Sunday, December 23, 2012

CHARITIES | 3/4 Clients Keep < Half Telemarketers $

Dec. 23, 2012–The New York attorney general has jurisdiction over charities that (1) raise or spend more than $25,000 in New York, and (2) any charity that uses a professional fundraiser. 

 In 78 percent, or 467, of the 602 campaigns, the charities kept less than 50 percent of the funds raised.  In 76 of the 602 campaigns reflected in the report, charities actually lost money. In only 49 of the 602 campaigns did the charity retain at least 65 percent of the money raised, the amount deemed acceptable under the Better Business Bureauʹs standards for charitable organizations.

In total, 61.5 percent, or $147.9 million, of the funds raised by 82 telemarketers in 2011 was paid to fundraisers for fees and/or used to cover the costs of conducting the campaigns.  By comparison, charities retained 38.5 percent, or $92.7 million, of the total funds raised in the campaigns. [Note: As of December 23, the website has a six-point decimal-place error in reporting the dollar amounts.]

Wednesday, December 19, 2012

NYC | Landfill Idea a Mistake?

I have heard it several places - the map of part of Manhattan that was not flooded by Sandy looks a lot like the Manhattan Island that Peter Stuyvesant et al. colonized.

The implication is that the landfill approach was a mistake. So the World Trade Center was taken down from above by terrorists and its landfill has been overrun by Sandy's surge. The two disasters are often linked but not quite in this way.

Now the implication has been posted as a comment on an article on Dutch responses to flooding in Crain's. The article is behind a subscription wall but the comment is not:
  wrote on The Dutch are already building houses that float and are attached to the ground (the seabed-to-be) by anchors. We have a LOT more land here, and can afford to let large amounts of it revert to its natural state.  We'd better start building reefs for oyster beds and planting marsh plants in low-lying areas of New York now rather than waiting for another Sandy, because there will be, not one, but many.  Like it or not, New York is going to return to the boundaries it had in the 1600s, pre-landfill, no point in spending a lot of money and labor trying to deny it. Read more: (limited access).
One reason that the Dutch were over here in the first place is that floods had been taking place in Holland and Belgium and they were looking for places to relocate their people.

Thursday, December 13, 2012

JOB TRAINING | A Program that Works

Presenting Certificates to graduates of a course on brownfields remediation by the NJISJ. L to R: Albert Williams, Director, Workforce Development and Training, NJISJ; Cornell William Brooks, President and CEO, NJISJ; a student; Schenine Mitchell from EPA Region 2; and five other students. Photos by JTMarlin.
major front-page story in The New York Times today (Thursday) questions the value-for-money of $29 million spent on a halfway-house program for ex-offenders in Brooklyn, on the basis that it fails to deliver on promises of job training and life skills support. 

On Tuesday, December 11, I attended a graduation ceremony for 14 young people who went through a program that impressed me as delivering on exactly these promises. The course was offered by the New Jersey Institute for Social Justice in Newark, N.J.

The graduation ceremony included 30 people (of all ages) from the families of the students and a dozen people involved in the program, which has corporate as well as government support. The students were graduating from the Metro Newark Brownfields Training Program, which offers a combination of life skills, academic and highly technical training for careers in remedying brownfields – i.e., land and buildings declared toxic and unfit for habitation. 

Kenneth Lucianin, Commissioner, 
Passaic Valley Sewerage 
The students enrolled in 14 weeks of EPA-specified training for lead abatement, asbestos removal, OSHA health and safety, hazardous waste operations and emergency response and general brownfields issues. The program is offered by the New Jersey Institute for Social Justice, which offers both training and advocacy for ex-offenders. This was the first graduation I attended, as an observer, because I have a six-month contract to assist the Institute with advocacy and with analysis of job-market data, and I was interested in this other part of the Institute's work, which I observed taking place at the other end of the office floor.

Like a good shepherd, the Institute's Director of the Workforce Development and Training, Albert Williams, knows each one of his flock. At the graduation ceremony in the New Jersey Historical Society in Newark, he good-naturedly described each of the trainees, from the super-eager one who arrived an hour early each day of class to the one who was a Doubting Thomas, disbelieving in the possibility that a job would await him at the end of the program.

Michael DeFrancisci, Executive Director,
Passaic Valley Sewerage Commission.
Studies of training programs have turned up widespread evidence of low placement rates. But the brownfields training program has been a huge success by this criterion, with the enrollment of 33 men and women and a placement rate of 92 percent. 

In addition to taking the course, students must take EPA tests to be certified as brownfields workers in each specific area. Two of the speakers at the ceremony were from a major employer of brownfields workers and they spoke enthusiastically of the need for workers with the skills offered, and the certifications obtained, by the brownfields training program.

The speakers (whose photos appear above left) were Kenneth Lucianin, Commissioner of the Passaic Valley Sewerage Commission, and Michael DeFrancisci, Executive Director of the Commission. They projected that the demand for graduates will grow quickly with Superstorm Sandy's remediation needs, on top of the steady supply of New Jersey Superfund sites that can be developed once they have been appropriately remediated.

