Archives: Reg Murphy Pubs

Don Mathews

A Tale of Two Ironies and a Solitary Socialist

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Properly told, the stories of two great ironies – one in the history of socialist ideas, the other in the history of capitalism – begin with French socialist, Louis Blanc (1811-1882). Let’s start with the socialist ideas irony.

One might surmise that the history of socialist ideas is loaded with ideas about socialism. It isn’t. It’s loaded with ideas about capitalism. 

From all the books, tracts, leaflets, pamphlets, primers, circulars, essays and articles that socialist thinkers have written over roughly 225 years, the pages devoted to critiquing capitalism could make a mountain range; the pages devoted to providing a blueprint of socialism, a mound.

Louis Blanc stands out among socialist writers for being the first to contribute a clump to the mound. Blanc certainly wrote more pages of capitalism critique than socialism blueprint. Nonetheless, he was the first socialist writer to offer specifics on how production in a socialist economy could be organized. Since Blanc, few socialist writers have mustered the wherewithal to venture beyond “in socialism, the means of production are owned by the people,” which barely qualifies as a doodle, never mind a blueprint. 

Blanc offered his blueprint in the last twelve pages of “The Organization of Work,” a 67-page pamphlet published in 1840. He used the first 55 pages to rage against a new kind of competition spawned from what Blanc called the “new economic regime,” which others would soon call capitalism. To Blanc, the new competition pitted worker against worker, capitalist against capitalist, and capitalist against worker in an economic civil war that spared few of poverty and no one of misery.

The solution, of course, was to replace competition with cooperation, but how to do that? Blanc’s answer: begin by introducing a new type of enterprise, the social workshop. Blanc’s social workshop amounts to a business enterprise in which workers, not capitalists, make all production and operational decisions – how the enterprise is organized, what to produce, who gets hired, who gets fired, who does what job and who gets paid what.

Blanc had no desire to vanquish capitalists. He encouraged capitalists to invest in social workshops, which would pay interest “guaranteed by the budget” on invested funds. But a capitalist would have no voice in decision-making unless the capitalist also worked in the workshop.

The social workshop’s advantage, Blanc argued, is this. In a private enterprise, the capitalist gives the orders, the workers obey. In a social workshop, the workers call the shots, so they naturally cooperate. And cooperating workers are more productive than order-obeying workers.

There is more to Blanc’s blueprint, namely the features that made it a blueprint of socialism. Blanc eventually lost faith in socialism, but not in social workshops, though none existed. He died in 1882, thinking his idea would go forever unrealized.

Yet as Blanc’s pamphlet made its rounds in 1840, American capitalism was beginning a remarkable evolution that produced enterprises run by workers. The advent of railroad and telegraph lines in the 1840s gave rise to new and larger businesses and a new kind of worker, the salaried manager. The late-1870s brought mass production, vertical integration and a much-expanded role for managers. By 1910, salaried managers, not capitalists, were making all production and operational decisions at many of America’s largest and most innovative business enterprises, including Standard Oil, General Electric and DuPont.

Thus, Louis Blanc’s dream of an enterprise run by workers was realized in capitalist America in its largest corporations. No doubt, a giant corporation is not the social workshop Blanc had in mind. Yet the fact is, capitalism’s behemoths are worker-run enterprises. Few ironies are more fun.

Roscoe Scarborough

U.S. Overdose Deaths on the Decline

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

The number of fatal overdose deaths in the United States peaked in May 2023 and started to decline in the latter half of the year, according to the most recent data from the Centers for Disease Control and Prevention.

An estimated 107,500 people died from fatal overdoses in the US in 2023, down from an estimated 111,000 overdose deaths in 2022. That is a 3.1% decline in overdose deaths in one year. This is the first decline in overdose deaths since 2018. The decline is modest and the data are preliminary. One might argue overdose deaths are plateauing, but it’s better news than another annual increase. Unfortunately, the US still has more fatal drug overdose deaths per capita than any other high-income nation.

Drug overdose declines are not equally distributed across our nation. All states east of the Mississippi saw a decline, except for Alabama, West Virginia, and Washington DC. Preliminary data show that Georgia saw a 5.58% decline in overdose deaths over the past year. Most states west of the Mississippi saw increases. Alaska, Oregon, Nevada, and Washington experienced over 25% increases in annual overdose deaths.

