Half Changed World

Last month, I finally managed to get my new Palm E2 to synch properly at work, and I wanted to get an extra HotSync cable so I wouldn’t have to keep carrying mine back and forth between home and office.  It ticked me off that Palm charges $24.99 for a basic cable, so I googled to see if I could find one for cheaper.  I soon found a company called Vavolo, which offers one for just $5.95, plus another $5.90 for shipping.  And theirs uses the USB port to charge the handheld, instead of requiring a separate cable and outlet.

It wasn’t until I went to check out that I realized that, even though the website is entirely in English, Vavolo is located is Hong Kong, and that the cable would be shipped to me directly from there.  I hesitated a minute, but decided to go ahead, since I wasn’t in a rush to get the cable.  I had found an online coupon worth $3, so the most I’d be out is $9, and I was curious to see what I’d get.

The package came today complete with interesting Hong Kong stamps.  The stamps totalled 17 HKdollars, or just over $US 2.  And the package claims that the cable was made in Japan, not Hong Kong or China.  I’m boggled that this business model is profitable.

Like almost everyone in the US who drives a gasoline-fueled car, I’ve been suffering from sticker shock when I buy gas lately.  The last time I filled up, I paid $2.49 a gallon, after driving past two stations at $2.69 and $2.83.

Unlike almost everyone in the US who drives a gasoline-fueled car, I don’t think the government should be doing something about it.  If anything, I think gas should probably be more expensive.  I don’t think people are ever going to take conservation seriously until it hits them in the wallet, and for both environmental and geopolitical reasons (e.g. not wanting to be dependent on oil-producing nations), I think it’s important that we consume less fossil fuels.

There’s very little evidence that people have started to change their driving patterns in response to the increased cost of gas.  At least in the short-run, fuel consumption is not very sensitive to price (e.g. it’s what economists call inelastic).  At the margin, people may do less leisure driving, but the cost of gas is still a pretty small fraction of the cost of a trip.  And driving is still cheap compared to train and plane tickets, at least for a family.  It’s going to cost us about $100 in gas to drive the minivan to NYC this weekend, but train tickets for the boys and me would be around $250, and that’s with N. riding for free.  And while I love taking the metro to work (I can read!), for most people, public transit is inconvenient if available at all; as Brett at DadTalk wrote: "despite a frugal streak that runs miles deep, I’m going to continue driving to work just to steal a few extra minutes each day with my family.

The big changes that people can make in response to higher fuel costs — buying more efficient cars, choosing houses closer to work or on public transit routes — all only happen over time, and if people think that gas prices are going to stay high.  And I don’t think people have gotten there yet.

I also worry a lot about the impact of higher gas costs on low-income families, for whom an extra $10 or so is a big hit on their budget, and means that they’ll have to cut back somewhere else.  I think any proposal to increase the price of gas needs to address this issue, and cushion the blow.  One intriguing possibility is Pay at the Pump car insurance, where the price of no-fault car insurance is built into the cost of gasoline.  It simultaneously ensures that everyone is covered and changes one of the major costs of car use from a fixed cost to one that varies with the distance you drive.  It would simultaneously promote conservation and make car ownership a lot more accessible to poor families.

And yes, in spite of my environmental leanings, I think making car ownership a possibility for poor families is generally a good thing.  Many jobs are inaccessible without a car.  Groceries are more expensive at the stores you can reach without a car.  And commutes by public transit often stretch to 2 or more hours a day, especially when you need to take a child to day care or school en route.  A bunch of welfare to work programs have tried to create specialized van routes to bring workers to remote jobs, but my sense in most cases is that it’s cheaper and more helpful to just buy people reliable used cars.

In her comment on my post on part-time work, Jennifer wrote:

"So that makes me think that an employer who can figure out how to employ people (of course mainly mothers) part time in an effective way that makes use of their real skill sets will, be able to get some real leverage out of the talent differential they are able to exploit."

