We’ve experienced solid growth in recent weeks and now have more than 4,200 readers. For the benefit of newer readers, I thought I’d share my six favorite posts from our earlier days.
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This was our very first post after we launched in August. Amazon had recently opened a new grocery store here in Washington DC. I visited to see what the future of the grocery business might look like. The technology was impressive: cameras and weight sensors allowed me to just grab the items I wanted and walk out without going through a checkout lane. AI software figured out what I had taken and automatically charged the credit card I had on file. In this piece I argued that the post-pandemic environment was the perfect time for Amazon to expand its presence in the grocery business: labor markets were tight, the commercial real estate market was weak, and people were eating at home more.
For the last 20 years, budget hawks have been warning that large deficits would drive up interest rates with dire consequences for the American economy. In this piece, Alan explained why these folks keep being wrong. In a word: demographics. People tend to borrow money in their 20s and 30s as they’re buying homes, establishing families, and starting businesses. Later in their career, they stockpile savings to prepare for retirement. With birth rates declining around the world, the ratio of older workers to younger workers has been falling. As a result, we have more savers chasing fewer borrowers, which has put downward pressure on interest rates.
The pandemic unchained millions of white-collar workers from their offices, allowing them to work remotely from anywhere. The result was an exodus from the big, expensive cities where a lot of jobs had been located. Alan crunched the numbers and identified the nine cities that have experienced the biggest real estate boom as a result of this exodus. Interestingly, eight of the nine are based in the Mountain West (the ninth is Austin, Texas)—a reflection of the severity of California’s housing shortage. Alan also observed that the 2017 tax law encouraged people to leave high-tax states like California by capping deductions for mortgage interest and for state and local taxes.
This summer, Alan stayed at a hotel and noticed that the service wasn’t as good as it used to be. A formerly lavish breakfast had been cut down to a few sad boxes of cereal. Declining service quality can be observed across the economy, as everyone from airlines to universities struggle to cope with COVID and high labor costs. Alan argued that official inflation statistics fail to fully account for these quality declines. Alan’s article sparked a national conversation. Neil Irwin of the New York Times dubbed the phenomenon shadow inflation, while NPR’s Planet Money newsletter called it skimpflation.
Self-styled affordable housing advocates frequently oppose the construction of new market-rate housing on the theory that constructing “luxury apartments” actually makes housing more expensive. In this article, I explained new research that refutes this common argument. Researchers in Finland obtained detailed property records that allowed them to track exactly what happened when a new market-rate apartment building went on the market. They showed that the people who moved into these new apartments frequently vacated apartments in lower-income areas. They estimated that for every 100 luxury apartments that go on the market, 60 units are freed up in neighborhoods with below-average incomes. Another recent study focused on American cities and reached similar conclusions.
Employers require employees up and down the income spectrum to sign non-compete agreements. Such agreements can impose severe hardship on workers—including a trio of Wyoming nurses I profiled in this piece. A national survey of workers in their mid-30s found that 15 percent—including 8 percent of those in the lowest income quintile—were required to sign such agreements. I argued that states should block enforcement of non-compete deals. Non-compete language has been unenforceable in California for more than a century. Far from discouraging innovation and entrepreneurship, the lack of non-compete enforcement in California may have actually aided the success of Silicon Valley.
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