Two years ago, I wrote a column in this space about skyrocketing overdose deaths amid the COVID-19 pandemic. Many pandemic-era causes of overdose deaths have subsided. Social distancing and social isolation came to an end. Stress associated with living through a global pandemic has waned. Public health has moved beyond a myopic focus on COVID-19. All of these conditions should improve care for those struggling with addiction and reduce overdose deaths.

The US overdose crisis was once driven by prescription painkillers, then it was heroin, and in recent years fentanyl (a synthetic opioid) has been a primary cause of overdose deaths in the US. Fentanyl can be injected, but it’s often smoked, consumed in pills, or mixed in with other illicit drugs.

With deadly fentanyl now widespread, what’s causing overdose deaths to decline nationally? Shifts in the supply of available illicit drugs impact overdose deaths. Much of the 2023 increase in overdose deaths in western states coincides with the availability of fentanyl in the regional illicit drug supply. It’s possible that overdose deaths are declining overall because the overdose epidemic has already claimed such a significant percentage of the illicit drug using population in eastern states. On a more hopeful note, the US could be reaping the benefits of overdose prevention efforts and addiction treatments.

I suggested some reforms to address overdose deaths in my 2022 column. At least one suggested reform has been implemented—increasing access to naloxone/Narcan. In March 2023, the FDA approved over-the-counter naloxone nasal spray. My other policy recommendations have not been implemented in a meaningful way, at least not in Georgia.

Opioid manufacturers and distributors are paying billions in restitution for their roles in the opioid epidemic. These funds should be invested in evidence-based programs and practices.

Effective drug education and other prevention programs are critical to reducing overdose deaths. Prevention programs are more likely to succeed if paired with consistent messaging from family, public health departments, community organizations, and religious institutions.

Drug interdiction efforts must be improved. It is essential to slow the illegal smuggling of fentanyl into our nation. Similarly, state and local police must disrupt drug distribution in our communities.

Access to quality healthcare combats addiction and prevents overdose deaths. It is essential to expand access to a range of addiction treatment programs, including inpatient rehab, outpatient rehab, and medication-assisted treatment. These programs remain out of reach for many folks living with addiction due to cost, limited providers in one’s area, or a lack of insurance coverage.

Georgia is one of ten states that have not accepted expanded Medicaid coverage, which would provide healthcare for all adults earning up to 138% of the federal poverty line. Expanding Medicaid coverage provides one avenue for improving access to addiction treatment programs and reducing overdose deaths.

Roscoe Scarborough, Ph.D. is chair of the Department of Social Sciences and associate professor of sociology at College of Coastal Georgia. He is an associate scholar at the Reg Murphy Center for Economic and Policy Studies. He can be reached by email at rscarborough@ccga.edu.

Three Strong Economies: U.S., Georgia, and Glynn

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

It warrants repeating: the performance of the U.S. economy over the past 4 years is remarkable.

Despite four years and counting of continuous adversity – the pandemic, followed by inflation, followed by the Federal Reserve’s tight monetary policy – the U.S. economy has posted decent or better real GDP growth in each of the last seven quarters and unemployment rates below 4% in each of the last 27 months.

More remarkable are the performances of the economies of Georgia and Glynn over the past four years. 

Both economies were strong heading into 2020. Georgia finished 2019 with a solid 3.3% increase in real gross state product. Its labor force grew by 82,622 to 5,208,593. Its labor market was tight: 96.5% of the 5,208,593 were employed.

County output data are of dubious reliability for my taste, but experience plus data related to output that are reliable indicate that the Glynn economy was thriving ahead of 2020. Most telling is the decrease in Glynn’s unemployment rate from 3.7% in 2018 to 3.5% in 2019. A tight local labor market that becomes even tighter is a symptom of a thriving local economy.

In March 2020, the pandemic hit. It hit Georgia hard. It hit Glynn harder.

In April, Georgia’s labor force sunk to 4,946,604; its unemployment rate jumped to 12.4%. In the first quarter of 2020, Georgia’s real GSP fell at an annualized rate of 8.7%. In the second quarter, it fell at an annualized rate of 26.7%.

In February 2020, Glynn’s labor force numbered 39,237; its unemployment rate, 3.4%. In April, Glynn’s labor force numbered 36,964; its unemployment rate, 16.4%.