Schenine Mitchell of EPA Region 2, participated in awarding certificates and spoke to the group glowingly of the brownfields training program. The program combines training in basic education and technical sophistication with an emphasis on strong mutual support among members of each class after they leave the Institute. 

My observation of the interaction among the graduating class and their instructors leaves me with a very good feeling about the human side of the training. As Mr. Williams said: 
We don't care a whole lot about what you did and where you came from before you came to us.  We care where you are going and how you are going to get there.
I suggest that the people who are disappointed with what Brooklyn ex-offenders are getting in the way of training and support go see what the New Newark is delivering.

Friday, December 7, 2012

NJ Took a Bigger Hit in 2008 than NY

Before the meltdown of 2008, New Jersey (blue diamonds) 
enjoyed lower unemployment rates than New York State
(red squares). After 2008, NJ rates rose above NY.
(Chart and estimates for 2012 by City Economist, based
on 10 months of 2012 data.) Source: BLS.
The freezeup of the global financial system, which reached subzero levels in September 2008, affected all Americans. But it affected some more than others. New Jersey seems to have taken a bigger hit than New York State.

During the go-go years in the mid-2000s, the unemployment rate in New Jersey remained below that of New York State. New Jersey residents who worked in New York City brought their paychecks back to their local communities and supported employment where they lived.

In the four years since 2008, the situation reversed itself and the unemployment rate in New Jersey exceeded that of New York State.

In both states, the unemployment rate between 2007 and 2009 is striking - from 4-5 percent unemployment to 8-9 percent - a doubling in two years!

Why was New York State less affected? Here are three theories that might explain why New Jersey suffered more from the 2008 hit:

1. The law of large(r) numbers - If you record the results (head or tail) for each coin toss, the more the more the number of tosses the closer one gets to the long-run probability of 50 heads for every 100 tosses. (The more you gamble, the more certain it is that the casino will win.) New York has more people and workers than New Jersey, so its unemployment-rate estimate based on a small sample of households will be more stable. Its unemployment rate will over time be less variable than New Jersey's. But the New Jersey unemployment rate is not just more variable - it is consistently lower than New York's before 2008 and higher after 2008.

2. Allen's rule from 1847 - When the climate is colder, animal extensions evolve into shorter ones than in warmer climates. The arctic-circle rabbit has shorter ears than the warm-climate jackrabbit. There are no flamingos in the arctic circle. Similarly, in hard times (e.g., frozen financial markets), companies close branches to save money. Since the engines of New Jersey's economy are in New York City and Philadelphia, the urban centers

3. Bergmann's rule, also from the 19th century - The mass of a species tends to be heavier in colder-weather regions, to conserve energy. A penguin is bigger than a humming bird, a polar bear is heavier than tropical bears (the sloth bear, spectacled bear and sun bear), which are not found in cold-climate zones. So the big cities - New York and Philadelphia - may have kept their strength by pulling in workers from back-office and branch posts outside the city.

Unemployment Rates Decline for Men, Women, Blacks and Youths

Seasonally adjusted unemployment rates in the civilian population. The
rates fell from October in every category, but black rates remain 
twice as high as white rates. Youths are 16-19 years old. Source: Chart
by CityEconomist based on BLS Table A2, December 7, 2012.
The overall job numbers this morning, for November, were good. The unemployment rate fell to 7.7 percent from 7.9 percent and jobs increased by 146,000, although some prior figures were adjusted downward.

But how broadly in the working population was the improvement felt?

Answer: The seasonally adjusted unemployment numbers, for November 2012, show declines from October for both whites and blacks, and in the major categories of the civilian population.

The bad news is that the differences are still stark. Blacks have an unemployment rate approximately twice as high as whites.

The improvement in the black unemployment figures was substantial across the board, between 1.0 and 1.1 percentage points. The improvement in the larger base of adult whites was 0.1 to 0.2 of a percentage point. The rate for white youths fell by 0.4 of a percentage point.

Sunday, December 2, 2012

OBAMA | First-Term Green Legacy

President Obama achieved a great deal in his first term to advance energy efficiency and renewable energy. But his objective of making significant progress to slow climate change was not achieved. It was beaten by the fossil-fuel lobby acting through the know-nothing opposition of Tea Party Republicans or their brow-beaten colleagues.

With his reelection, in the teeth of huge spending by his opponents, the President is in a good position to get through some of his original program that was left on the table. The lessons of Hurricane Sandy may help his case.

Obama's Eco-Achievements
Obama started by making solid appointments, with Steven Chu as Secretary of Energy and Lisa Jackson as Environmental Protection Agency Administrator. He supported climate-change proposals at Copenhagen, and admitted that what was achieved there "was not enough". Here's what he did achieve in his first term, mostly through his budgeting and regulatory authority:
1.    Obama put energy efficiency and renewable energy on state agendas. The $90 billion investment in green jobs in the stimulus bill may not immediately have created 5 million new jobs — many states were not ready to take advantage of the programs in a timely way. But it encouraged states and localities to focus on needed environmental initiatives and the longer-term impact of their efforts is real and accounts for about half of the 23 percent lower projections in just a few years of 2020 emissions.
2.    His EPA has twice raised auto fuel-efficiency standards under the Clean Air Act. Nixon's Clean Air Act was the basis for the Obama EPA's higher Corporate Average Fuel Economy ("CAFE") standards, first requiring 35.5 mpg fuel efficiency by 2016 and now 54 mpg by 2025. By using existing legislation, Obama moved America forward despite the Congressional stalemate.
3.    He regulated carbon emissions under the Clean Air Act. Obama's EPA won a major victory in June 2012 when the U.S. Court of Appeals, DC Circuit, unanimously affirmed EPA's ruling in 2009 that (1) greenhouse-gas emissions pose dangers to public health and welfare and (2) four measures would be instituted to regulate carbon emissions.
4.    He saved the U.S. auto industry and its technology-generating capacity. The auto industry bailout was not just a job-creation success. By keeping this major component of U.S. industry alive, the President kept the United States as a strong player in electric-car technology and in the campaign to generate more efficient batteries.
5.    He has used federal purchasing power to reduce carbon emissions. He has made energy efficiency part of the mandate and procurement criteria of theGeneral Services Administration and has supported the Energy Star rating program of the EPA and Department of Energy.
6.    He has supported four rounds of the ARPA-E program for energy technology research. The Advanced Research Projects Agency, once part of the Department of Defense, has an energy component administered by the Department of Energy. It has so far made awards for 107 project awards, with amounts ranging from $400,000 to $6 million each, for research on such topics as "electrofuels", carbon capture, batteries, electric grid, thermal energy storage, and rare earth substitutes. It would be hard to overestimate the long-term importance of this effort for the United States and for the planet.
Why Obama Failed to Address Climate Change Directly

That Obama didn't succeed in doing more on climate change reflects unpredictable developments. The BP oil spill early in his first term discouraged offshore oil drilling, and the Fukushima nuclear meltdown discouraged further nuclear power development, constraining his options. But most important, the Republican House of Representatives adopted a totally negative stance toward the President's climate-change goals. The entire minority membership of a committee headed by Senator Barbara Boxer's committee boycotted hearings on the House-passed Waxman-Markey cap-and-trade bill. I had a ringside seat to observe the crackup of the legislation in the 111th Congress, as senior economist for Congress's Joint Economic Committee. The bill was debated to death in the Senate. After the election of more Tea Party adherents in 2010, it was all over.

In 1970, it would have been hard to believe that 42 years later the nation still would not have such a carbon tax or a carbon-price-setting mechanism like a cap-and-trade system. Green issues then had bipartisan support. President Nixon's strong Clean Air Act amendments to the original 1963 Act created the EPA, William Ruckelshaus became its first head (and the late Russell Train its second), and new water-pollution laws were passed after two years.
What stopped progress? OPEC's decision to create an oil shortage. Inflation cascaded through private and public prices and economic concerns overtook environmental ones. The GOP took on the mantle of environmental deregulation in the name of promoting economic growth, although significant instances of environmental progress have occurred under Republican leaders since Nixon.

The GOP's Opposition to Environmental Rules Is Negotiable

President Reagan, for example, may have cut social and environmental budgets, including one-third of EPA spending, but in his second term he did something important. He noted the high cost of ozone-depleting chlorofluorocarbon (CFC) gases and he promoted a worldwide reduction via the 1987 Montreal Protocol. This Protocol has been described as the most successful international convention ever, signed by 197 countries and the European Union, and it has stopped the growth of the ozone hole although some aerosol substitutes, such as hydrofluorocarbons, continue to contribute to global warming even though they don't damage the ozone layer.

President George W. Bush during most of his administration was, like Reagan, antagonistic to environmental regulation, but in the latter years of his presidency he championed significant initiatives to conserve natural resources that became law, and he moved the country along on the path toward greater energy efficiency.

Given that Reagan and Bush 43 added valuable environmental achievements late in their second terms, President Obama has some encouraging precedents. The fact that his re-election results are strong may have something to do with Republican leaders entering the 113th Congress with a more serious inclination to cooperate with President Obama than two or four years ago. He now has a real opportunity to achieve more of the change he promised in 2008.

Proposals for the President's Second Term

Climate-change legislation deserves to be near the top of the President's second-term agenda. Even if the United States magically reduced its emissions to zero, the planet will be threatened by the continuing rapid industrialization of China, India and other emerging economies. For the United States to exercise global leadership on this important topic, it must do more at home.
Some things will happen on their own. The Energy Star rating has been shown in several articles by Professor John Quigley and others to raise the value of a property significantly for both sale and rental, so this certification has legs. Venture capitalists are supporting renewable energy projects. Vehicle manufacturers are hard at work on fuel and battery efficiency. HSBC Bank projects the low-carbon economy will triple to $2.2 trillion a year by 2020.

