Why Is the Midwest in Decline?

I think that Mike Lofgren is onto something in his post at Washington Monthly on the detrimental effects of federal policy on the American Midwest:

Statehouses all over the Midwest have been taken over by legislators so stultified by the dominant atmosphere of social regression that they are incapable of thinking of any aspect of public policy aside from abortion restrictions. The Missouri legislature seems to have nothing better to do than dream up dozens of ever-weirder abortion laws. This from the state that sired Harry Truman, Thomas Hart Benton, and T.S. Eliot.

What has happened to the Midwest has been replicated in the regions of other developed countries with declining industries. The fading ore and steel-producing regions of northeastern France opted for the National Front in recent elections. The old industrial north of England, weakening since the shipbuilding and textile crash of the 1920s, chose UKIP and Brexit. The worn-out industrial and coal-mining region of Silesia in Poland hopes for improvement from the proto-fascist Law and Justice Party.

And that is the principal flaw of Lauck’s thesis. The topics that Lauck writes about—the cultural and intellectual trends of a region—must at some basic level be influenced by the industrial or commercial changes in the society that gave rise to those trends. That perspective is absent in Lauck’s book. A book about the decline of the Midwest in the 20th century should have given more reference to the epic industrial collapse and political transformation that has taken place. Along with these misfortunes, massive changes in the federal regulatory structure over the last several decades have severely handicapped the region’s competitiveness with the coastal centers. All these adverse trends have resulted in the almost surreal physical aspect of post-industrial Detroit, Youngstown, Gary, and other cities. They resemble the bombed-out wastelands of defeated Germany in 1945.

While I agree that policy has had a big and largely detrimental impact on the MidWest, I think he’s pointing his finger at the wrong culprits. Highway building provides subsidies disproportionately to the West. The managed trade agreements we’ve negotiated under the rubric of “free trade” over the period of the last couple of decades have disproportionately subsidized the Northeast and the West and hurt the Midwest. Look at the distribution of military bases. Base closure has hurt the Midwest much more than the West and the Southeast. The list goes on almost endlessly.

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What’s the Impact?

An article at The Conversation proposes “development impact fees” intended to “support infrastructure in the neighborhoods that need it most”. Here’s how the fees are structured:

Impact fees are one-time charges assessed on new real estate development. They reflect the cost of expanding public facilities to meet the development’s new demands. For example, municipal revenue from fees might be spent on new schools to alleviate student overcrowding problems or new parks that serve the new residents.

Most states have legislation that enables impact fees. The fees are common in many rapidly growing areas, particularly in the southern and western U.S.

Most impact fee programs assess all new development according to the average cost of facilities that will serve it, regardless of the actual location of the new development. However, this approach is flawed. For example, we know centrally located residents have much shorter commute times than those who live further from the city center. By definition, the high-cost area for the cities’ transportation needs is the fringe property.

Under the everyone-pays-average-cost system, centrally located urban areas will tend to pay more than their proportionate share of new infrastructure costs. This extra burden discourages the exact type of development that mitigates urban sprawl. By contrast, more remote high-cost areas receive an implicit subsidy and pay less than their total costs. Even though they need extensive infrastructure investments, they pay only average costs.

At the margin, this reduces development in low-cost areas, but subsidizes development in high-cost areas. In urban jurisdictions, impact fees can distort the distribution of new development to be inefficient. New infrastructure goes to places where it’s less valuable than it might be elsewhere.

I have pretty serious reservations about such a plan as applied to the city of Chicago. I think it would tend to subsidize the wealthiest Chicagoans to the detriment of the poor. Here’s the authors’ graph of the incidence of their plan in Albuquerque:

Translated to Chicago “core” would be the Loop, “interior” would be the Near West Side or South Loop, and “fringe” would be Austin. The area least in need of subsidization is the Loop and the most in need is Austin. Our problem isn’t just urban sprawl; it’s actually the least of our problems. Our graver problem is excessive focus on the Loop while ignoring the underdeveloped areas like Austin or Englewood.