The spike in Glynn’s unemployment rate is no surprise. The industry hit hardest by the pandemic was leisure and hospitality – Glynn’s largest industry. Leisure and hospitality typically accounts for around 22% of total employment in Glynn.

In the fourth quarter of 2019, leisure and hospitality employment in Glynn numbered 8,453. In the second quarter of 2020, it numbered 6,008.

The two economies clawed their way through the next five months, then surged in the last three. At year’s end, Georgia’s labor force numbered 5,166,537; its unemployment rate, 5.1%. Glynn’s labor force numbered 38,847; its unemployment rate, 4.8%. Leisure and hospitality employment in Glynn numbered 7,624.

To appreciate the rebound in Georgia and Glynn in the second half of 2020, note that the U.S., which was rebounding faster than any other nation, posted a year-end unemployment rate of 6.7%.

Extraordinary measures taken by the Federal Reserve in the first months of the pandemic caused the U.S. money supply to increase, from February 2020 to February 2022, by 40.5%. That caused the 12-month rate of inflation to increase from 1.4% in January 2021 to 9% in June 2022.

The Fed began its monetary tightening to check the inflation in March 2022. By August 2023, short-term interest rates were up four to five percentage points; medium and long-term rates were up three to four percentage points. And since August 2023, that’s where rates have remained.

In years past, monetary tightening of this magnitude would all but guarantee a recession. Thus far, our current Georgia and Glynn economies seem impervious to it. Georgia’s unemployment rate fell below 4% in July 2021 and has been no higher than 3.3% since November 2021. Glynn’s unemployment rate fell below 4% in April 2021 and has been below 3% more often than above 3% since November 2021.

A final note. In the U.S., leisure and hospitality employment has yet to surpass its pre-pandemic level. In Georgia, it did so in the second quarter of 2023; in Glynn, in the second quarter of 2022.

Why the Opposition to Mining the Okefenokee

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

Twin Pines Minerals proposes to strip-mine for titanium and zirconium near the Okefenokee National Wildlife Refuge. However, there has been unprecedented opposition to the proposed mining. Why do people care about protecting the Okefenokee Swamp?

There have been more than a quarter million individual comments at the state and federal level about the proposed mining on private land adjacent to the Okefenokee National Wildlife Refuge, according the Southern Environmental Law Center. The SELC notes that at least 19 local governments have passed resolutions calling for protection of the Okefenokee and there have been numerous letters of opposition from elected officials on both sides of the aisle. Additionally, more than 70,000 comments were submitted to the Environmental Protection Division of the Georgia Department of Natural Resources during the public comment period on draft permits to mine the land adjacent to the Okefenokee.

For most of American history, swamps held negative connotations; they were viewed as wastelands that are only useful if converted into land that’s suitable for farming or development. Just a few years ago, Trump vowed to “drain the swamp” in Washington. Clearly, negative connotations about swamps persist.

My colleague, Dr. Chris Wilhelm, professor of history at the College of Coastal Georgia, explains shifting attitudes toward swamps in his book From Swamp to Wetland: The Creation of the Everglades National Park. The first national parks were developed out of a concern for protecting scenery for the benefit of tourism. The Everglades National Park was different because it was designed to protect the habitats and ranges of the indigenous flora and fauna.

The twentieth century saw a shift in Floridian and American attitudes toward the environment; people increasingly found value in ecological and biological diversity. The Florida Everglades came to be recognized as ecologically fragile and valuable “wetland” that required protective status. Politicians and the tourism industry saw the establishment of the Everglades National Park as a boon for tourism and economic growth.

The establishment of the park was a catalyst for modern environmental campaigns to protect wilderness and biological diversity in the US. According to Wilhelm, progressive conservationists’ concern with ecological and biocentric diversity laid the groundwork for modern environmentalism. Resistance to mining in the Okefenokee Swamp ecosystem is evidence that these attitudes have gone mainstream.

The Okefenokee Swamp is the largest blackwater wetland ecosystem in North America and the least disturbed freshwater ecosystem on the Atlantic Coastal Plain. Over 90% of the swamp is protected within the Okefenokee National Wildlife Refuge. Due to its high level of biodiversity and limited disruption by man’s activities, the Okefenokee is on the US Tentative List to be designated a UNESCO World Heritage Site.

