OBIT | Michael Katz, Poverty Historian

Prof. Michael B. Katz

Today's New York Times has a four-column obituary of Michael B. Katz, Harvard '61, Ph.D. '66, Walter H. Annenberg Professor of History at the University of Pennsylvania, who died on August 23 in Philadelphia.

His obit is worth reading.  It recognizes a long life spent on the topic of poverty, which recently has regained mainstream interest because of U.S. and global trends toward greater inequality.

The obit by Paul Vitello identifies succinctly the core question about poverty that Katz addressed in his histories of how America has treated its poor people, which is: Do we have our policies toward the poor wrong, or do our policies reflect our national attitudes?

Katz was a Penn history professor for 36 years and founded its urban studies program. Less than one year ago, he wrote in The New York Times about NYC Mayor Michael Bloomberg's antipoverty record, suggesting that it was significant and insufficiently recognized.

The two best-known books by Prof. Katz were "In the Shadow of the Poorhouse" and "The Undeserving Poor". His history of poverty programs extends from the poorhouses modeled on England's, to the Progressive Era reforms, to a Freudian analysis of poverty in the 1920s and FDR's New Deal.

Katz contrasted two economic ideas:

• The microeconomic idea that as economic agents we are masters of the marketplace – and therefore the poor must be defective or "undeserving" in some way.
• The macroeconomic idea that the poor remain poor because rich people who control the rules of the economic game make sure the game is rigged in their favor, and the goal is to change the policies.

Katz took to irony in his search for the criteria that Americans use to identify the "deserving poor". They seem to be, he said, based on his dispassionate review of the literature:

• disabled war veterans
• widows with children
• anyone else with Anglo-Saxon forebears

He chronicled the ways in which prejudice in the workplace, in lending practices, in housing, in business location and in the political process have kept the poor in their place. The thrust of his published work was to question the idea that there is an "underclass" and a "culture of poverty" that is beyond the help of public policy.

He asked, ultimately, whether macroeconomic public policies are not the major source of the problem of poverty, but rather microeconomic public attitudes toward the poor. So long as we have the microeconomic idea hard-wired to public thinking, there will be no progress at the macroeconomic level.

NYC Tech Industry - How Big Is "It"? Why Is It Important?

Roosevelt Island Campus, NYC, under construction.

A recent study estimates that the New York City workplace includes 291,000 jobs in the city's tech "ecosystem", with 150,000 of the jobs being tech positions in non-tech industries.

Within the tech industries, 58,000 jobs are tech jobs and 83,000 are non-tech jobs, a total of 141,000 jobs.

The study, The NYC Tech Ecosystem by HR&A Advisors, also concludes that 44 percent of the tech jobs do not require a bachelor's degree.

The study takes the correct position that to estimate the number of jobs in the "tech industry", we should include not just companies like Google and Facebook. It also believes that the count should go beyond occupational titles like entrepreneurs, coders, and engineers.

We took an inclusive stance toward the definition of software and IT jobs in the estimates we did for the NYC Comptroller's 1999 report on NYC's Software and IT industry, but it was not as broad as that of the HR&A report. I was the chief economist for the Comptroller at the time of the report, and Henry Etzkowitz was a consultant to the report.

Adding together the NYC and suburban job figures, the Greater NYC total was 47,000 in the software and IT NAICS codes, for the year 1997. This is one-third of the number of payroll jobs in tech firms in the HR&A estimates.

NYC is second only to Silicon Valley in number of
private tech companies acquired in 2012.

As a benchmark for assessing these estimates, Con Edison's 1999 staff for information resources was more than twice the number of software staff (293 vs. 140).

For software firms servicing Con Ed, the ratio of software staff to other information resources was slightly more than five to one (108 vs. 19).

My interview with Etzkowitz a year ago got into the question of technology as an economic development engine. It prompted some private comments to me from David Hochman that I have obtained his permission to share.

He wonders about the use of the term "tech" and "technology" in connection with the driving of economic development. Using the widest possible definition of tech jobs may not necessarily be helpful. See his blog post on this topic. The implications of his line of thinking include the following:

• The broadest definition of technology may be less useful for economic development purposes than a narrower one. Counting too many non-tech jobs in tech industries may make it hard to focus economic-development support. 
• Including too many non-tech jobs doesn't help the NY Tech Council, for example,  define itself as a "technology" council. Lacking a clearer boundary, it is tied down to software, web site and mobile communications functions.
• NYCEDC could fall into a trap of competing with Silicon Valley or Route 128 on the size of the tech work force rather than the quality of its tech initiatives. The challenge should be to get all the wealth creation, job creation and distribution we can out of the assets NYC brings to the global economy.
• NYC's universities could similarly get lost in congratulating themselves on the number of their graduates in tech industries rather than on the extent of their entrepreneurial skills and the next-generation readiness of their graduates. NYC's universities are still not obviously in the front rank in the tech field. The Roosevelt Island experiment is exciting but has as yet borne limited fruit.

The best news is that in Bloomberg's third term the startup innovation providers moved closer to the big, primary driving sectors. Hochman wrote to me:

You are right - this was resisted at first. What changed is that NYCEDC embraced the synergy/symbiosis, whatever you want to call it, and decided to make that the heart of the marketing/promotional campaign. Bloomberg asked NYCEDC to deliver marketing sizzle, and they did so brilliantly, joined by the Partnership for NYC and the NYC Investment Fund. I get at some of this here.

Hochman wasn't aware of the innovation group that met regularly at the NYC Comptroller's Office in the 1990s. However, he did know about the "New York Academic Consortium" of tech transfer officers that Etzkowitz mentioned in my interview with him. It was for many years bogged down in discussions of techniques of deal maximization, rather than on the more basic question of maximizing economic development. As Hochman says:

That's why I separately convened a group with some tech transfer officers but also many other university office directors with different titles and duties such as director of economic development or director of incubation initiatives. For a time we were the only group in the city - that I was aware of - discussing the cultural barriers to success. Only in the last few years have our institutional tech transfer offices become interested in spinoff formation at all, and it's still not the primary driver in offices that bring in so much money from drug royalties.

