Sunday Poll: What Impact Will The PGA Championship Have On Our Regional Economy?

With the exception of Tuesday’s primary the news last week was dominated by the 100th PGA Championship held at Bellerive Country Club in suburban St. Louis County.

I’m not a golf fan, so my thoughts turned to economics:

The 100th PGA Championship Aug. 9-12 is expected to have an economic impact felt well beyond Bellerive Country Club’s picturesque course, up to $100 million, according to some estimates.

Hotels are filling up downtown, nearly 20 miles from the course that’s situated in a mostly residential area with few hotels nearby. (Post-Dispatch)

For today’s poll I’d like you to think about the economic impact on the regional economy.

This poll will close at 8pm tonight.

— Steve Patterson

Readers Split On Homicide Rate

Last year St. Louis had more homicides than we’d seen in a couple of decades. This year we have a new police chief, hired from within, and our mayor in her first full calendar year in office. Will they be able to lower the number of homicides this year?

Of course none of us know for sure…we can only guess. My personal feeling is until we make significant progress toward addressing economic inequality we’ll continue seeing the same level of violence. Inequality — real & perceived:

Hicks and Hicks (whose relation is unclear) found that the link between conspicuous consumption and high crime rates is much stronger than the link between income inequality and crime.

That said, when spending is visible, the rates of only certain types of crimes tend to spike. Theft and vandalism, interestingly, aren’t significantly more present, but murder and assault are. These findings actually take a bit away from Gary Becker’s hypothesis, seeing as a visibly luxurious car apparently isn’t likely to inspire theft. Instead, this study adds to what’s called “strain theory,” which is another way of making sense of criminal behavior. Strain theory suggests that when poorer people perceive inequality, they feel less of a commitment to social norms and in turn come to view crime as more acceptable. The key insight the Hicks’s study provides is that when potential criminals are giving up on social expectations, they’re doing so based on information that’s visible, not information that’s password-protected. (The Atlantic)

Placing signs in your yard saying “We’ve got to stop killing each other” or calling on a deity might make you feel better — but they don’t do a thing to address the actual problems in our high-crime neighborhoods. How you ask?

From Talk Poverty in 2015:

1. If the private market fails to provide enough jobs to achieve full employment, the government must become the employer of last resort.
2. When growth is below capacity and the job market is slack, apply fiscal and monetary policies aggressively to achieve full employment. Right now, this means not raising interest rates pre-emptively at the Fed and investing in public infrastructure.
3. Take actions against countries that manage their currencies to subsidize their exports to us and tax our exports to them. Such actions can include revoking trade privileges, allowing for reciprocal currency interventions, and levying duties on subsidized goods.
4. Support sectoral training, apprenticeships, and earn-while-you-learn programs.
5. Implement universal pre-K, with subsidies that phase out as incomes rise.
6. Raise the minimum wage to $12/hour by 2020 and raise the overtime salary threshold (beneath which all workers get overtime pay) from $455/week to $970/week and index it to inflation.
7. Provide better oversight of financial markets: mandate adequate capital buffers, enforce a strong Volcker Rule against proprietary trading in FDIC-insured banks, strengthen the Consumer Financial Protection Bureau, and encourage vigilant oversight of systemic risk in the banking system by the Federal Reserve.
8. Level the playing field for union elections to bolster collective bargaining while avoiding, at the state-level, anti-union, so-called “right-to-work” laws.
9. Maintain and strengthen safety net programs like the EITC and CTC, SNAP, and Medicaid.
10. In order to generate needed revenue and boost tax fairness: reduce the rate at which high-income taxpayers can take tax deductions, impose a small tax of financial market transactions, increase IRS funding to close the “tax gap” (the difference between what’s owed and what’s paid), and repeal “step-up basis” (a tax break for wealthy inheritors).

To many of us the choice is clear — all of the above or continue to see the violence escalate.

Here is the results of the recent non-scientific Sunday Poll:

Q: Compared to 2017, the number of homicides in the City of St. Louis for 2018 will be…

• significantly lower 1 [3.85%]
• slightly lower 7 [26.92%]
• about the same 7 [26.92%]
• slightly higher 8 [30.77%]
• significantly higher 2 [7.69%]
• Unsure/No Answer 1 [3.85%]

A year from now we’ll know who was right.

“Many white Americans of good will have never connected bigotry with economic exploitation. They have deplored prejudice but tolerated or ignored economic injustice.”
–Dr. Martin Luther King Jr. Why We Can’t Wait, 1964 (Newsweek)

Aresting and locking up more people isn’t the answer, providing an economic alternative to crime is the long-term solution.

