Archive for the ‘Real Estate’ Category

Why Research Universities Merit the “Freedom of the City”

Sunday, May 6th, 2012

What I shared with university colleagues on 5/6/12–

Colleague,

I’ve been thinking of implications of the various [Illinois] pension bills in the light of the larger question of the need for economic development in Chicago and in Illinois.

Yale economist Robert Shiller, the co-originator of the Case-Shiller housing index, recently made a dire prediction, that the housing market may not recover for a generation, meaning “in our lifetimes.”

The implications of this prediction, if correct, are profound. The political game of chasing around and announcing “jobs, jobs, jobs” may shortly be practically useless. Longer-term sources of economic growth besides tax incentive gimmicks to attract and retain businesses will have to be found.

Cities have historically grown and thrived because, as centers of commerce, they were in some sense free economic zones that became magnets of opportunity for both migrants and for entrepreneurs. But our generation of legislators, whether federal, state, and local, have somehow embraced bureaucracy and regulation as a solution, and are locking out opportunity.

By reducing constraints upon UIC’s [University of Illinois at Chicago] growth as an urban, state research university, Chicago and Illinois could become a greater research and educational magnet, drawing more scientists, more businesses, and more students, and rival Boston or LA within two or three generations, if we collectively make the right decisions to unshackle our research universities and institutes and let them grow and thrive. The “freedom of the city” must be extended to the University of Illinois (both UIC and UIUC [University of Illinois at Urbana-Champaign]) and to partner institutions as research leaders.

In order for such a strategy to succeed, civic leaders who are alumni of NU and U Chicago will have to drop their elite snobbery and allow UIC to thrive as well, since UIC in the long term can “bring the big numbers” of both graduates and researchers to help Chicago and Illinois thrive. But even these three Chicago research universities are not enough to build a “rival Boston” strategy for this region.

That is why legislative action that drives away research talent, and the dollars that senior professors and principal investigators bring with them, is exactly the wrong economic development strategy for Illinois.

As long as state research universities are lumped into legislation covering all matter of non-research institutions, and subject to numerous unintended consequences and unpredictability, the state research university will not thrive to the extent that it could in Illinois. We already see talented colleagues voting on the expected results of such election-year legislation with their feet before the final votes are cast.

Infrastructure alone will not bring Illinois or Chicago back. We have to have a “somewhere” to where the roads and bridges lead. Because real estate will not be an answer for perhaps a generation, state and other research universities do help answer the question of “somewhere.” So let’s not sandbag research universities with bureaucratic disincentives for success, OK?

There are so many encouraging changes taking place at UIC, especially UIC College Prep–there should be dozens more such Chicago and Illinois high schools!–that I’m sad to see some of our colleagues go at this critical moment for UIC.

But we do have a great opportunity, even in these awful times for Illinois, to actually make the right legislative decisions to shape a better future.

Regulatory freedom for the Research Universities of Illinois is part of the answer. The sooner the University of Illinois, including UIUC and UIC, can be set apart with its own legislation freeing the development of research and the attraction and retention of talent from regulatory constraints, the better.

But who will take the lead in spreading this message? Who’s got the guts to do this in an election year?

Much easier to add more bureaucracy and to call it “reform.” Yet where is the economic development–which is what we really need–in that?

So far, the legislature has taken the safe DMV approach–more rules and more roads. But rules and roads leading to what?

Cordially,

Albert Schorsch, III

© Copyright 2012, Albert J. Schorsch, III
All Rights Reserved

Share

Film: Demographic Bomb

Friday, January 28th, 2011

The widespread belief in the threat of overpopulation is often more firmly held than religious faith, and persists throughout the developed world.

This belief has shifted across several elites in society over recent centuries, from the pious powerful seeking to eliminate the undeserving poor, to the progressives seeking to engineer a better society, to the eugenicists and their negative mirror image (and their sometime friends) the associated fanatics seeking to eliminate the weak and to grow a master race, to environmental idealists wishing to erase the human footprint from the earth, to enlightened and wealthy postmoderns seeking to incrementally reduce the sources of social dissonance as they shape a society to suit their fanciful self-image or their charitable foundation’s flavor of the week.

To all of these, the following film will come as something of a shock.

The 2009 film Demographic Bomb ran on EWTN on the evening of 1/26/11.

Demographic Bomb, written and directed by Rick Stout, who co-produced the film with Barry McLerran, includes top thinkers including Nobel Economics laureate Gary S. Becker of the University of Chicago, USC demographer and planning professor Dowell Myers, Columbia U. historian Matthew James Connelly, as well as partisans on opposing sides of the population debate such as Paul R. Ehrlich, the original author of The Population Bomb, and Nicholas Eberstadt.