While I am a fan of the Cornell/Technion initiative on Roosevelt Island, Hochman has a warning about the way in which it was put together:

I am a skeptic... and I certainly disagree with your (tongue-in-cheek) conclusion that you should have tied your policy initiative to a real-estate program. I think that was a very bad outcome. Some of this I hinted at at my initial comments on the applied sciences initiative, but I haven't done the serious commentary I've been planning since Cornell was announced, though I certainly agree with you on the importance of Manhattanville and the role of engineering generally. 

These economic-development issues are not new. Stuart Leslie and Robert Kargon, professors in the History of Science program at Johns Hopkins University, wrote a paper, “Selling Silicon Valley: Frederick Terman’s Model for Regional Advantage”, Business History Review, Volume 70 (Winter 1996), 435-472. Long before Bloomberg launched his program, the paper explores the origins of the Silicon Valley model for regional economic development, and some problems with its replicability. We covered many of these issues  in Chapters IX, X and XI of the 1999 Comptroller's Report.

Leslie and Kargon show how the Silicon Valley model worked. Frederick Terman, Stanford's provost, envisioned a partnership of academia and industry, and trained students to put it into effect. He cultivated an aggressive entrepreneurial culture.

Beginning in the 1960s, business groups set out to move the model to other places, building their own versions of Silicon Valley, in some cases enlisting the help of Terman and his disciples. The authors discuss several examples, including the New Jersey Institute of Science and Technology, led by Bell Labs; the Graduate Research Center of the Southwest and the SMU Foundaton for Science and Engineering in Dallas, Texas; and the Korea Advanced Institute of Science and Technology - of which the Korean example is rated the most successful. The paper shows both the importance of the contributions of local universities and the limits to their ability to generate startups in the absence of a local tech industry that is available to nurture the environment within which startups can thrive.

More recently, in Invented Edens, Robert Kargon has moved on to write, with Arthur Molella, about models of the techno-city, i.e., a planned city developed in conjunction with large industrial or technological enterprises. The authors map the concept as applied in Norris, Tenn., home of the Tennessee Valley Authority and Disney’s Celebration, Fla.

In the early 1990s, the Disney Development Company set out to spend $2.5 billion to develop 4,900 acres in the Reedy Creek Improvement District. The plan -  prepared by Cooper, Robertson & Partners and Robert A. M. Stern - combines advanced energy and communications concepts with extensive parks and trails. Celebration is designed to be the ultimate techno-city and was named the "New Community of the Year" in 2001 by the Urban Land Institute.

The Terman model has served Silicon Valley well. We need to learn all we can from it. But it is not the only path to innovation in technology. New York City and Celebration and other communities need to explore other avenues.

Bill de Blasio, Joe Lhota, and the Future of NYC

Bill de Blasio with neighborhood friends from Brooklyn, 

November 24, 2013. Photo by JTMarlin.

New York City has been blessed with a succession of strong mayors, and now we have two strong candidates for mayor - the "second-toughest job in America," as the late Mayor Koch used to say.

Mayor Bloomberg will be a hard act to follow. Coming in right after 9-11, he was a godsend and must be considered one of the great mayors of the city. Having a mogul as Mayor was a signal that the city is likely to be safe for other moguls, and gave them confidence to stay, to visit and move in. The steady aggregation of wealth in Manhattan keeps the NYC brand strong, even if Wall Street's rep is in the gutter. NYC is still the safest big city.

Adolfo Carrion (L) and Joe Lhota (R) at AARP Mayoral

Forum. Photo by JTMarlin.

But, lucky as we are to have had him lead the City, Mayor Bloomberg is leaving behind some big problems for de Blasio or Lhota to deal with. For starters:

• The NYPD's "stop and frisk" hunts for illegal weapons or other contraband have been deemed unconstitutional by a Federal judge because they have had insufficient cause. Race is not enough of a reason to stop someone. The judge says a cop has to have a reason for stopping someone. That doesn't mean crime rates are going to have to soar again.
• The labor unions are chomping - no, foaming - at the bit for long-delayed collectively bargained contracts. The new agreements could be budget-busters. Depends on how the revenues come in and the U.S. economy is still recovering from 2008-09.
• The people Mayor Bloomberg chose to turn the school system around, and the methods they are using (such as constant testing) have been strongly criticized. Needs some re-thinking. 
• His economic development programs have been heavily real-estate-oriented and involve unprecedented levels of new property-tax abatements that will pinch the budget as more services are required for new areas of development.
• The late-in-the-game tech initiative, a Cornell campus on Roosevelt Island, may disappoint for the very reason that was its impetus - the City's interest in making use of property on Roosevelt Island.
• The Mayor's ability to fund his own election campaigns has meant that he is not forced like other politicians to hunt for contributions - which has kept him above interest-group pressure, great, but also has kept him detached from the hoi polloi.    

Both Bill de Blasio and Joe Lhota are capable of running  New York City. The major differences between them are ones of personality and policy.

• Personally, de Blasio is warm, enthusiastic, and neighborly, whereas Joe Lhota is tense, combative, and remote (when he is under stress, his eyelids come together as if he seems to want to shut out all the rest of the world).
• On the policy front, de Blasio wants to level the playing field for NYC's middle class and poor people, which means more services for them and probably higher taxes on the very well off. Lhota's biggest concern is to avoid raising taxes at the top rates and to keep NYC safe for wealthy apartment buyers. They both will be tempted to put these differences under the light of class warfare. Lhota may think he will win most this way, but I wouldn't bet on it. Not this year.

The unions may have been divided in the primary, but most of them seem to have no trouble scrambling from the Quinn and Thompson camps to de Blasio. The first two polls show de Blasio ahead by a three-to-one margin. (These numbers are virtually the same as those for Quinn vs. Lhota way back in 2012 when de Blasio was an unknown.) The first tests for the next mayor will be whether he can work out labor agreements that don't break the budget.

The good news for the next mayor, whether de Blasio or Lhota, is that New Yorkers are weary of their mogul. Twelve straight years of Bloomberg after eight years of Giuliani means that City Hall has gradually been cut off from the public, for reasons of security and of philosophy, in ways that were inconceivable in the Koch and Dinkins days.

