Archives: Reg Murphy Pubs

Transaction costs go beyond the courts

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

With the nomination of Judge Brett Kavanaugh to replace Justice Anthony Kennedy on the Supreme Court of the United States has come a renewed discussion of the importance of the Supreme Court and the role of its justices in our everyday lives. Should Supreme Court justices be strict constitutional constructionists or should justices interpret the Constitution taking into account changes in our culture and values? Alternatively, should Supreme Court justices simply interpret the law or should they, through their interpretation, make new law?

I must confess I enjoy hearing experts argue the various sides to these heady issues. I really enjoy a good explanation. After all, I have made a living simply explaining things.

Today, the question before us is should judges in general have a good understanding of economics, especially when making rulings on civil wrongs called torts? To this end I want to introduce you to Ronald Coase (1910-2013). Coase, best known for having been on the faculty of the University of Chicago School of Law, won the Nobel Prize in economics in 1991 for his work in the area economists call “transactions costs.” Using Adam Smith as an anchor, economists are very good at explaining how people, as they pursue their own self-interest, are guided by an invisible hand to promote the welfare of others. Furthermore, in a perfect world, this pursuit of private interest results in an allocation of economic resources that maximizes social welfare. This is the nature and benefit from competition.

The key phrase in the previous sentence is “perfect world.” The perfect world has many attributes, two of which are perfect knowledge and no transactions costs. This is to say, everyone in a market knows what everyone else knows and it is costless to get together and trade.

This is where Coase comes in. In his article entitled The Problem of Social Cost, he argued that in a lawsuit involving two people who are free to engage in trade, the resulting allocation of resources does not matter on what the judge rules. Here, judges don’t need to know economics. They just need to assign property rights — assign guilt.

An example may help. Assume that I live next to a noisy neighbor with a very loud stereo. I, however, like quiet. I go over and ask my neighbor nicely to turn it down and they tell me no. I ask again and all they do is turn it up louder. So, I call up my attorney friend, complain to the police, and then finally sue for quiet.

Let’s assume I win. By the judges ruling (giving me the property right of silence), I can have perfect quiet all the time. However, in the perfect world my neighbor might come over, offer me a little money, and ask is there a time I will be gone so they can make noise. Well, I will be gone some days and they did, after all, offer some money. So, yes, here are the dates. Give me the cash. In the end, I get some quiet and my neighbor gets some noise. This is the final allocation of resources that maximizes social welfare.

What happens if my neighbor wins and can have noise all the time? Again, in the perfect world, I may offer my neighbor some money to turn the stereo down on some days at some times, especially the days they are gone making noise somewhere else. They may very well agree. Here, like above, I get some quiet and they get some noise.

The ‘Coase theorem’ says that regardless of who wins — determined by the judge — we end up with the same amount of noise and the same amount of quiet. The key to this outcome is that my neighbor and I trade property rights after the judge rules.

However, what happens if there are transactions costs — we are unable to trade. In this case, the ruling of the judge matters. Here, the judge needs to understand the economic consequences of their ruling. Where is social welfare maximized? When I win or when my neighbor wins? How much quiet and how much noise?

The world is full of transaction costs. The beneficial impact of free trade and competition can be limited. We need to understand these limits. This is not to say we need to prevent competition and trade from occurring. The world is never quite perfect. Maybe we can get there with a judiciary that understands a bit of supply and demand. The economists at the Murphy Center are always glad to help.

  • Reg Murphy Center
  • Skip Mounts

Finally, labor markets are tight again

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Labor markets are always slow to recover from recessions, especially nasty recessions. And the last recession, the 2007-2009 recession, was nasty.

At long last, labor markets have largely recovered from that nasty recession. The national unemployment rate is down to 4 percent. Nine states – Colorado, Hawaii, Idaho, Iowa, Maine, Nebraska, North Dakota, Vermont and Wisconsin – have unemployment rates less than 3 percent. Only two states – Alaska and West Virginia – have unemployment rates greater than 5 percent.

Georgia’s unemployment rate is down to 4.2 percent. Nine Georgia counties have unemployment rates below 3 percent, while 81 – including Glynn at 3.3 percent, McIntosh at 3.7 percent and Camden at 3.8 percent – have unemployment rates between 3 and 3.9 percent. Only two Georgia counties have unemployment rates above 6 percent.