— Steve Patterson

Opinion: Our Gas Prices Are Way Too Low

Gasoline here in the U.S.is cheap compared to much of the world.

The average price of gasoline around the world is 4.09 U.S. Dollar per us gallon. However, there is substantial difference in these prices among countries. As a general rule, richer countries have higher prices while poorer countries and the countries that produce and export oil have significantly lower prices. One notable exception is the U.S. which is an economically advanced country but has low gas prices. The differences in prices across countries are due to the various taxes and subsidies for gasoline. All countries have access to the same petroleum prices of international markets but then decide to impose different taxes. As a result, the retail price of gasoline is different. (GlobalPetrolPrices)

Comparing gas prices alone doesn’t tell the full picture. For that I turned to a handy Bloomberg site,

Global gas prices are on the decline—about 2.3 percent, on average, in the past three months. Behind that modest decrease is a wide range of price swings felt differently around the world. We ranked 61 countries by three economic measures to see which has the most affordable gas and which feels the most pain at the pump.

It listed the US is the third most affordable — behind Venezuela and Saudi Arabia. Initially I decided to limit myself to the G7 countries:

Canada

Canada is seeking to restore its image as a leader on global warming with a nationwide tax on carbon pollution. The country has a lot to lose: Vast reserves of difficult-to-extract oil will mean either an environmental toll to produce it or an economic toll to keep in the ground. Cheap gasoline in Canada goes hand in hand with high consumption—only Americans use more per person.

France

The French can afford to pay for their expensive gasoline, but they’re increasingly turning to electric cars instead. French automakers Peugeot and Renault are both competing in the expanding market for EVs. France has one of the world’s highest EV sales rates and one of the densest charging networks.

Germany

German gas isn’t exactly cheap, but it’s little bother for the average driver in Europe’s largest economy. Gas consumption is average and is likely to decrease as the country commits to battery-powered cars. Incentives were introduced for car buyers in 2016, and BMW and Volkswagen are now working to electrify their fleets.

Italy

Car ownership in the home country of Ferrari and Maserati is among the highest in the world. However, the prolonged slump in global oil prices offered less relief to Italian drivers than in most countries, largely because of the country’s high taxes on fuel.

Japan

Japan’s long-standing national gasoline tax helped its carmakers take an early lead in developing fuel-efficient vehicles. Toyota and Honda invested big in fuel-cell technology, while the Nissan Leaf became the world’s best-selling electric vehicle. Japan now has more public battery chargers than gas stations.

United Kingdom

Sales of electric vehicles are accelerating in the U.K.—one of the biggest markets for battery-powered transportation. EVs make a lot of sense in a region defined by short driving distances and one of the highest gasoline prices in the world.

United States

President Donald Trump has scrapped environmental regulations and supported fossil-fuel production in the first months of his presidency. But if success is judged by the price of gasoline, there isn’t much room left for improvement. U.S. gasoline prices tumbled under his predecessor, Barack Obama, while oil production soared and cars became more efficient. Americans still guzzle more gas than any other country, so even with low prices, a thirst for the open road takes a bite out of the average paycheck.

I then decided I needed to also look at the country with the most expensive gas and the two where gasoline is more affordable than here:

Norway

Norway’s high gas prices and high incomes are an electric car maker’s dream. The country has the biggest share of electric vehicles in the world. That may seem strange for an economy built on oil, but Norway is one producer that doesn’t subsidize gasoline at the pump. Instead, the country uses its oil riches to fund national services, such as free college education and savings for infrastructure improvements.

Saudia Arabia

The Saudis sit atop two enormously valuable bodies of liquid: oil and water. Both are being pumped to the surface at unsustainable rates. Saudis rank among the greatest gas guzzlers in the world, but they devote a below-average share of their incomes to buying it. That’s because the government heavily subsidizes the price at the pump.

Venezuela

Life, liberty and the pursuit of happiness. Countries have different ideas as to which rights are inalienable, and Venezuela stands alone in considering nearly free gasoline a birthright. In 2016, President Nicolas Maduro raised pump prices 6,000 percent, but filling up a tank of gas still costs less than a cup of coffee. Venezuela isn’t a rich country but consumes gas like one.

I complied some of the information into a chart — looking at price per gallon, affordability relative to wages, gallons used per driver, and how each compares to the highest user of gasoline.

As you can see four other G7 countries (France, Germany, Italy, UK) have gas prices that are at least twice ours. Twice. We use far more gasoline than everyone else — even the two countries with more affordable gasoline.