There is concern that mining would do irreparable harm to the swamp. The proposed mining would occur on Trail Ridge, an earthen dam on the eastern side of the Okefenokee that maintains the swamp’s water levels. Additionally, one of the mining permits would allow the company to withdraw 1.4 million gallons per day from the Floridan Aquifer. Both permits threaten the hydrology and ecology of the Okefenokee.

The initial permits are for a 582-acre demonstration mine, but Twin Pines Minerals owns thousands of acres in the area. If approved, expanded mining operations are anticipated. Proponents of the proposed mine contend that the project will generate new jobs. Opponents of the mining warn that the project jeopardizes the local tourism economy associated with the swamp.

Georgia Senate Bill 132 would have imposed a three-year moratorium on new or expanded mining near the Okefenokee Swamp. The House passed SB132 with a vote of 167 to 4, but the bill was not brought up for a vote in the Senate before this year’s legislative session adjourned.

The Environmental Protection Division that issued draft mining permits will review and respond to public comments. There is no timeline for EPD’s final decision. What’s for sure is that the future of the Okefenokee and other wetlands will be shaped by federal and state politics, economic interests, environmentalists, and civically-engaged citizens.

Roscoe Scarborough, Ph.D. is chair of the Department of Social Sciences and associate professor of sociology at College of Coastal Georgia. He is an associate scholar at the Reg Murphy Center for Economic and Policy Studies. He can be reached by email at rscarborough@ccga.edu.

This is One Strong U.S. Economy

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

The record of the U.S. economy over the past four years is remarkable. It is a record of steady economic growth, productivity growth, labor force growth and exceptionally low unemployment.

What makes that record remarkable is it has been achieved under a stream of adversity: the pandemic, followed by inflation, followed by exceptionally tight monetary policy.   

The U.S. economy moved into 2020 in solid shape. In the fourth quarter of 2019, real GDP increased at an annualized rate of 2.6%. (Since 2000, the average annual rate of real GDP growth is 2%.) In February 2020 the labor force numbered 164,412,000; the unemployment rate, 3.5%.

The pandemic hit in March.

In April, the labor force numbered 156,276,000; the unemployment rate, 14.8%. In the first quarter of 2020, real GDP fell at an annualized rate of 5.3%. In the second quarter, it fell at an annualized rate of 28%.

In May, as the pandemic worsened, the economy began to recover. In the third quarter of 2020, real GDP increased at an annualized rate of 34.8%. In the fourth quarter, it increased at a 4.2% annualized rate.

By year’s end the labor force was up to 160,761,000, the unemployment rate was down to 6.7%.    

In the first quarter of 2021, real GDP increased at a 5.2% annualized rate to $20,990.5 billion, which eclipsed the pre-pandemic high of $20,951.1 billion posted in the fourth quarter of 2019. For all of 2021, U.S. real GDP increased by 5.8%. At year’s end the labor force numbered 162,429,000; the unemployment rate returned to the sub-4% zone at 3.9%.

In November 2022, the labor force rose to 164,441,000, eclipsing the level posted in February 2020. In December 2022, the unemployment rate fell to 3.5%, the rate posted in February 2020.

No national economy recovered from the pandemic as quickly as the U.S. economy did. 

On February 23, 2020, a massive outbreak of coronavirus in Italy set off a global financial panic. On March 16, the panic became a meltdown. To stop the meltdown, the U.S. Federal Reserve System and other central banks pumped a trillion dollars of reserves into banks and other financial institutions. They continued to load banks with reserves until the pandemic was clearly in retreat. 

The Fed prevented a global financial disaster at the onset of the pandemic. But as the economy recovered, banks turned reserves into loans. New loans become new money. Between February 2020 and February 2022, the U.S. money supply increased by 40.5%.

That increase in the money supply caused the 12-month rate of inflation in the U.S. to increase from 1.4% in January 2021 to 8.9% in June 2022.

Only a central bank can cause inflation, and only a central bank can reduce inflation. The surge in inflation prompted the Fed to reverse course and tighten credit conditions. Aggressively.

In a series of steps between March 16, 2022 and July 27, 2023, the Fed increased its key interest rate (its IORB rate) from 0.15% to 5.4%. Market interest rates followed the same path. Mortgage rates moved from the 3-plus % range into the 7-plus% range.

In years past, monetary tightening of this magnitude would all but guarantee a recession. Not in this U.S. economy. Real GDP has increased in six consecutive quarters at rates ranging from 2.1% to 4.9%. The unemployment rate hasn’t budged from the 3.5-3.9% range.

