September 15, 2009
Several years ago, Dirk W. Early of the Association for Public Policy Analysis and Management conducted a study on the role of subsidized housing in reducing homelessness. Below is the abstract:
Additional funding for subsidized housing is one of the most commonly proposed solutions to the problem of homelessness. For example, the Interagency Council on the Homeless has called for a $2 billion increase in the budget of the Department of Housing and Urban Development (HUD) to address the shortage of subsidized housing. However, research on the effect of subsidized housing in reducing homelessness is far from conclusive. This study combines data from the American Housing Survey (AHS) with a survey of the homeless to estimate the effectiveness of subsidized housing in reducing homelessness. The results indicate that subsidized housing has not targeted those most at risk of being homeless, and therefore a simple expansion of existing housing programs will have little effect on the number of homeless.
September 12, 2009
Freakonomics points to a great article from the Economist that suggests that Capitalism is thriving. According to the World Bank’s annual Doing Business report, “which tracks changes to the regulations that affect business”:
In the year since June 2008, 131 countries introduced 287 pro-business reforms—20% more than in the previous 12 months and more than in any year since the World Bank started the survey in 2004.
Low and lower-middle income economies accounted for two-thirds of the action, with Rwanda turning out to be the world’s champion reformer—the first time a sub-Saharan country has claimed the prize. Eastern European and Central Asian countries were the most energetic reformers by region for the sixth year in a row (26 out of 27 governments there introduced reforms). Middle Eastern and North African countries were not far behind (17 out of 19 countries), and 17 high-income countries also spruced up their business regulations.
Of significance, the article also notes that,
…in poor countries, a ten-day reduction in the time it takes to start a business can lead to an increase of 0.4 percentage points in GDP growth. Another shows that people who have a formal title to their property invest as much as 47% more in their businesses.
September 1, 2009
“About 10 percent of infants die in their first year of life in Africa — still shockingly high, but considerably lower than the European average less than 100 years ago, let alone 800 years past. And about two thirds of Africans are literate — a level achieved in Spain only in the 1920s.”
Continue reading here.
August 31, 2009
According to Richard Florida, director of the Martin Prosperity Institute and professor of business and creativity at the Rotman School of Management at the University of Toronto, there is a statistically significant relationship between drug use and unemployment. He finds that the use of illegal drugs is positively correlated with state unemployment (.31). When he looked at marijuana and cocaine use, the correlations were even higher (both .36).
(Click to enlarge)
August 26, 2009
NYU Economist William Easterly writes,
The title of this blog will make many think I am callous, and yet I definitely agree that poverty is an EXTREMELY BAD THING. Perhaps some use the words “human rights violation” to be equivalent to “extremely bad thing,” but why? There are many different “extremely bad things,” and it helps if everybody discriminates between them.
The only useful definition of human rights is one where a human rights crusader could identify WHOSE rights are being violated and WHO is the violator. That is what historically has led to progress on human rights. The government officers of the slave-owning antebellum US and the slave-owners were violating the rights of slaves – leading to activism against such violators that eventually yielded the Emancipation Proclamation. The local southern government officers were violating the civil rights of southern blacks under Jim Crow, leading to activism against these violators that yielded the Civil Rights Act and the Voting Rights Act. The apartheid government officers in South Africa violated the rights of black South Africans, and activism against these violators brought the end of apartheid.
Poverty does not fit this definition of rights. Who is depriving the poor of their right to an adequate income? There are many theories of poverty, but few of them lead to a clear identification of the Violator of this right. Moreover, human rights are a clear dichotomy – someone violates your rights or they do not. But the line between poor and not-poor is arbitrary – it is different in different countries, and on a global scale, many still argue what is the right dividing line that constitutes poverty. So calling poverty a “human rights violation” does not point to any concrete actions that the “violator” must stop in order to restore rights to the “violated.”
So it’s disappointing that the 2009 report of Amnesty International is blurring its previous clear focus on human rights to a fuzzy vision that now includes poverty:
“So many people are living in utter destitution…As the global economic outlook appears more and more gloomy,hope lies in the … determination of human rights defenders willing to challenge entrenched interests despite the risks they face. (p. 9)”Social and political progress arguably happens the same way as progress in science or as progress in business: somebody precisely defines a problem and somebody (possibly somebody else?) hits upon a way to solve that well-defined problem. To confuse poverty and human rights violations is to slow down the solutions to both.
PS also see the excellent 2009 book by Chauffour
August 23, 2009
Steve Horwitz from the Austrian Economists blog writes:
While looking for something else, I stumbled across this Census report on household income from 2006. What’s really interesting is to look at the percentage of households in each income category and how that’s changed over time. If the prophets of doom and decline and rising inequality are right, we would expect to see, I’d think, lots more rich households and lots more poor ones as the supposed gap widens. Some prophets of doom might expect to see fewer households in the upper brackets as the highest income categories are dominated by a few people getting very, very rich.
The reality, as it turns out, is different. From 1980 to 2006, the percentage of US households earning $100,000 or more (in constant 2006 dollars) grew from 8.6% to 19.1%. The percentage between $75k and $100K grew from 10.3 to 11.3 percent. At the other end, the percentage under $15K fell from 16.6% to 13.4% and the percentage between $15K and $34K fell from 26.2% to 23.3%. Thus all three categories below $35K fell a total of 6.1 percentage points.
The middle classes fell too, though by less. The sum total across the $35K to $75K categories fell by 5.4 percentage points. In other words: the net movement of households was an 11.5 percentage point gain in households above $75K and a net reduction of 11.5 percentage points in houses below $75K. So the percentage above $75K rose from 18.9% to 30.4%. That is, it increased by over 50%.
Let me repeat that: over 30% of US households in 2006 earned above $75K compared to under 20% in 1980. Over the same period, the percentage of US households earning under $35K fell from 42.8% to 36.7%. Fewer households are poor, fewer are middle class, and a hunk more are above $75K. (And in case you were wondering, those general trends hold for black and hispanic households too – with the percentage of black households under $35K falling by 10.9 percentage points and the number above $75K increasing by 8.9 percentage points, for example.)
Throw on top of this the fact that most everything people buy costs less in real terms and you have a recipe for increasing wealth across the board. Not bad for what so many people claim is 30 years of stagnation.
Update: Click here to read our interview with Steve Horwitz.