Friday, April 24, 2009

The Grass is Always Greener ... in Norway

Ah Norway! There has been so much talk of you lately and how America should model itself after you! After all, you are an egalitarian society, that enjoys both huge government spending and economic growth. Why wouldn't we want to be like Norway? I mean check it out! Isn't the grass so green!
Sarcasm aside, I am quite skeptical of the "Nordic Model" working in America and here's three reasons why (I do have more but these won't put you to sleep):
  • Scale - Have you ever made a plan and pulled it off and then though to yourself "That was great I should do it again but at a much larger scale." It's not as easy. Say you were successful with a small garden and you decide to expand your garden. After all it isn't much different right? Instead of taking an hour a day to nurture your plants, you would have to take more time in the garden.

    Implementing the Nordic Model would be the equivalent of a gardener deciding to become a farmer. I don't think people are aware of the fact that Norway has roughly the same population as the state of Alabama. Alabama makes up less than 2% of America's population (which is coincidentally 1/50th. Get it, 1/50th. 50 States. I'm such a nerd). Administering the "Nordic Model" for the United States, a nation with 65 times the population, would obviously be, well, a difficult task. The scale of the project would be more complicated (have higher "costs" in economic terms). I don't believe the model scales well, and that's one reason why I am skeptical.
  • America's Diversity - America is a diverse place which is a good thing. So what does this have to do with Norway? Well did you know that 94% of the population of Norway is the same ethnic group (Norwegian). 94%!!! The United State's largest group is the white alone (meaning white and not Hispanic) group. They make up 74% of the population. There are a few places that are a homogeneous as Norway. No Utah is only 90% White. West Virginia is 94% white, New Hampshire is 95% and Maine and Vermont are 96%. Those are the only 4 states.

    So what does this have to do with Norway? It is a lot easier to act in favor of the "Public Interest" when everyone is so similar. What is the "Public Interest" of America? The news illustrates the diversity of opinions that exists, and which is to be expected. Afterall, this is America.
  • Is the Grass REALLY that Green? - I really think proponents of bringing this way of life to America are in love with it; and as the cliche goes "love is blind." The black market in Norway has exploded. If people are so happy with their system, why is there a black market. Shouldn't their needs be taken care of? America's system is not perfect, just as our democracy is not perfect. But it is without a doubt the best system out there.

    Interesting Side Note: There was an article in the Economist back in December of 2006 speaking about Sweden(another Nordic model country) and how it's not working for them. There have been recent studies saying that it is also a deceiving because Sweden is about a rich as the state of Louisiana. How would you like for everyone to have that standard of living.

Saturday, April 11, 2009

Who's the Welfare State?

I came across this picture of the Great Depression.  I asked myself "Does this look like today?"  After all, people are quick to compare today to the Great Depression.  

One thing that is interesting about this picture is that the sponsor of the sign is the Chamber of Commerce.  Today we do not look to the Chamber of Commerce for these kinds of solutions.  We look to the government.  

 I started to look at the "welfare state" concept using Bureau of Economic Analysis (BEA) data and came across some interesting facts that I felt like sharing.

Welfare State Ranking - Top and Bottom 5
1. New York$3.17
2. Massachusetts$2.40
3. Rhode Island$2.35
4. Vermont$2.30
5. Maine$2.09
46. Virginia$1.13
47. New Hampshire$1.07
48. Colorado$0.95
49. New Mexico$0.90
50. Utah$0.80

These figures are per-capita dollars (this allows for a fair comparison across states) in 2007.  The are for money received by individuals for programs like Medicare, Medicaid, Food Stamps, TANF, etc.  Interesting that the highest state receives 4 times as much as the bottom.  It is also to look at the top five and notice a similarity of geography.  

It is also interesting to look at the bottom five and compare it to the map in the previous post.  It seems like the people from Michigan are moving to the states with the lowest per-capita dollars.  Maybe these are states where the chamber of commerse is able to take care of their own and some others too.

Friday, April 03, 2009

A Lesson From Michigan

So after a one day break I'm back in the saddle again. Here's a chicken-or-the-egg type question: What comes first the people or the jobs? While you think about that I want to share some highlights from and article in the Detroit News. It can be found here, and is summed up by the headlines "Leaving Michigan Behind: Eight-year population exodus staggers state" "Outflow of skilled, educated workers crimps Michigan's recovery" (was Michigan recovering?).

The writer states "Michigan's exodus is one of the state's best known but least understood problems." Least understood. Hmmmm. Could it be that your economy stinks? Let's look at the map (included in the article) that shows where the Michiganders are moving to.

The red states receive the people. Lots moving to Florida - retirement. But then theres a lot in the south, Texas, Arizona, California. These states have been the boom states economically. So what comes first the jobs or the people?

According to the article "The state loses a family every 12 minutes, and the families who are leaving -- young, well-educated high-income earners"

Now before you say wow I'm glad I'm not there, New York (where I live) is in the same boat. Sandy Parker, the President of the Rochester Business Alliance wrote an article saying that Upstate New York is facing a similar situation. In fact, when I first met her she welcomed me saying that she was happy to see a college education young person moving to Rochester.

So why are the people running away? Some blame it on the decline of manufacturing based economy to a service based economy. I point my finger at taxes. People (individuals and businesses) are shifting to where they won't get dinged with high taxes. 9 of the 10 highest taxed counties in the United States are in New York.

And the problem is that it is becoming a death spiral. As the population ages, they leave the tax base. But there are programs like social security, medicare, etc. Some of these programs are state funded. What happens when your younger population is fleeing.

What we are seeing is the formation of ghost towns. It is fascinating to me in a car-wreck-on-the-interstate kind of way. (You know you rubberneck). I have some interesting data that I want to share about related topics. So what is the lesson that we learn? If you want to kill your economy, tax it.

Thursday, April 02, 2009

What do Facebook, History, and Upstate New York have in common?

So I have decided to leave economics out of the picture (if that is possible) and write a post. Danielle has finally decided to join Facebook and is currently sending our requests from my page. I don't really get Facebook. I love technology but don't get Facebook. Does that mean I'm getting old. I remember back in my day we used to email everyone. And before that we would talk to people in person.

I have been thinking about history lately (after listening to EconTalk, my preferred weekly podcast) and realize how important a complete and accurate understanding of it is. You really can't get a good idea of what is going on with out it.

We have been settling in nicely here in Upstate New York. We are trying to get our garden in (pictures forth coming). Today's weather was beautiful. I'm looking forward to things greening up, and maybe some friends from New York City will make the drive up. We could sit in the basement and Facebook each other. You know what. I thought I was pretty cool for having 50 some odd friends on Facebook. Then I found out my sister has somewhere in the order of 3 times as much. Oh well. If Facebook friends are a good indicator of coolness I'm not very cool.

So you're wondering what Facebook, history, and Upstate New York all have in common. They were in this random post.