I think that’s right — but precisely because so many employers are unwilling to consider part-timers, those that do can often get away with paying them less.  One of my first posts on this blog pointed out a newspaper article in which a publisher referred to stay-at-home moms as "a cheap and highly skilled workforce."

I’m still surprised that employers aren’t more willing to hire parents returning to full-time work after a few years out of the workforce.  Setting aside those few careers where the technology does fundamentally change every 2 or 3 years, it’s hard to make an economic argument for why they shouldn’t be more open. 

The only explanation that makes any sense to me is what economists call "signalling." In this context, a signal is a something that isn’t bad in itself, but is believed to correlate with unobservable characteristics that are undesirable.  For example, young adults with GEDs do much worse in the labor market than their peers with regular high school diplomas, even though they’ve proved themselves by taking the test to have similar levels of knowledge.  Economists suggest that a GED is a signal to employers that the person might have a low tolerance for routine and discipline.  Similarly, I’m afraid that employers see taking any extended period out of the workforce as signaling that the person might lack full commitment to a job.   

I recently read a blog posting where Mandy at Fosterfest pointed out that Justice O’Connor spent a significant period of her life as a stay-at-home mom.  She argued that at the time there really weren’t very many experienced female judges, so given that Reagan wanted to nominated a woman, he had to accept one with fewer credentials than the average nominee.  Today, there are so many women with highly successful linear legal careers, it’s unlikely that another woman with an extended period out of the legal profession could ever be nominated.

I’m not arguing that people who take 5 years out of the workforce should expect to return at the same level as their peers who worked continuously during that period.  But, far too often, they aren’t able to return at even the same level that they were at when they left.  And that just seems crazy.

I was struck by this post, from LAmom, in which she suggests that financial concerns are causing women to postpone (or forgo) parenting:

"If women who might be both physically and emotionally ready to have children routinely feel like they can’t because of finances, then our society is failing to meet the needs of women and families."

I think LAmom is fairly characterizing the discussion on Feministing that inspired her post, but I wondered how representative those experiences were.  I can’t think of anyone in my personal acquaintance who really wanted to have kids, but waited because of money.  (By contrast, I know a lot of women who wanted to have kids, but didn’t want to be single moms, and weren’t in a relationship that they wanted to bring kids into.)

More broadly, Dave Pollard claims that people worldwide are having fewer children than they want, due to economic constraints.  I’m skeptical about both halves of that statement.

The first part may be true in the sense that the Gallup organization does regular surveys of how big people think the ideal family is, and people in most countries do give higher numbers than the actual birthrate.  But I’m not sure how much thought people put into those answers, and whether they actually mean that many people have significant regrets about not having more kids.

The second part of the claim seems especially weak to me.  Pollard argues that the widespread correlation between women’s education and lower fertility is spurious and that the increased participation of women in the labor force is demand-driven.  In other words, women are working because they have to, and therefore can’t have as many kids as they want.  This seems totally offbase, for several reasons.

• People overwhelmingly have fewer kids in more affluent countries than in poorer countries.
• At least in the US, women’s labor force participation is unaffected by husband’s earnings, which makes it very hard for me to accept Pollard’s claim that it’s driven by "economic necessity."
• Pollard cites a statistic that "over 40% of Americans say they would have more children if they were wealthier."  In reality, however, in the US rich people have — on average — fewer kids than poor people. 

Quick, what countries would CAFTA create a free trade agreement with?  I can’t tell you either without looking it up.*  I know the legislation for this passed the Senate last week and will be taken up by the House sometime this month, but that’s about it.  For a fairly significant piece of legislation, it’s been pretty much invisible from the public political discussion, at least from where I sit.  It’s a perfect example of the phenomenon discussed in this week’s CQ cover story (login required) — an issue that is of critical importance to interest groups, and of little interest to the vast majority of Americans.