I don’t know what has enabled this U.S. economy to perform as well as it has in the teeth of such adversity. I do know that it’s remarkable, and it’s not getting the attention or appreciation it deserves.

Equally remarkable: Georgia and Glynn. Stay tuned.  

Donald Black: A Theoretical Sociologist

Written by Roscoe Scarborough on . Posted in Reg Murphy, Roscoe Scarborough.

One of my mentors, Donald Black, University Professor Emeritus of the Social Sciences at the University of Virginia, passed away in late January. Here, I’ll discuss Black’s vision for sociology. I believe that he would find my focus on his scientific contributions to be a more prudent tribute than a review of biographical details of his life, though he was very interested in biographies of intellectuals. A conventional obituary of his credentials, appointments, publications, and awards can be found on the American Society of Criminology website.

Black self-identified as a theoretical sociologist. He approached studying human behavior like a physicist studies the universe. Black developed testable theories that hold true across all societies and all time.

Black devised his own approach to explaining human behavior. “Pure sociology” is a type of sociology with no psychology. Pure sociology explains social behavior with its location and direction in social space—its social geometry.

Black is best known for his book The Behavior of Law in which he developed a general sociological theory of law. The book contains a series of theoretical formulations that predict and explain the quantity and style of law in various locations and directions in social space.

For example, Black states “Law varies inversely with other social control.” In a society or group where there are other social controls—family, school, work, religion—there will be less law. In a society where these controls are absent, there will be more law. The book is full of these falsifiable propositions. Collectively, these constitute his general theory of law.

Black’s sociology predicts and explains social life without regard to the individual. Pure sociology makes no presumptions about any essential human nature. His theory does not account for how individuals experience reality. It includes no psychology. Black sought to focus on “the social” and “declare independence from psychology.”

Most social scientists would explain a police officer’s act of making an arrest in terms of an officer’s motivations, background, biases, decision-making, or some other aspect of their psychology. Black transcends an individualistic focus, removes all psychology, and explains arrest as a function of the behavior of law. To use Black’s language, “the social geometry” of the encounter explains whether or not an arrest occurs.

Black was troubled by overt activism in modern sociology. Black contended that ideology doesn’t belong in social science, unless ideology itself was the subject of study. Pure sociology is value-free, including being free of any ideology.

Many sociologists regard value-free sociology as undesirable and make value-judgements in the name of sociology, often to address perceived injustices. For example, a sociologist might research capital punishment in the U.S. and conclude that there are racial disparities in who is sentenced to death. Many sociologists go one step further and advocate for eliminating capital punishment because they deem the practice to be racist and inhumane.

Black would repudiate the intrusion of one’s personal values into sociology. Conversely, he would commend a scientific explanation of the social conditions in which governments employ the death penalty as a form of conflict resolution. For Black, the goal of sociology is to explain human behavior, not to enact social change.

Black influenced how I do sociology. Like Black, I try to develop markedly sociological explanations of behavior; I locate causality in social institutions, not in the psychology of individuals. Additionally, I strive for objectivity and to prevent my own values and biases from intruding into my scholarship or teaching. In my From the Murphy Center columns, I believe that Black would praise my commitment to advancing sociological explanations of phenomena including firearm deaths, declining teen mental health, homelessness, and other subjects. He would challenge me to remove all psychology from my sociology. Finally, I think that he would caution me that taking time to write for the public distracts from advancing theoretical sociology.

Roscoe Scarborough, Ph.D. is chair of the Department of Social Sciences and associate professor of sociology at College of Coastal Georgia. He is an associate scholar at the Reg Murphy Center for Economic and Policy Studies. He can be reached by email at rscarborough@ccga.edu.

Drew Cagle

Voting in Primary Elections

Written by Drew Cagle on . Posted in Reg Murphy.

As Georgia prepares for its upcoming presidential primary on March 12, the importance of participating in this electoral process cannot be overstated. While general elections typically capture the public’s attention, primary elections are equally, if not more, important in shaping the political landscape. In primary elections, voters have the opportunity to choose which candidates will represent their party in the general election. This initial step in the electoral process plays a pivotal role in determining the choices available to voters later on and, by extension, the future direction of local, state, and national governance.

