Archive for April, 2010
When should you rent versus buy? It’s a question lots and lots of people are asking these days. Armed with intriguing new post-crash data on the relative costs of renting versus buying, The New York Times’ David Leonhardt suggested that the significant decline in real estate prices was making buying a home a much better proposition in a growing number of communities across the country. (The Times offers a great interactive rent-or-buy tool, if you’re currently thinking about this).
Leonhardt’s analysis provoked an intriguing debate among many of the web’s most thoughtful economics commentators. Ryan Avent, writing at Free Exchange, urged caution. Felix Salmon thinks housing prices still have a ways to fall, especially as inflation eats away at them. Robert Shiller, the Yale economist who initially identified the housing bubble, and the tech bubble before that, also believes real estate prices may still have further to fall. Leonhardt replies thoughtfully here and here.
On Morning Edition yesterday, I discussed the merits of owning versus renting your home with host Steve Inskeep. The ideal of homeownership is deeply ingrained in the American psyche. For the past half century, owning a home of your own has been the veritable cornerstone of the American Dream. We more or less take it for granted that homeownership is a good thing. Homeownership, it is commonly thought, goes along with higher incomes. It causes people to be more diligent, hard-working, and productive. It leads to stable families, stable communities, and higher levels of happiness and well-being.
But, a whole slew of recent research suggests that there are considerable costs as well as benefits to owning your home. A 1998 Federal Reserve Bank of Dallas study, undertaken well before the boom and bubble, provided detailed empirical evidence of America’s over-investment in housing. Yale University’s Robert Shiller, the world’s leading student of bubbles, housing, and otherwise, found that from “1890 to 1990, the rate of return on residential real estate was just about zero after inflation.” Or as Nobel prize-winning Columbia University economist Edmund Phelps puts it: “It used to be that the business of America was business. Now the business of America is homeownership.” He adds, “To recover and grow again, America needs to get over its ‘house passion.”‘ I delve into these issues in greater depth in The Great Reset.
Richard Florida was on NPR’s Morning Edition today to talk about why owning a home is not always better than renting. In his new book, The Great Reset, Richard quotes Edmund Phelps who said, “America needs to get over its house passion. Listen to the interview below to hear Richard and Steve Inskeep talk about new ways to live and work post-recession:
A week or so ago, I looked at the hardest-working versus highest-earning states using data from a new study (PDF) from the Bureau of Labor Statistics. The study by Dante DeAntonio used data from the Current Employment Statistics – a monthly survey of more than 400,000 U.S. business establishments – to generate estimates for employment, hours, and earnings for U.S. states. My MPI colleagues and I were curious about how data would play out for U.S. metropolitan regions, so we contacted DeAntonio and he graciously supplied the data. (more…)
My paper with MPI colleagues Charlotta Mellander and Kevin Stolarick is out in the new issue of Environment and Planning A. Its full title is “Music scenes to music clusters: the economic geography of music in the U.S., 1970 – 2000.” Here’s the abstract.
Where do musicians locate, and why do creative industries such as music continue to cluster? This paper analyzes the economic geography of musicians and the recording industry in the U.S. from 1970 to 2000, to shed light on the locational dynamics of music and creative industries more broadly. We examine the role of scale and scope economies in shaping the clustering and concentration of musicians and music industry firms.
Here’s a new video that’s being released today over at The Wall Street Journal online.
A week or so ago, Newsweek’s Julia Baird pointed to my analysis of the connection between national happiness and tolerance. That reminded me and my MPI colleagues of the Heritage Foundation’s Economic Freedom Index. The index, which covers 183 countries, is based on ratings for 10 specific factors: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom. Hong Kong topped the list overall, followed by Singapore, Australia, New Zealand, Ireland, and Switzerland. Canada came in 7th, the highest among North American nations and slightly ahead of the United States which ranked 8th.
To what extent is economic freedom associated with tolerance and happiness? Are freer nations also more tolerant? Are their residents happier than those of other nations? To what extent is economic freedom also associated with other factors like affluence and material well‑being, the level of human capital, and the transition to postindustrial economic structures? And what is the relationship between freedom and economic inequality?
To keep up with the changing creative economy and its new demands, communities, organizations, and educational institutions have to develop and embrace new strategies to better train, educate, and prepare workers.
As the second feature in our series, Creative Capstones, we interviewed Michael G. Novak, CEO of the School of Design in Monterrey, Mexico (CEDIM) to discuss how the school is developing new models to train future designers and innovators. CEDIM recently launched its Master of Business Innovation.
Creative Class Group (CCG): Describe CEDIM and its history.
Michael Novak: From its beginning in 1978, when CEDIM started as a School of Design in Monterrey, México, it was clear for their visionaries’ founders that design and innovation would play a relevant role in our future society. Today, CEDIM is recognized for its innovative educational model which integrates design and innovation as the competitive strategy for the business in the new global economy.
The great folks at GOOD magazine interviewed me for their neighborhoods issue. Here it is.