Economics

Brooklyn is not fulfilling its potential in the retail market, and construction jobs are not keeping pace with the number of construction projects in the borough, says a recent report on the labor market in Brooklyn, published by the Brooklyn Chamber of Commerce. While the number of jobs in Brooklyn grew 1% in 2005 – the highest percentage occuring in culture and recreation – the 6.2% unemployment rate still lags behind the citywide average of 5.5%. Commanding the labor market is still the public sector, at 41% of all jobs in the borough. Wages have kept pace with inflation, but also remain below city average. The overall number of residential building permits issued almost doubled between 2001 and 2005. In 2005, 1,600 were issued, at a total of 9,000 units – coming in just over Manhattan, which totaled 8,500.
Brooklyn Labor Market Review [Brooklyn Chamber of Commerce]
Chamber’s ‘Target’: Shopping [Brooklyn Papers]
Photo by Rob Innes.

Hal Varian, a professor of business, economics and information management at the University of California, Berkeley, weighs in on Bush’s proposal to limit the mortgage interest deduction in an editorial in the New York Times:

An excessive subsidy on one asset means that less will be invested in other assets. The money put into building those huge villas on the hillside could have been put into factories, office buildings and schools. Investment in physical capital and human capital makes the economy as a whole more productive, unlike investment in housing.

Given the huge subsidies to housing, it is likely that we as a country have overinvested in this area. Cutting back some of those subsidies would be good economic policy. That being said, I hasten to add that this is unlikely to happen anytime soon. People have put substantial amounts of their wealth into housing in large part because it has been so highly subsidized. The housing tax subsidy has been built into housing prices, to some degree, and cutting back could lead to painful capital losses on home values.

If you give a lollipop to a baby, it may make him smile, but you will pay dearly for that smile if you try to take the candy away. The best thing to do is to distract the baby with other sweets, while you gradually extricate the lollipop from that sticky hand.

An Opportunity to Consider [NY Times]