That’s how labor markets ought to be. Tight.

The labor market recovery has been remarkable, albeit protracted. Though the national recession ended in mid-2009, the national unemployment rate in 2011 was still 9 percent. By the end of 2015, it had fallen to 5 percent.

The labor market recovery in Georgia has been even more remarkable.

In 2011, Georgia’s unemployment was still 10.2 percent. Not a single Georgia county had an unemployment rate below 7 percent. Fully 118 of our 159 counties had unemployment rates in excess of 10 percent.

By the end of 2015, Georgia’s unemployment rate had fallen to 5.6 percent. Only one Georgia county had an unemployment rate greater than 10 percent.

The labor market recovery on the South Georgia coast has been more remarkable still.

We hardly need reminding that the recession hit harder and lasted longer in our neck of the woods than in most other necks of the woods. In 2011, Glynn’s unemployment rate was 10.4 percent, McIntosh’s was 10.6 percent, Wayne’s was 12.1 percent and Brantley’s was 13.2 percent.

By mid-2014, local unemployment rates were still alarmingly high: 8.1 percent in Glynn, 8.5 in McIntosh, 9.6 in Wayne and 10 percent in Brantley.

Brantley’s current unemployment rate of 4 percent is the lowest it has been since 2004. Wayne’s current unemployment rate of 4.2 percent is the lowest it has been this century.

Now there’s just one piece of the local labor market recovery left to complete.

During recessions, the labor force often shrinks. During the last recession, the nation’s labor force decreased by 2.4 percent, while Georgia’s fell by 6.5 percent.

Local labor forces shrunk much more. During the last recession, McIntosh’s labor force decreased by 11 percent, Wayne’s by 12 percent, Glynn’s by 13 percent and Brantley’s by 15 percent.

Recoveries draw people back into the labor force. The labor forces of both the U.S. and Georgia are now 3 percent larger than their previous peaks.

Unfortunately, the same cannot be said for local labor forces. Local labor forces are growing again but remain below their previous peaks. The labor forces of Glynn and McIntosh are 3 percent below their previous peaks, while Brantley’s and Wayne’s are off by 7 and 11 percent from their previous peaks.

We’re getting there, though, and the low unemployment rates are truly welcome.

  • Don Mathews
  • Reg Murphy Center

Trying harder to find a job not always possible

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

I recently attended a conference where Chi Man Yip, a doctoral student at University of Calgary, presented a paper called Search Relativity, which he has coauthored with Ying Tung Chan of Southwestern University of Finance and Economics. The paper is not yet published and is still in progress, but I found its premise and conclusions quite interesting.

The aim of the paper is to try to understand relative unemployment rates of more educated individuals to less educated. Historical data show that the unemployment rate among society’s most educated always hovers around one half the overall unemployment rate. Paradoxically, the overall unemployment rate is not correlated with the fraction of society who are highly educated. The paper takes a theoretical approach to solving this paradox.

Among their interesting results is the one from which the paper derives its name: Search Relativity. The authors present a simplified model showing that the primary characteristic that improves one’s chances of finding a job is search intensity relative to others in the labor market. In other words, if you look harder than anyone else, you will find a job faster than anyone else.

Their theory suggests that education, experience, etc., do not, in themselves, increase one’s speed of finding a job. More educated individuals have lower unemployment rates simply because they devote more time and energy to looking for work.

This is potentially a really important finding for policymakers and social workers. That advice our parents gave us is now supported by economic theory — if you are having trouble finding a job, look harder!

So, for those of us who are lucky enough to be employed, our suspicions are confirmed. It’s not luck at all. We have jobs because we worked hard to find them, and others do not have jobs because they just didn’t work as hard as we did. Right? That’s what this new theory from Yip and Chan says.

But, wait. Not so fast.

After Chi Man had presented, while most in the room chatted excitedly about this result, one young woman raised an important objection to that line of thinking. She pointed out that even if Yip and Chan’s theory is correct and search intensity is the only important factor in successful job hunting, the solution to unemployment is not as simple as just telling the jobless to look harder. One’s ability to search intensely for work is often affected by things beyond the individual’s control.