The President in his second term has a Groundhog Day chance to push forward programs and laws that directly address climate change. Through the last two Congresses, Carol Werner at the EESI has faithfully been pushing out information on a large number of Congressional initiatives in the arena of clean energy and climate strategies. Here are five ways ahead that seem to me to be most promising:

1.    A carbon tax. The lack of progress of the Waxman-Markey bill in the Senate despite support of the President's Climate Action Partnership has reopened bipartisan consideration of a direct tax on carbon of perhaps $20 a ton. This might add 10 percent to the cost of gasoline, but it would lead to correct signals being provided throughout the economy. Pigou-type taxes on pollution ("tax bads, not goods") are viewed with a friendly eye by many analysts on both the left and the right.
2.    Trading permits — the Cantwell bill. As a backup for a carbon tax or a parallel strategy, the limited cap-and-trade bill proposed by Senator Maria Cantwell (D-WA) is a good plan that could be a focus for bipartisan negotiation. It creates an "upstream" (at the power-generation source) market for carbon among large energy producers and users. It seems to me easier to understand and execute than the broadly based Waxman-Markey bill.
3.    Championing state and local initiatives. With Hurricane Sandy as the backdrop, support local environmental investments and rethinking of zoning and building codes or planning for surge protectors. Green incentives in the stimulus bill have encouraged states and localities to act to improve energy efficiency and reduce emissions. Without a carbon tax or a national market for carbon permits, these efforts need encouragement. The President can help revitalize them with national support of subnational and private investments.
4.    Using the Presidency to make the case for change. Michael Northrop, program director for sustainability at the Rockefeller Brothers Fund, urges the President to use his second-term status to tell the truth about the U.S. coal industry, its grave impact on climate change, its declining share of electric-power fuel, its declining employment. Coal employs 40 percent fewer Americans than a few years ago as U.S. solar jobs grow 13 percent annually. He recommends the President convene a national bipartisan climate action planning council composed of sitting and former state and local officials, company CEOs and civic leaders, with leadership by a senior advisor in the White House appointed for this task. A good idea.
5.    Continued agency actions. Since the Congress is unpredictable, the most reliable way forward is to continue exercising executive authority through the EPA, Department of Energy and other agencies to lower emissions and to build clean-energy markets. The President has already done much by using federal buying power to support clean-energy markets, but he can do more. Catalogs of options include those of the Center for Climate Strategies and the Presidential Climate Action Project.
The timing of Hurricane Sandy could not have been better for purposes of bringing more business leaders on the side of action to address climate change. Stay tuned and make your voice heard.

Dr. Marlin is Chief Economist for the New Jersey Institute for Social Justice in Newark, NJ.  The views expressed in this post are not necessarily those of the Institute.  The abopve post appeared on the Sallan Foundation site a few days ago.

Wednesday, November 28, 2012

SANDY | Compared with Katrina

New York Governor Andrew Cuomo has "raised eyebrows" with his claim that Superstorm Sandy suffered worse property damage than Katrina. The New York Times today sorta debunked this claim with a side-by-side comparison of the two storms, although on electrical outages Sandy wins hands down.

No question that Katrina was a worse storm by meteorological standards, and the deaths were much greater, which Governor Cuomo concedes. What he argued (based on my having seen the replay of his remarks on MSNBC) is that the scope of the damage was greater. He didn't actually say that the  dollar value of the damage in New York, New Jersey and the other states that have been hit by Sandy is greater. Let's look at an updated chart of the top 20 storms in the U.S. since 1900 in current dollars.

Top 20 U.S. Storms Since 1900, 2012 $
1 Great Miami $180.22 1926
2Galveston $105.57 1900
3 Galveston $84.91 1915
4 Katrina $84.62 2005
5 Andrew $64.41 1992
6 Storm 11, SW FL$53.94 1944
7 Donna $49.81 1960
8 New England $46.84 1938
9 Lake Okeechobee $44.89 1928
10 Wilma $25.96 2005
11 Hazel $24.26 1954
12 Diane $24.11 1955
13 Camille $23.04 1969
14 Charley $20.38 2004
15 Ike $20.37 2008
16 Hugo $20.02 1989
17 Carol $19.29 1954
18 Agnes $19.01 1972
19 Ivan $18.59 2004
20 Storm 2 $18.51 1949
Source: Roger Pielke Jr.'s blogsite

In my recent posts I attempted to update a 2010 table of the top storms. Through a  comment on my last post I was sent to this table, for which I am grateful. It is updated by the person who prepared the original table, Roger Pielke, Jr. The method he uses is described in a 2008 paper cited in the footnote to the table in last post. I cited this work frequently in examining the Hurricane Irene damage data. The numbers above are easy to use. Just plug in a number for the estimated damage in current dollars and you have the ranking of Superstorm Sandy in fair historical terms.

If you add together the $32.8 billion New York damage and the $29.4 New Jersey damage, the $62.2 billion total takes you to the #6 spot. Definitely, the NY $9.1 billion aid request for flood surge prevention (and the New Jersey equivalent) should be excluded from the total.

Pielke argues that to be consistent, one should also exclude from damage numbers any business interruption costs, because storm damage estimates historically only included the value of destroyed assets. If business interruption is excluded, much of  the $62.2 billion will be excluded. But there are other states affected by Sandy (the Connecticut shoreline was badly hit in some places), and adding in their damage will top up the final number.

Where I come out is this:
1. There is a bias against long-ago storm-damage numbers, but there is also the bias of ignorance that governments operated under 112 years ago. They knew less about weather patterns and were less prepared. So in comparing the viciousness of the storms, they seem less terrible today for the same level of severity because we know how to prepare. If no one was ready for Superstorm Sandy, can anyone doubt that the death rates would have been much higher along the shore - more than 200 miles of shoreline from Cape May through to Montauk?

2. Adjusting for inflation is a no-brainer. But Pielke has adjusted for more than that, for the value of property because of rising density. Someone could argue he has over-adjusted.

3. Katrina was recent, so the business-interruption problem doesn't apply. Recent practice is for business-interruption and loss-of-use to be insurable and to be a legitimate damage. Think of it this way: When your house collapses in a storm, you have two problems. One is you need to rebuild. The second is that you need a place to stay. Insurance companies tend to pay for both. The same applies to business. If my store is flooded, I lose inventory and I have to spend money repairing electrical wiring and walls etc. Meanwhile I also lose business while I am fussing about these problems. Insurance policies tend to pay for both of these problems. I think that business-interruption is  reasonable damage cost to include in these estimates.

4. But Governor Cuomo's request for $9.1 billion relates to a different kind of problem. The storm reveals inadequacy in the infrastructure and makes it imperative to address it. Think of the homeowner whose house is destroyed. The town decides not to let the beach-dwellers rebuild, or to require higher standards of construction. The town may offer the homeowner some compensation for what amounts to a taking way of a right to use of property. But an insurance company could refuse to reinsure, which might amount to the same thing if a homeowner needed to borrow to rebuild (banks typically want their mortgaged properties to be insured). The point is that remediation of adverse conditions is not a new piece of damage - the damage merely exposed a problem that was there all along. That's why I don't think it should be included in damage estimates.

Bottom line, I think that the damage caused by Katrina was similar to that caused by Sandy, apart from loss of life where there is no comparison. The reason is that Sandy affected a larger area and it hit two of the five biggest business central business districts in the nation - downtown and much of midtown.

It may not be social justice, but economics uses the yardstick of dollars rather than windspeed or pain and suffering. Governor Cuomo may have a case that the dollar value of the cost of damage to property was greater for Sandy. A counterargument is that the levees were broken around New Orleans and that will take a huge amount to replace. But isn't the additional cost similar to the problem with flood prevention in New York? To rebuild the levees, they will have to be higher and stronger. It's not just the damage we are talking about, it's the revelation that prior defenses were inadequate. The whole issue of infrastructure "needs" is hugely important, but it is separate from the assessment of damage as traditionally computed.

Saturday, November 24, 2012

SANDY | Official Costs Imply #5 Ranking among Hurricanes

Source: CityEconomist insertion of Sandy into the list, with $62.4 billion being the inflation-adjusted 2010 value of 24 states' costs. Original table from NOAA, National Weather Service, National Hurricane Center, Pielke et al. (R. A. Pielke, Jr., J. Gratz, C.W. Landsea, D. Collins, M. Saunders, and R. Musulin, 2008: "Normalized Hurricane Damages in the U.S.: 1900-2005." Natural Hazards Review, 9, 29-42, cited in Blake and Gibney, 2011). Pielke et al. adjust historical data for inflation to 2010, wealth per capita and population.
Where does $62.2 billion for NY and NJ put Sandy's rank among U.S. hurricanes? 

Governor  Christie of New Jersey late yesterday afternoon announced $29.4 billion as the cost of Sandy to New Jersey's 127 miles of coast. With Governor Cuomo's previous announcement of $32.8 billion, the total for these two hardest-hit states is $62.2 billion.

The NY-NJ estimate of $62.2 billion in 2010 equates to $66 billion in 2012 dollars according to the BLS cost-of-living converter. So for the total impact to be equal to $62.2 billion in 2010, the other 22 states affected by Sandy will need to come up with impact numbers that add up to $3.8 billion, which is a highly probable average of $170 million per state.

If the NY or NJ estimates rise, or other states have much higher costs that bring the total above $75.7 billion, Sandy could rank #4. But it was just a  tropical storm by the time it hit landfall in New Jersey, so Sandy is unlikely to get close to the Galveston Hurricane of 1915. 