To bridge the gap between income and wealth inequality described as "the two cities", de Blasio has made a specific proposal to get a little more money from the rich (raising the top tax rate slightly, by a fraction of a percentage point, on those earning more than $500,000 a year) to provide expanded access to early-childhood education for everyone. Offering earlier schooling means the working parent or parents can go back to work earlier, while the children are socialized earlier and are likely collectively to perform better in higher grades. NYC businesses will reap the benefit of a more skilled workforce. Lhota has accepted half the idea, the universal pre-school part, rejecting the idea that higher taxes would be needed.

In the less than six weeks between now and the election, the two campaigns and the many "independent" voices will be painting the choices in various colors of class warfare. Lhota has already said that de Blasio is using a "Marxist Playbook". The realistic range of policy options in New York City does not take us into the terra incognita of "There be Dragons" Marxism. But the City does face real choices.

NYC as a Potential #1 Global Tech Leader

L to R: John Tepper Marlin, Helen Keller, Henry Etzkowitz.

Last month I met with my friend Henry Etzkowitz for breakfast. There he is with the hat in the photo at left. I am taking the picture (a "selfie") with my right hand. Behind us is a portrait of Helen Keller that reminds me of the thought, “None so blind as cannot see,” an idea dating back before Oedipus to Jeremiah 5:21.

On the appropriate policies for encouraging technology, Etzkowitz is my guru. He travels around the country and the world picking up honors for his documentation of policy successes, and I update him on recent developments in NY State and NY City, the most interesting of which is the Cornell-Technion Center on Roosevelt Island.

Over the last two decades we have often shaken our heads together at the failures of NYC policy-making to encourage technology as an engine of local economic development.

Tech Policy, NYC, 1995-1999 

Our shared interest in tech policy goes back to the 1990s when I was serving as chief economist for the second of the three NY City Comptrollers, between 1992 and 2006. The chief economist function was created by new responsibilities conferred by the 1990 NYC Charter Revision on the Office of the NY City Comptroller.

(The Comptroller, an elected official, is currently John Liu. Eliot Spitzer has just thrown his hat in the ring to succeed Liu. Outgoing Borough President Scott Stringer has for months been considered the most likely to be elected.)

The City Comptroller's office has been included in economic-development planning - for example, in a 1995 conference organized by the President of the Federal Reserve Bank of New York, Bill McDonough. The NY Fed called together leading institutions in the region to explore New York’s potential for transition to a knowledge economy, imitating the initiative taken before and after World War II by the Federal Reserve Bank of Boston, and leading to the expansion of tech startups along Route 128. The Lower Manhattan Association provided administrative support for the NY Fed’s conference, and a young science-policy graduate, Michael Salvato, worked on the program. Etzkowitz was a key participant, as the then-director of SUNY’s Science Policy Institute.

Magnificent it was, but not sustained. Few participating institutions signed up for the follow-up phase. Contrast this with the New England Council, a decades-long effort from the 1920s that sought to follow the model that led to Silicon Valley, by systematizing the high-tech spinning-off fostered at Harvard and MIT.

The New England Council sustained its effort first in scientific instruments at the turn of the 20th century, then in radio in the 1920s. Their work helped create Small Business Investment Companies and the entire venture capital industry after World War II. When I was at the Small Business Administration in the 1960s, I was able to study at close quarters the successes of the SBIC program. The American Research and Development Corporation was founded in 1946 as a pro bono regional development effort. A decade later it founded the Digital Equipment Projects, which was intended to create better aircraft training simulators but engineered the mini-computer along the way.

Why Did the NYC Regional Effort Fail? 

So why was the effort not sustained in New York City, in contrast to the Bay Area and Route 128?

Maybe

• Silicon Alley was considered to be doing okay by itself and the involvement of government and universities wasn't seen as necessary. 
• NYC software firms that were competing with the Bay Area and Route 128 by supporting Wall Street's highly proprietary electronification projects did not see any value in regional cooperation. 
• Their growth was resisted by traditional parts of the advertising industry, which felt that it was being cannibalized. (The AOL merger with Time Warner did not seem to be good for the traditional information and communication businesses.)
• Some knowledgable tech people felt that NYC was too far behind Stanford and MIT both on the entrepreneurial front and in the sophistication of its programming to begin to compete. 
• Others decided that nothing more was needed than a professional association - first the NY New Media Association, then the NY Software Industry Association (which evolved into an incubator that depended too much on its real estate viability) and the putatively broader-based Tech Council.)

The NYC Software/IT Industry Report, 1999 

In this environment, the NYC Comptroller’s Office published a report, under my direction, on the “NYC Software/IT Industry” in April 1999 (summary and links to pdf files here). The NY Times covered it well, including with its summary of the report a photo of the Comptroller. The Chancellor of CUNY, Professor Harry Markowitz, told the Comptroller he loved the report. The Comptroller was pleased and generously said so. Etzkowitz played a key role in helping us define the history of tech policy and an appropriate path forward for NYC, as reflected in the last few chapters of the report.

The Report showed that New York had most of the elements required for a world-class technology center:

• A public-school system that provides a steady supply of well-trained high school graduates who are ready to grapple with technology issues at the university level.
• Close cooperation among regional universities, private and state-run (and definitely including community colleges), to ensure strong support for entrepreneurs seeking high-quality technical staff.
• Centers of technology excellence among the universities, especially schools of engineering, and supportive faculty at business and law schools.
• Training for technology experts in tech transfer and entrepreneurship.
• University-based incubator labs and university support for policies that reward labs and centers and individuals within them for innovation. 
• Business interest in, and support for, bringing university-based ideas to market in a collaborative environment.
• Government support for technology to encourage university-business cooperation.

The big missing tooth in this dazzling smile was the entrepreneurial skills created by the open communication between universities and business in Silicon Valley and Cambridge, Mass.  NYU and Columbia around that time announced they were going to work more closely together on research and technology initiatives.