I tend to fall in the squishy middle on free-trade.   Fundamentally, I don’t think it’s either feasible or desirable to slam the door on globalization.  Free-trade agreements matter a lot on the margins, but aren’t going to affect the major overall trends; for example, whether or not we pass free trade agreements, there’s not going to be a textile industry in the US.  I accept the argument that trade promotes overall growth — but there are clearly winners and losers, and I’m much more inclined to worry about those distributional impacts, which mainstream economists often airily dismiss as "short-term transitional issues."  But I also don’t think it makes programatic sense (v. political sense) to set up special programs for workers dislocated by free trade as opposed to workers who are unemployed for any other reason.

One of the ways that I figure out where I stand on legislation when I don’t have the time or interest to delve into the details is to look at who is supporting it and opposing it.  (This method isn’t perfect — even Rick Santorum supports some legislation that I like — but it works reasonably well most of the time.)   Probably the best thing that can be said for CAFTA is that it makes the US sugar cartel scream — and anything that pisses them off can’t be entirely bad.  Unions despise CAFTA, of course; unions have worried about free trade displacing jobs at least as far back as the early 19th century. (I wrote my undergraduate thesis about two 19th century labor activists, and it was amazing how modern their concerns sounded.) 

I hadn’t realized until I read this article in today’s Washington Post how partisan of an issue CAFTA has become — they predict that it will get less than 10 Democratic votes in the House, versus the 102 votes that NAFTA got 12 years ago.  There are a lot of historically free-trade Democrats who are opposing it because it has even less in the way of worker protections than past free-trade agreements and because the Bush Administration cut them out of the negotiations completely, making it a "take it or leave it" deal.  At the same time, some Democratic leaders whom I respect — including Jimmy Carter, Donna Shalala, and Henry Cisneros — are supporting it.

*Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.

Just in time for Father’s Day, the Washington Post today has a story on a study that found that states with more successful child support enforcement programs had lower overall rates of out-of-wedlock births.

This is interesting, because theory doesn’t predict which direction child support laws should affect non-marital births.  Strong child support enforcement should make it less desirable for men to father children whom they will be forced to support, regardless of their relationship with the child’s mother, but at the same time should make it more desirable for unmarried women to have children, because they’re less likely to bear all the cost themselves.  If I remember correctly, Charles Murray attacked child support laws in Losing Ground, because he thought they overall promoted nonmarital childbearing.

I haven’t read anything more about this study than what was in the newspaper, but the researchers are fairly well-respected types.  If the finding hold up, this suggests, first, that the negative incentives for men are greater than the positive incentives for women and second, that the men have a significant degree of influence on the decision.  The latter implication surprises me.

In graduate school, I took a class on income inequality in the United States.  One of the things that I learned in that class is that "within group inequality" has been the major contributor to the overall increase in inequality.  What that means in non-economist language is that even if you only look at a group of people who are all of the same race, gender, education, age, etc., inequality has grown enormously.  While the average college graduate makes a lot more than the average high school dropouts, there’s still a huge variation within each group.

The Washington Post had an article today on "housing envy" that illustrates an aspect of this phenomenon.  Real estate prices have taken off so much in this area that people with the same incomes (the article focuses on several pairs of coworkers) are in enormously different situations depending on whether they were lucky enough to have bought real estate more than 4 years ago.  People who moved to the area more recently, or were too early in their careers, or just not motivated to buy, are pretty much screwed.  Either they can’t afford to buy, or their mortgage payments eat up a huge portion of their income, or they’ve taken a risky gamble with an interest-only loan.

We’re on the lucky side of that divide.  Eight years ago, my suburban-raised husband dragged my NYC-raised self into a realtor’s office and eventually we bought the house we’re still living in.  That choice has had huge consequences for our family — it’s meant that I’m able to support the family on just my paycheck and that I only lose about an hour a day to commuting (round-trip), much of which I can spend reading on the metro.  And if we were willing to move away from the coasts, it could buy us an awfully nice quality of life, or even let us both freelance.

As the saying goes, it’s better to be lucky than good.  But I think it’s bad for society for luck to matter so much.  At least Virginia’s property tax laws don’t further benefit long-term owners over new buyers the way California’s do.