That’s a strategy that was openly and actively pursued by the late Mayor Daley. His never-realized Cross-Town Expressway was intended to further establish that pattern.

Politically, the plan strikes me as nearly impossible. Chicago already dominates Cook County and it already concentrates resources on the Loop (here it’s done via an arcane artifact called the “tax multiplier”). DuPage has no interest in cooperating with Cook and vice versa. The state is so focused on Medicaid and paying employee wages and pensions it doesn’t have any attention left for anything else.

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Let’s Go to the Scoresheet

Murdering people: inexcusable
Violence: bad
Speech: should be tolerated
People who bring clubs (or guns!) to demonstrations and protests aren’t peaceful demonstrators.
There need to be a lot more arrests.
White supremacists are a) vile and b) dopes.
Trump’s comments on the riots in Charlottesville have been at best mealy-mouthed.

Have I missed anything?

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I Don’t Care

I don’t care what the editors of the Wall Street Journal tell me about wages:

Researchers at the San Francisco Fed this week updated their 2016 paper that disaggregated the wages of full-time workers with steady employment from recent entrants—that is, new workers or those returning to full-time work. Their earlier analysis showed that average wage growth had slowed less than expected during the recession while staying relatively flat during the recovery.

That’s because workers who lost jobs during the recession were generally lower skilled and lower paid, so average weekly wages didn’t fall significantly. However, many of those workers have since been rehired at below-average wages, which has depressed the aggregate.

In prior expansions, wage growth has been driven mostly by continuously full-time employed workers, and the researchers find that’s still the case. Wage growth for these workers is now close to the pre-recession 2007 peak. But there are now many more workers who have been on the labor-force sidelines who are moving to full-time employment, thus creating a drag on wages.

“Counterintuitively, this means that strong job growth can pull average wages in the economy down and slow the pace of wage growth,” the economists note. The effect is even larger because so many higher-paid baby boomers are retiring. “With so many of this generation still approaching retirement, the so-called Silver Tsunami will continue to be a drag on aggregate wage growth for some time.”

The study portends better wage news for all workers if we can keep the expansion going—and even more if tax reform can accelerate growth by spurring more capital investment and increasing productivity. As ever, the cure for wage stagnation is faster growth and greater demand for workers.

Real median income is below its pre-recession high (heck, it’s still below what it was in 1998). My taxes are significantly higher and rising rapidly. Both property tax and income tax are rising at double digits on a year over year basis. It’s not my imagination that I have less disposable income now than I did in 1977.

And, as Lawrence Summers warned just recently, the likelihood of the expansion continuing for another four years is very low, the Fed doesn’t have the tools to counter a recession with monetary policy, and the will to respond to a recession with fiscal policy is low to non-existent.

The need for basic reforms is growing practically every day.

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Ignoring the Facts

It’s amazing how quickly and easily you can arrive at mutually acceptable agreements as long as you’re willing to ignore the facts and aren’t actually dealing with those involved in the dispute. From David Ignatius’s Washington Post column:

As U.S. officials ponder the path of negotiation that might lead to a permanent treaty, they have signaled several basic American positions: First, the United States would offer assurances to North Korea that its regime wouldn’t be toppled; second, it would guarantee the security of South Korea, a close U.S. ally; third, Washington would pledge not to seek any quick reunification of the Korean Peninsula, reassuring China and Japan, which fear a unified, resurgent Korea; and finally, the United States would express willingness to discuss the future status of its military presence in South Korea, if a peace agreement proved durable.

Tillerson has already publicly offered the first three assurances. The fourth is the most delicate, because all parties recognize that, for now, U.S. troops are an essential stabilizing force, curbing not just Pyongyang but also greater militarization in Seoul and Tokyo.

Does anyone seriously believe that even were all of the assurances in the passage above to be granted it would make the Kim regime feel secure?

I believe there are several things we need to keep in mind. First, the United States military is by far the most powerful in the world. North Korea would still be insecure regardless of what we did.