Note that century-earlier estimates are generally based on physical damage only, whereas later economic impact numbers, after WWII, include impacts such as business-interruption costs because these became widely insured events. In addition, dollar-value rankings must be adjusted for inflation, as is done in the table above. There is no sense in using unadjusted dollar numbers that go back to 1900. The most costly U.S. hurricane ever was the 1926 Great Miami Hurricane, which cost $164.8 billion in 2010 dollars according to the National Hurricane Center.

Last year Hurricane Irene has been widely quoted as having had an economic impact of $15 billion and has been improperly ranked #5 highest in damage. Their numbers were not adjusted for inflation. Irene did not rank even in the top 10 after adjustment for inflation. (See my comments last year

SANDY | NY-NJ Cost–$62.2 Billion

Ocean County had the largest number
of "affected" houses. But Cape May
was the worst hit relative to population.
Source: CityEconomist, from FEMA data.
Governor Christie of New Jersey announced late yesterday (7:41 pm posted on that the cost  of Superstorm Sandy so far for his state are $29.4 billion. So that is $62.2 billion for the two hardest-hit states, adding in $32.8 billion for NY. The subsequent addition of $9.1 billion for NY by Governor Cuomo for flood surge prevention doesn't belong in the damage column.

We know that some counties within New Jersey were much harder hit than others, although every county in the state was declared FEMA-eligible. The worst-hit counties are Cape May, Atlantic, Ocean and Monmouth - i.e., the four southeastern coastal counties.

The $29.4 billion New Jersey cost will be borne by state taxpayers, the Federal Government and private businesses and individuals. Every one of the various forms of coverage of these costs comes with a price tag. The question is who pays for them and when. For a national calamity, the nation steps up to pay some of the bills.
- Private insurance will cover some of the (1) property damage above the deductible and (2) business interruption and loss of use. But coverage will be harder to get in future; deductibles will rise; premiums will increase. The NYC Comptroller's Office showed that how this happened after 9/11. It makes sense that casualty insurance companies over time have to match their premiums to their claims, especially when interest income is low, so some of the premium hikes are reasonable.
 - If private utilities are self-insured or their premiums go up, they will use this in their rate base when they apply for rate increases.
- Government payouts at all levels will have to be financed from the expense budget or with bonds. Either way, they impose a budgetary burden now and later.
- The Small Business Administration loan program will either collect back from businesses or will have to absorb the loss and get funding from the federal budget.
- FEMA and the flood insurance program within its umbrella will need to get more federal funding for amounts not already set aside for claims.
- The uninsured and unreimbursed portion of losses will be absorbed by individual businesses or households. In New Jersey alone, FEMA has recorded more than 70,000 homes "affected" by Sandy. Many of these homes will be expensive to repair or rebuild. Many are uninsured because insurance may have been hard to get or too expensive.
- Because of the high costs of rebuilding infrastructure, rebuilding near water may become more difficult. Private homeowners may see their property values decline.

Within all the big numbers are many private tragedies, people who are faced with bills they can't pay or rebuilding that they may not be permitted to do. As usual, small businesses and struggling households are the hardest hit. Only a few get attention in the media. Americans help their neighbors in time of need. In the end, we all bear some of the cost but some people bear more than their share.

Friday, November 23, 2012

PCS Says $11 Billion Sandy Claims So Far, Below Expectations

PCS reports that insurance claims for Sandy are only $11 billion. This is good news for casualty insurance companies and holders of catastrophe bonds (which don't pay off as much if a catastrophe happens). More broadly, the lower-than-expected number (Eqecat said it expected $20 billion in insured losses) could mean a number of things: - Huge losses are uninsured, which is quite possible because so much of the hit was taken by individual homeowners near water. Those properties are difficult and expensive to insure, which means many homeowners self-insure. - The Federal flood insurance program (FIMA, part of the FEMA system) may be getting many claims. - States and localities will be filling in to repair damage and take care of people made homeless and the costs will be filed with FEMA. - Homeowners may be slow to file claims. Or the Eqecat original estimate was too high. It was the basis for an economic-loss estimate of $50 billion that has been widely reported. NY Governor Andrew Cuomo has estimated $33 billion cost for New York State. NY City Council Speaker Christine Quinn used an estimate of $26 billion losses for New York City, after Gov. Cuomo released his estimate; her figure presumably is scaled to fit inside the statewide number. Still no estimates for New Jersey. Governor Chris Christie said he expected to release them by Wednesday, November 21. No sign yet in Googledom of these numbers. FEMA has been releasing data on the number of homes that have been damaged in any way.

Thursday, November 22, 2012

SANDY | Restore to NYC the Dutch Windmill Expertise!

The amazingly detailed interactive map in The New York Times today shows all the areas near water in New York City where buildings suffered from flooding during the surge of water that occurred because of Hurricane Sandy. 

