Some economist asks a couple of questions:
I wonder to what extent UI benefits discourage migration. North Dakota could use some workers. Nevada has too few jobs. Yet we’re paying people in Nevada whether they have a job or not. I doubt many would move to North Dakota anyway. Paying them not to makes it less likely. But how much less likely?
Don’t get me wrong. I’m not suggesting there’s anything wrong with the UI benefits programs. I’m asking a question. I don’t know the research here. How many workers would move from high unemployment rate states (like Nevada) to low unemployment rate states (like North Dakota) in the absence of or with less generous UI programs?
No guessing. I’m asking for research. My quick search revealed more about the EU than the US.
That quick search must have been on Facebook or his favorite porn site, because my quick search found that there are about 300K workers in North Dakota, and about 1.2 million in Nevada. Nevada’s unemployment rate is 14.2%. That’s 170K workers, or well over half of the workforce of the entire state of North Dakota. If North Dakota, which has an unemployment rate of 2.8%, could absorb, say, 3% more workers, that’s 9,000 jobs, which would bring Nevada’s unemployment rate to around 14%. Before asking how many workers would move, how about asking how many could move? The answer is, clearly, not enough to make much difference.
Also, why does North Dakota have such a low unemployment rate?
There’s a magazine called “The Economist”. I don’t have “a joint appointment with the Department of Health Policy and Management at Boston University’s (BU’s) School of Public Health and Health Care Financing & Economics (HCFE) at the Boston VA Healthcare System, U.S. Department of Veterans Affairs”, but I’m pretty sure that it’s about Economics. When I searched for North Dakota on that site, I found this article explaining that North Dakota is having an energy boom.
These kinds of vaporous questions get a link from Sully.
WarMunchkin
It also might be worth pointing out that ND gets back something like, what 2 dollars? for every tax dollar it pays to the U.S. government. That helps. Just sayin’
Edit:
States Receiving Most in Federal Spending Per Dollar of Federal Taxes Paid:
1. D.C. ($6.17)
2. North Dakota ($2.03)
3. New Mexico ($1.89)
4. Mississippi ($1.84)
5. Alaska ($1.82)
6. West Virginia ($1.74)
7. Montana ($1.64)
8. Alabama ($1.61)
9. South Dakota ($1.59)
10. Arkansas ($1.53)
link http://taxprof.typepad.com/taxprof_blog/2004/09/red_states_feed.html
jwb
Excellent takedown of the use of false naiveté.
ed
Is your mother a whore?
Captain Haddock
“I don’t know the research here. ”
That pretty much sets the tone for the entire article.
Punchy
True story — My sis’ fam moved to Bismarck for teaching gigs, and suddenly found…..in that relatively barren land….no affordable housing! This oil boom in ND has made housing prices redunkulous. Whooda thunk that?
Not to mention, how do you get Sand People to move to frigid, really, really cold-ass ND? Do you offer to buy them $200 in coats, gloves, mittens, scarves, longjohns, and boots?
alex
And that doesn’t even take into account that a considerable component to the crummy economy is due to the collapsed real estate market. Which do you think has a greater bearing on keeping unemployed Nevadans in Nevada: Unemployment benefits or underwater houses?
mistermix
@Punchy: I’ve spent many a day in Bismarck, which is a lovely town in the winter. Regularly 20 below without wind chill.
steviez314
I actually have a BA in Economics and an MBA–but that didn’t stop me from thinking “they can’t sell their fucking houses in Nevada so how the hell can anyone move.”
NonyNony
@Punchy:
And even more dangerous – how do you know how many of them have moved there? After all, everyone knows that Sand People walk in single file to hide their numbers. So there could be a full-scale invasion of North Dakota going on and no one would ever know!
geg6
North Dakota? Seriously? The state where about 3 people live? And where the weather is, well, let’s just say Nevadans would have a bit of an adjustment period while living in their cardboard boxes (since they have been unemployed and their houses are most likely unsellable in Nevada, they won’t be able to afford housing, right?) during December, January, February, and March?
This guy claims to be an economist and starts right out by throwing this shit out there with a claim of having done no research on it at all. Is this how economics works? Just say whatever stupid shit comes to mind? And I’ve had people like this scream at me that political science isn’t a science. Based on this guy, I have to say that economics bears more than a passing resemblance to alchemy.
