"Brain Drain" vs "Net Migration"

"Brain Drain" is a plague of a political catch phrase. It leads to ill conceived public policy resulting in wasted efforts without incremental improvement.

The problem with "Brain Drain" is that it is very expensive to educate someone. This costs both private resources as we are reminded every month when we write our student loan checks as well as public funds that subsidized what we outlayed out of pocket. All of this comes with the eventual price that an individual becomes more mobile with more education. Therefore, the more that Wisconsin spends on educating people, the more likely they are to be able to take advantage of opportunities outside of Wisconsin, the more that the United States spends on education, the more likely they are able to take advantage of opportunities outside of our borders.

Now, there are lots of advantages that locally come from investment in education as well, undoubtedly some percentage (and probably a significant one) do stay to take advantage of local opportunities. However, programs aimed at retaining people locally after graduation from the local university, or aimed at increasing local enrollment in local public universities are misguided efforts as if any of these people become the type of high level talent that drives economic development, the same migration opportunities open up to them as well.

Rather, the focus should be on net migration of educated population, and more specifically high-level educated talent. The efforts should be made to create the employment and business opportunities for people to migrate here after being educated elsewhere to now seek their economic fortunes. These people were much cheaper to educate because their educations weren't locally subsidized and they introduce new thoughts, culture, and ideas that may not have been cultivated at Local U.

As an example Local U may be a great university, it may even have national or world renowned programs. To eliminate the "Brain Drain" from Local U grads leaving the state, the State government could spend public dollars to guaranty a job to every graduate of Local U by subsidizing companies that hire a Local U grads. However, the elite of Local U grads can already get jobs anywhere they want and State government's actions supress Elite grad's pay because the applicant pool is so deep with Local U grads.

Furthermore, State government's actions suppress the pay for non-Local U grads, decreasing the incentive for in-migration of talent educated at Far Away University. Elite grad wants to start a business to operate in the innovative way envisioned by Elite grad. However, because Elite grad's business wants the top people it can attract, it wants to hire the best from Local U's best programs and the best from Far Away U's best programs. Because Elite Grad wants the best access to the best talent, Elite Grad moves out of the state to create a new company.

Now this was a very convoluted example and a pretty extreme one at that. But my point is that efforts to maximize local population and the specific retention of all of those grads, may marginally improve educated out-migration, but harms educated in-migration. As educated in-migration is a much cheaper work force (costing fewer public subsidies), at the very least state programs shouldn't make it harder for this in-migration to happen.

I am also suggesting that rather than broad, unspecified retention programs, public dollars are better spend creating the resources for the Elite Grads of a program to create their economic development here through collaborative offices integrated with the universities such that Elite Grad is able to transition from Local U to the Local Economy. 

The Urbanophile recently (and much more articulately) expressed similar thoughts:
http://theurbanophile.blogspot.com/2009/04/detroit-out-migration-devastates.html

Michigan seems to be at the epicenter of many of these discussions, as it is sporting the trifecta of net out migration, job losses, and housing destabilization. 

However, it should be noted that Detroit had less gross out-migration last year than Chicago, but Chicago had more than enough gross in-migration to compensate for those losses and then some.

It becomes a case of chicken or the egg, do you improve conditions to attract more people, or do you attract more people to improve conditions?

While Wisconsin's diploma privilege creates a huge incentive for its grads to stay in the state, does this Draconian approach actually harm the quality and growth of the legal profession in Wisconsin because the state is saturated with lawyers from only two law schools. What is the incentive for a grad of a better law school than Marquette and Wisconsin (30 some law schools out there) to practice in Wisconsin? In theory, wages are somewhat suppressed because of the saturation of lawyers willing to stay in the state.

However, this may have the unintended (but good) effect of allowing law firms here to offer more competitive rates compared nationally, assuming that there is a suppressive effect on associate wages, partners can still make the same amount of profit on lower billable rates. Clients in turn see lower billable rates and become willing to direct their legal work here.

Along those lines, I have always thought that professional services such as lawyers, financial advising, accounting could be a growth industry for the Midwest, as they are becoming more easily practiced remotely and offer lower billable rates than on the coasts. 