The Dot-Com Bust and Mayor Bloomberg’s First Two Terms 

However, in fact technology took a back seat after the sharp drop in dot-com share values in spring and fall 2000. The NY Academy of Sciences won a million-dollar grant from the STARR foundation, but the large universities were not impressed and most of the funds went to support publications drawing attention to the tech assets of the region. A seminar series drew second-tier administrators and junior faculty, with the notable exception of the President of New York Poly in Brooklyn.

One practical result was the creation of a network of area university technology officers who spun off their own support network. After 9/11, and the election of a mayor who had made his fortune by selling technology services in the form of Bloomberg machines, Etzkowitz and I expected the new mayor to lead a major tech initiative that would make the City of New York into a tech center that might eclipse both Silicon Valley and Route 128.

We were disappointed. The new mayor made clear he was a businessman first and techie second, and he did not undertake any major tech initiatives in his first two terms. He made up for that in his third term with the competition that led to the Cornell-Technion project, but if he had stuck to the term limits in City Charter he would not have left much of a tech legacy.

For the ten years after the Comptroller's Software Report, Etzkowitz and did what we could to keep the recommendations of the software report in front of people who might implement them. Etzkowitz organized the NY Inter-University Seminar on Innovation, bringing researchers and practitioners together from across the region. We had monthly meetings with guest speakers who discussed the recommendations for inter-university cooperation for technology development. We deliberately did not meet at universities, but mostly in the Comptroller’s Office and sometimes the conference rooms of law and business offices.

In 2001 I wrote to the Mayor about creating a technology-transfer office comparable to the Mayor’s film and broadcasting office. In 2002 I met with Deputy Mayor Dan Doctoroff on the subject.  Etzkowitz also tried to get some interest from the new Mayor.

While the NYC Economic Development Corporation did some good things to assist firms involved in the knowledge economy, their focus was largely on matching up available real estate with business needs. They took action when real estate opportunities meshed with tech promotion.

The Cornell-Technion Initiative and NYC’s Potential 

In 2012, as the Cornell-Technion Roosevelt Island initiative took shape, Etzkowitz and I felt that our thesis of the missing link in NYC’s innovation ecosystem — a Stanford-MIT-like institution focusing on commercializing knowledge, tech transfer and incubation, as well as basic research and education - had found a place on NYC’s policy agenda.

In retrospect, it looks as though to get the interest of Deputy Mayor Dan Doctoroff we should have translated the Software Report recommendations into a real estate-driven project. When I met with Doctoroff I should have come in with a plan not just for policy but for leveraging $100 million in vacant city land and municipal bonding to attract 20 times that in university and business investment.

A lot of cities are trying to emulate the success of the Bay Area and Route 128. The typical competitors are state capitals with a local university like Albany, N.Y. or Austin, Tex. or Raleigh, N.C. On the Cornell-Technion plan, Etzkowitz comments:

Mayor Bloomberg’s Roosevelt Island project is now focusing on master’s-level students. But research groups require a variety of skills and levels of involvement, including Ph.D. students, post-doctoral fellows, teaching faculty, research associates and undergraduates, supported by large-scale research funding, typically from the federal government, with state government and industry support at the margin.

I remember attending a meeting of MIT alumni in NYC, when Mayor Bloomberg had just published his book and was contemplating a run for Mayor to succeed Giuliani. He emphasized how competition keeps everyone on their toes. Afterwards I spoke with an MIT professor who said that NYC would never catch up to Route 128 because it didn't have the entrepreneurial spirit. Etzkowitz thinks this is still a problem: "NYC still needs an MIT-type institution, along with a system of mentoring research groups to generate spinoffs. Entrepreneurship is a group activity."

One of the hopes of Mayor Bloomberg's economic development team is that Technion - which has a strong record of generating spinoffs - will stimulate Cornell and together they will light a fire under NYU, Columbia, CUNY and SUNY. Etzkowitz sees some potential in some "home team" NYC projects:

NYU has a big data analysis center focused on urban issues, building upon its mathematical strengths and industry links. Columbia is breaking its geographical boundaries, expanding its technology projects above 120th street and linking with City College, in a joint biomedical/engineering research center, building on the strengths of these two schools. NYC also has special assets. The SUNY Fashion Institute of Technology spins out boutique fashion firms, continuing the Institute’s role of bringing together industry and labor to helped the garment industry grow into the fashion industry. Similarly, the SUNY at Purchase theater and dance schools operate on an implicit incubator model, graduating theater and dance troupes into NYC’s thriving cultural economy.

A key to the future is how state governments are responding to their revenue challenges. Etzkowitz  thinks that underfunding of schools in California since Proposition 13 and cutbacks in support of the University of California may damage the Bay Area franchise. Massachusetts, meanwhile, is going in the other direction, funding its public schools and universities.

Henry, thank you for our conversations. And for you, the reader who has read this far - there is more to this story, so stay tuned! (Follow tweets on Twitter - @cityeconomist.) (August 14, 2014: See followup post here.)

CRIME | Cell Phones, Plus and Minus (Update April 9, 2015)

Crime rates have been falling, maybe because cell phones
 provide a fast way to call police. But in the USA and in the
UK, cell-phone theft is rising. The remedy is now the target. 

The Institute for Economics and Peace recently put out the UK Peace Index, which got me thinking about crime rates.

Five days before, the London Economist included an article, “Down These Not So Mean Streets” (April 20), showing the steady decline of British crime rates over two decades, to half its earlier levels,. despite a continuing serious recession.

The same week, the British Crime Survey (a household survey comparable to the U.S. Victimization Survey - a supplement to the Uniform Crime Report) also reported a continuing drop in crimes.

There has been a steady decline from the 19 million estimated in the mid-1990s to 8.9 million crimes – the same 50 percent drop that the Economist cited from police reports, although the police recorded only 3.7 million crimes. 

Compared with 2011, crimes fell as much as 15 percent in the UK for the category of criminal damage. Robbery (stealing with the threat of violence) was also down more than 10 percent.

The UK Peace Index at the same time showed that the incidence of violent offences – which is higher than in the United States, although injuries and deaths from such events are much less seious – is falling faster in the UK than in other countries in  Europe or in the United States.

