very small apartments: “How Seattle Killed Micro-Housing: One bad policy at a time, Seattle outlawed a smart, affordable housing option for thousands of its residents.”
SRO and micro-housing along with the tiny house movement, lower housing costs as they reduce housing space and costs. For low income people and families, small housing is better than no housing, and usually preferred to shelters and government housing.
Hotel rooms can get a lot smaller too, if local regulators allow. Consider “China’s capsule hotel: A room with no view.” (Baltimore Sun, August 12, 2013)
For 61 yuan or $10 U.S. the newly opened capsule hotel in Haikou, south China’s Hainan province, offers guests some amenities in a very small space. The hotel covering 200 square meters has 26 capsules stacked into two rows. The length and width of a single bed, the capsules are equipped with ventilating fans, flat-panel televisions, wi-fi and a foldable table.
S China’s Haikou has its first capsule hotel (China.org.cn, August 13, 2013)
2017 Apr Public Forum Topic Area: Election Reform
Resolved: The United States ought to replace the Electoral College with a direct national popular vote.
For the April Public Forum topic students can research the history, politics, and incentives created by the Electoral College system. The U.S. was founded as a republic and the Electoral College helped small states maintain influence. Without an Electoral College, few Presidential candidates would bother making multiple trips to Iowa and New Hampshire each election cycle.
But maybe that would be a good thing. Should Iowa farmers and New Hampshire coffee shops have such an outsized role in each Presidential election? Consider the tens of millions of Republicans in California and Democrats in Texas who had no voice or impact in the recent election.
Presidential candidates and their campaign managers knew California and Texas mattered only for raising campaign funds, so focused their time and money on swing states instead. In what sense do Texas and California voters give their consent to Presidential elections if their votes won’t matter in the winner-take-all Electoral College system?
Supporters of the Electoral College could advocate reform so state electors could be split to reflect the popular vote. “Faithful Electors: If Every State Split Electoral College Votes, No One Would Be President-Elect,” (Medium, Nov. 11, 2016) discusses the challenges of a system of “faithful” electors voting as their state’s citizens vote. Looking at the November votes:
Based on an analysis of the latest tallies as of the morning of November 10th, a state-by-state popular vote split of Electoral College votes would result in a lot of redistribution of votes. As a result, no candidate would have the required majority of Electoral College votes needed to become the next president. …
This is a big part of the reason why anything beyond two party system is guaranteed to fail in the Electoral College system. More candidates would earn Electoral votes, but none of them would meet the threshold to become president. We would need to switch to instant-runoff voting (or similar) in order for candidates to achieve a majority of support.
A problem with judging the direct election of the President alternate, or a split Electoral College system, by the last election is that if the rules were different the campaigns would have been different.
The Presidential campaign teams focused their money, time, and ground game on winning key states to win the Electoral College. They didn’t focus on the popular vote, so spent less time with campaign stops and rallies in Texas, California and New York. Nearly 67 million people live in California and Texas, or nearly 1/5 of total US population. With New York/New Jersey population of 29 million added, nearly 100 million live in these four states, approaching 1/3 of US population.
“Here’s How Campaigns Would Work If We Abolished the Electoral College,” (Time, November 17, 2016), discusses how direct election would shift the system:
But strategists who have worked on presidential campaigns say that would change the way elections run dramatically, possibly exacerbating some of the complaints Americans have about their current system.
They say that under a national popular vote, they would push their candidates to spend more time in TV interviews; hold more rallies in big cities like New York, Houston and Los Angeles; raise vastly more money for nationwide advertising, direct mail and voter outreach; and focus more on their party base than swing voters.
With direct popular vote Presidential campaigns would like focus their efforts in big population centers in New York/New Jersey, California, Texas, Florida, and other big states. But that’s where the people are. The U.S. Census report lists ten largest US cities.
The Pew Research Center post “Trump’s victory another example of how Electoral College wins are bigger than popular vote ones,” (December 20, 2016), notes:
…Donald Trump won 304 electoral votes to Hillary Clinton’s 227… That result was despite the fact that Clinton received nearly 2.9 million more popular votes than Trump in November’s election,…
This mismatch between the electoral and popular votes came about because Trump won several large states (such as Florida, Pennsylvania and Wisconsin) by very narrow margins, gaining all their electoral votes in the process, even as Clinton claimed other large states (such as California, Illinois and New York) by much wider margins. Trump’s share of the popular vote, in fact, was the seventh-smallest winning percentage since 1828, when presidential campaigns began to resemble those of today.
An additional rationale for the Electoral College was to check populist enthusiasm that the Founders feld majorities were susceptible to.
“The Electoral College Was Meant to Stop Men Like Trump From Being President,” (The Atlantic, November 21, 2016) explains:
Most of the men who founded the United States feared unfettered majority rule. James Madison wrote in Federalist 10 that systems of government based upon “pure democracy … have ever been found incompatible with personal security or the rights of property.” John Adams wrote in 1814 that, “Democracy never lasts long. It soon wastes, exhausts and murders itself.”
It’s easy to forget (or never learn) the more important role the states had before the Progressive Era, World Wars, and New Deal:
The Constitution says nothing about the people as a whole electing the president. It says in Article II that “Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors.” Those electors then vote for president and vice-president. They can be selected “in such Manner as the Legislature thereof may direct.” Which is to say, any way the state legislature wants. In 14 states in the early 19th century, state legislatures chose their electors directly. The people did not vote at all.
Many online posts and articles can be found defending the Electoral College system as well as advocating replacing it with direct popular elections. However, Public Choice economists tend to focus on a different problem, one of rational voter ignorance.
Jason Brennan in “Trump Won Because Voters Are Ignorant, Literally,” (Foreign Policy, November 10, 2016) outlines the role of incentives in keeping voters uninformed:
Trump owes his victory to the uninformed. But it’s not just Trump. Political scientists have been studying what voters know and how they think for well over 65 years. The results are frightening. Voters generally know who the president is but not much else. They don’t know which party controls Congress, what Congress has done recently, whether the economy is getting better or worse (or by how much).
Public choice economists note that people are more likely to research new cars or smartphone because their “votes” matter in the quality and functions of the cars and smartphones they end up with.
Not so with politics. How all of us vote, collectively, matters a great deal. But how any one of us votes does not. Imagine a college professor told her class of 210 million students, “Three months from now, we’ll have a final exam. You won’t get your own personal grade. Instead, I’ll average all of your grades together, and everyone will receive the same grade.” No one would bother to study, and the average grade would be an F.
The New Yorker reviews Jason Brennan’s Against Democracy (November 7, 2016) begins:
Roughly a third of American voters think that the Marxist slogan “From each according to his ability to each according to his need” appears in the Constitution. About as many are incapable of naming even one of the three branches of the United States government. Fewer than a quarter know who their senators are, and only half are aware that their state has two of them.
Brennan, in this LearnLiberty.org video “How to Vote Well,” discusses problems like cognitive bias, that add to the challenge of rational voting with a system of direct election of President. YouTube video: