ECON 3240 Misc Project Notes (last update: 4/1/2020 11:33 PM) Spring 2020

Group Project Notes

During the last 2 weeks of class we will discuss each topic as a group, introduced by a brief 20-30 minute presentation of your group’s key findings. What you focus on and its relation of COVID-19 is up to you and your group; however, all presentations should draw upon course readings. For example, reference Banerjee and Duflo’s discussion of the UBI, and they also address gender when targeting social assistance. For more on gender, see the American Time Use Survey or reference Heather Bousey’s Unbound (you can ask me for chapters and I can post the index). When finding references, you can almost never go wrong with Dylan Matthews (consider Future Perfect to be recommended reading for the course). Don’t hesitate to rewrite questions to suit your group’s interest. However, do tie whatever you are working on back to the class’s themes of poverty and inequality. For example, will the CARES Act payments reduce poverty, inequality, or unemployment—at least temporarily? We should all know the answer to this question (see the discussion of the CARES Act on Vox’s Future Perfect vertical). If you need help with paywalls or an ebook, let me know by email.

Homelessness, for example:

What does our text (Banerjee and Duflo (2019)) say about homelessness as a poverty and inequality issue? Banerjee and Duflo do not include homelessness in the Index and they do not discuss U.S. homelessness policy. However, if we search the Kindle version for “homeless,” then a few interesting discussions come up—see the note and quotes below. Throughout their book, Banerjee and Duflo stress the dignity imparted by jobs: just having a cash income or housing may not be enough. [[bring all of this to a footnote?]] There is also a political economy dimension: since the U.S. has lost many manufacturing jobs to technical change and trade with China and Mexico, the best way to deal with lost income or homelessness may be to follow Denmark and Germany’s example and spend more on aggressive Trade Adjustment Assistance (TAA) and other active labor market policies—these can target lagging regions. An example we have discussed in class is the effort of NY state and Tarrytown to use tax breaks to attract biotech firms like Regeneron. New York also tried offering Amazon tax breaks to locate their HQ2 in NYC. Another example would be Ohio’s appeal to Glass company to use the same Moraine Assembly plant that closed in 2008.1 These regional subsidies are controversial in economics (and in Queens) because it seems like taxpayers are subsidizing large companies and because these large companies pit cities and communities against each as the search for the best deal (this happened in the Amazon HQ2 competition).

The index of Banerjee & Duflo (B&D) 2019 (posted here as a pdf) does not mention homelessness. However, searching the eBook or Kindle version reveals homelessness on three pages: pages 315-16, pages 281-82 (read the pages before and after), and page 234.

- Perhaps best reference is on pages 315-16: B&D discuss ATD Fourth World, a group founded by a group of homeless people in France to find jobs for other homeless people. Consider focusing on what they are doing in Spain (https://www.atd-fourthworld.org/legal-office-social-rights-madrid/). ATD Fourth World’s thesis is that the homeless don’t just need shelter—they need jobs as well. Homeboy industries is an example of ex-gang members or returning citizens creating jobs and peer groups for each other. As Father Greg says, “Love never fails. It will find a way to have his way.” I hope he is right. (If we ever meet in person again, we can share some Homeboy Guacamole or if you are ever in LA check out the Homegirl Café, a safe space, with excellent food I have been there).

1 GM went bankrupt in 2008 and was saved by the TARP bailout. Its SUV production seems to have moved to Texas—see Bognar and Reichert’s 2009 documentary The Last Truck: Closing of a GM Plant and their 2019 documentary (which won the 2020 Oscar for Best Documentary and is available on ).

- Earlier, on pages 234-35, B&D discuss policies that may prevent workers who lose their jobs from losing their homes as well. This is relevant to the impacts of social distancing today. Many are losing their jobs; we want them to retain not only their jobs or their housing/apartments. Recall that the 2008 crisis had a housing dimension, too: the problem was a bull market fueled by risky mortgage loans; foreclosures were a symptom of the crisis; and subprime lending had followed a redline pattern, which lead more new homeowners in poor neighborhoods to lose their homes. B&D are concerned with job loss due to automation and the responsibility of society to displaced workers:

This specific force of automation is exacerbating what is always a concern. When a worker is fired, the firm is done with him, but society inherits the liability of his continued well-being. Society does not want him to starve or his family to be homeless; it wants him to find another job he likes. We fear his anger, especially if it leads to a vote for the many lurking extremists in today’s world, whereas the firm does not have to pay for the retraining, the welfare payments, or the social costs of the anger.

This kind of argument has traditionally been used to justify making it difficult to fire workers. Some labor laws, like India’s, make it virtually impossible to fire anyone in larger firms. Others, like the French laws, make it difficult and uncertain. The worker can appeal and possibly be reinstated with back pay. The problem with such firing costs is that they can make life very difficult for a manager faced with a nonperforming worker or an urgent need to downsize in order to survive. As a result, firing costs may discourage hiring in the first place, which would exacerbate unemployment.[22] Banerjee, Abhijit V. and Esther Duflo, 2109, Good Economics for Hard Times (pp. 234-235). PublicAffairs. Kindle Edition.

- The 1st reference to homelessness on p. 315-16 discusses the case of a nurse, Chantal, who loses her job when she becomes disabled in an accident. She became homeless and sought help from the nonprofit ATD Fourth World:

Travailler et Apprendre Ensemble (“Work and Learn Together”), or TAE, is a small business started by ATD Fourth World to provide people in extreme poverty with permanent jobs. One winter morning, we went to Noisy- le-Grand in the east of Paris to observe one of their team meetings. When we arrived, the group was preparing the schedule for the workweek across their different activities, assigning people to tasks and drawing up their plan on a whiteboard. When they were done with scheduling the work, they started discussing a company event. The atmosphere was relaxed but engaged, problems were discussed with seriousness, and everyone then went off to start their tasks. It could have been the weekly meeting of a small start-up in Silicon Valley.

What was different was the activities they were scheduling (cleaning services, construction, and computer maintenance) and the people around the table. After the meeting, we continued talking to Chantal, Gilles, and Jean-François. Chantal had been a nurse, but after an accident found herself seriously disabled. Unable to work for many years, she ended up homeless. This is when she reached out to ATD for help. ATD gave her housing and directed her to TAE when she was ready to work. She had been working there for ten years when we met her, first on the cleaning team and then on the software team and had become a leader. She was now contemplating leaving to start a small NGO to help disabled people find work. Banerjee, Abhijit V and Esther Duflo (2019) Good Economics for Hard Times (p. 316). Public Affairs. Kindle Edition.

Additional Links

Greg B. Smith (2020) City Shuttles Homeless and Other Virus Patients To Hotels, March 25th 2020

Anabel González (2020) A memo to trade ministers on how trade policy can help fight COVID-19, March 25th

“We’re In The Business Of Second Chances.” Father Greg popularized the radical notion that even the most demonized individuals can thrive when given a second chance. In the beginning he partnered with local Los Angeles businesses in the Boyle Heights neighborhood, encouraging them to hire homeboys and homegirls. Eventually, Homeboy Industries was established as a nonprofit and began creating and operating its own job training businesses. Now, Homeboy Industries has grown from a single bakery to almost a dozen social enterprises, which provide both a vital training ground for clients as well as revenue streams to support the mission. Expansion of our businesses proves that people can transcend their pasts and become valuable, empowered employees and business leaders. [Guess what, all of these businesses are closed due to social distancing, but when they open again they will need our help, lets order their products and visit them when we can]