Tuesday, September 23, 2014

The myth of exports

There is an old fable that goes something like "exports are the key to prosperity.  America was much more prosperous and cities doing better when exports were higher."  I want to caution against such a thin reading of economic history, as it can cause embarrassing mistakes.  Take, for example, the assertion that everyone agrees that boosting exports is important and that building an export economy is more important for cities than building downtown apartments.

This fetishization of exports as a metric is pernicious because it can lead policy towards suboptimal goals.  Especially for cities.  Sometimes they are based on false assumptions as well.  For example the above links are based on the false notion that "exports include both goods and services".  This is false:

The OM-ZIP series can track export sales of states, metropolitan areas, and ZIP codes (at the three-digit level). Statistics are available for exports of merchandise only. No sub-national data currently exist on exports of services.

That's right, exports does not include services.  So high service metros like New York, San Francisco, or Los Angeles are penalized in the export section.  Metros that export manufactured goods and commodities like grains, oil, and machinery reflect well in the export section.  An oil producing port of origin like New Orleans will therefore score well, despite the relative poverty of the metro.  Especially because it is a port of origin for much of the goods that go down the Mississippi.

Generally, that person or entity is the U.S. seller, manufacturer, or order party, or the foreign entity while in the United States when purchasing or obtaining the goods for export

And yet this is the 21st century.  The success of the tech and financial industries in spurring growth in places like San Francisco and New York suggests that the information age is at hand, and that exports as a metric of economic health is not as important as it once was.  For many cities, building a downtown apartment IS more important than building up exports.

Good-bye commodities exports

Hello services

For cities like Chicago, where manufacturing exports have long waned, clinging to those remaining industries rather than fostering new 21st century industries is contraindicated.

Metro Area
1 New Orleans-Metairie-Kenner, LA 20209.1
2 Houston-Sugar Land-Baytown, TX 17778.0
3 Seattle-Tacoma-Bellevue, WA 14160.9
4 San Jose-Sunnyvale-Santa Clara, CA 14087.7
5 Salt Lake City, UT 13764.1
6 Detroit-Warren-Livonia, MI 12904.6
7 Cincinnati-Middletown, OH-KY-IN 9312.0
8 Portland-Vancouver-Hillsboro, OR-WA 8881.9
9 Memphis, TN-MS-AR 8522.5
10 Miami-Fort Lauderdale-Pompano Beach, FL 8304.9

This chart ranks things, but not per capita GDP, unemployment, purchasing power, or other relevant metrics of a metropolitan region's overall health.

1 comment:

  1. I hear you loud and clear. Fortunately, Miami has begun to build more and more apartment buildings. At the moment, I live in one, close to the beach and it is really nice (for the interested: http://ionmiamicondos.com/), but there is really a deficit of more such buildings in the area. I hope people will come to their senses soon.