The film’s most telling point from the standpoint of economic science was made by Prof. Becker, who cited Adam Smith’s insight that prosperity was associated with growing population, while declines in population were associated with declines in prosperity.

Indeed, the economic organization of our society is based upon the assumption of continued population growth. The outnumbering of the young by the old, which is implied by declining birth rates, places a great burden on the young, and can lead to economic decline. This is one of the basic arguments of the film, which notes a demographic trend underlying declines in real estate markets, where fewer buyers follow to acquire the homes built by the Baby Boom generation. This reduction in demand leads to declines in value, and thus also leads to economic decline.

Those political and social activists who believe that an economy can be legislated or regulated into existence might as well be trying to legislate the weather and the force of gravity. Underlying every economy are its markets. Underlying these markets are demographic forces, and underlying these demographic forces are tangible resources found in the land, the air, and the seas. Without exception, the underlying market, demographic, and physical forces eventually erupt and overcome foolish efforts to shape society that do not effectively acknowledge and harmonize with the powers of these underlying realities.

Demographic Bomb, the second film in a series preceded by Demographic Winter, lets the experts speak in their own words, but firmly draws its own conclusions that population decline, forced by misguided governments and organizations, is hurtful to human society.

Here is the trailer for Demographic Bomb.

Here is the trailer for Demographic Winter.

Please see my earlier post on the work of Prof. Dowell Myers for the importance of the advancement of immigrants to economic development.

© Copyright 2011, Albert J. Schorsch, III
All Rights Reserved

Share

Connecting economic recovery with the advancement of immigrants

Sunday, September 12th, 2010

Chapman University professors Steven Gjerstad and (2002 Nobel Prize winner) Vernon L. Smith have written a comprehensive analysis of US recessions and recoveries since 1929.

This analysis, along with their less technically written 9/10/10 Wall Street Journal Article entitled, “Why We’re in for a Long, Hard Economic Slog: Evidence from 14 U.S. recessions shows that the economy doesn’t recover until housing recovers” (you must be a WSJ subscriber to read this online), are well worth the read if you wish to understand the forces working to actually bring about an economic recovery. As Gjerstad and Smith state in their WSJ article:

“Our study of all the postwar recessions and the Great Depression leads to the following empirical proposition: If there is no recovery in housing expenditures, confirmed by a recovery in consumer durable goods expenditures, then there is no economic recovery.”

Looming underneath the “Great Recession” following the Banking Panic of 2007 is a demographic shift related to the aging Baby Boomer generation’s changing spending patterns accompanying their life-cycle transition.

In this vein, USC Professor Dowell Myers, a distinguished urban planner and demographer, wrote also in 2007 a very insightful book entitled, Immigrants and Boomers: Forging a New Social Contract for the Future of America, in which he argued that public policies which encourage immigrants to step into the economic and social gaps left by the departing Boomers would benefit the US: The quicker the US integrates our immigrants into full partnership in society, the better off we are as a nation economically as well as socially.

If the US were to pair the insights of Profs. Gjerstad and Smith with those of Prof. Myers, we might come up with more effective public policies that moved us out of recession to a better economic place. Because there are fundamental financial and underlying demographic forces at work behind this “Great Recession,” I agree with Profs. Gjerstad and Smith that we are in for a “long slog.” But Prof. Myers shows us one long-term way out: the integration of and partnership with US immigrants.

The economic argument here is a commonsense one: If Boomers are spending less as they age and this prolongs an economic downturn, someone else has to step into the gap. The more successful immigrants can become and fill this gap, the better off we are.

Because of the underlying demographic and financial forces, we shouldn’t expect recent pre-election Washington-based financial legislative “stimulus” gimmicks to have much of an effect. (See my earlier post mentioning the limited impact of presidents.) True immigration reform built upon the integration of talented and hard-working immigrants into American society would work to speed economic recovery, but don’t expect politicians to take on this difficult challenge any time soon. Presently, even though it is against our best interest as a nation, it pays politically in some quarters to marginalize immigrants.

Hence, we’re indeed in for a long slog economically, unless we somehow collectively come to our senses as a nation and realize that immigration, if it is accompanied by economic and social integration, is really good for us.

To date, Washington has not connected economic recovery with the advancement of immigrants. But the two are closely related. The longer we wait to integrate our immigrants both economically and socially, the worse off we will be as a nation.

© Copyright 2010, Albert J. Schorsch, III
All Rights Reserved

Share