Arnold Kling  

Numbers to Ponder

PRINT
Discover Tyler Cowen... Economic Elitism Thought Exper...

The latest issue of Reason cites a study by economic consultant Gary Shilling.


More than half of all Americans--53 percent--now depend on government for their income. In 1950 the figure was just 28 percent...Shilling totaled up federal, state, and local government workers, plus private-sector workers who owe their jobs to government, plus recipients of Social Security, other transfer payments, and benefits such as food stamps. He also tacked on dependents...adjusting his figures to avoid double-counting...

On line, you can read about his analysis in Mark Trumbull's piece in the Christian Science Monitor.

Meanwhile, Stan Humphries of Zillow totes up real estate values in Red and Blue states.


the Red states (pro-Bush) have substantially lower home values than do Blue states (pro-Kerry). Red states had a Zindex of $190,323 vs. a Zindex of $323,952 for the Blue states as of the first quarter of 2007

Thanks to Richard Florida for the pointer.

I wonder if we've seen some redistribution of wealth away from the private sector and toward government workers and contractors since 2001. I wonder if the public sector tends to be larger in the blue states.

Living in a Maryland suburb of DC, I see an economy that is very much government-driven. I think that's why I have a hard time taking a dire view of the housing market. It's hard for me to picture government workers defaulting on their mortgages in droves.

I'm sure that there will be mortgage defaults in California. California has always had expensive, volatile housing markets and creative mortgage lending practices. But the question is whether the rest of the country looks more like California or more like Maryland. Based on Shilling's numbers, I would bet more like Maryland.


Comments and Sharing





COMMENTS (9 to date)
Dan Weber writes:

Was the juxtaposition of the home values in red states and blue states supposed to imply that the blue-government is successful in their wealth transfer to their constituents?

This may be true, but I don't see it from those figures. There's too many other conflating factors.

Also, last I heard more government revenue comes from blue states than red states, and more government spending goes to red states than blue states. (Those figures may be total crap, of course, but it seems like a thing that someone who knows where to look up the figures could do relatively easily.)

Floccina writes:

I see a real danger in more than half of all Americans--53 percent--now depend on government for their income. If they can figure a way to vote themselves a raise we could be in trouble. Thankfully they are dispersed and have different interests but if the percentage continues to climb a pro-governmnet sepending coalition could be built. Consider how strong push to raise teachers salery is in the democratic party even though there is no evidence that it will help the students. Some part of the push IMO is due to the teachers being and important part of the Democratic party.

Floccina writes:

Edward Glaeser’s work might imply that the higher real-estate prices in the blue areas could reflect the greater government barriers to building in the blue areas. Democrats seem to go for a more green agenda which often includes slow growth policies which create barrios to building and thus higher real-estate prices.

Matt writes:

When 50% of workers depend on government, then it is generally the government of China that supports the employment.

Boonton writes:

Flocinna

I see a real danger in more than half of all Americans--53 percent--now depend on government for their income. If they can figure a way to vote themselves a raise we could be in trouble.

Do you know how to vote? Or when you turn 65 are you going to not cash your Social Security checks and pay full cost for doctors visits instead of using Medicare? You have meet the enemy, he is in the mirror!

spencer writes:

I realize this is a quote:
More than half of all Americans--53 percent--now depend on government for their income.

But it is incorrect. This quote implies that 53% receive most are all of their income from government. But that is not what Shilling said.

He said that 53% receive some income from government. If a farmer receives a support payment it is only part of their income and that is similar to many of the receiptents of transfer payments. If an employed worker receives an earned income credit it is only part of their income. For welfare in particular this has been a major change over the past decade where people were moved off welfare where the bulk of their income came from government to private jobs where only part of their income came from welfare.

I for one would like to see the entire study
because I suspect these type of trends make the quoted headline misleading.

Matt writes:

"He said that 53% receive some income from government"

It matters little as we know government comprises about 50% of the economy,meaning half of the GDP goes through government.

John Thacker writes:

But the question is whether the rest of the country looks more like California or more like Maryland.

A little too simplistic, in my mind. California and DC-suburb Maryland are both areas that saw tremendous housing price gains during the recent bubble. Some states (mostly Blue) saw tremendous housing price gains, others didn't. (For a variety of reasons. Some states just have fairly stagnant populations, whereas some Red states like Texas and North Carolina saw fast growing economies and populations, but not a lot of housing price growth, possibly because of easier zoning laws, cities not surrounded by water on two sides but rather in the middle of plains, or something.)

A lot of the country looks like neither Maryland nor California.

So another important question is whether price declines and defaults will be mostly limited to places in the country that saw the huge price increases (validating the bubble idea), or whether it will be much more widespread.

Lord writes:

The problem is more likely how far creative mortgage lending has spread than how stable local economies are. Even a stable job can't cope with a doubling mortgage payment.

Comments for this entry have been closed
Return to top