Jim talks more than anybody else. Our Wednesday breakfasts aren’t dominated by him, but he does have more to say than any of the other nine at the table.
Last week, he put down his coffee, looked squarely at me and said, “No one in his right mind can make sense out of economic data.”
I didn’t bite. “What do you have in mind?” I asked.
“Unemployment rates,” Jim replied as a challenge.
“Nothing to them,” Andy shot in. “They go down, fewer people looking for jobs. They go up, and there are more people in the job market.”
“Wrong on both counts,” Art said definitively.
“Right,” Joe chimed in. “If rates go down, that means the percent of people in the labor market looking for jobs has gone down. It’s a percent. The number of people looking for work may have gone up or down. It’s all relative to the size of the labor force, the sum of people with and without jobs, but looking.”
“That’s why I like pancakes,” Charlie muttered. “They’re easy to understand.”
Jim sat there looking pleased. He had made his point: Economic data are not easy to understand. However, he was not ready to let the conversation drift elsewhere. He baited the hook: “According to MyApartmentMap.com, Indiana ranks second from the bottom in the average rent for a two-bedroom apartment. Only Arkansas has cheaper apartments.”
“That’s an easy one,” I said. “Shows that only Arkansas is a place less desirable to live and less productive than Indiana.”
The silence was broken only by conversations at other tables. Finally, Warren said in sadness, “That’s cruel.”
“Cruel?” I rejoined. “If Hoosiers made more of what the world wanted, our wages would be higher and housing prices would rise. Then again, even with the wages we offer, if we had better schools and a better quality of life, more people would want to live here and rental rates would go up.”
“Maybe,” Dave said, “my hearing aid was off, but I didn’t hear nothing about the supply of housing. All you talked about was the demand for housing. What about the supply side?”
“Supply,” I said, “responds to demand or the anticipation of demand.”
“Meaningless,” Byron pronounced. “Look who lives in rental housing. Only the shiftless and the rootless. Folks who work hard and are committed to the community, good citizens, they buy homes.”
There was an embarrassed silence until Jim said, “That’s plain stupid. There are many good reasons for renting instead of buying. Generally, homeownership is more expensive than renting, and millions of people don’t have the money for a down payment let alone handling a mortgage and upkeep expenses.”
“That’s what I said,” Byron insisted. “Shiftless. If they made the effort, the poor wouldn’t be poor. There is no excuse for poverty. If you can’t afford a home, it means you’re a slug.”
“And,” Jim went on ignoring Byron, “many people would prefer not to tie up their assets in something as illiquid as a house.”
“That’s what I mean about being rootless,” Byron asserted.
After that exchange, the group gave up conversing and began to disperse. It only takes one ill-informed, dogmatic person to silence the majority in today’s world.
Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business.