Second, not only has the United States not attacked North Korea in the last 60 years, it has never done so. The Korean War began with an invasion from the North with the intention of reunifying the northern and southern zones, separated as a consequence of the occupation of the northern part of the Korean peninsula by the Soviet Union following Japanese withdrawal. That was matched by U. S. occupation of the south, under the principles of an agreement between the Soviet Union and the United States reached in August 1945. The Soviets withdrew their troops in 1948 after installing a communist government headed by Kim Il-sung, the grandfather of the present ruler of North Korea. The U. S. withdrew in 1949. In 1950 the North invaded the South.

If there is any party interested in “quick reunification of the Korean Peninsula”, it is North Korea. They have never renounced that objective.

So, let’s recap. In exchange for assurances they cannot possibly believe the North Koreans will relinquish a goal they’ve maintained over the period of nearly 70 years. Sounds like a great agreement to me.

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Perspective

I encourage you to read Claire Johnson’s exploration, “Complicated History: the Memorial to Robert E. Lee in Richmond”, her recent post at the blog of the University of Virginia’s Virginia Newspaper Project. Quoting extensively from late 19th century newspapers with both white and black readerships, the post puts the questions being debated so angrily today into needed perspective. Here’s a snippet:

It is a matter of much contention today whether these monuments to Confederate leaders were one such message to the black communities of the South or simply monuments built to honor the Civil War dead and Southern history.

Confederate monuments began going up in Richmond not long after the end of the Civil War. In 1875, a statue to Stonewall Jackson was erected on the Capitol grounds. However, the statues that now line Monument Avenue went up later, beginning 25 years after the end of the war, in 1890, with Robert E. Lee. The other Confederate statues on Monument Avenue came later: J.E.B. Stuart and Jefferson Davis’ statues were added in 1907, 42 years after the Civil War ended. Stonewall Jackson’s was built in 1919, followed by the monument to Confederate Naval Officer Maury in 1929. That’s 54 and 64 years, respectively, after the end of the Civil War and fall of the Confederacy.

There are other possible purposes: a reminder of the many losses during the Civil War and the ongoing need for reconciliation.

Of those who feel the need to tear down Confederate memorials, with what will you replace them? Choose wisely. Not only should we not forget that the war was fought, we shouldn’t relinquish the opportunity to remember why it was fought: it was fought over the abolition of slavery.

My ancestors fought, successfully, to free slaves. My ancestors suffered losses as a consequence of that struggle, losses whose effects persist to the present day. I was taught by my parents to treat everyone, regardless of the colors of their skins, with respect and consideration. Tell my impoverished Irish ancestors about their white privilege. The very idea is absurd. I don’t think I have anything of which to be ashamed or contrite and certainly less than the descendants of those who owned slaves, traded in slaves, fought for the Confederacy, or have continued to praise the Confederacy.

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The World Goes On

Despite the U. S. news media’s fixation on the events in Charlottesville, the world went on last week. You might find the Associated Press’s weekly update of events in the South China Sea interesting and enlightening. And here’s a summary of activities in Syria on both the parts of the Syrian government and the American-led forces.

Eleven people were shot to death in Chicago over the weekend, mostly on the South Side.

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Missed By That Much

You know, I almost agree with John Grover’s prescription for progress in our issues with North Korea, as expressed at RealClearDefense:

Trump should do what he does best – the unexpected and the unconventional. He once said that under the “right circumstances” he would be “honored” to meet Kim. Where did that Trump go – the one willing to talk things out with world leaders, instead of aimlessly threaten? It would raise the hackles of certain hawks and hardliners, but Trump should invite Kim to Washington and offer to visit Pyongyang in return.

I do think that Trump should invite Kim Jong Un to visit us but I don’t think it should be to Washington, DC. As I’ve suggested in the past, I think they should take a driving tour of the United States, starting in New York and ending in Los Angeles, possibly with a visit to Disneyland.

Unless he is genuinely insane, that should bring an end to Kim’s “reducing to ash” talk. And both of them might learn something about the United States.

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What Doomed the Revolution?

