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The real driver of regional inequality in America

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People can no longer afford to move to opportunity.

America in the Gilded Age was a starkly unequal place, not just in terms of inequality between people but inequality between regions. Long-settled, fast-industrializing states in the Northeast were far richer than those of the West or the South, which had many fewer factories, railroads, and other kinds of capital goods that allowed for productive work and high wages. But around 1880 that began to change, and for 100 years, income gaps between states slowly converged at a rate of about 1.8 percent per year.

But since 1980, that process has began to slow, and over the past decade it’s essentially stopped entirely. Today, Massachusetts’s GDP per capita is about double what you find in Mississippi — roughly equivalent to the gap between Switzerland and Slovakia — and it’s not getting any narrower.

Phillip Longman of New America’s Open Markets program has been arguing for some years now that Reagan-era shifts in the federal government’s attitude toward corporate concentration are to blame. This is one of several arguments that’s helped inspire Democrats to start calling for a rethink of federal antitrust policy. But new empirical research from Peter Ganong of the University of Chicago and Daniel Shoag of Harvard’s Kennedy School of Government suggests the issue is more complicated than that. After all, even as the richest cities have gotten richer on a per capita basis, their share of aggregate national output has stagnated because their populations are growing slowly.

Ganong and Shoag argue that the slowing population growth in rich cities and the slowing of regional income convergence are intimately linked trends.

Less skilled workers used to move to rich states to increase their wages. That lowered average income in the rich states while raising it in the poor ones, as people’s natural tendency to move toward economic opportunity helped drive nationwide convergence of wages and incomes. But in the contemporary United States, zoning restrictions that prevent adequate levels of house building mean that much of the higher incomes earned in rich states simply pass through in the form of higher housing costs.

For skilled workers, this trade-off is worth it, but for the working class, it generally isn’t. Consequently, working-class people have begun to move out of the rich states and toward the cheap ones — throwing the pattern of convergence into reverse.

Two big shifts in migration and economics

This set of four charts in Ganong and Shoag’s paper tells the fundamental story — in the old days, there was a strong tendency for poor states’ per capita incomes to grow faster than those of rich ones and an equally strong tendency for people to move away from poor states to go live in rich ones. But in recent years, the income convergence trend has slowed and the migration pattern has reversed.

People move, of course, for non-economic reasons. You can see clearly on these charts that the warm weather of Nevada and Arizona causes those states to punch above their weight in terms of migration in both eras. But the overall pattern is striking. Lots of people used to move to rich places like California, Maryland, and the tri-state area around New York City. These days, very few people move there, even though the typical resident of the South or Midwest could earn more by moving to a rich city.

The reason is that these states are also more expensive, and for working-class people the higher costs are no longer worth the higher wages.

This chart shows that until 1990 or so, both skilled and unskilled workers could improve their standard of living, even considering housing costs, by moving to a high-income state. But the net gains for unskilled workers began to diminish sharply, and by 2010 a typical low-skill household was actually worse off in a high-income state due to the even higher housing costs.

Traditionally, in other words, both lawyers and janitors earned more in the New York City area than they did in the Deep South. Today, “lawyers continue to earn much more in the New York area in both nominal terms and net of housing costs, but janitors now earn less in the New York area after subtracting housing.”

The result is that less skilled workers now tend to eschew the highest-wage, highest-cost locations — creating a powerful counterpressure to other forces that would otherwise drive regional income convergence.

The paradox of regional inequality

This and other lines of recent research tend to indicate that the gains to increasing the housing supply (whether through zoning changes to allow more market-rate housing or through the direct construction of social housing) would produce large economic benefits. Regional inequality would be reduced, as the pattern of state-level income convergence restarted. Ganong and Shoag also believe that about 8 percent of the increase in individual-level inequality can be explained through this mechanism. Meanwhile, overall GDP would be about 9.5 percent higher, and the structural increase in the capital share of national income would be greatly reduced.

In short, with more elastic housing supply, the United States would be richer on average, and the gains would be disproportionately concentrated among poorer people and poorer states.

But there is a paradoxical aspect to this. The housing fix for regional inequality entails more rather than less concentration of economic activity in rich coastal metro areas. The mechanism is that with a greater supply of housing, the working-class share of the population of these metro areas would grow disproportionately — dragging per capita incomes down while pulling them up in poorer places. Sunbelt and Rust Belt cities would be richer but smaller, while coastal ones would be bigger.

This would leave almost everyone better off, but it’s not exactly the political solution to the problem of regional inequality that elected officials are looking for. To get that job done, politicians may need to look at more direct solutions like moving white-collar government work to cities that have suffered population decline or creating new universities in declining areas.