That said, don’t blame poor Sully. He’s even more ignorant of economic theory and reality than the asshole he’s quoting.
schrodinger's cat
Andrew Sullivan’s ignorance of basic economics is astounding, all though that doesn’t stop him from regularly bashing Krugman, the Nobel Prize winning economist on matters economic.
Poopyman
Captain Editor asks: Did you really want to use “vaporous” in the last sentence instead of “vapid”?
dmsilev
@geg6:
To first order, yes.
dms
Dennis SGMM
This post is a perfect follow-up to the two others preceding it.
David Fud
I wonder to what extent the 14% unemployed in Nevada are our mysterious Lizard People. I don’t really know, but I’m just sayin’.
My quick research found that Lizard People won’t go to North Dakota because they would not be able to sun themselves for six months of the year. My solution to the unemployment problem: provide all new North Dakota residents with a sun lamp.
Bloix
North Dakota has a low non-farm unemployment rate because it has no cities or suburbs to speak of. When people can’t get work, they leave the state and look for work in Minneapolis or even further away. No one moves to North Dakota to look for work, because there isn’t any. The population of North Dakota today is lower than it was 30 years ago.
mistermix
@Poopyman:
Yeah, I did, and I’m thinking “vaporific” would be a good tag.
vaporous [ˈveɪpərəs]
adj
1. resembling or full of vapour
2. (Physics / General Physics) another word for vaporific
3. lacking permanence or substance; ephemeral or fanciful
4. given to foolish imaginings
5. dulled or obscured by an atmosphere of vapour
JMC in the ATL
The funny (?) thing is that economists think they’re actually doing science.
Xboxershorts
The vast majority of the ND jobs are in the gas and oil drilling field and should not be considered the kind of permanent employment that leads to migration and transplanting of roots from one state to another.
TheMightyTrowel
@JMC in the ATL: The funny (!) thing is that so far all the comments on that blog post are some variation of ‘were you born dumb or did something make you that way?’
Rob
The Economist isn’t about economics
Dennis SGMM
@JMC in the ATL:
How in hell did Economics ever become a science? Beyond the level of “If the people have no jobs and no money then the economy suffers,” it’s less an apt predictor of economic outcomes than the “Farmer’s Almanac” is of the weather. Seems to me, as an ignorant old hippy, that most economists make their money by constantly stating “I can explain that.”
JM
God, can you imagine being poor and far away from your friends and family and fucking your ass off in Nowheresville, ND?
DougJ
DailyDish links to so much idiotic pseudoeconomic stuff.
toujoursdan
Just keep in mind that economics isn’t a science. It’s a modern, secular religion with its own creeds, denominations, schisms, sacred scripture (viz., various indices), clergy and ritual. It even preaches salvation in a future paradise. “If you follow these rules, we will all be happy in a capitalist, libertarian paradise. If you don’t follow these rules you’ll be punished by a dystopian, poverty stricken hell.”
Now that traditional religion is dying, it had to replaced by some other faith-based thinking because most people can’t live without it. People also can’t live without hope and modern economics provides it.
It’s become the opiate of the people.
Gian
how many owe more than their houses are worth, can’t rent, and can’t move out of the house, pay the mortgage and move to another state, and get another place to live?
being upside down on a house makes moving problematic. Unless that new job at double pay includes a couple years pay as a signing bonus, a lot of people can’t just move without going BK to unload the old house, and that makes even renting tough in the new location
JMC in the ATL
@Dennis SGMM: Don’t ask me. I went into an Accounting Ph.D. program intending to do behavioral experiments in judgment and decision-making, and ended up surrounded by a bunch of whackjobs that thought that tweaking regression models of stock market data until one finds a significant anomaly, and finding a theory afterward to fit the data constitutes scientific inquiry.
I’m not saying that psych based research is hard science, but I will assert that valid experimental social science research requires a modicum of adherence to accepted methodology.
Needless to say, I left after a semester.
Corner Stone
@JM:
Except for the “poor” part, this sounds kind of nice actually.
Gordon Guano
It’s The Grapes of Wrath all over again. Except that modern-day Joads would have to buy have car insurance they couldn’t afford before trying to take their jalopy they couldn’t afford to where there are supposedly jobs. At least they have better sense than to move to try and get a farm job that doesn’t even pay minimum wage.