I am not too far removed from my own job search to remember the resources it required: access to a computer for building my resume and for submitting it to online job listings, transportation to job interviews, nice clothes for interviews and the ability to pick up and move to a new city for the job I eventually got. It does not make sense to tell someone without access to these things to look harder for a job. And it does not make sense to expect someone without a job to be able to gain access to these things.

This is the issue faced by many of our unemployed. They face constraints making it impossible to look harder.

So, yes, Yip and Chan’s theory does have important implications for policymakers and social workers, but their answer is not simply in telling folks to try harder. The policy implication is that in order to alleviate joblessness, we need to help provide the tools necessary to try harder. Only then can we assume individual motivation is a primary determinant of who gets the jobs.

  • Melissa Trussell
  • Reg Murphy Center

Orchard Street, immigration and the Statue of Liberty

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

I’m from Orchard Street. Are you? I have been told that over one in three Americans are from Orchard Street. Curious? Are you sure you are not from Orchard Street? If not, where is your Orchard Street?

For me, one of the most emotionally moving places in New York City is the Tenement Museum located at 103 — you guessed it — Orchard Street. This is the lower eastside of Manhattan and is probably a place where the Hop-On Hop-Off buses that fill the city with tourists don’t stop too often. (Schiller’s Liquor Bar is near. Sunday brunch is wonderful.)

The goal of the museum is to capture the stories of immigrants who started their lives in America on New York City’s lower eastside. The stories you hear begin in the 19th century. They are told while you tour tenement buildings that are across the street from the museum shop. You begin by walking up to the top story — usually four or five floors above street level — where your guide begins telling you about the first recorded family to live and work in the tenement. As you walk up you are going back in time. The rooms you visit are not restored but roughly/crudely returned to the way they were at the tenement building’s beginning. As you descend to another floor you move forward in time and learn the story of another family.

When you reach street level you see pictures of the current day descendants of the tenement’s residents. There you meet their descendants of today, the legacies of immigrants who found a place to work and live on Orchard Street. From what I remember, my maternal great grandmother, Margarette Emmel, knew Orchard Street before walking across the Manhattan Bridge to find Brooklyn Heights. Unless you are a Native American, you are a descendant of an immigrant. Where are you from?

The Statue of Liberty is iconic with the celebration of our freedom on the Fourth of July and any other day of the year for that matter. For me it is part of America’s holy ground. Beginning in 1883 it was probably the first amazing thing the future Orchard Street immigrants saw as they entered New York harbor. So, in some very real sense, as we celebrate our freedom with Lady Liberty, we should also celebrate being a nation of immigrants and the freedom of those who came to Orchard Street.

Emma Lazarus is the author of The New Colossus, the poem that is on the Statue of Liberty. These lines are well known beginning with “Give me your tired, your poor, Your huddled masses yearning to breathe free…” As a poet, she knew the right words to use. Lady Liberty calls to people who want to ‘breathe’ free. Emma did not say “be” free. I wonder if she deliberately chose the word “breathe” to say that freedom is not where we are (be); freedom is who we are (breathe). Like the air we breathe, freedom is part of our physical being and spiritual souls.

For those of you who know where I am going, I believe that criminals, murderers, drug dealers, pedophiles, etc. should be in jail regardless if they are immigrants or citizens. However, anyone who yearns to “breathe” free should be welcomed here. One of the problems with our current immigration system is that it is too difficult to enter legally. It is so difficult people need to enter illegally — they need to sneak in. People enter on one-week tourist visas knowing that they are planning to stay much longer, but there is no legal document that validates a longer stay. We need easier legal ways for people to get in. I suspect that if it is easier to get in, it will then become easier for people to return to their native lands knowing that they can come back.

Everywhere I go, I hear about labor shortages. Also, data clearly show that there are not enough workers paying into Social Security to support the future demands of retiring baby boomers. We have a growing economic constraint on our stand of living. It is a people problem. We need immigrants, seasonal workers, etc.

So, let us breathe our freedom today and let’s use our imagination to find ways to let anyone who wants to breathe with us come in and take a breath. Let us never forget the sweet smell of Orchard Street and the legacies created there — “I lift my lamp beside the golden door!”