The Financial Times the next day pinpointed the incongruity between data and theories propounded by economists about the causes of recent trends in crime rates. The article, “Crime Drop Poses Puzzle for Social Scientists”, cites the following factors as contributing the lowered crime rate:

Police Deployment. The British Government claimed credit for the crime drop through better use of police, as the number of UK police deployed has fallen to the lowest level in more than ten years. Police are used more effectively than in the past, but crime rates have continued to fall, long after police methods changed.

More Perps in Prison. Hard-liners in the USA and Britain argue that tougher sentencing that jails more criminals has pulled criminals off the streets and served as a deterrent others. Since the 1970s, starting with Nixon’s war on drugs, the USA built up the largest prison population in the world, to the recent level of 2.2 million, a fourfold increase in incarceration in 1978-2008. With less than 1/20th of the world’s population, the USA now has one-fourth of its prisoners. The higher incarceration rates and sentences originally targeted drug sales. But later the sum also rises for violent (murder, robbery, assault) and property crimes - and while U.S. incarceration rates have recently been declining, most crime rates continue to fall.

Reduced Air Pollution. If you are a hammer, everything looks like a nail. High lead in the air has been seriously linked to teenage misbehavior, so environmentalists like Jessica Reyes argue that reduction in lead in gasoline could explain lower crime rates. This may well have been a contributory factor. But the reduction in lead has been gradual - is the impact of this likely to have been so rapid and continuous?

Legalized Abortion. Stanford Law Professor John J. Donahue III and Chicago Economics Professor Steven D. Levitt in 2001 argued that legalized abortion meant that fewer children were being born to mothers who could not afford an abortion - or did not dare to get one - when it was illegal. But this event analysis could be confused with something else that is occurring at the same time. The original article is well-constructed. However, the thesis and data, disseminated in Levitt’s Freakonomics book, have been widely disputed. Critics observe that the presumed causality based on national law does not work very well with state data and changes in state laws.

Missing from the FT story is another hypothesis that does a good job of explaining both the decline in general crime rates and an increase in larceny (thefts from people's person without threats, i.e., skillful pickpocketing) and certain robberies.

Growing Cell-Phone Use.  Cell phones and pocket-sized communication and photographic technology started to come into widespread use in the 1990s, when crime rates started to plunge. Cell phones provide users with the ability to call friends and police if they are threatened or come upon a crime, and could explain the rapid drop in crime. The addition of photo-taking capacity to cell phones made them even more effective. This theory is supported at both the national and  the state level, according to >University of Pennsylvania Law School Professor Jonathan Klick; , John MacDonald, chair of Penn’s Department of Criminology; and Thomas Stratmann of George Mason University, in their paper Mobile Phones and Crime Deterrence: An Underappreciated Link,”

Growing Cell Phone Crimes. Now cell phones are increasingly the target of thieves. The fastest-growing area of crime in the USA and Britain is theft of cell phones. Here are some indicators:

• In London, 300 cell phones are stolen every day, half of them iPhones.
• Men tend to robbed, i.e., have the phones taken from them by force, whereas women tend to be victims of larceny, i.e., they have their cell phones taken from them by stealth.
• The likely London victim is a yuppie in their 20s at a club or other "place of entertainment".
• In San Francisco, stealing of cell phones accounts for half of all robberies, and Bay Area Rapid Transit is a likely place for thieves to operate.
• In Oakland, a man came out of an anti-crime meeting at a police precinct house and was relieved of his cell phone at gunpoint.
• In New York City, cell phone theft now accounts for 40 percent of robberies. 
• A young chef from MOMA on his way home was stopped and killed for his iPhone 5. 
• In a widely reported story a few months ago, a Brooklyn cell phone thief had the stolen cell phone swiped from him by another cell phone thief. Thief #1 reported the crime to the police, providing information that allowed them to trace Thief #2. Both of them were arrested in a highly satisfying day for the NYPD.
• From a thief's perspective, the theft of a cell phone has the advantage of removing from the victim the means of calling the police, although in an urban environment there are many ways to get lost in a crowd.

What We Can Do Personally to Protect Our Cell Phones.  The New York Times today devotes two-thirds of a page to "Outsmarting Smartphone Thieves". Seven pieces of advice from Malia Wollan:

• Be aware when you use the iPhone in public. In San Francisco, one M.O. is to slap the victim on the back of the head and catch the iPhone.
• Use the password  - the iPhone can be set up with a four-digit password. Use it.
• Write down the ID number of the iPhone.  You need to know your iPhone's International Mobile Equipment Identifier, the IMEI. The easiest way to find it is to go to the dial pad and type *#06#. Two other ways are in the article. Then record it somewhere where it can be found in a crisis - such as on your partner's iPhone. My IMEI number is 013037000631140. You can have the number recorded by your local policed station. Because of the high incidence of the crime, the NYPD is delighted to register your cell phone IMEI.
• Use location tracking apps. It is free on Apple products.
• Brick the iPhone.  Call the police and your cell phone service carrier. The iPhone can be made inoperative (like a brick) even if the thief changes the SIM card, unless the iPhone is exported. Keep the 800 number for your carrier somewhere other than on the iPhone.
• Change passwords. Having your iPhone stolen is a pain because passwords may be stored in them. Credit cards, banks... Change the passwords.
• Stay one generation behind the latest iPhone. In April a woman in the San Francisco area was relieved of her cell phone at gunpoint. But the thief returned it to her because it wasn't an iPhone 5. Protect yourself by being behind the times a little.

What Can  Companies and the Police Do to Stop This Crime? Here are some ideas:

Senator Chuck Schumer with NYPD
Commissioenr Ray Kelly.

• The police are becoming highly active in encouraging iPhone owners to bring the devices in to have the identification codes recorded. This will help them catch cell phone theft more quickly.
• The police are properly encouraging us all to be more watchful. We can also be on the alert to warn iPhone users about the frequency of iPhone theft.
• Police involvement in identifying cell phones makes it more likely that these thefts will be reported. The robbery/larceny rate is likely to continue to climb until there are better ways to catch the thiefs.
•  Senator Chuck Schumer (D-NY) and NYC Police Commissioner Ray Kelly have advocated a national registry of cell phone numbers. This is coming on line, but not so quickly.