Governor Andrew Cuomo has assessed the damage statewide as $33 billion and has called for $30 billion in Federal aid. Speaker Christine Quinn has put the New York City damage (which would fit within the statewide number) at $26 billion and has called for $20 million and a surge-control system to prevent 15-foot waves from cascading through New York City streets.
The Dutch call this a "Speculaas Moulin"–
 a windmill cookie, with almond and ginger
spices–eaten Dec. 6, St. Nicholas Day.
Bring back the Dutch! They first came to New York when the Dutch East India Company in 1609 sent English navigator Henry Hudson to explore the river now named after him. He went far upriver into what is now Canada and wrote back to his sponsors that beavers lived on the river in abundance.

A Dutch settlement, New Amsterdam, was founded in Manhattan largely to support trapping beavers and sending them to Europe for women to wear. The New York City coat of arms has two beavers on it as well as a four windmill wings in honor of the Dutch settlers.
Seal of the City of New York..
Note windmill and two beavers.
Which brings me to the windmill. The Dutch were famous for their windmills because that's what kept the water out. Much of Holland is at or below sea level and the windmills were used to pump out the polders, the areas surrounded by dikes.

My Rotterdam-born mother, Hilda van Stockum (1908-2006), wrote  The Winged Watchman about a family that lives in an old windmill during the Nazi Occupation. Two boys aged 10 and 14 join the Resistance. The book shows how the windmill did its work when the electric mills could not operate for lack of power.

First published in 1962, The Winged
 has sold 45,000 copies since 

1995 and was optioned for a movie.
This book by my mother has special relevance in light of Hurricane Sandy, which caused most of its damage because of flooding and caused most of the lost economic activity because of the electricity outages.
The Dutch have been facing these flooding problems for a long time. Their world preeminence in building windmills to pump out water made them experts in making sails for the mill wings. This helped make them a naval power for a time. 
After the English took over the Dutch colony in 1664, they renamed it New York. The city grew most rapidly when the Hudson River became the gateway not only to upstate New York but also, after the Erie Canal was built, to the Great Lakes.

The Dutch have developed many kinds of technology to deal with today's challenges to their flood-threatened system of polders. New York needs to get their advice. And The Winged Watchman provides both a history of the importance of windmills in Dutch history and an education in the ways to deal with flooding.

Tuesday, November 20, 2012

SANDY | Cape May–Most Homes Hit Per Pop.

Source: Chart by CityEconomist based on initial assessments from FEMA
and county population estimates from the U.S. Census Bureau as of
July 1, 2011. 
As I noted in my previous post, Ocean County had the greatest number of homes damaged by Sandy.

But relative to their populations, Cape May is the hardest hit of all the New Jersey counties, with nearly 74 homes damaged per 1,000 population, ahead of Ocean County with 69 homes and Atlantic County with 37.

Monmouth County is next with 16 homes damaged per 1,000 population, Hudson County with nearly 4 homes per 1,000 population, Bergen County rounded to 2 homes and Middlesex County to 1.

These seven counties are the only ones with a number that rounds to 1 or more. Every one of these hard-hit counties is on the Atlantic Coast.

(John Tepper Marlin is Chief Economist for the New Jersey Institute for Social Justice. His views expressed on the CityEconomist blog are personal and do not necessarily  reflect the views of the NJISJ. Permission to post charts from this blog on Hurricane Sandy is granted on condition that they are attributed to CityEconomist.)

SANDY | Damage to NJ Homes, by County

Source: Chart by CityEconomist based on FEMA data. Permission
granted to use this chart with attribution to CityEconomist.

Using aerial surveys, FEMA reports that 71,770 homes were damaged in New Jersey. The damage is classified as "Affected", "Minor", "Major" and "Destroyed".

Of the New Jersey homes that were "Affected" or worse, 40,001 homes – or 55.7 percent of them statewide – were in Ocean County, which above Atlantic County and below Monmouth County on New Jersey's Atlantic coast.

Although the eye of Sandy made landfall in Atlantic County below Atlantic City, it is not surprising that the brunt of the impact was felt in Ocean County. Hurricane Sandy was spinning counter-clockwise when it hit land.  

The damage to the two counties adjacent to Ocean County, Atlantic and Monmouth, was the same percentage of New Jersey homes - 14.1 percent. 

Cape May, to the south of Atlantic County, accounts for 10 percent of the damaged homes. These four counties account for 94 percent of the damaged homes.

(John Tepper Marlin is Chief Economist for the New Jersey Institute for Social Justice. This blog is personal and does not reflect the views of the NJISJ.)

Sunday, November 18, 2012

SANDY | U.S. Deaths from the Hurricane–Interactive Map

The death toll from Hurricane Sandy is shown in a useful map in the Sunday print edition of the NY Times. However, it cuts out after a 65 mile radius of New York City and does not show the three deaths in Atlantic County, where the hurricane made landfall, just south of Atlantic City.

The interactive map on the NY Times website has the full map without an arbitrary cutoff.