  • Reg Murphy Center
  • Skip Mounts

Tariffs and Trade: In theory and in reality

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

One of the many unanticipated benefits of writing under “From the Murphy Center” has been the enhanced connection with our community. Often someone will tell me that they read a column and liked it. One time someone said, “Don’t give up the day job — whatever that is.” Even a few of the men who sit in front of Parker’s on St. Simons Island early in the morning solving the world’s problems have offered friendly critiques. Keep it up Golden Isles. Melissa, Don and I think it is great.

A few weeks ago I wrote a piece that argued that knowing business is not the same thing as knowing economics. I said it is important that policymakers have a clear understanding of tariffs, the balance of trade, the capital account and trade deficits. Even under the best of circumstances, international trade theory is hard to understand. It is helpful when reality gets in the way and gives us a case upon which to hang our hat.

In theory, when a tariff is created, the importer of the tariffed item pays a tax when it is brought into the country. One might anticipate that this tax, say 25 percent, is passed along to buyers. Buyers, seeing the increase in price due to the tariff, switch to domestically produced substitutes, now appearing relatively less expensive. Therefore, in theory, tariffs help domestic industries.

Now, tariffs in reality. I was in middle Georgia over the weekend and talked with a businessman who uses various types of steel in his production process. He only, and I repeat, only uses domestically produced steel. As he says, “I’m a vet and I only buy American.” He will never buy foreign steel.

Well, he recently placed an order with his domestic supplier. The tariff should not affect him, right? He was told that his price was now 25 percent higher when compared to his last order. The supplier said, “We need to get our 25 percent while we can.” President Trump’s proposed tariffs are to take effect in July. Already we can see how domestic firms will react to a tariff on foreign steel.

This is not a one-off case study. The economics literature on tariffs is filled with instances like this. I doubt if this is what the President’s policymakers had in mind.

When there is a balance of trade deficit with China for example — imports from China exceed exports to China — Chinese citizens end up holding lots of dollars. This is to say, our balance of trade deficit is matched by a capital account surplus.

What do they do with these dollars? We were in New York City with friends a few weeks ago and I commented, while sitting in traffic (a New York City sport) on how much construction is going on. Our friend, who has been in the financial services industry forever, said that Chinese investors are one of the largest, if not the largest, player in this construction. He also said that this is across the United States in every major city. Our balance of trade deficit can be seen in the very changing of our domestic skylines. This is what they are doing with their surplus of dollars — investing in the United States! Do we want this construction to go away with a smaller trade deficit?

As we celebrate our freedom this Fourth of July, let us also celebrate the ability to trade freely. Let freedom and not government determine economic outcomes. Happy Fourth to each of you. Let freedom ring!

  • Reg Murphy Center
  • Skip Mounts

Form Formal to Casual: Is the change in office fashion good or bad?

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

Work fashion has changed much over the years, especially office work fashion — fashion for what used to be called “white collar” jobs.

Not so long ago, the dress code for office jobs was simple: suits and ties for men, below the knee length dresses or jackets and below the knee length skirts for women. Aside from color coordination failures and other random lapses in taste, people looked sharp.

Sometime in the 1990s, formal began to give way to casual. Now, suits and ties make the backs of closets rather than people look sharp, as formal dress has been replaced by business casual, or what I call post-modern, office hodgepodge.

I’m torn on whether the change in office fashion has been for the good or for the bad.

I’m big on aesthetics. That’s a point for suits and ties.

I’ve also found that when adults dress like adults, they’re more likely to act like adults, though there are no guarantees. Score another point for suits and ties.

The big problem with a suit and tie, though, is the tie. A men’s necktie is nothing but a decorative hangman’s noose.

I like to be productive at work. I’m more productive when I’m not choking.

And ties are expensive. A nice tie runs $50 easy. So a tie is double strangulation. A tie will choke you when you pay for it as well as when you wear it.

Some guys who didn’t like spending their work hours choking would wear their ties with shirts that were an inch too big around the neck. You could always spot those guys. They looked like bobble-head dolls.

A better technique is to ditch the tie altogether. That’s pretty much what we’ve done.

