R.I.P. | Adele Wick, Economist (1950-2015) (Updated May 8, 2017)

Adele at a screening sponsored by the R.S. Schalkenbach
Foundation, which she chaired. Photo by JT Marlin.

Adele Ernst Wick died at her home in Greenland, N.H. on Sunday, September 27, 2015.

Born in 1950, in Gates Mills, Ohio, Adele received her B.A. in Economics from Wellesley College in 1972 (my wife Alice also graduated from Wellesley in Economics six years earlier).

Adele continued her education at the University of Chicago, receiving an M.A. in economics in 1976.

Adele taught Economics at the University of Tulane in the early 1980's. The family moved from New Orleans, La., to Greenland, N.H., in 1986. She took on many volunteer and free lance assignments while she was raising her children, including work on oral histories with the family of Cyrus Eaton. Her local work in Greenland included youth soccer, Greenland Public Library and the Weeks Brick House. She also took tremendous pride in pioneering Greenland's recycling program.

Adele was greatly attached to her family
and her dogs.

Adele combined her love for friends, family, her large dogs and nature by taking frequent "walk-talks" as she would call them. She was a good listener and avoided making judgments, which made her a good board chair.

She was involved in national organizations pursuing tax reform in the interest of greater and more equitable economic development. She was a peacemaker and with that credential was elected chair of the board of the Robert Schalkenbach Foundation in New York. I served on this Board and can testify to her calming influence. Schalkenbach was the printer for, and follower of, Henry George, author of Progress and Poverty.

Adele worked with Pugwash, the peace-promoting
project started by Cyrus Eaton of Cleveland.

She took an interest in other people's projects. When my mother (Hilda van Stockum) died in 2006 she wrote the nicest thing in my mother's condolence book:

April 19, 2007. John - [...] I'm about to finish The Winged Watchman. I don't want to finish it. The story, the style, and the illustrations I savor. I particularly love the beginning, making its young readers feel the war through hunger, and the father's line about preferring to think about what people do out of church to in. I usually don't look at illustrations, but hers draw me in with their delicacy, feeling and power. Thank you for introducing me to Hilda van Stockum.

She is survived by her sister Mary Bole; her four children, Douglas Miller, Patrick Miller, Charlie Miller, and Elizabeth Miller; and her grandchild Henry Miller.

With her death, the world is a less peaceful and beautiful place. Alice and I extend our sympathy to her family.

Postscript

The obituary above was reprinted in the Georgist Journal. On the Legacy.com site connected with the Cleveland Plain Dealer, I found the following note posted that I thought I would share:

December 31, 2016

I just today learned of Adele's death. I wanted to confirm her address for a new year's card and found her obituary.
We were graduate students at the UofC forty years ago: classes together, study groups for comprehensive exams, tennis, and a lot -- a lot - of hilarious laughter.
We hadn't met or spoken since, but kept up an occasional correspondence, exchanged wedding gifts -- I think about her whenever I use the teapot she gave us -- Christmas cards, and so on. It didn't seem important when there was no Christmas card last year; we all get distracted.
Others have noted her crystalline intelligence, good humor, and friendship. Her children know those qualities better than anyone.
Please accept condolences from one of her quondam -- one of her favorite words -- friends.

Larry Morgan, Chicago, IL

- See more at: http://www.legacy.com/guestbooks/cleveland/adele-ernst-wick-condolences/176030567?view=2&entry=124853206&referrer=1#sthash.yg40VrEP.dpuf

LAND VALUES, NYC | Bill Vickrey Lives

Prof. Bill Vickrey

The Federal Reserve Bank of New York has performed a service in showing that CoStar data can be used to generate estimates of land value over time and across an area.

The study (in the April/May 2008 issue of Current Issues in Economics and Finance, 14:3) is built around a computation by three Fed staff members (Andrew Haughwout, James Orr and David Bedoll) of average land values per square foot in New York City, excluding Staten Island, and ten New Jersey counties.

The average land value rises sharply from $47/sf in 1999 to $89/sf in 2001, then falls back after 9/11 because of questions about NYC’s future as a place to live or work.

Recovery set in quickly in 2003, with land values rising to $104/sf and soaring to $366/sf in 2006. As theory would predict, prices are highest in mid-Manhattan and fall off as a property is more distant from the center.

The report is interesting on many levels:
- The care that CoStar shows in collecting and verifying data makes it a useful new source of information on commercial property values.
- Property values increase five-fold increase in property from the post-9/11 dip in 2002, a remarkable achievement for which Mayor Bloomberg deserves significant credit – property values are an excellent hedonic index of the desirability of living or working in a particular city. One would like to have comparable data from other cities to see NYC’s relative performance.
- The data show how changes in overall building values primarily reflect changes in the underlying land, since buildings themselves depreciate over time. As more data of this type become available, it will become easier to show that taxes on land (“site”) value are fairer and more efficient than taxes on buildings. Land values do not depreciate in value like buildings and increases in these values are, in the thinking of Henry George, “unearned rent” relating to population growth and are therefore especially appropriate as a tax target.
- Over time, site values can be expected to grow steadily and are therefore a good basis for a tax system.
- Site value taxation was at the heart of recommendations for New York City presented at economic hearings before NYC Comptroller Liz Holtzman in 1993 by Columbia Professor William Vickrey, who was awarded the Nobel Prize in Economics in 1996 for his work on auctions and congestion pricing. Unfortunately, he died between the announcement of the award and its presentation in December, and Prof. Lowell Harriss went to Stockholm instead to accept it on Vickrey's behalf.