Left Coast Tom
@geg6:
To confirm the problem of selling houses in Nevada Mr. Economist might have visited Calculated Risk, and found the following chart pron: Negative Equity By State, where he could have seen that Nevada is the only state where the majority of houses (actually, about 2/3) with mortgages are underwater. Didn’t even have to use Mr. Google.
WyldPirate
@Dennis SGMM:
It never has been except in the fevered fantasies of economists.
People that do real science laugh at the idea that morons over in the B-Schools think what they are doing is science. That coupled with the fact of the “fruits” of their teachings and apparent lack of any sort of ethical or moral framework in their graduates, leads me to think that the world would be a much better place if B-Schools on campuses across the nation were simply bulldozed to the ground.
ItAintEazy
I lived for six years in North Dakota.
I don’t recommend it for anyone.
jcricket
@Gian:
Our over-promotion of house-buying does in fact lead to less job mobility that would otherwise exist, and this is probably not a good thing for society.
That said, you’re not going to see a mass influx of people to places like North Dakota and Wyoming – as people have pointed out, those are generally not-as-desirable for a number of reasons.
But sure, why not, let’s have some forced relocation of people from high unemployment areas to low unemployment areas. I’m sure the gov’t forcing people to move will work great.
Oh wait, you want the gov’t to cut the “generous” UI benefits (obv. the writer has never had to live on UI benefits + pay for COBRA)? So yeah, people who are already broke will just up and move exactly how?
God we are ruled by dumbasses.
Nutella
mistermix, if you had a well-paid spot at BU and a cushy government job, too, you could be one of the elite academics who bloviate about things they’ve never investigated or studied at all and wouldn’t have to strain yourself doing plebe things like web searches before publishing your deep thoughts.
JMC in the ATL
@WyldPirate: In many research universities, Econ is in with social sciences, not Business. There tends to be a lot of friction between Econ and Business at the graduate level, in fact, since Econ views Business as co-opting their theories and methods while making more money. Depending on the school, they may be expected to accommodate Business Ph.D.s who get rather lavish funding and resources while their own budgets are being cut.
I still don’t think it is real science, but Econ and B-School shouldn’t be conflated.
PeakVT
No guessing. I’m asking for research.
Wait. This dweeb has a cushy gig as a professor, where he is (presumably) paid to do research, and he posts what amounts to a bleg demanding other people do research? I thought only hacks like the Doughy Pantload could get away with that.
kth
I periodically look at the table of unemployment rates by metro area (because wanderlust), and all of those towns at the top of the list (i.e., lowest unemployment) are tiny or college towns or both. I’m not sure how useful that info is to a single unemployed construction worker in Phoenix or Fort Lauderdale, let alone a couple million of them.
James
From wikipedia on North Dakota: The corruption in the early territorial and state governments led to a wave of populism led by the Non Partisan League (usually referred to as the “NPL”), which brought social reforms in the early 20th century. The NPL which was later incorporated as part of the Democratic Party, fashioned a number of laws and social reforms, in an attempt to insulate North Dakota from the power of out-of-state banks and corporations, a number of which are still in place today. In addition to the Bank of North Dakota and the North Dakota Mill and Elevator (both still in existence) there was a state-owned railroad line (later sold to the Soo Line Railroad). Additionally, anti-corporate laws were passed, which virtually prohibited a corporation or bank from owning title to land zoned as farmland. These laws, which still exist today, and which have upheld by both the State and Federal court systems, make it almost impossible to foreclose on farmland, as even after foreclosure, the property title cannot be held by a bank or mortgage company. Thus, virtually every farm in existence today in North Dakota is still a “family-owned” farm. As a result, CBS News has reported that the state with the highest per capita percentage of millionaires is North Dakota.
Looks like the real progressives live in the Plains not on the Coasts. Between those laws and the federal money they are leeching it is no wonder unemployment is so low.
WyldPirate
@JMC in the ATL:
Point taken.
I just have a pretty low opinion of the lot of them in the business/economics/finance/marketing arena of academics and the real world. It’s hard for me to sometimes reconcile the worthiness of the disciplines vs the damage to society that they have wrought.
Similar arguments can be made for other disciplines I suppose, but these four seem to be the worst of the offenders in a benefit/harm consideration.
Annelid Gustator
Sully has a terminal fear of quantitation. And empirical evidence in general. Unless it is purely the revealed wisdom of our betters in the glorious past.