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skorgu
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Hugo arrives from Finland

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We live in a remarkable world. Does anyone else notice...?

Anyway.

Out of the box.




Some assembly required. Delayed by a hunt for a socket wrench that fit, which at length proved to be the handle that holds the other socket wrenches.




Together! Am I an engineer's daughter or what.




The front plate.




United with its siblings.




Ta, L.

posted by Lois McMaster Bujold on August, 17
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Showoff!
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@nongnonghead @agfitzp @profcarroll @arawnsley The question is not *what* to prohibit first, but *who* did you empower to decide what to prohibit next.

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@nongnonghead @agfitzp @profcarroll @arawnsley The question is not *what* to prohibit first, but *who* did you empower to decide what to prohibit next.


Posted by pwnallthethings on Friday, August 18th, 2017 5:59am


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Spintires returning enhanced & expanded in MudRunner

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Back in 2014, the RPS treehouse shook with everyone thundering around pretending to be trucks stuck in squelching mud. Such was the captivating magic of Spintires, a serious simulation of simply trying to drive across rough Russian terrain. But ongoing development got bogged down by a drawn-out spat between developer Pavel Zagrebelny and publishers Oovee Game Studio, and Spintires seemed to be left to rust in the cybermud. Well! In a surprising and confusing twist, Spintires is back with a new edition coming from another studio and a different publisher. Focus Home Interactive today announced Spintires: MudRunner [official site], an enhanced and expanded edition of Spintires coming in October. (more…)

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OH YESSSS
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RT @EyePatchGuy: So, some of you may have wondered why I take Nazi punching -- and any rando’s aversion to Nazi punching -- so very persona…

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So, some of you may have wondered why I take Nazi punching -- and any rando’s aversion to Nazi punching -- so very personally. Story time!


Posted by EyePatchGuy on Thursday, August 17th, 2017 3:27pm
Retweeted by cstross on Friday, August 18th, 2017 11:26am


2210 likes, 1759 retweets
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Calling a Fascist a Fascist

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This is a guest post by Lisa L. Miller, Professor of Political Science at Rutgers University

In the movie Denial, which recounts the story of the libel lawsuit filed by disgraced historian David Irving against Emory University Professor Deborah Lipstadt, who labeled Irving a Holocaust denier, Professor Lipstadt is surprised to learn that the legal team hired by the book’s publisher does not intend to defend her claims by proving that the Holocaust did, in fact, happen. Rather, they aimed to show that David Irving deliberately misused, manipulated and lied about historical evidence in order to promote his own ideological and racist ideas. The reason for this decision, offered by solicitor Anthony Julius in the film, is that getting into a war of evidence with someone who denies reality for ideological purposes, plays right into his hands. It opens a debate about a subject on which all the evidence is on one side, and provides an opportunity for Irving to pick apart the experiences and lives of the traumatized.

I have been reminded of this film many times in the past few months, but never more so than last week-end when President Trump refused to draw a sharp line between white supremacists/neo-Nazis, and the people protesting them. Now, decent-minded people are consumed with trying to prove that there is no “alt-left” comparable to the racists on the right, that the fascists incited violence, and that they are different in kind from the anti-racists protesting them.

The temptation to argue with the peddlers of hatred is great. How can we let stand the false equivalency between those promoting fascism and those opposing it? Surely we must prove the truth.

Perhaps. But getting into a war of evidence may simply provide opportunities for the forces of fascism to normalize and mainstream their views. It introduces and legitimates the idea that there is even a debate worth having.

A different approach would be to ask: What is the history of these groups, what is their purpose? What ideology is served by the deliberate falsifying of historical and contemporary facts? What do these groups want?

The evidence certainly suggests that Donald Trump is, at a minimum, a racist sympathizer. He single-handedly used his wealth and fame to perpetuate the lie – wholly racist in nature – that President Obama was not born in the United States. He has declared his intention to deport millions of law-abiding Muslims, ban immigration of Muslims, and has called Mexican immigrants drug dealers and rapists. He openly accepted the support of avowed white supremacists during his campaign and has done virtually nothing to distance himself from these groups and their political aims since.

The neo-Nazi and white supremacist groups that marched in Charlottesville are similarly transparent in their purpose. They believe in the supremacy of white European Christians over, well, everyone else. In particular, they want to eliminate Jews and Blacks from their communities, and are also deeply hostile towards Latinos, Muslims, LGBTQ folks, feminists (perhaps women, generally), Catholics, and many others. There is no mystery here. They are hateful and dangerous groups whose aim is dominance.

