The Scale of Detroit’s Problem

There has been a lot of discussion recently about the bankruptcy proceeding that Detroit is going through. There are a lot of angles on this that are of interest to an urban/economic geographer. There is the story about globalization and foreign competition in the automobile market. There is the story about right-to-work rules and the eroding competitiveness of union employment in northern states. There is even the story about how the elimination of the gold standard killed Detroit. And, of course, the story most people seem to be writing about of late is the one about retirement benefits and public workers.

Detroit~TimelineThe question about financial stability seems to have struck a chord, in part, because it ties into a larger discourse about the financial stability of pension systems in the United States. And while I would argue that the concern over Social Security has been overblown, largely for political purposes, the issue of state and local pensions is another matter (the Pew Center has done an excellent job tracking this issue for those that are interested).

However, all that aside, I think the biggest lesson of Detroit may not be the one that most people are writing about. Instead, I think the biggest take away from Detroit stems from the basic geographic concept of scale. For, despite the problems with global competitiveness, the growth of the Sunbelt and the burden of public pensions, it just so happens that the economy of the Detroit Metropolitan region is growing.

Let me repeat: the economy of Metropolitan Detroit is growing! While the Detroit Metro Area took a hit in 2009, just like the rest of the country, it rebounded in 201o and 2011 (the last years for which we have data). The regional GDP of Detroit went from from $179 billion in 2009 to $189 billion in 2010 and $199 billion in 2011.

It turns out many of the problems Detroit is experiencing have to do with how the “tax pie” is being split. The growth of suburban Detroit and the establishment of separate districts for purposes ranging from schools to water to fire, is strangling Detroit of regional tax revenues. The inability to share resources across the metropolitan region is at the heart of Detroit’s problems. The growing disparity in services across the city mirrors the growing disparity in wealth that we’re seeing in the United States and elsewhere. We have seen the fruition of suburban haves and urban have-nots. Thus, if one were just to simply change the nature of political and taxing districts in Detroit, problem solved.

However, dividing up the pie in more equitable ways is no easy matter and I don’t think that reconfiguring urban districts is likely to happen any time soon. In the meantime, the problems that Detroit is facing may well be coming to other cities in the not-too-distant future. If the numbers from the Pew Center are any indication, look out New Orleans and Chicago!

DetroitMap1And while this is nothing new for anyone who studies urban economics, it seems that much of the press has failed to connect the dots. Of course, not everyone has missed this story. Paul Krugman has rightly noted that, while Detroit may have had some political problems, it’s fiscal problems have little to do with mismanagement of funds (and the numbers from the Pew Center back this up). Even more to the point, Robert Reich writes forcefully on the issue of scale and seems to have hit the nail on the head on this one – as he does on a lot of things for that matter.

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The Road to Austerity

Well, it’s not every day that academic economics literature makes headlines, but such was the case with a paper from a U-Mass graduate student that has single-handedly discredited the most authoritative work on the economic danger of public indebtedness. If people remember back to the last presidential cycle when Paul Ryan was arguing against more economic stimulus and in favor increasing austerity measures, his argument was based in large part on the work of former IMF head and current Harvard economist Ken Rogoff (more on him later) and his colleague at the University of Maryland, Carmen Reinhart. In particular, Reinhart & Rogoff argues that debt levels over 90% of GDP lead to a dramatic decline in economic growth.

In his Path to Prosperity plan that he frequently cited, Paul Ryan emphatically stated that, “Debt in excess of 60 percent of the economy is not sustainable for an extended period of time. That is bad news for the United States. According to the non-partisan CBO, the President’s budget would keep the debt climbing as a share of the economy in the decade ahead, from nearly 70 percent this year to over 87 percent of the U.S. economy by 2021. University of Maryland economist Carmen Reinhart testified before the House Budget Committee that 90 percent is often a trigger point for economic decline.”