I think one of his not-too-long ago posts where he wrote about the grinding bootheel of socialism in the UK keeping the Galtian supermen (his parents, apparently) down.
One almost starts to believe that everything in Sully’s world is “coulda-woulda-shoulda.”
edmund dantes
Seriously? This guy is a professor at some university? He’s fucking snotty ass bitch in the comments too. People came him hard statistics, and he says “not good enough”.
JMC in the ATL
@WyldPirate: defending economists. Now I need a shower.
Martin
John Galt once told me that there was no use in wasting your precious productivity doing pointless research that other people would do for free. The formula for rational self-interest in journalism was easy:
1) Publish serious-looking piece asking tough questions, and save all of those research hours to play WoW.
2) Collect paycheck
3) Wait for bloggers too stupid to get paid for their productivity to do your research for you
4) Write followup piece with free research with new serious questions like ‘If North Dakota can do it, why can’t other states? Why can’t Iowa expand their shrimp industry or Alaska grow more pineapples?’. Play more WoW.
5) Collect 2nd paycheck, still not having done any reasearch
6) Repeat until you can skip getting other people doing your research for you and instead write pieces about class warfare and why you, as a no-pay job creator, should be taxed.
shortstop
@edmund dantes: He can’t even be arsed to check out hard data on individual factors affecting the decision to move (housing market, ND’s ability to absorb the unemployed of other states, temporary nature of ND’s employment boom, etc.), and he demands full-fledged migration studies from his readers. Tool.
Bill H.
The guy is onto something. I’ll bet he’s accounted for, oh, dozens of unemployed people in the US. If we dropped UI then unemployment would drop by 0.00001% instantly because those two or three dozen people would instantly move to another state and get jobs as oil field workers, waving their engineering degrees in their coworkers’ faces every day.
Steve M.
I don’t know, but I bet it’s a lower number than it would be if it were possible to sell a freaking house in this miserable no-modifications-allowed housing market.
(A point I see I’m not the first to make.)
dollared
So at least we’ve defined structural unemployment: if your prior career was a cocktail waitress in a topless bar in Vegas, you don’t have the skills or wardrobe to be an oil drig roustabout in North Dakota.
That’s at least 3% of the current national unemployment rate right there, isn’t it?
Martin
Oh, and once North Dakota is done soaking up Nevada’s 170,000 unemployed with their 9,000 jobs, maybe they could start working on California’s 1,348,000 unemployed above the 5% rate.
Stupidest economist ever.
nothanks
It’s fun to make shit up. Even more fun when it is anonymous. Many comments above prove it. And where is that research on how UI affects migration in the US anyway?
Oh sorry, another stupid question. Everyone knows we shouldn’t think too hard about the effect of government programs that spend taxpayer money.
MobiusKlein
@kth: Wow, that table explains a lot.
At the bottom, you can see pretty much the California Central Valley (and inland empire ) is at the heart of CA’s employment problem.
357 Riverside-San Bernardino-Ontario, CA 14.2
359 Madera-Chowchilla, CA 14.3
360 Bakersfield-Delano, CA 14.4
362 Redding, CA 14.6
363 Hanford-Corcoran, CA 15.0
365 Fresno, CA 15.7
366 Visalia-Porterville, CA 15.9
367 Modesto, CA 16.2
368 Merced, CA 16.3
368 Stockton, CA 16.3
370 Yuba City, CA 17.8
and trailing all metro areas,
372 El Centro, CA 29.3
the lowest unemployment metro comes in at just over 10
275 San Francisco-Oakland-Fremont, CA 10.1
So which states can absorb even 1/10th of CA’s unemployed?
edit: Oops,
206 Santa Barbara-Santa Maria-Goleta, CA 8.7
Pangloss
I would imagine that a large component of North Dakota’s workforce is in agriculture. But then again, maybe they need lounge singers on their farms….
ericblair
@Martin:
The general attitude towards unemployment by our betters seems to be that if you can’t fit 25 pounds of potatoes in a 5 pound bag, it’s because 20 pounds of those potatoes are lazy freeloaders. QED. Now where’s my endowed chair at.
Ana Gama
I lived in Bismarck once….for a year. That was enough.
It snowed that year for the first time on October 14th. We got 16 inches in about 7 hours. It never warmed up enough after that to melt that snow. Remnants of it were still on the ground when I moved to CA on April 28th the next year.