In Georgia, as in many states, the presidential primary serves as a measure of public opinion and a testing ground for candidates’ policies and campaign strategies. The outcomes in Georgia often have significant implications, given the state’s diverse demographic and political makeup. It is a mini-version of the general election, giving glimpses of the broader national political climate, offering insights into issues that resonate with voters across different regions and backgrounds. Participation in these primaries is not just an exercise of your civic rights; it is a powerful means for voters to influence the political narrative.

The importance of voting in primaries is underscored by the fact that the candidates selected during this process will go on to represent their parties in the general election. The choices made in the primaries effectively shape the political agenda of each party, and maybe the nation, for years to come. When voter turnout in primaries is low, a small, and possibly unrepresentative, segment of the population ends up deciding who the available candidates in the general election will be. This can lead to the nomination of candidates who may not accurately reflect the preferences of the broader party electorate. Because of this, participation in primary elections is crucial.

Additionally, primary elections often feature races for other important offices, such as senators, representatives, governors, and local officials. These positions significantly impact governance at various levels, influencing everything from education to taxes to healthcare. The decisions made by these officeholders can have a direct and tangible impact on the daily lives of citizens.

Georgia’s upcoming presidential primary is not just an opportunity to choose a presidential candidate; it is a chance to shape the future of the state and nation. It is a forum for voters to make their voices heard, their stances clear, and their aspirations plain. High voter turnout in primaries sends a strong message about the public’s engagement and interest in the political process, encouraging greater accountability and responsiveness from political leaders.

So, as Georgia gears up for its presidential primary, it is imperative for voters to recognize the power and significance of their participation. Voting in the primary is a step towards ensuring that the democracy functions as intended, with leaders who are representative of and responsive to the electorate. It is a responsibility that goes hand in hand with the privileges of democracy. Every vote counts, and in the context of a primary election, particularly in a state decided by less than 1% in the last election, it can be the deciding factor in shaping the political future. Therefore, I encourage all eligible Georgians to participate in the March 12th election. Make your voices heard, and keep democracy going.Top of Form

Drew S. Cagle, Ph.D. is an Assistant Professor of Political Science in the Department of Social Sciences at College of Coastal Georgia. He is an associate scholar at the Reg Murphy Center for Economic and Policy Studies. He can be reached by email at dcagle@ccga.edu.

Melissa Trussell

Cupid Economics: How and why we match with whom we match

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

Happy Valentine’s Day!

Now, let me ruin the romance for you by describing how economists view love and marriage.

Economists study and write about the “marriage market,” wherein, much like in a market for goods or services, individuals search for what they want and snag it when they find it. While prices in a marriage market are not always as explicit as those in a market for heart-shaped candies, they still do exist. In some cultures, they are, indeed, explicit, and take the form of dowries or bride-prices. In modern, western culture, the marriage price is negotiated as the terms of the relationship—who will perform what household duties, how shared bank accounts will be handled, etc.

Also like in the market for candies, preferences are important. More popular or more unique candies bring higher prices. A husband or wife who is desired by multiple potential partners is able to negotiate a better deal for themselves in marriage. They may not have to wash as many dishes as a less desirable partner.

Not surprisingly, what makes a potential partner desirable is different for each individual. Like in the market for jobs/labor, the marriage market is as much about search and matching as it is about negotiating a price and sealing a deal.

So, why do we match with the people we match with? And why do some folks choose not to participate in the matching at all? And is our matching really ideal? (If you resisted the urge to just answer “love” to these questions, you may be a budding economist.)

First, what brings us to the marriage market in the first place? Not knowing I was already writing this article, my Granny provided a great example last week. I was telling her about my really rough start to this semester: In the last five weeks, I had an infected cat bite on my hand, a head-to-toe allergic rash reaction to the antibiotic I was taking for that infection, a bout with Covid, and nasty a stomach bug. Somehow, my children have managed to stay healthy, and I am staying afloat at work, but it has been hard, to say the least. My Granny’s solution: “You need a husband.”

Granny is thinking like an economist. Marriage comes with economic incentives—a second income, a second set of hands to perform household work and childcare, and (Granny’s thought) insurance that covers your side of the work when you are sick. We come to the marriage market because life is easier with help. The data bear this out. Particularly among women, marriage rates decline as incomes and education increase, i.e., as they need less of a safety net.