Well, it turns out that a number of economists have been skeptical of Rogoff and his work at the IMF all along, and his work on debt levels exceeding 90% more recently. The later work was particularly contentious because economists such as Dean Baker were complaining that Reinhart & Rogoff had refused to share their data (as is customary) so that others could seek to duplicate it (a basic scientific premise – even for the dismal science). The fact that Dean Baker was crying about this in 2010 should have raised eyebrows – after all, he was screaming that we were in a housing bubble years before most economists realized it and was arguably the first significant economist to predict the financial crisis we now know as the Great Recession.

So, long after the election, and long after austerity measures have been implemented throughout Europe, Reinhart & Rogoff did finally share their data with an innocent graduate student from U-Mass who was trying to write a term paper for class and was tasked with reproducing a study using the same data. And guess what the graduate student, Thomas Herndon, discovered? The data and analysis was flawed; very flawed.

Rather than debt levels over 90% leading to -0.1% change in GDP, it actually leads to a 2.2% change in GDP. Granted, countries do tend to grow faster with less debt, but it turns out that high levels of public indebtedness don’t necessarily make the economy run in reverse.

R_Rcorrect-1The fact that a graduate student discovered a number of methodological and statistical errors has raised serious questions about the Reinhart & Rogoff’s research. The most damaging discoveries surround the methodological problems in the research. It turns out that Reinhart & Rogoff excluded three important examples of high-debt, high-growth nations from their data set (Canada, New Zealand, and Australia in the late 1940s). Furthermore, Reinhart & Rogoff made some questionable assumptions as regards the weighting of various historic periods as Herndon’s paper makes clear.

Finally, there is the embarrassing spreadsheet error that Reinhart & Rogoff made in their Excel spreadsheet formula, forgetting to sum the bottom five rows in a data column, thus leaving out Belgium in their formula, which provided a key counterexample. This glaring mistake, and lack of publication in a peer-reviewed journal, has led to much lampooning in the media, perhaps done most effectively by Stephen Colbert.

reinhart_rogoff_coding_error_0As much as this is a story about misguided economic policy, the bigger issue is the misuse of research more generally. The degree to which some interest groups want to cherry pick data to fit their per-conceived conclusions has spawned a wealth of think tanks and corporate sponsored research. This produces the effect that comedian Bill Maher refers to as the bubble and Jon Stewart refers to as an alternate universe. Unfortunately, rather than conceding any ethical lapses in their research and/or questioning the results of their research, Reinhart & Rogoff have decided to remain in their alternate universe and have maintained that, “Nevertheless, the weight of the evidence to date…seems entirely consistent with our original interpretation of the data in our 2010 AER paper.” Wow, that’s some serious chutzpah!

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Violence, Guns and Maps

In the wake of recent shooting sprees in Connecticut and Colorado, the country is grappling with the problem of what to do about guns. Of course, guns do make it easier to kill people, and to do so more quickly and efficiently. This partly explains the extraordinarily high gun-related murder rates in the United States as compared to the rest of the world (Switzerland excepted) as data from the OECD makes clear.

GunDeathsOECD

However, there really ought to be a larger discussion of the high levels of violence more generally, as the graph below demonstrates. For even if we were able to get rid of all of the gun violence we would still have one of the highest murder rates in the world (see below). Evidently we’re pretty good at grabbing just about anything we can find and whacking someone else with it. At some point there needs to be a larger discussion about levels of inequality; and not just in terms of income inequality, which is the end result, but in terms of access to opportunity. The spatial barriers to equality are critical to overcome if we’re ever going to address the underlying causes of violence (see the economic geographer Richard Florida’s thoughts on this).

Violence

Still there is a link between guns and gun violence as is evident in the correlation from this scatter diagram that appeared in Mother Jones (using data from the Pediatrics and the Centers for Disease Control & Prevention). And if one is looking for a good background article on the issue, I would recommend the recent New Yorker articles by Jill Lepore.