Governor Christie said that Hurricane Sandy was America's second-worst ever. That is true only if you use property damage as the basis for comparison and you ignore the fact that money amounts in 1900, which would be really stupid because U.S. dollar values need to be adjusted for inflation over such a long period.

I have already noted this (see below). Doesn't Gov. Christie read my posts?

  1. Hurricane Sandy's Severity ... - Huffington Post
    John Tepper Marlin
    31 Oct 2012 – Upon examination, Hurricane Irene does not even rank among the 10 most costly. "A dollar ranking that does not adjust for inflation is just not useful." [Emphasis added.]

    How to Measure Hurricane Sandy's Damage John Tepper Marlin29 Oct 2012 – Maintained by John Tepper Marlin. Wikio - Top Blogs - ... "A ranking based on dollars that does not adjust for inflation is just not useful." [Emphasis added.]

Friday, November 9, 2012

ESB to WS | "Mark to Market"

Empire State Building is red, white and blue–for Veterans'
Day. Photo by JT Marlin.
November 12, 2012–I was looking at the Empire State Building colors and was sure the message was: "Blue on top. Barack Obama won a second term. Get used to it."

To the Wall Street hedge fund and private equity guys who in vain spent bundles of money trying to defeat Obama for threatening to raise taxes on the very wealthy, the colors say: "Mark to Market."

In fact, of course, they need to go through denial (Wait for more ballots! Recount! Travesty!) and anger before they get to the Nirvana of acceptance. 

But the ESB management has kindly made it easy to find out what meaning ESB actually intended. You just have to go here to find out that the building is blue, white and red in honor of the Veterans' Day Holiday on Monday, not the election. They turned on the colors three days early.

Tuesday, November 6, 2012

EMPIRE STATE BLDG | Signals Vote Total

For the first time, the Empire State Building
shows Electoral College votes on a bar graph.
Photo by JT Marlin from his apartment.
Nov. 6, 2012–For the first time, the Empire State Building today has been signaling the results of the U.S. electoral college vote. (If a lot of Americans have their way, this will also be the last time that the signal will be used. for this purpose.)

Like the election of the Pope, one can see the outcome of the election by looking at the top of the building. But the signal is not polluting smoke but the color of the building itself. The lights at top show progress toward the magic of the 270-electoral-vote target.

The light show is being provided by CNN. The left side of the top of the building shows Romney Electoral College votes in red and on the right the Obama Electoral College votes in blue.

For much of the evening the lights under the bar graph section of the building were red, white and blue. When Obama reached 270 electoral votes, the rest of the lights went to all blue.

The bar graphs were made possible by new LED panels. This is the first use of the new lights. Many Americans would like to end the Electoral College and use the popular vote to decide the election. In that case the bar graph would take on a different meaning.

Thursday, November 1, 2012

GREEN EDGE | Bloomberg Fairly Endorses Obama's Record

Mayor Michael Bloomberg is right and David Brooks was wrong. Bloomberg has endorsed Obama for re-election today, for his efforts to do something about climate change.

Brooks was dismissive of Obama's green jobs program in a NY Times piece. Brooks argues that people are gloomy about green tech and Obama is to blame. He also mysteriously blames Al Gore, because he was so successful in promoting green issues.

What's wrong with green jobs is the GOP opposition to it in Congress.

1. The green jobs program was not such a failure–most of the investments are working as well as anyone expected from a new government program.

2. The program was predicated on there being a price for carbon, which Brooks supports. The failure to pass any bill on this topic during Obama's first term is the result of GOP congressional intransigence.

The green jobs program has had more of an impact than Brooks allows. He describes the green jobs program solely as a green-tech program, and this leads him to focus exclusively on renewable energy. Yes,  renewable energy is mostly a highly technical area where it is hard to put to work very many people quickly. The workers who assemble and install wind turbines, for example, are likely to be skilled steelworkers. It takes time to recruit and train skilled workers. Therefore progress will be slow.

But the green jobs program had an energy-efficiency component. This was a good idea:

  • In its analysis of the benefits of various alternatives to pursue environmental solutions, increasing the efficiency of U.S. energy use was at the top of McKinsey & Co.'s list. 
  • State governments are pursuing this concept through promotion of energy audits, house by house and neighborhood by neighborhood. 
  • Residential and commercial developers are seeking for their new buildings various green certifications, such as LEED and EnergyStar. 
  • Economists have shown that the owner and renter payoff from energy efficiency is real and substantial. 
  • Companies like Johnson Controls have thrived by retrofitting older buildings with green remedies.
  • Van Jones may have been hounded out of the White House, but his idea of training ex-offenders as a labor pool to work on environmental projects is happening. 
  • Superfund-site remediation is a significant employer of ex-offender trainees and I have personally seen this program at work in New Jersey.
Obama came into Washington with a lot of ideas. He put health care at the top of his list and he got his program through the Congress. The problem he faced next is that the opposition in Congress did not want to let him get anything else through.