In the middle of the winter that year it became too cold to snow. We had days when it “warmed up” to 20 degrees below zero.
Interestingly, the summers are hot and dry. Over 100 degrees for days on end. But little or no precipitation after May. At night it would cool off to the upper 40’s. Great sleeping weather. That’s the nicest thing I can say about living there. It’s nice sleeping in the summer.
Ana Gama
@MobiusKlein: Rumor has it that the new stimulus money that CA is going to get for their high speed rail that’s coming from the funds WI and OH gave back are going to be used to build the Central Valley lines.
ShouldaCouldaWoulda
The post to which mistermix linked has been updated.
Brachiator
@Dennis SGMM:
Someone came up with an elegant model of something related to business. The model could be fined tuned using sophisticated math and dollops of statistics. Instant “science.”
Didn’t matter whether the model accurately reflected reality.
In fact, as a past article in the Economist showed, economists fell so in love with their models, that they no longer cared whether they said anything meaningful about the economy.
And these are the same shamans that have been put in charge of world economies.
dollared
Austin Frakt does some nice work, but he is one prickly bastard. Shuts down his comments, he does, once Mistermix calls him on his bullshit.
But he got the Sully love for his North Dakota “question,” proving once again that for the sake of his click numbers, it truly “would be irresponsible not to speculate.”
handy
@ShouldaCouldaWoulda:
And the comments section has been closed. I guess our stalwart economist found his answer–his question was bad.
ShouldaCouldaWoulda
@handy
Yeah. Questions hurt me tiny brain. Yours too? (Doh! Another question. Ouch.)
no
I gotta say mistermix, you kinda blew this one. Went all nuts when the guy asked an honest question after he did some work–sufficient for a blog I think. (Read his update.)
Still, you have not come up with the research that shows he really should have had all the answers. All you showed was that in your fantasy world where he was saying something he really was not, you showed it wouldn’t work out. Wow! Nice job. You must be very proud.
Who says a blogger needs to have all the answers anyway? You clearly do not.
MobiusKlein
@handy: probably deleted / moderated comments that were outrageous.
But what’s there seems very tame.
rf80412
100% complete BS.
Any amount of unemployment means more workers than jobs: whether it’s ND’s 2.8% or NV’s 14.2%. How on earth could ND’s economy get better with higher unemployment?! How would these migratory workers’ lives improve by being unemployed in ND instead of in NV?!
This whole argument only makes sense if you view unemployment as a measure of potential growth – what Marx called the “reserve army of labor” – and that since maintaining full employment prevents economic growth beyond that supported by population growth, tolerating unemployment is going to let you build up for a brief but spectacular economic boom if and when you can magically get all those people back into the job market at once.
Of course, what always goes unsaid is that economic growth beyond population growth is unsustainable. Economists are looking at a special and short-term case of transition from a low-growth economy to a high-growth economy – while neglecting the immediate transition back to a low-growth economy when all the new jobs get filled – and generalizing it to something that can be maintained indefinitely. They hold this view because the plutocrats are very good at holding onto wealth created during an expansion phase and protecting it from an inevitable plateau or a contraction phase.
Achieving and then maintaining full employment must be the policy.
shortstop
@handy: He didn’t just close it; he deleted almost everything that was uncomplimentary. WATB.
Richard W. Crews
the saying is : the wind doesn’t blow – North Dakota sucks.
jhand
I went to the linked blog. After a dozen or so people called the author (Austin) a dumb ass, and explained why he was such, he closed down the comments section. His argument reminds me of the anti-abortionist argument that population is no problem because we have all that space available in places like Wyoming, Montana, and the Gobi Desert.
sacman701
I lived in ND for 3 years. It does not suffer from a shortage of labor. Every year its universities graduate hundreds of people who grew up there and would prefer to stay in the state if they could, but end up leaving (usually for the twin cities) because there isn’t enough work available in ND. The state’s problem is that it’s just too remote. Fargo is 3.5 hours from the twin cities. Everywhere else in the state is even further away from anything big.
I didn’t mind living there btw. It was cheap, I had a short commute, there was virtually no crime, and people are extremely laid back. I think I heard one car horn in 3 years. Of course it was flat, the winters were brutal, and it took forever to get anywhere else.