GunCorrelation

While the violence in our society may be the fundamental problem that needs to be addressed, it certainly doesn’t hurt to focus on the symptomatic issue of guns. I appreciated the strong stance of one local papers that decided to publish a map of all the local gun registrations. The (White Plains) Journal News decided to publish the names and locations of all of the gun registrants in Rockland and Westchester counties. The registrations were, of course, public information and it was perfectly legal to publish them. Their logic was that if people were worried about gun violence and access of, say, children to guns, they might want to know where there are guns in their neighborhood. The reaction to this, however, was overwhelming. Evidently even proud gun owners still prefer the element of surprise that anonymity provides them.

Under intense pressure from the gun owners, the gun lobby and law enforcement organizations – as well as fear on the part of some newspaper employees who feared retribution – the paper pulled the interactive maps. But this is a free country so here’s a copy of the map for Westchester County.

WesthesterGuns

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Racist Tweets

One last word on the election. Despite all of the euphoria over the election of a black* president there has unfortunately been a strong racist reaction. No, it’s not like a European soccer match where they’re chanting racial epithets in public, but in the privacy of their own homes, Americans have used technology to broadcast their racist sentiments via tweets. Of course, once this stuff is out there electronically, it’s provides a rich social database, and one that is pretty easy to pinpoint right down to the street address. Luckily, there are concerned geographers at Floating Sheep that keep track of this and bring this to light, lest we think we’ve solved all of our problems through the election of a few token leaders. Here they’ve published a map of racist tweets after Obama’s re-elections that you can take a look at. They’ve also calculated location quotients for every state in America – and it looks like Alabama won two national titles this year!

RacistTweets

*Or whatever you call someone with one white parent and one black parent, we evidently don’t have a word for that anymore that doesn’t use the term race, a term that causes even more confusion because it presupposes more than one race, which, of course, there isn’t. We’re all part of the human race so far as I know.

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Our Arcane Electoral College

While the election has seemingly been over for a long time, the electoral vote was officially certified in a joint session of congress this past week and, no surprise, Obama won. Obviously, the whole electoral college has come under much scrutiny, given the disproportionate amount of attention that is paid to a few states while most of the electorate is ignored. Here is a map, The United Swing States of America, that appeared on Frank Jacob’s blog, Strange Maps, depicting the somewhat irrational procedure we use to elect our president.

SwingStates

Frank Jacobs is a writer and journalist based out of London who maintains a blog on maps that is of interest to anyone who likes maps. Go check it out!

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Electoral Geography Series

As every student of the American political scene knows, the United States elects its head-of-state on the basis  of the electoral college rather than the popular vote. Although the historic reasons for this decision may be arcane, it none-the-less creates a political geography where some voters are more important than others. And for those that are interested in understanding the politics of the so-called swing states, there are a couple of series that do a nice job explaining the dynamics of what’s taking place in those places.

One is the Presidential Geography series that appears on Nate Silver’s New York Times blog.

The other is the Swing State series that is published by The Economist as part of their US Elections 2012 coverage. They don’t have a a nice home page for series but they have done analyses of Colorado, Florida, North Carolina, Pennsylvania, Virginia and Wisconsin. One of the things that The Economist has always done well is their presentation of graphical information and they don’t disappoint – here is an example of their maps & graphics for Virginia:

Political geography of Virginia

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U.S. Political Geography

For those that are interested in following US electoral politics, perhaps the best analyst out there is Nate Silver. Nate is a stats guy, not a pollster, and what he does is to analyze polls, modelling their accuracy. Of course, this annoys a lot of pollsters (see John Zogby), but if you’re interested any of the major upcoming political races, you should check out his blog, Five Thirty Eight, on the New York Times web site.

Map~538

I’ve been a fan of Nate’s work since he was contributing to the Baseball Prospectus analyzing statistics there. He’s taken the same common sense approach, asking good questions and adjusting his model accordingly, to become the best political analyst around. Furthermore, Nate is proof that a good liberal arts education can provide you the opportunity to pursue all kinds of things.

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