But, once we are in the marriage market, with whom do we match? Contrary to the adage opposites attract, economists find that we tend to match with individuals who have similar incomes, education, political leanings, etc., to ourselves. But, our ultimate matches depend not just on our preferences but also on the pool of candidates to which we are exposed.

And, according to St. Louis Fed economist Paulina Restrepo-Echavarria, our matches are not ideal. Our matches promote the persistence of inequality in economic and educational attainment. She compares the marriage matches that would be made by an all-knowing and benevolent social planner to those we make in real life. The social planner’s guidance would lead us to matches that are both better for society and better for us as individuals than the matches we make on our own. Her conclusion is that we would do better if we simply devoted more effort to the search, widening our pool of candidates, and improving our chances of making an ideal match.

So, here’s to all the searching and match-making taking place this Valentine’s Day.

And, if you are happily matched, please don’t take this as my call for you to begin now to expand your pool. Ignore everything I’ve written; you are no doubt the exception to Restrepo-Echavarria’s findings. Maybe this just gives you something new and interesting to talk about at dinner tonight with your love.

———–

Dr. Melissa Trussell is a professor in the School of Business and Public Management at College of Coastal Georgia who works with the college’s Reg Murphy Center for Economic and Policy Studies. Contact her at mtrussell@ccga.edu. The views expressed in this article are those of the author and do not necessarily represent those of the College of Coastal Georgia.

Skip Mounts

Taylor Swift’s Lessons for Entrepreneurs

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

Confession time: I am thinking about hiding my toaster. It is old, likely wastes electricity and probably harms the ozone yet it still makes a beautiful English muffin. The current administration wants to regulate home appliances as part of their ‘green’ agenda. While toasters are not on the list now, what about tomorrow? It will take Josh Gates of Expedition Unknown to find it after I’m done.

Another confession: I have watched too much professional football. I have loyalties to the Green Bay Packers and the Buffalo Bills. When I was nine years old, I got Coach Lombardi’s autograph at an opening of a Red Owl grocery store in Appleton, Wisconsin and the Bill’s long-time head coach, Marv Levy, was an undergraduate economics major. Being a fan is simple for me.

With the Super Bowl now in the rear view, I admit finding a curiosity with the Kansas City Chiefs. I wish the media would have just left Taylor Swift and KC tight end Travis Kelce alone. Its only football for gosh sake. Just leave them alone. Remember what happened to the relationship between Marilyn Monroe and Joe DiMaggio? (If you are thinking ‘who’, ask someone in their golden years.)

Coastal students seeking the Bachelor of Business Administration (BBA) must choose an area for extended study – a concentration. Currently, entrepreneurship is the fastest growing among the nine concentrations from which students can choose. Not only is there coursework, but entrepreneurship students are also exposed to the programs and guidance of our Lucas Center (also available to all students at the College).

I think Taylor Swift offers our future entrepreneurs a few lessons on being successful. First, the facts. In 2023 Ms. Swift’s Era Tour netted $1.04 billion. It is estimated that the tour also generated $5.8 billion in community benefits outside of the concert in jobs, hotels, local tax revenues, etc. She also paid bonuses to her employees, of which truck drivers got $100,000. This is what happens in the magic of entrepreneurship. Not only do entrepreneurs benefit themselves and their customers, but they also create external benefits to many others. This is to say, there are multiplier effects beyond the initial act of entrepreneurial creativity. Future Taylor Swift concerts will only amplify these benefits.

Contrast this to the federal government and the Inflation Reduction Act of 2022. First, it has very little to do with inflation. Most of the Act, around $390 billion of the $500 billion price tag, are subsidies and other incentives aimed at advancing the green agenda of battery plants, semi-conductors, processing chips, EVs, nationwide charging stations, windmill farms in the ocean, and on and on. Here, subsidy is just a word that means private businesses would not produce this stuff without the government paying them to make it. Producers of oceanic windmill farms want larger subsidies and greater liability protection from legal actions brought on the behalf of dead whales and birds. Ford has discovered that people really don’t want electric pickup trucks. Cities that bought electric buses cannot get spare parts as the producer declared bankruptcy and EVs don’t work well in cold weather plugged into charging stations that don’t work. The federal government is the only entity that can encourage the production of things that people don’t want. A subsidy funded by other people’s tax dollars usually does the trick. (My colleagues will point out things called public goods, but this is for another day.)