Meanwhile, watch out for theft, report incidents, and support programs to reduce crime.

Update (April 9, 2015). Cell phones are now crime scene records. The implications of this for the police and for crime control are still being figured out.

NY LAW SCHOOL | Quinn Is a Pro

Speaker Christine Quinn at NY Law School,
Friday, Feb. 15.

A recent NY1-Marist poll shows New York City Council Speaker Christine Quinn as the three-to-one favorite to be the next mayor of New York City. Her speech this morning at the New York Law School Forum (see photo above) was consistent with the polling.

Being a front-runner is a hazardous position, and Speaker Quinn's job today was to hold her place. She did that.

She was elected to the City Council in 1999 from my neighborhood, Chelsea, so she has a favorite-daughter position around here. She has been Speaker since 2006. She is ahead, by a convincing 37% to 13%, over former NYC Comptroller Bill Thompson, whose base has been Brooklyn but now lives in Manhattan. Some of my good friends are backing Mr. Thompson and are counting on a runoff between him and Quinn that he might win. Thompson did surprisingly well in the last election against Mayor Bloomberg, but analysts interpret this as more of a vote against a third term for the Mayor than as deep support for Mr. Thompson. Also, Public Advocate Bill de Blasio is only one percentage point (12%) behind Thompson in the poll and de Blasio has the advantage of incumbency.

On the Republican side, Joe Lhota, who worked for Mayor Rudy Giuliani and has more recently been running the MTA, is the favorite. In a lopsidedly Democratic city, it's a long shot for him - the poll shows him losing to Quinn 64% to 18%. More worrisome for him is that only 20% of respondents supported him - most respondents didn't know enough about the GOP candidates to make any choice at all. He can count on getting enough campaign finance support to run a significant challenge. But money is not usually enough to win in New York City as many wealthy also-rans will testify. Mayor Bloomberg got his foot in the door because of 9/11, after which people were properly concerned about the future of New York City as a business engine, and Bloomberg's business acumen was a convincing asset.

There is still talk of other people entering the race this year, but it's nearly March and doors are closing. So those who are concerned about LAM - Life After Mike - assembled at the breakfast forum to build up their dossiers on Ms. Quinn, who would be the first female mayor of New York City and the first openly gay mayor. The event attracted more than 250 people by my count. A streaming-video recording of the event is here.

Ross Sandler, NY Law School host.

Ross Sandler is the host (see photo at left). His breakfast event is the closest thing to a successor to the City Club of New York, which played a significant role in the City of New York for more than 100 years, including in the fiscal crisis and then the mayoralty of the late Ed Koch. A moment of respectful silence for the loss of a great Mayor... and another moment for the demise of the City Club.

The New York Law School's location near the NYC courts makes it convenient for students who may want to get a law degree at night. Its location make is easy to find faculty to teach part-time. My connection with the NY Law School is that my great-aunt Inez Milholland's brother got his law degree after a career as a Harvard football kicker (he was class of 1912), which in those days got the columns of newspaper ink now lavished on the pro teams. Inez Milholland, by the way, was the woman who led on her horse the march down Pennsylvania Avenue on the eve of President Wilson's inauguration - a march that set the stage for passage of the 19th Amendment giving women the vote. (The NY Times on March 4 led off with paragraphs about Miss Milholland.) The 100th anniversary of this march is in two weeks.

Questioners in two lines.
Revered City Club tradition (sniff).

Chris Quinn was a pro, took questions with a combination of respect and firmness, and lightening up the atmosphere with believable stories about her Irish grandfather and her mother's fear of a hex:

If you take down the Christmas tree before Three Kings Day, it will be a curse on you for the rest of the year. 

She listened to tough questions from Charlie Komanoff, Roger Herz and Azi Paybarah about congestion pricing and Commissioner Kelly (whom she would like to stay on) and stop-and-frisk laws. She expresses sympathy with a problem like sound cannons and either gives an "I will look into it" or (in the case of congestion pricing) a "no chance that will  happen soon" answer. She supported the mayor in his bid for congestion pricing, but makes clear that the outer-borough opposition is  strong and this plan is on ice in 2013. In a political environment where a candidate walks a narrow path between cannons to the left and cavalry to the right, with minefields in the middle, she got to the other side with a sure step and no mishap. She did mention Verizon as failing to keep all its mobile phone subscribers in communication during Hurricane Sandy and then Prof. Sandler sheepishly noted that Verizon was a co-sponsor of the breakfast; when informed of this she sort of said she was sorry and breezed on.

To my mind, the test of the day was whether we would have a Marco Rubio water-bottle problem. No way.   She is on top of her game.

It's still "early times" for the 2013 Democratic Primary on September 10. Good politicians focus earnestly on the next election, not so much the one(s) that may occur soon after - because, as the late Howard Samuels once discovered, there is no point in worrying about the later election if you lose the earlier one. Based on her performance today, I would say that Speaker Quinn will continue to lead the pack come September 10.

Using Salt to Melt Snow on Roads

I read in the run up to the Big Blizzard that Mayor Bloomberg has 250,000 tons of salt ready to spread on the streets of New York. The blizzard is happening on a late Friday-early Saturday morning, so the impact on the New York City economy is not as significant as it would be if the blizzard were occurring on a Monday morning, thereby disrupting office workers' commute.

From the work I did at the NYC Comptroller's Office in 1992-2006, when I served as chief economist, I know that the crucial variables in a snowstorm for determining economic impact are the timing, the precipitation and the temperature (TPT). The impact is reduced if the snow is on a weekend, if the precipitation is low (two inches is where trouble can start) and if the temperature is above 32 degrees Fahrenheit.

Putting down salt allows the City of New York to reduce the impact of freezing temperature on the ability of commuters to get to work, or shoppers to get to stores. One of the worst scenarios is a slushy snowfall and then a deep freeze, causing icy roads.