From a practical perspective, though, the shift from suits and ties and dress clothes to post-modern, office-hodgepodge business casual has made life more complicated. Before, the line separating appropriate office attire from inappropriate office attire was clear. Now, it’s not.

The initial descent into office fashion decadence happened when some offices introduced “casual Fridays.” “Casual Fridays” was a ploy concocted by human resources people to boost office morale. “Hey, you’ve worked hard all week. As a reward, we’re going to let you dress down on Fridays. So, chillax! Go casual!”

A hasty move. To some people — many people, it turned out — casual and slob are synonyms.

In short order, people showed up for work in clothes one might wear to compete in a pie eating contest. Some people showed up looking like they had just competed in a pie eating contest.

So “casual Fridays” quickly became “business casual Fridays” — business casual meaning clothes less formal than suits and ties but more formal than pie eating contest clothes.

Well, thanks for the clarification.

And we all know what road “business casual Fridays” led down. Why just Fridays? What’s wrong with the other days?

Now every work day is a post-modern, office-hodgepodge business casual day.

Maybe suits and ties was a better rule. Except it’s nice not to choke while working. And I’ll eat pecan pie any time. Cherry pie is good, too. And apple.

  • Don Mathews
  • Reg Murphy Center

Summer jobs important for economy, people who have them

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

It’s an exciting week in the Golden Isles. Kids are out of school, Memorial Day has passed and vacation season is in full swing. Last week, I heard on the radio a woman in Atlanta rejoicing that traffic would be lighter now that school is out. I laughed, remembering the first summer after I moved to Brunswick from Atlanta. I quickly had to adjust to a new and opposite way of thinking about traffic patterns. Atlanta may slow down for the summer, but here in Coastal Georgia, we come alive with activity.

This is our season to shine. Folks come from all over the country to play on our beaches, relax by our pools, dine in our restaurants, shop in our stores, and reside in our homes and hotels. And we go to work to serve them with smiles, introducing them to our Isles’ most golden attribute — its people.

When I say we go to work, I mean it literally. According to the National Bureau of Labor Statistics, businesses in the Brunswick area employed 100 more people in January 2018 than in January 2017. But, in June of 2017, we had 2,000 more jobs than in January of the same year. With a total labor force around 53,000, this seasonal fluctuation in employment is no small deal. And data from previous years looks similar — each summer, we see a temporary but significant rise in employment.

I know what some of you are thinking, though. Many of these jobs are part-time and/or temporary, and a lot of them are held by high school or college students trying to make some extra cash while school is out. So, maybe they aren’t actually that big a deal after all.

If that’s what you’re thinking, you are not all wrong. Most of our seasonal jobs are temporary, and many are filled by “kids.” And, many of them are low-paying jobs. In fact, though we gained 2,000 jobs, average weekly earnings fell from $681.60 in January 2017 to $635.36 in June 2017. But, I do not believe this means these jobs are insignificant for our labor market.

In fact, I believe those low-paying, seasonal jobs are some of the most valuable jobs we have, both for the employer and for the employee, especially if that employee is a high school or college student.

The employers are the clearer winner. They get cheap labor to fill in the gaps created by our summer influx of business.

I have heard some people argue that the employees are losing — working hard for little pay. If we consider only current financial gains, this may be true. But, if you have ever worked one of these summer jobs, as I have several summers, you will likely agree with me that the experience itself is worth at least as much as the wages.

Labor economists tell us that experience increases one’s productivity and is a key determinant of one’s future wages. This is one reason the School of Business and Public Management at College of Coastal Georgia is so proud of our internship program, which requires every student in our program to graduate with work experience in their field.

Work experience — whether a summer job or internship; whether paid, unpaid, or underpaid — improves your prospects of obtaining future employment and of earning higher future wages.

So, if you have the opportunity, snag one of our 2,000 seasonal positions. Your future self and our current and future economies will thank you.

  • Melissa Trussell
  • Reg Murphy Center

Why manufacturing matters in the Isles

Written by Skip Mounts on . Posted in Reg Murphy, Skip Mounts.

