Category Archives: Economics

Understanding the impact of increasing inequality in the U.S.

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“The Last Class” is documentary film released earlier this summer that follows the last class taught by Robert Reich at the University of California Berkeley before retiring after 40 years of teaching.

The class, “Wealth and Inequality,” offers “a deeper look at why inequalities of income and wealth have widened significantly since the late 1970s in the United States, and why this poses dangerous risks to our society.”

Besides his long career as a university professor, Reich is a well-known social activist and commentator, and served as Labor Secretary in the Clinton administration.

Here’s the movie’s official trailer.

This morning a friend let me know that Reich made the entire class–all 14 lectures, each about 1-1/2 hours long–available to watch for free on YouTube.

What an amazing resource!

It would be a big investment of time to work your way through the class lectures, but undoubtedly well worth the price of entry!

Here’s his introduction to the first class session.

Welcome to my undergraduate course on Wealth and Poverty. This is the first of fourteen classes.

The questions we’ll focus on today: Is some inequality both inevitable and necessary? At what point, if ever, does it become a problem? What’s the difference between income and wealth inequality, and which is more important? How do income and wealth inequalities overlap with race and gender? And the real puzzle: why did these inequalities begin to widen so dramatically starting in the late 1970s and early 1980s, and continue widening since then?

Even though this isn’t a real classroom and I’m not with you in person, I hope you find this both enjoyable and challenging. Don’t expect to learn by just watching and listening, though. I want you to be an active learner — which means answering questions I pose and putting various puzzle pieces together. I’m not going to tell you what to think. I’m going to try to provoke you into thinking harder and more deeply.

If you wish, I’ve shared some select readings from the syllabus for you. They’re available at: https://robertreich.substack.com/p/fi…

Ready to dive right in?

Here’s Class #1. Links to each of the lectures can be found using the link earlier in this post.

Honolulu is also losing 20-somethings

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The San Francisco Chronicle has a feature story today trying to decipher why young adults are leaving the city (“Why 20-somethings are abandoning San Francisco — even when they can afford it“). There may be a pay wall, but I’m not sure.

Overall, from 2013 to 2023, the share of 20-somethings in San Francisco County dropped from about 18% of the population to about 14% — the largest such decline of any major U.S. county and nearly quadruple the national drop. The data prompts a big question relating to the city’s economic future: Is this the mere ebbs and flows of San Francisco’s demographics at play, or the start of something much grimmer?

Here’s the relevance to us here in Honolulu. The article includes a table showing the decline in the 20-something population across 11 cities, with San Francisco at the top of the list with the greatest decline.

But second on the list, only slightly below SF, is Honolulu.

It appears we have a similar problem.

Is it wrong for local government to save money by using out-of-state vendors?

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I flagged this comment when it was posted on the “Next Door” website.

Just got our property tax bill from City /county of Honolulu and it went up again . That was upsetting , but I decided this year to put it on our credit card so I could get flight points. Our grandkids love to visit and flights are so expensive.! So I call the number on the back and a nice man informs me that it would cost me 76.00$ to put it on the credit card. Even more annoying was , he was working in Texas because the city outsources the payments. So we don’t have a bill paying service in our own state? They can’t give local people the job here? The county can’t set up a service here so more of our young people can stay here to work? So next time I hear how the state is concerned about losing our young workers, they should look at their own policies.

It seems like a fair point.

But one comment made a pretty good point in response.

it is not simply a matter of hiring people to do jobs. it takes special software and interfaces to deal with the credit card companies, all kinds of computer security updates and controls, and these are neither inexpensive to install for a big government process, nor cheap to maintain. There are service companies that specialize in providing that service and they are more cost effective than trying to do it “in house”. The processing fee is a pass through from the credit card processors, part of which gets rebated to people, like the original poster, who earn “flight miles” on their cards. Using an “echeck” is only a $2 or $3 fee or else, the check can be mailed by “snail mail” at no extra charge.

So it may be that setting up an operation of that kind in Hawaii, with its relatively small population coupled with high costs, just isn’t feasible, even if there were “buy local” preferences in place.

The Institute for Local Self-Reliance has a good discussion of local purchasing preferences that have been adopted by many state and local governments.

Here’s an excerpt:

Local governments spend a lot of money, and their procurement and contracting policies can be important mechanisms for advancing other public aims. Many cities, counties, and states give a preference to local businesses in their procurement decisions as a means of supporting and growing their local economies.

At least 45 states, plus the District of Columbia, have procurement policies designed to give a preference to businesses that meet certain characteristics, such as those that are owned by veterans, pay certain wages, use environmentally sustainable practices, or manufacture within the state. Of these, about half have adopted an explicit preference for businesses that are small and/or local. In addition, more than thirty states have policies aimed at steering purchasing to minority- and women-owned businesses.

Looking beyond state governments, large numbers of counties, cities, and towns have procurement policies of their own.

These policies vary considerably. Some apply broadly, while others focus on construction contracts, others on goods and services, and others only in certain narrow situations. Some are absolute preferences, or more commonly, percentage preferences. These say that if a company meets certain qualifications, it doesn’t have to have the lowest bid in order to win a contract, just be within a certain percentage—usually 5 percent, but as high as 15 percent—of the lowest bid.

I couldn’t find a concise description of preferences used by state and counties in Hawaii.

State law does have preferences for certain kinds of “made in Hawaii” products.

A Hawaii product requires over fifty per cent Hawaii input towards the total cost of the product for:

(1) Class I products mined, excavated, produced, manufactured, in the State; or

(2) Class II products are agricultural, aquacultural, horticultural, silvicultural, floricultural, or livestock product raised, grown, or harvested in the State.

Are there others? And are there legal limits? When does the idea of competitive bidding to create a level playing field give way to specific preferences?

Interesting issues.