In the laboratory, adding salt (sodium chloride) to water can bring down the freezing point from 32 degrees Fahrenheit to several degrees lower. It is hard to define this lower number because it depends on how much salt one puts down on the roads (the more salt that is added, the higher the salinity percentage and the lower the freezing point of the water). In a lab, the freezing point can be brought down lower than in storm conditions.

So salt is only useful to add when the temperature is below the freezing point for salty water - otherwise the salt water will simply run off into the ground or into sewers. By the time temperatures drop, if they do, the salt water is gone.

Similarly, below some temperature, adding salt is a waste because it is below the freezing point of water, unless temperatures are expected to rise above freezing, in which case the salt will speed up melting.

Finally, many people with ecological concerns argue against using any salt at all. Salt is corrosive of vehicles and the roads themselves. The runoff is terrible for plants and marine life. Pets that play outside get the salt on their paws and suffer from the abrasion. Read about this in "Why You Shouldn't Use Salt to Melt Ice."

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.

Hurricane Sandy - 5th, 6th Most Severe?

How will Hurricane Sandy rank in severity, for example, compared with Hurricane Irene? A number of estimates are already appearing and estimates of insured losses have been growing beyond the first estimate of $10 billion, which would imply a total cost of approximately $25 billion using a rule of thumb described below.

In 2011, Hurricane Irene was described as being the fifth-costliest hurricane in U.S. history. I didn't believe it, and I checked it out. This number should not be used. Hurricane Irene does not even rank among the ten most costly. A dollar ranking that does not adjust for inflation is just not useful.

The suggestion has already been made that Hurricane Sandy will be the costliest East Coast hurricane ever. Some superlatives have been used:

-          The MTA says Sandy is its worst disaster ever because of the corrosive nature of the salt water from floods on its tracks.

-          Con Ed says this its worst disaster ever.

-          On Long Island, 90 percent of LIPA customers are without power.

-          The Wall Street Journal posted satellite photos showing Sandy is larger than Irene.

-           

The WSJ concludes that Sandy will cost more than its estimate of a $15 billion cost for Irene. NY Governor Cuomo has observed that the cost of Irene was mostly upstate, whereas the cost of Sandy is downstate.

Prospective Measures of Severity

The significance of an oncoming storm is now estimated by meteorologists based on wind-speed categories and barometric pressure. The two measures are interrelated and point to likely wind speeds. The public needs also an indicator of the likely economic impact of flooding.

1. Five Wind-Speed Categories. A Category 1 hurricane means wind speeds of 74-95 mph on the Saffir/Simpson Hurricane Scale. The categories go up to 5 for wind speeds above 155 mph. Hurricane Irene petered out on its way north. The warm air carried by Hurricane Sandy on its way north met another storm with cold air from the northwest.

2. Millibars - Barometric Pressure. The Christian Science Monitor has posted a lucid summary of the importance of this measure of hurricane severity. (It also repeats the error cited above about the cost of Hurricane Irene - I will return to this.) Ordinarily, the barometric pressure is related to wind speed. The normal sea-level barometric pressure is 1013.5. During a hurricane the eye of the storm shows the lowest barometric pressure. The lower the pressure, the higher the winds. During the afternoon before Sandy hit landfall, the barometric pressure at its eye fell from 943 to 940, which is a level associated with Category 3 or Category 4 winds. The lowest barometric pressure that has been measured in a U.S. hurricane is 882 for Hurricane Wilma. Hurricane Carla was the tenth-lowest, 931. The National Hurricane Center list of the most intense Atlantic hurricanes does not follow the Millibars ranking exactly, since Katrina and Wilma are not in the order one would expect.

      Ten Windiest (“Most Intense”) Hurricanes

Name (after 1953) or Location	Year	Category	Millibars
1.Florida Keys	1935	5	892
2.Camille	1969	5	909
3.Katrina	2005	3	920
4.Andrew	1992	5	922
5.Indianola, TX	1886	4	925
6.Keys, FL	1919	4	927
7.Lake Okeechobee, FL	1928	4	929
8.Donna	1960	4	930
8.Miami, FL	1926	4	931
10.Carla	1961	4	931

Notes: Wind Category is at Landfall. Category 5 on the Saffir/Simpson scale means 155 mph winds for at least one minute. Category 4 means 131-154 mph for at least one minute. Category 3 means 111-130 mph for at least one minute.  Millibars are mercury readings for barometric pressure. Source: Based on NOAA, National Weather Service, National Hurricane Center, Blake and Gibney, 2011.

3. Flood Surge Impact. However, most of the damage is caused by the delayed impact of the flooding surge (the hurricane equivalent of a post-earthquake tsunami). We need a new indicator of likely flood damage, which would have to take into account the economic value of property in the track of the hurricane, the sea level of the land, and the size of the expected surge.  The Flood Surge Impact index could take into account the timing of the tides – Hurricane Sandy hit landfall near high tide and the full moon added to the height of the tide and therefore to the surge. The geography of the surge was important in the case of New York City because the surge came from two directions – down the Connecticut coastline through the Long Island Sound and northward through the funnel of New York Harbor.

Retrospective Measures of Cost

There are at least six basic ways to measure or adjust the cost of a hurricane. They overlap:

1. Loss of Life, or Injury.  While every life is precious, on the simple measure of number of lives lost to a hurricane, Hurricane Irene's 24 lives lost did not even rank among the 100 most costly hurricanes. Preparedness is much better than it used to be, and evacuation is widely recommended. Mayor Bloomberg has made clear that the overriding priority of the City of NY is to avoid loss of life among residents and emergency workers. The mayor has taken a scientific approach to evacuation based on flood probability maps that use feet above sea level a proximity to water to create three evacuation zones. These maps proved highly predictive. Also contributing to reduced fatalities is the steady improvement in (a) U.S. Government warning systems via NOAA and its National Weather Service and National Hurricane Center, and (b) the FEMA network of state notification and assistance.  Loss of life can be converted to a dollar figure via life insurance losses or a value that economists impute to a person's remaining working life. Injuries also represent a cost either to the individual or to health insurance plans (private or governmental), and injuries that result in a disability have a working-life cost that can be attached.