On May 4, the Chamber of Commerce had its annual State of Manufacturing lunch. It was great to celebrate manufacturing in the Golden Isles and to recognize the 70 years that Georgia Pacific has been in our community. While preparing some remarks for my brief talk, I ran across some data that I would like to pass along.

One of the issues that the economists at the Murphy Center discuss among ourselves is why did southeast Georgia take so long to recover from the recent recession? To review, relative to the state and to the nation, southeast Georgia was the first to enter recession in 2008 or so. Then, relative to the state and to the nation, southeast Georgia was the last to show signs of overall recovery in late 2014 or early 2015. If you do the math, southeast Georgia was in recession the longest of possibly any area in the United States. This performance was even in the face of a port that was booming and a hospitality industry that was doing very well. To figure out reasons for this duration is important.

One of the issues we consider is the diversity of our economy. Some say we are too dependent on tourism for our own good. This may be true, but it is a wonderful advantage that we have over the rest of the world. Why not use it?

Data show that in 2000, our area had 270 firms that were identified as construction and 85 that were identified as manufacturing. By 2006 firms in construction had increased to 338 while manufacturing firms had increased to 95. It does not take a rocket scientist to argue that the housing boom was driving the number of construction-based businesses.

Then the recession hit. By 2017, the number of firms identified as construction had fallen to 213 while manufacturing firms are at 76. Overall, in the goods-producing sector of our economy, manufacturing represents 25 percent of the firms in 2017. In 2000, this was 20 percent. So, over the last business cycle, manufacturing relative to construction has become more important to us. I think this is important.

To an economist, the demand for labor and other inputs is a “derived demand.” This is to say the demand for workers and for their production is derived from the demand for the products they produce. In our case, the demand faced by construction firms is largely local, while the demand for manufacturing firms is national, if not global. In my mind, we had become so dependent on construction and local demand that we had to pull ourselves out of recession. Had we been more dependent on manufacturing, a broader market demand (regional, national, global) would have pulled us out of recession.

Consider the port, Sea Island and Jekyll Island. All three seemed to lead the recovery of the overall Golden Isles economy. Why? Think of where they sell. Clearly, all the automobile transports going past the St. Simons pier bring cars that are sold throughout the United States and not just the Golden Isles. Looking at all the jets that use McKinnon-St. Simons Island Airport, Sea Island serves an international marketplace. Lastly, a review of the license plates of vehicles on Jekyll Island indicates that a regional, if not national, demand is served.

By becoming more dependent on manufacturing and its broader marketplace we will become more resistant to the business cycle. We are diversifying where we sell. It is well worth our time to figure out ways to promote this diversification by thinking of ways we can develop manufacturing. Working on infrastructure would be a start. Maybe developing a local aviation driven training program would be another. Considering our community’s shared vision statement, a great start would be accomplished by simply Working together.

  • Reg Murphy Center
  • Skip Mounts

Downtown conference center is a troubling game

Written by Don Mathews on . Posted in Don Mathews, Reg Murphy.

The idea of the city of Brunswick building a conference center on the site of the old Oglethorpe Hotel in downtown Brunswick really worries me.

The argument for building the conference center is standard — a conference center will provide strong economic juice to downtown Brunswick by bringing in visitors who will spend money at downtown shops and restaurants and by employing local folks who will spend money at downtown shops and restaurants.

A good-looking conference center would also enhance the aesthetics of downtown, which would increase property values and attract even more locals and out-of-towners.

Aesthetics matter. The Brunswick Urban Redevelopment Agency’s plan is for the conference center to have the look and spirit of the old Oglethorpe Hotel. That’s a smart call.

But the downside risk of the conference center project is enormous.

The city has $3 million on hand to build the conference center. The conference center is estimated to cost $8.1 million. In addition, the Urban Redevelopment Agency recommends building a three-story parking deck for the conference center. That’s likely another $5 or $6 million.

Such projects routinely come in over budget. So figure about $15 million to build the conference center and parking facility.

The roughly $12 million shortfall is likely to be raised by issuing debt. $12 million is a lot of debt for a little city with many needs to throw at a single project.

The hope, of course, is that the conference center will generate so much economic juice downtown that the project more than pays for itself.

How realistic is that hope?

Research on the conference and convention center business doesn’t inspire confidence.