Federal Government ROTing our Country

I found a chart (albeit from 2005) that listed federal expenditures per state based on the amount of federal taxes paid by that state. I used this to produce a Return of Federal Dollars index. I'll call it ROT for Return on Taxes.

http://www.nemw.org/taxburd.htm

An examination of the ROT index identified that certain states were "givers" taking in less federal money than it paid in taxes while other states were "receivers," taking in more federal money that they put in. There were 17 total "giving" states, in order of ROT:

New Jersey .65
Nevada .67
Connecticut .73
Minnesota .73
New Hampshire .75
Illinois .78
Delaware .80
California .80
New York .82
Colorado .83
Massachusetts .85
Wisconsin .88
Washington .89
Michigan .94
Oregon .93
Florida .95
Texas .97

I'll compare this to the top 17 "receiving states"
Mississippi 2.02
New Mexico 2.00
Louisiana 1.85
Alaska 1.83
West Virginia 1.75
North Dakota 1.65
Alabama 1.63
Kentucky 1.51
Virginia 1.51
South Dakota 1.48
Hawaii 1.43
Montana 1.43
Maine 1.41
Arkansas 1.40
Oklahoma 1.35
South Carolina 1.35
Missouri 1.32

When the states are grouped by geographical region:
Northeast .89
Midwest .91
South 1.19
West .95

In all, the South as a region received an additional $120B in federal spending than it contributed through taxes. Therefore, on a per-capita basis, the Federal Government is undergoing a massive redistribution of wealth from the rest of the country into the South. 

Alternatively, we can look at the generic political makeup of the states on the "giving" list versus the "receiving" list. The "giving" list is made up of predominantly Democratic leaning states (exceptions: Nevada, Florida - Purple; Texas - Republican) while the "receiving" list is made up of predominantly Republican leaning states (exeption: New Mexico, Virginia - Purple; Maine - Democratic). Now to draw more accurate conclusions, I would need to compare a few years of data to evaluate if this was based upon the Republican control of government in 2005, or if there is something more structural regarding this wealth transfer. However, the strength of the line drawn between the recent political leanings of a state and its share of government money is compelling. If the size and expense of government is a defining difference between D and R politics (I know a lot of people would disagree that there is any distinction in this matter between the two, but go with me for a second), the political leaning of the states may actually reflect this, whereby the "giving" states see comparatively less federal government investment than they pay for and therefore have the belief that the federal government is not doing enough, while the "receiving" states see the generous returns of federal money into their states and feel that the government spending should be reined in.
Two possible sources of the additional money may be federal highway and agricultural subsidies. Typically, our largest states are also our least populated, or at least have the lowest population densities and have large agricultural systems.  With our ever expanding federal highway system, it simply costs more per person for federal highway construction and maintenance in large states than in small states.  The government spends a lot on agricultural subsidies and as agriculture requires land, it is reasonable to assume that these tend to be correlated to land area, rather than population.  I couldn't find any statistics, but this article seems to support the federal highway system theory. http://www.redorbit.com/news/technology/....for/index .html At least it supports the idea that California, New York, and Texas received less per capita (all listed as "givers") in federal highway funds than Alaska, Wyoming, Montana, North and South Dakota and Vermont. (Alaska, Montana, North and South Dakota are all in the "biggest receivers" category). However, Federal Highway expenditures are funded through the separate $0.184/gal. Federal Gas Tax. However, assuming that the highest population states are going to buy the most gallons of gas, States' returns on federal gas tax should be similar to the returns on income tax.

Milwaukee Designated UN Water Technology Hub

http://www.jsonline.com/business/43835922.html

JS Online is reporting that Milwaukee will be the 13th city to be designated a UN Global Compact City. The UN Global Compact City Program is directed to promoting and facilitating the research and development of techniques and technologies that address the large scale problems faced by the world's urban areas. Each city is designated as a research center for for a particular problem. Milwaukee's designation is Water Technology and the treatment of drinking water.

While the Global Compact City program will allow researchers and companies in Milwaukee greater access to resources and promote worldwide connections in other Global Compact Cities, perhaps the biggest impact of this program is the worldwide recognition of Milwaukee as a center of freshwater technology. This plays into the Milwaukee Water Counsel's efforts to brand/market Milwaukee as such a place, but this type of outside recognition is much more valuable than marketing coming from within Milwaukee.