Vickrey’s ideas faced practical implementation problems 15 years ago. Today, the obstacles are more political than practical. If New York City evolves toward a rational system, it will follow more of Vickrey’s recommendations. It was part of his genius to know that technology would in due course catch up to his brain. The New York Fed has helped move this process along.

Avoiding U.S. Fiscal Ruin - David Romer in 2007

Washington’s Out-of-Control Budgets - Notes on a Lecture by Prof. David Romer. (The following report is abbreviated with his permission from notes on the lecture taken by Bill Batt, staff political scientist in the New York State Assembly's Legislative Tax Study Commission, 1982-1992.)

On October 25, 2007, Scranton University held its 22nd Annual Henry George Lecture  and Romer was the Lecturer. [Henry George was a self-taught, widely read economist who favored taxing land rather than labor; he ran with labor support for the mayoralty of New York City in 1886, coming in second, ahead of Theodore Roosevelt, and again in 1897, dying at the height of the campaign. - JTM] The city of Scranton, Pa. itself was wild that day, as it played host to fans of the NBC hit serial, "The Office", set in Scranton. 

David H. Romer is the Herman Royer Professor of Political Economy at the University of California, Berkeley. He is a member of the American Economic Association Executive Committee, co-director of the Program in Monetary Economics at the National Bureau of Economic Research, and a member of the NBER Business Cycle Dating Committee – the so-called “wise men” who decide when national business cycles begin and end.

The lecture title was "Avoiding Fiscal Ruin: Failed Strategies and New Approaches to US Budget Policies." Professor Romer posed three questions: (1) How did we get here? (2) What are the likely consequences? and (3) What are some possible solutions? He showed simple PowerPoint bullets and graphics describing the past history and looming fiscal crises the nation faces in the next few decades:

History of the U.S. Budget

• The United States ran a small budget surplus throughout the years 1791-1929, except for support of the Civil War and World War I.
• The U.S. budget had an annual surplus in the early 1950s, and a deficit every year since then except for the final years of the Clinton administration.
• We are now running a $200 billion deficit, some 2 percent of GDP, which will grow enormously in the next two decades if most assumptions are borne out about health care, social security and other demographic trends. (He did not comment on the budgetary impact of the wars in Afghanistan and Iraq.)

The nation got into this position because we have in recent years stopped thinking of taxes and spending as going hand-in-hand. Moreover, beliefs about appropriate budget policy have changed. The prevailing view in the 1950s was that budgets should be in balance, at least averaged over a few years. Truman, in this regard, was a fiscal conservative, even though he favored government support of services. In the 1960s, a view took hold that balancing the budget was less important than maintaining economic growth. Hence deficits were sometimes necessary as a stimulus at certain points in the economic cycle. Nixon remarked, in 1971 [quoting Milton Friedman in 1965 - JTM], "we are all Keynesians now."

Reagan, in the 1980s, wanted to shrink government, as he believed that "government is the problem." It was possible, he argued, to do so according to a strategy of cutting back on domestic programs, called "starving the beast" [the original use of the term is attributed to David Stockman, Reagan's first budget director - JTM]. It followed to his adherents that cutting taxes would lead to a fall in government spending.

Cutting taxes doesn't have much impact on expenditure levels. Revenues, he argues, change for many reasons, and by tracing the history and motivation for tax changes, he has shown that the cause and effect relationships are very complex, and that correlation and causation should not be confused. He has looked at speeches, news conferences, reports, votes, and events such as wars and recessions, and concluded that it might even be that invoking "starve the beast" rhetoric actually leads to increases in tax and expenditure. Moreover, so many factors are involved in tax policy changes that there is typically shared fiscal responsibility – blame and credit for any policies are quite diffuse.

Problem. When the two sides, revenues and expenditures, are not viewed together it becomes difficult to focus policy. All indications are that U.S. taxes will soon need to increase, but little attention is being given to revenue designs.

With baby-boomers retiring, medical expenses increase, debt service increases, infrastructure renewal demands grow, and so on. Some leaders are already calling for such increases. But all the forecasts are necessarily based on existing law, which will need to be changed. The phase-out of tax measures in the year 2010 will lead to new initiatives, and these will call for new assumptions.

Likely Scenarios. Only three scenarios are possible:

1. Lower national saving, which will mean less reinvestment, slower growth and a lower standard of living.
2. A national economic crisis in anticipation of what is in reality a "Ponzi scheme".
3. Pay off the debt, either by raising taxes or printing more dollars. His comparison with past experiences in nations in Latin America was not lost on the audience. Nor did he see the United States abandoning care for its elderly.

Solutions. Professor Romer argues that we need to:

• Educate the public to a level where a solution is politically possible. He said that we need to link taxes and spending together once again as was the case prior to the 1960s. The political appetite for such policies are not presently on the horizon, but he suggested that perhaps some kind of "mutual disarmament pact" could be devised such as was set up earlier to address the Social Security crisis in the 1980s, and as exists now for closing military bases.
• Improve accounting practices by the federal government and for the U.S. economy.
• Introduce strong "pay as you go" rules such as were attempted in the Gramm-Rudman approach two decades ago.
• More radically, introduce a stringently fashioned "balanced-budget amendment."
• In addition, or alternatively, create a separate agency, comparable perhaps to the Federal Reserve System, that would be granted powers to impose fiscal and budgetary requirements.

Professor Romer was not sanguine that any solution was within sight, even though we are on a "potentially ruinous fiscal path." He argued that we need to contemplate major changes to address the problem.