The final number for lives lost from Hurricane Irene appears to be 24. Just one of the deaths was in New York City. The deadliest Atlantic hurricane since 1900 was in Galveston, in 1900, with a range of between 8,000 and 12,000 deaths.

    Five Deadliest Atlantic Hurricanes Since 1900

Name or Location, Category	Year	Deaths
1. Galveston, TX, 1900, Category 4	1900	8,000-12,000
2. Lake Okeechobee, FL, 1928, Cat. 4	1928	2,500-3,000
3. Katrina, Category 3	2005	1,200
4. Florida Keys, Category 4	1919	600 (287 land)
5. Long Island Express (Great NE), Cat. 3	1938	600 (256 land)

Source: NOAA, National Weather Service, National Hurricane Center. Blake and Gibney, 2011. The National Weather Service started giving names to hurricanes in 1953. 

The fifth-deadliest was the 1938 Long Island Express. On the criterion of deadliness, Hurricane Irene did not qualify as one of the five most severe.

2. Loss of Physical Property.  Property can be destroyed by wind or flooding or a combination. This means a loss of wealth of the property owner. If the loss is charged against revenue, it means a loss of revenue. (A building may be a depreciated asset; loss of inventory is likely to be expensed.) The first impact may be flying debris, the lifting off of roofs, the flattening of flimsily constructed buildings. The delayed effects include (a) loss of electricity from downed power lines, which means that many perishables have to be thrown out, and (b) flooding, which destroys or rends temporarily useless all kinds of property such as books and electronics, especially if the flooding is from salt water, which MTA Chairman Joe Lhota and Con Ed Chairman Kevin Burke say is especially damaging to power connections, create huge problems for electricity supply and transportation infrastructure.

3. Business Interruption. The delayed effects of a hurricane also include business interruption. Increasingly, businesses insure not only against loss of property but the loss in profits that comes from an interrupted business. When a restaurant or a theater remains closed because of floods that prevent people from showing up, it is hard to make up the loss because the business space has a limited capacity. That is something that is not fully taken into account by those who look for a large rebound after a disaster, as might be true of a retail store that offers a post-hurricane sale. Some kinds of losses are much harder to make up Figures on the cost of hurricanes increasingly include business-interruption losses, which bias upward the later numbers – another reason it is so important to adjust for inflation as discussed below.

4. Insured vs. Uninsured Private Losses. Insurance companies are most interested in the total of insured losses. But from an economic perspective, losses to individuals (e.g., workers paid by the hour) are real. The money that would have been spent in the community by the individuals is missing. The National Hurricane Center uses a simple formula to estimate uninsured losses - it doubles the number for insured losses.

5. Government Losses. At the national level, flood insurance is provided by the National Flood Insurance Program. Individuals pay a premium for this insurance, which would otherwise not be available. After a hurricane, there will be payouts and a loss that may exceed cumulative premiums. The National Hurricane Center in its estimate of damage adds in the number for flood damage provided by the National Flood Insurance Program. FEMA programs provide relief to local governments and individuals. Other Federal bodies (the dewatering unit of the Army Corps of Engineers, for example), states (emergency response teams) and localities (police, fire, sanitation, ambulance) must also be factored in as costs of a disaster.

6. Adjustments for Inflation or Growth in Business Activity. Two kinds of adjustments are typically made to comparisons among hurricanes. One is to adjust cost figures for inflation. The Christian Science Monitor story cited above incorrectly describes Hurricane Irene as the fifth mostly costly hurricane in U.S. history. As I explained last year, that label only works if we are under the delusion that a dollar 100 years ago should be valued the same as a dollar today. (Apart from the fact that business-interruption costs are increasingly included in hurricane losses, adding to the size of the numbers.)  There are widely available cost-of-living indicators to refer to, such as this one from the BLS. Business activity measures are used to relate hurricane damage to the value of the real estate through which the hurricane travels. This is a good predictor of cost and is also a factor to consider in comparing the impact of a hurricane traveling the same path in different years.

Total Economic Damage

The deadliest hurricanes are not always the costliest in terms of property loss or business interruption.

The ten costliest Atlantic hurricanes are listed below with their estimated damage. Total estimated damage includes insured and uninsured losses. A rule of thumb is that uninsured losses equal insured losses. So if an insurance association or forecaster estimates that insured losses are $10 billion, then total private losses (insured plus uninsured) are commonly estimated at $20 billion. In addition, losses are borne by Federal, state and local governments – the cost of special national insurance programs like flood insurance, or the cost of FEMA assistance, or the cost to states and localities of the overtime of emergency assistance personnel or the damage to public infrastructure.

Note that 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. There is no sense in unadjusted dollar numbers that go back to 1900. The most costly U.S. hurricane ever was the 1926 Miami Hurricane, which cost $165 billion in 2010 dollars according to the National Hurricane Center.

       Ten Costliest Hurricanes (pre-Sandy)

Rank	Hurricane	Year	$bil. (2010 $)
1	Great Miami	1926	164.8
2	Katrina	2005	113.4
3	Galveston	1900	104.3
4	Galveston	1915	71.4
5	Andrew	1992	60.5
6	L.I. Express	1938	41.1
7	SW Florida	1944	40.6
8	Lake Okeechobee	1928	35.3
9	Ike	2008	29.5
10	Donna	1960	28.2

Source: 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. The adjustment for inflation is essential. 

Hurricane Irene's estimated cost was $15 billion. Clearly, it does not rank among the ten most costly hurricanes. However, Hurricane Sandy will surely do so. The key is insured losses and government losses. If Hurricane Sandy ends up with insured losses above $15 billion, the economic impact could end up at about $38 billion, and it will rank #8, between the SW Florida Hurricane of 1944 and the Lake Okeechobee Hurricane of 1928. But if insured losses approach $20 billion, the cost of Hurricane Sandy will end up above the 1938 Long Island Express, and would rank #6. If insured losses exceed $25 billion, it could rank ahead of Hurricane Andrew, at #5.