Milwaukee joins the 12 other current Global Compact Cities:
San Francisco, USA - Climate Change
Puerto Alegre, Brazil - Housing
Berlin, Germany - Healthcare
La Havre, France - Sustainable Tourism
Asker, Norway - Corruption
Plock, Poland - Climate Change
As-Salt, Jordan - The Environmental Street Project
Tshwane, South Africa - Rosyln Strategic Development Program
Ulan Bator, Mongolia - Urban Development
Jinan, China - Reducing Traffic Fatalities
Jamshedpur, India - Industrial Sewage Treament
Melbourne, Australia - Sustainable Urban Development


Projects pledged in Milwaukee's application include:

• Studying aquaculture to breed edible fish on the assumption that seafood offers cheaper animal protein than livestock.

• Doing research to reduce algae in Lake Michigan and use algae as a biofuel.

• Disinfecting storm-water runoff and desalination of winter road salt.

• Seeking new efficiencies in wastewater treatment.

• Removing radium from groundwater, advancing a pilot project that began last year in Waukesha.

Milwaukee Connector or (Trains v. BRT)

I will start out by saying that am skeptical to tepid regarding the use of a fixed rail system in Milwaukee. My analysis changes for connections between population centers such as increasing Amtrak service to Chicago, the KRM to Kenosha, and Rail connection to Madison. But my point locally is that we have spent so much on developing a car-centric city so far, that to deny this is a waste of those expenditures.  This doesn’t mean that we have to continue with our heavy investment in car infrastructure, in the future, it just means that a system has to be designed, including technology selections, for the particular location that it will serve.

Despite all of the venom that comes forth from people when you discuss it, with respect to the decision between rail v. BRT v. Busses, it has always seemed like this is just a matter of vehicle selection and could be pretty easily identified with an economic study of the available vehicles/systems. 

I am going to try to take a look at the proposed technology options, as well as how the proponents of such technology are trying to sell that theirs is the correct choice.

One of the problems, as noted by Renn ( http://theurbanophile.blogspot.com/2007/11/why-rail-transit-is-bad-idea-for.html ) is that rail proponents define the benefits of rail in terms of externalities - reduced pollution, Transit Oriented Development, "coolness"/image, rather than the merits of a rail based system itself.

This self-selection of benefits raises a flag, and to the minimal extent is a reflection of the much greater cost to implement a rail system versus other public transit system options.  “Sure, you are paying more, but you are also getting TOD! and saving the Earth!” However, I don't subscribe to the Wal-Mart brand of government, and believe that if there is value, then the increased expenditure can be worthwhile.

This is where rail proponents have lost me. There has been little effort to explain what makes the increased investment in rail worthwhile over the other public transit options. Where is an analysis of maintenance/operational costs?, fuel costs?, train set operational lifetime?, are people willing to pay higher fares to ride a train? - are there advantages found in any of these areas?

With respect to the external factors given in support of rail, I would submit that any public transit meets whatever "environmental" goals are established, and I would venture that with proper design, a BRT system could be pretty d**n cool. The last point, TOD, may have an impact in favor of rail, but I feel that the present discussion of it hasn't been accurate thus far.

TOD (Transit Oriented Developent) recognizes that property values, and increased investment in residential/commercial development increases around new/improved transit stops. There seems to be a much higher correlation of this between rail transit, than is found with other forms of public transit (buses).

However, I think that the point that is overlooked is the infrastructural investment that is made. Generally any public infrastructural investment that is compatible with the surrounding area is going to improve demand and property value. This would be true for brownfield remediation, parks, riverwalks, transit, even public parking structures and commercial developments (see TIF's) therefore, TOD seems more to me to be a reflection of the heavy infrastructural investment in the area (transit only really benefits those areas with access points) rather than specifically tied to the transit itself. The transit (specifically rail transit) concentrates the economic benefit at specific locations, maximizing the return found at those locations.

