Sunday, June 8, 2014

No. 000007 Urban Economics for Dummies--

1. Saint Louis and Kansas City are the geese laying the golden eggs for Missouri.

2. Cities are the driver of economic growth for only in cities does the phenomenon of agglomeration economics take place.  David Schleicher, "THE CITY AS A LAW AND ECONOMIC SUBJECT."

3. Economic growth in Saint Louis and Kansas City has slowed or stopped because:
  • we suffer from all the ills of urban sprawl (aka local sorting) (why economists use such euphemisms is beyond me)
  • we don't have enough highly skilled highly educated people.
As to the former:
there is an inverse relationship between the gains from agglomeration and sorting. Having many small local governments, and enabling individuals to choose their local public policies by sorting among them, affects the organization and density of people in metropolitan areas, creating movement away from economically-optimal location decisions. Sorting thus reduces agglomerative efficiency.
As to the later (caution wonkish) follow these links:

Serlin explains in four paragraphs that we don't have enough jobs because we don't have enough know how (smart skilled educated people to put everyone to work). Our bottle neck is a lack of skills and education:
So, you could just say, That's the solution today! The computers and robots won't 100% not need humans for a very long time, if ever. Just keep building more and more computers, and more and more robots, then you'll need more and more people to attend to, work with, and complement those computers and robots, until every unemployed human is now employed! They're all maintaining, assisting, and otherwise working with the robots and computers that took so many jobs originally!
The biggest current problem with this is there's a bottleneck. And it's a very serious one – skilled workers. It's relatively easy to keep building more and more and more robots, and computers, and facilities, and high-tech machines (at least if you have the skilled workers), but to produce enough trained engineers, and business managers, and skilled technicians, etc. to complement, and keep employed, all of the billions of unskilled workers globally, that's what we're not nearly up to the task for. That's the bottleneck, or at least the biggest and hardest one.
Without far more skilled workers – many highly skilled – there will not be nearly enough need for the masses of unskilled workers. There just won't be anything for them to do that's a high-tech production method like we've discussed without more skilled workers. All you'll be able to do with them is the primitive production method that employs only unskilled workers. And that production method is so relatively low output, it will be paid too little in raw materials to create non-poverty, or perhaps even subsistence, wages for most of the workers.
So it looks like to me the solution depends most on attacking this bottleneck, skilled labor – and the right skills needed for an L2 package. You do this, and you keep employing more and more of a smaller and smaller number of remaining unskilled workers, until their unutilized numbers get small enough to push their wages to a middle class, or at least non-destitute, level.