So, on to Taylor Swift’s lessons for our budding entrepreneurs. They are simple, obvious, and extraordinarily important. In an interview, she attributed her success to being smart (“If you fail to plan, you plan to fail/Strategy sets the scene for the tale” lyrics from her Midnights album), thinking (she buys carbon offsets for her jet so she can be net zero), hard work, and giving people what they want. Imagine that. Dedication, thinking, hard work and paying attention to consumers are Taylor Swift’s lessons. Our students need to see that it is not what they want that matters. It is what others want. Success is built around thinking of others. Taylor Swift’s impact on the world would have not been possible had she produced a concert that no one wanted to attend.

These lessons work everywhere, from a global concert tour to wherever you call home. Imagine the impact our Coastal entrepreneurs can have! Final confession: I am not just a fan of Vince Lombardi and Marv Levy. I’m totally into being a Swiftie and the entrepreneurial gifts of Taylor Swift!

Dr. Skip Mounts is Dean of the School of Business and Public Administration at the College of Coastal Georgia, a Professor of Economics, and an associate of the Reg Murphy Center for Economic and Policy Studies and the Art and Lindee Lucas Center for Entrepreneurship.

How Averting Disaster Caused Inflation

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

In two previous columns, I have argued that the leading explanations of the post-pandemic inflation are wrong.

Supply chain disruptions do not cause inflation. Supply chain disruptions cause the prices of a narrow set of goods and services to increase. Inflation is when the prices of a broad range of goods and services increase, then increase some more, then increase some more, then increase some more, and so on.

Rising wages do not cause inflation. Wages increase as worker productivity increases: the more productive workers are, the more employers are willing and able to pay them. Rising productivity pays for rising wages.

Inflation has a single cause: excessive money supply growth. The post-pandemic inflation is no exception.

From 2000 thru 2019, the U.S. money supply increased at an average annual rate of 6.2%. In 2020, it increased by 25.7%, and in 2021, by another 11.4%. From February 2020 to February 2022, the U.S. money supply increased by 40.4%. That’s what caused the 12-month rate of inflation to rise from 1.4% in January 2021 to 8.9% in June 2022.

So, what caused the surge in money supply growth in 2020 and 2021?

The actions the Federal Reserve took to prevent a global financial catastrophe at the onset of the coronavirus pandemic, coupled with the actions it took to keep banks abundantly stocked with reserves through the pandemic, caused the surge in money supply growth in 2020 and 2021.

On February 23, 2020, the Italian government imposed a lock down on eleven towns in the hope of containing a massive outbreak of coronavirus. In financial markets, the news prompted panic and an immediate “rush to safety.” Investors rushed to sell higher yielding assets and rushed to buy “safe haven” assets, primarily U.S. Treasury bonds and bonds issued by the governments of Japan, Germany and the U.K.

In the last week of February 2020, the value of U.S. blue chip stocks fell by 12%, while the yield on ten-year U.S. Treasury notes fell to a record low 1.13%.

As the outbreak spread and intensified, panic in financial markets did, too. On March 9, blue chips dropped by 7.8% before New York Stock Exchange officials halted trading. The yield on the ten-year Treasury note hit 0.54%.

Then came the meltdown. As markets opened on March 16, financial institutions and investors began unloading assets, including safe haven assets, for cash. Sell orders inundated the U.S. Treasury bond market. Stock prices plunged, bond yields spiked, and short-term credit channels froze. Liquidity in the global financial system was rapidly evaporating. 

The Federal Reserve had been adding liquidity to financial institutions since February 23. On March 16, it opened the floodgates. It purchased hundreds of billions of dollars in Treasuries that the institutions were frantic to sell. It announced it would continue to purchase assets in large amounts until credit markets functioned smoothly again. It also set up funding facilities to provide short-term credit until frozen short-term credit channels thawed. 

The meltdown ceased. By July, credit markets functioned smoothly. With no end to the pandemic in sight, the Fed opted to reduce its asset purchases rather than end them, to further fortify banks.

In preventing a global financial catastrophe and in keeping banks abundantly stocked with reserves through the pandemic, the Fed increased its holdings of Treasury securities and other assets from $4,170 billion in February 2020 to $7,128 billion in June 2020, and to $8,934 billion in February 2022. Banks turn reserves into loans, and loans increase the money supply – in this case by 40.4% from February 2020 thru February 2022. And that, as we’ve discussed, caused the post-pandemic inflation.