To expand this thought, Milwaukee has $100M to spend on public transit, if that $100M is used to make a rail route from downtown (Wisconsin/Water) to the East Side (North/Prospect) with a stop in the middle (Brady/Van Buren).  That $100M investment is only useful to properties at those three intersections and I would guess exponentially decays the further away you get.  I would guess that at 5+ blocks from the intersection there is minimal incremented value.  So those three locations get, to use a legal concept, a 1/3 undivided interest in the $100M investment.  This is a lot of incentive to develop at those three locations.  On the other hand if you used $100M to buy the best bus system in the world for that same route, but it stopped every block along the way.  You still get added value to the area, but it is distributed across the entire route, and so the development is more spread out and likely less aggregated.

This is one of the areas where I think that proponents of BRT have failed. We understand that it is cheaper, that part is implicit. However, BRT proponents have failed to address its advantages beyond costing less and being "flexible" in its routes. I think that the route "flexibility" argument isn't as strong as BRT proponents think it is. Any transit system design would reflect near-term growth projections, or its a poorly designed system. Additionally, the often touted statistic of BRT proponents that many of the current transit system routes have changed little in the last 100 years (cited as evidence of bus route permanence) inherently argues against the "flexibility" advantage.

Furthermore, many of the advantages of a new BRT system come with investments in improving infrastructure. Traffic signals that adjust to allow oncoming buses to pass are an infrastructure investment, improved bus shelters/sidewalk "bump-outs" that allow passengers to board buses at grade without the buses pulling over and "kneeling" are an infrastructure investment, improved ticket sales kiosks (there are currently none) and LED indicators of wait time for the next bus are infrastructure investments. These are many of the features that any transit system an attractive system to riders, and would be included in any BRT system.  All of these are significant infrastructure investments that both discourage route "flexibility," but also reflect the infrastructure investments that allow for TOD over the current transit system.

Other infrastructure improvements for a BRT system, like dedicated lanes (or bus/bike lanes) on some route portions are further infrastructure investments that help to maximize the benefits of the BRT vehicle. Add design elements to all of these infrastructure improvements, and you would have a BRT system that rivals any train set in the "coolness" factor as well.

Even with all of these improvements, BRT is likely much less expensive than rail, so the cost factor is weighs in BRT's favor; however, by focusing on the "cheap" and "flexible" portions of the argument, BRT proponents sell themselves short in the potential benefits of BRT.  The same “cheap” and “flexible” concepts could be presented and argued for more persuasively if they were couched as broader coverage, more service for the same price.

However, there is a growing body of evidence that rail does attract higher levels of ridership than bus transit. This is an offshoot of the coolness/image factor.  Friends attest to this from their personal experience and anecdotal evidence in Mpls.  Looking to Mpls. rail infrastructure appears to have a shown a transformative power (TODs, people giving up cars, the middle classes choosing city neighborhoods as a place to invest) that is not nearly as realized by BRT precisely because of the coolness factor or the “flexibility” issue, perceived or otherwise. The rationale (at least on a gut level) is that once fixed rail is in, it's going to be maintained. The Hiawatha light rail corridor in Mpls has radically changed the equation for many in Southeast Mpls. Attorneys who would not be gung ho to ride the bus (BRT from the suburbs, maybe) make purchasing decisions to invest in homes in SE Mpls (Longfellow neighborhood, in particular), because the LRT drops them off a a couple blocks from work.

They not against a BRT component to Mke's transit system, but they feel that the denser, neighborhoods of Milwaukee (East Side, Third Ward to Bayview) are better served by rail and could be transformative. You want to see Walker's Point blossom? Put a streetcar through it. People will invest in droves. You want to see a fraction of that investment? Perhaps put a BRT stop in the same spot.

If we are looking at what might best serve current demand, and enhance that level of service, then BRT might perform admirably. Take an existing transit corridor, look and the ridership and trip times, provide a dramatically improved trip time and stronger connections, and shazam: the people who already ride the bus have found a dramatic improvement to their quality of life. Perhaps you'll even get some people who found the previous bus service too slow or unreliable to be relied upon will start using the BRT. Generally, this will be people that already live in the transit corridor. However, rail will actually attract different people to live on and near the route. Often a more affluent demographic, who would never consider making that purchase based upon a bus connection. That's what is meant by transformative.