The recent non-scientific Sunday Poll had fewer responses than usual:

Q: Current gas prices in St. Louis, at around $2.27/gal, are…

• Extremely high 0 [0%]
• High 1 [5%]
• Somewhat high 1 [5%]
• Neither low or high 7 [35%]
• Somewhat low 4 [20%]
• Low 3 [15%]
• Extremely low 4 [20%]
• Unsure/no opinion 0 [0%]

Still, more than half said our gas prices are on the low side of the scale. Decades of low taxes enabled us to build a non-sustainable auto-centric built environment. We can’t just raise taxes to where they should be, at least not too quickly. But we can’t continue to neglect our massive amount of crumbling infrastructure.

— Steve Patterson

Readers: Gov Greitens Should Veto Minimum Wage Bill

Nearly 85% of those who voted in the recent non-scientific Sunday Poll disagreed with the statement that Gov Greitens should sign the bill that would strip St. Louis of setting its own minimum wow higher than that of the state. More than half picked the “strongly disagree” option.

Here’s the final breakdown:

Q: Agree or disagree: Gov Grietens should sign the bill limiting the minimum wage to the same $7.70/hr statewide.

• Strongly agree 2 [6.25%]
• Agree 1 [3.13%]
• Somewhat agree 1 [3.13%]
• Neither agree or disagree 0 [0%]
• Somewhat disagree 3 [9.38%]
• Disagree 7 [21.88%]
• Strongly disagree 17 [53.13%]
• Unsure/No Answer 1 [3.13%]

A thriving economy has goods/services being exchanged at good pace. Those with minimum wage jobs spend every dollar they get:

Those in the bottom 30% of the income scale make an average of $14,000 a year, including the value of many government benefits like food stamps or disability payments. But they spend more than $25,000, or 182%, of their annual income mostly on basic needs like housing, food and transportation, according to a CNNMoney analysis of Bureau of Labor Statistics data. 

Worth noting is that this group includes senior citizens, who supplement their income from Social Security with savings, and students, who turn to mom and dad for help. Also, research shows that some underestimate how much aid they receive from the government. 

But the data also includes many low-income families and individuals who just don’t make enough to get by. Often, they have to decide what bills to pay or they turn to payday lenders or credit cards. (CNN/Money)

This is 182% of their income, while the rich only spend 61% of their income. For the middle class it’s 89%. If we pay those at the bottom a little more the money will circulate through the economy — not sit in accounts here and abroad. Foe nearly 40 policies of both Republicans & Democrats have eroded the middle class and condemned the poor to a life of struggling to stay afloat.

St. Louis needs an improved economy — paying workers more is the best way to do so. Please contact Gov Greitens immediately and let him know he should veto the minimum wage bill.

— Steve Patterson

Opinion: Minimum Wage Hike Will Benefit City Long-Term

Poverty is a major problem in the region — especially in the City of St. Louis, from January 2014:

The Missourians to End Poverty coalition released a report Wednesday showing that poverty was up in the St. Louis area and statewide. In St. Louis County, 12.1 percent of the population was impoverished in 2012, up from 11.9 percent the previous year, according to the report. In the city of St. Louis, 29.3 percent of residents were impoverished, an increase from the 2011 figure of 27.2 percent.

Poverty in the state increased in 2012 to 16.2 percent — or nearly 948,000 people — from 15.8 percent in 2011. (Post-Dispatch)

It’s true that poor people spend nearly every dime they get — budgets just aren’t big enough for saving.  Low-wage workers who get a few bucks extra per week will put that money back into the local economy. Granted, some short-sighted employers will scale back employee’s hours to keep them impoverished. Reduced employees can lead to lower service and customer dissatisfaction.  Still other employers will accept reduced profit margins because their revenue & profits depend on billable hours.

Crime is often a result of poverty conditions, so reducing poverty is a way to reduce crime. I know many of you see this increase in the minimum wage as a disaster. I think it’ll actually not be a significant of a shift either way, though I do think the long-term prospects are good provided wages increase beyond 2018’s $11/hour.

Readers who voted in the Sunday Poll were split, with the agree/disagree trading places throughout the day:

Q: Agree or disagree: The increase in St. Louis’ minimum wage will be a long-term net positive for the city.

• Strongly agree 12 [25%]
• Agree 12 [25%]
• Somewhat agree 5 [10.42%]
• Neither agree or disagree 2 4.17%]Somewhat disagree 5 [10.42%]
• Disagree 5 [10.42%]
• Strongly disagree 6 [12.5%]
• Unsure/No Answer 1 [2.08%]

I refuse to buy into the widespread job loss fear-mongering from those who want to keep people impoverished.

— Steve Patterson