Rather than get drawn into an argument with the inevitable “whataboutery,” perhaps we repeat again, and again, and again, for however long it takes, that these groups are violent authoritarian thugs, that they celebrate a past filled with genocide and brutality against groups they despise, and that they tell endless lies. They lie about Jewish people, they lie about the Confederacy, they lie about their own superiority. They lie about women, about gays, and about Catholics. They invent falsehoods about any group or individual that challenges their hierarchical worldview. We should be asking, loudly and frequently, what reason is there to give these groups, their members, or their leaders any credibility whatsoever?

Last summer my husband and I spent five days in Berlin, a city that brings the rise of fascism into sharp focus. Walking through the Topography of Terror – the museum detailing the emergence of Hitler and the Nazi party that now occupies the land where the SS headquarters once stood – then standing by the remains of the wall that separated East and West Berlin for nearly three decades, and finally, touring the Stasi Museum, housed in the former command offices of the East German Secret Police, the parallels between the tactics of authoritarians in both contexts are clear. The communists in Germany in the 1930s and 40s, having been hunted down, imprisoned, shamed, and sometimes executed by the National Socialist Party, apparently learned their lessons all to well. When their turn came, they deployed intrusive, damaging and frequently lethal methods to maintain control of power.

The Nazis and the East German Stasi shared contempt for the rule of law, for political competition in all forms, and, most horrifically, for any persons or groups who they deemed undesirable or a threat to their ideological or racial purity. On their way to total domination of Germany politics, the Nazi Party outlawed opposition parties, and then shamed, persecuted and executed Jews, gays, labor unions, gypsies, communists, the disabled, and Slavs. Their greatest atrocity, of course, was the slaughter of millions of Europe’s Jews, but their brutality knew few bounds. They burned books, imprisoned journalists, publicly humiliated women who had relations with the ‘non-pure,’ and deported tens of thousands of people. For their part, the East German Stasi ferreted out any potential chinks in the communist ideological armor by spying on youth, journalists, religious leaders, among many others, and justifying the murder of opponents it deemed ‘enemies of the people,’ which, as with the Nazis, meant anyone who disagreed with them.

It is worth noting, as well, that women played subservient roles in Nazi Germany, as essentially guardians of the race, and the upper ranks of the East German Stasi were completely devoid of women, despite communist rhetoric of gender equality. The women’s bathroom that was built in the Stasi Headquarters was eventually removed because there simply were no women at the highest levels of the East German Secret Police to use it.

And violence, or the threat of violence, was a pervasive part of Nazi and Stasi rule. Preparation for military excellence was a central feature of Hitler Youth. Twenty years later, East German children visited theme parks with tiny tanks as carousel seats, and learned rifle training at school. The underlying theme in both contexts was the need to be prepared, always prepared, for attack, for infiltration or invasion by the ever-present enemies of ‘the people’ (the pure Germans, the committed communists). That not every individual associated with the Nazi party or East German authorities supported or engaged in violent attacks is largely irrelevant because violence is at the core of any authoritarian political agenda.

Last week-end, the alt-right put its sympathy for these views on display for the nation and the whole world. They came to Charlottesville proudly waving Nazi symbols, confederate flags, white power slogans and signs, helmets, shields, sticks, guns, and they came carrying torches – a menacing display that is so deeply, and obviously, reminiscent of the Klan’s domestic terrorism. They chanted angry and vile slogans that were then made real in the murder of Heather Heyer, and the brutal beating of a black man.

Contempt for women from President Trump has been on vivid display since the Access Hollywood tape went public, and has parallels in the alt-right movement, some segments of which use harassment, threats and violent imagery to terrorize women in public spaces they deem male-only. The alt-right protestors who descended on Charlottesville were overwhelmingly male.

While Europe watched and waited in the 1930s, the Nazis were busy dismantling any political, social, or economic institution that might be able to challenge them and labeling any group opposed to them as dangerous. After the war, the East German Stasi quietly built an infrastructure of spying and propaganda based on a similar premise – that some groups threaten the racially and/or ideologically unified Volksgemeinschaft for whom the nation-state is really intended.

We, by contrast, have the luxury of hindsight, and the moral weight of history. We must do more than never forget. We must consciously and relentlessly remind everyone who these people are, what these groups stand for, and why they are so keen to normalize and mainstream their presence. They are not mainstream and this is not normal. No fascism on our watch.

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skorgu
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JayM
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Atlanta, GA
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