In this centenary year of the Russian Revolution (there were actually two of them—the February Revolution and the October Revolution) much is being written about it. The New York Times, following in a long-standing American tradition, cf. Ten Days That Shook the World and the movie inspired by it, Reds, is romanticizing it. In his article at The Week Ryan Cooper probes into a lot of the political machinations and minutiae of the Russian Revolution in an exploration of how the revolution went wrong:

But it is simply not the case that Marxism — an arid and over-elaborate doctrine, very interesting in some ways and clearly mistaken in others — is some turn-crank formula for purges and dictatorship. All the European labor parties were officially Marxist for decades, which led only to generous welfare states and some experimentation with government-owned industry. The Nordic countries became the most decent nations that have ever existed through policies that have direct roots in an early 20th century socialist movement that was fervently Marxist.

So if Marxism didn’t doom the Russian revolution, what did?

The obvious culprit is the incomprehensible chaos and brutality of its circumstances. Immediately before the revolution, something like three million Russians had died in the First World War. The rapid collapse of Tsarism and the Provisional Government empowered the most hardline and radical factions on all sides. Immediately after the revolution, the Bolsheviks had to fight a civil war against virtually every other faction in Russia, many of them murderous reactionaries armed by Western powers. Winning required yet more brutal tactics and fighting, killing roughly 10 million more people in the process. It’s at that point when truly awful authoritarianism started to set in.

Make no mistake: the revolution was a colossal failure. Regardless of the dreamy suppositions of its supporters, particularly here in the United States, it did not usher in a workers’ paradise. It resulted in the deaths of tens of millions of Russians and stunted Russia’s economic, political, and social development for most of the last century.

What doomed the revolution was the revolution. Although they may carry the guns and wave the pitchforks, revolutions are not started or won by peasants and workers. They are always internecine warfare, pitting one group of elites against another. That has been true of every revolution from the Glorious Revolution 400 years ago to the American, French, and Russian Revolutions, Mao’s Long March, and the Cuban Revolution of 60 years ago.

William of Orange, George Washington, Marat and Robespierre, Lenin, Mao, and Castro were neither workers nor peasants.

Russia had no group of even more or less benign but decisive liberal democrats waiting in the wings to assume power. They had the corrupt, brutal aristocracy or the corrupt, brutal intelligentsia.

In the case of the Russian Revolution a group of intellectuals led by Lenin replaced the Tsarist aristocracy. The mechanics of the revolution and human nature ensured its failure.

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You’re Tearing Me Apart

I think I see the terrible incidents at Charlottesville in much same light as Jason Willick does at The American Interest:

We’ve had polarization and culture wars before. This is different. This feels different. Stretching back at least to Dylann Roof’s mass murder of black congregationalists in 2015, the country has been getting pushed closer and closer to the edge. The summer of 2016 saw the assassination of five police officers in Dallas by a black activist. Donald Trump’s rhetoric as a candidate flirted with political violence over and over again. And since his election, the temperature has only been escalating. A Montana congressional candidate physically attacked a reporter. There have been campus riots against right-wing speakers, and clashes between Leftists and neo-Nazis on the streets of Sacramento and elsewhere. It was less than two months ago that an anti-Trump activist opened fire on a group of Republican Congressmen playing baseball in Alexandria.

The events in Charlotesville—in which a neo-Nazi ran down anti-racist protesters after a white supremacist march, killing at least one person and injuring many more—were distinctively hideous. The anti-civilizational fascists of the alt-right, no longer confined to marginal online forums, were out in force in a storied American town, maiming people on the streets. The President whom they openly admire (former Klansman David Duke praised him in an interview at the march) deliberately equivocated when given the opportunity to condemn them. Maybe he was egging them on, or maybe he is simply so narcissistic that he cannot distance himself from anyone who has offered loyalty. It doesn’t matter. Neo-Nazi blogs delighted at the President’s non-response. Fascists are emboldened. More on the far-Left will become convinced that racism cannot be fought adequately within the political system.

Like him I don’t really see an escape route from the cycle we’ve entered. Only events will tell and an external event of sufficient magnitude is itself too terrible to contemplate.

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