Rail can transform a neighborhood and a route, by attracting a new ridership, a new demographic, and thereby changing neighborhoods (encouraging the middle class/creative classes that prefer that type of life style to invest in the city) vs. BRT which, I submit, simply is an enhancement to the service which already exists and, according to Scott Walker and the like, is there solely to serve the poor (those who can't afford a car).

Two reasons, two visions. Call me an elitist, but I think that the benefits of attracting the middle/creative classes to further invest in Mke and in order to make the city seem "cool" enough for UW grads and others to want to come an live in, investments in rail (not a circle) are very wise and will, in the long run, allow Mke to reap much greater benefits through growth and innovation (and corresponding tax revenues, be them sales or property) than incremental transit improvements in poor neighborhoods. However, ideally, I'd like to see both.

I do have to admit that my perceptions are coming as someone who already uses the bus system 2-3 times a week and the proximity to a bus line was noted in the desirability of the location of our house. Therefore, as someone who is already a transit user, the efficiencies of an improved transit system that are the biggest factors in improving my ride and ride experience (traffic light priority, notification of "next bus" times, automated ticketing, smoother ride, more efficient boarding through bump outs and at grade doors) are all provided as what I consider to be infrastructural improvements.

And yes, there is a real "cool" factor, and as I wrote somewhere before, increasing transit riders is about gaining new ridership plain and simple. The new transit system has to be designed with an eye to attracting new riders. As strong as TOD has been, when you are starting/replacing with a new transit system, its not a matter of "build it and they will come" without having a plan of what route (vehicles, amenities, stops, route) is going to be targeted/attract what riders.

I agree with your skepticism of the downtown circle streetcar versus one new line connecting downtown (intermodal) to the East Side. I would personally rather see a streetcar line that would extend to at least Shorewood, and more preferably, to Bayshore Mall. I feel that that route would get you the most bang for your buck, service the densest parts of the city. Connect current transit users to jobs, retail, and entertainment. Plus target some of the most easily convertable new transit riders. Why not go for the low hanging fruit?

Tax Day Thoughts

Death and Taxes, right? Well, it seems that any solution to our country's looming fiscal problems (current economic downturn aside) will require not only rethinking government spending, but also government revenue collection.

I understand the benefits of our progressive income taxation system. It helps to balance the burdens of other flat, or regressive, taxation systems currently in place such as sales taxes and vehicle registration fees. Also, on a dollar for dollar basis, the those tax dollars paid, even in a smaller amount, cause more burden on those at the bottom of the pay scale as opposed to those at the top.

However, my biggest complaints regarding the tax code come from the sheer number of people who are now exempted from the tax code. Early estimated numbers for 2009 indicate that over 40% of the population will pay no or negative federal income taxes. Interestingly, a recent poll found that 56% of Americans thought that their taxes were too high. This means that basically everyone who paid taxes this year thought that they had to pay too much. In a setting where nearly half of the population is paying no or negative taxes, It is understandable that those that do pay taxes thought they were asked to pay too much.

With such a large segment of the population having no "skin in the game" of funding our federal government, how can their priorities be aligned with a fiscally responsible government? The federal government becomes one big entitlement program that much of the population doesn't have to pay for, but receives benefit from.

In that situation it is easy to support increased government spending - I'm not paying for it, but I get the benefit from it - why would you turn down something free?

Ari Fleischer, whom you can agree or disagree with his politics but can't deny his talents at spin, recently had similar comments in the WSJ.

http://online.wsj.com/article/SB123958260423012269.html

I would have preferred that he focused on effective tax burden of the bottom half of wage earners, rather than percentage of total federal revenue, as I think that those data are more reflective of the actual situation, since wage percentile isn't as important as actual income.

My other thought is against refundable tax credits. This seems like a very inefficient way of providing redistribution of wealth. First of all, assuming that we want a direct redistribution such as this (big if), it comes in the form of a single payment, rather than throughout the year when it can be integrated into someone's budget and it requires the completion of an overly complex 1040 income tax form. If the money is going to be distributed anyways, why not send it out like social security or reduce payroll taxes?

Second, combining with the first point, it is paying people to be a part of the country, without any restrictions on its use. The same dollar amounts directed into job training, primary education, health charity, or nutrition programs would serve a directed purpose and further a country wide goal of moving people into a situation where they no longer need these support services.