Urban development specialists have been promoting conference or convention centers as a means of reinvigorating downtowns for decades. More than 400 communities across the country now have a conference or convention center. Glynn voters first approved a special-purpose, local-option sales tax (SPLOST) for a conference center back in 2001, when conference centers were all the rage.

Unfortunately, conference and convention centers frequently fail to deliver. Actual conference attendance routinely falls well below estimated attendance — which means actual visitor spending routinely falls well below estimated spending — and the centers routinely lose money.

And conference and convention business is very sensitive to the business cycle.

To have any chance of even a modest return on investment, downtown Brunswick’s conference center needs an accompanying hotel. But hoteliers are showing little interest in building a hotel downtown.

That’s a gigantic red flag.

When entrepreneurs smell a profit opportunity, they pounce. None are pouncing on a hotel for downtown Brunswick.

The lack of interest suggests that hoteliers don’t think a conference center in downtown Brunswick will succeed.

Perhaps hoteliers are waiting for the conference center to be built before they pounce. Perhaps.

But what if the conference center is built and hoteliers still don’t pounce? Then what?

Then the city of Brunswick will be saddled with a lot of debt that it will only be able to pay off by forgoing many other much needed projects. Instead of spurring downtown development, the conference center could set development back for years.

The alternative to a conference center is not an empty lot. It’s a mixed use building, a residential and commercial combination.

Downtown residents spend more money downtown than conference attendees will, and residents won’t leave when the business cycle turns down.

And we have local entrepreneurs ready to pounce on just such a mixed-use building.

Residential and commercial space, financed and managed by local entrepreneurs, is a much wiser investment than a conference center.

  • Don Mathews
  • Reg Murphy Center

Children quickly change household economics

Written by Melissa Trussell on . Posted in Melissa Trussell, Reg Murphy.

I have taken and taught a lot of economics courses, and I have had opportunities to be part of a lot of really cool economics research in the last decade. But, the last month has provided me with one of the greatest economics lessons of my life. Two kids moved into my house.

This is not a permanent situation. They are just hanging out with me for a little while. But, oh my goodness! Kids change everything, not least of which is a household budget!

Groceries! So many groceries! I am very single. I am used to cooking one or two meals per week and just eating the leftovers until they are gone. But kids demand variety. And snacks. And drinks besides water. Groceries are not cheap, y’all. My household grocery budget more than doubled overnight with the addition of two kids.

And laundry. Can we talk about laundry?! My usual was one or two loads of laundry every two or three weeks. (I know — seasoned moms burst into laughter at this thought.) We are now washing one or two loads a day. My electricity usage increased from an average of 14 kWh in the week prior to the kids’ arrival to an average of 26 kWh in their first week with me.

I know this is not news to many of you. Those who have been parents for a while will probably find my experiences of the last few weeks familiar and perhaps will think it cute that I am just learning what you have known so well for so long. Bless my heart, right?

In fact, the story of my last few weeks is all too familiar and not at all cute to more than a third of Brunswick’s families, which are headed by single moms with children below age 18 according to the 2016 American Community Survey. Of those moms, 23 percent have children under age 5. Over half of single-mom families in Brunswick have incomes below the poverty level, and that statistic grows to two-thirds for single moms with children under 5.

For these moms, perhaps the most significant cost of raising children is one I have felt strongest this month — opportunity cost. Opportunity cost is the value of what we give up to do or experience something else. For me and for many single moms, the opportunity cost of parenting is a thriving career.

The kids came along two weeks before the deadline on a project I began working on four years ago. Crunch time. I had to call on family and friends to help with the kids so I could work on weekends to even have a shot at getting the thing submitted.

I had only been parenting a few days before I began to understand why mothers —particularly single mothers — often struggle to get ahead in their careers. Thank goodness I have such an amazing and supportive network of family, friends and coworkers. I was able to meet that deadline, and I have been able to adjust pretty well to the daily role switches from parent to professor and back to parent.

I cannot imagine how difficult this must be for moms without that sort of support system. Hug a single mom for me this week. Given the statistics cited above for Brunswick, it won’t be hard to find one.

  • Melissa Trussell
  • Reg Murphy Center