URBAN WEALTH FUNDS
Social wealth funds on the municipal level
Matt Bruenig, Roger Farmer and Miles Kimball, and Sam Altman have all pushed for versions of a US sovereign wealth fund for social good. Their work focuses on funds at the national level. But another version of the idea comes from Dag Detter and Stefan Fölster, whose 2017 book advocates for “urban wealth funds,” funded via better management of government land and other nonfinancial assets. A few such funds have already had success.
Using Boston as an example of a city that could profit from an urban wealth fund, Detter writes for the World Economic Forum in February:
“…Like many other cities, Boston does not assess the market value of its economic assets. Unlocking the public value of poorly utilized real estate or monetizing its transportation and utility assets – smarter asset management, in other words – would yield a return that would enable it to more than double its infrastructure investments. Through smarter asset management, Boston could improve its public transport system and other services without needing to opt for privatization, raise taxes or cut spending elsewhere.
“What’s the catch? Actually, there isn’t one.”
Link to the full post. A 2017 Brookings report showed how Copenhagen successfully implemented urban wealth fund policy:
“This paper explores how the Copenhagen model can revitalize cities and finance large-scale infrastructure by increasing the commercial yield of publicly owned land and buildings without raising taxes. The approach deploys an innovative institutional vehicle—a publicly owned, privately run corporation—to achieve the high-level management and value appreciation of assets more commonly found in the private sector while retaining development profits for public use.”
- Another successful version of urban value capture: Hong Kong’s metro (the MTR). “Hong Kong is one of the world’s densest cities, and businesses depend on the metro to ferry customers from one side of the territory to another. As a result, the MTR strikes a bargain with shop owners: In exchange for transporting customers, the transit agency receives a cut of the mall’s profit, signs a co-ownership agreement, or accepts a percentage of property development fees. In many cases, the MTR owns the entire mall itself.” Link.
- Detter and Fölster’s previous book envisions better management of government assets on the national level.
A case study in collective ownership
Related to the above, the Alaska Permanent Fund is a frequently cited example of how a state can capture, grow, and distribute wealth produced from natural resources. But it has also been the site of confusion over who is the actual owner of that wealth: a government or its citizens.
ANGELA CUMMINE, a political theorist and author of a book on sovereign wealth funds, uncovers an interesting episode in the history of the APF that raises fundamental questions about social wealth funds:
“In the late 1980s in the early years of the dividend, two Alaskans challenged the government’s right to tax the PFD in a case that went all the way to the U.S. Supreme Court. The petitioners argued that the underlying assets of the Permanent Fund—the natural resources of Alaska—were, according to the Constitution of Alaska, the property of the people. So too, therefore, were windfalls from their sale and the returns earned on the investment of those windfalls by the Permanent Fund. The government should not, on the petitioner’s view, be allowed to tax citizens on what was already their property.”
“Is [a SWF] state property, managed primarily for the benefit of the sponsoring government and its agencies, or the people’s property simple managed by governments on the citizenry’s behalf?
When we look to the real-world experience of sovereign wealth ownership and management, a demand for definitional precision becomes more urgent. On the ground, there is deep disagreement and confusion over these funds’ legitimate owner(s). Any theoretical consensus on the meaning of ‘sovereign’ in the SWF moniker must also translate into a practical consensus within communities that possess sovereign funds.”
Disparate effects of breaking the echo chamber
A new study expands on research into the backfire effect of exposure to opposing views on social media. Study respondents, all regular Twitter users, were measured on their views before and after exposure to information that countered their partisan views. The results:
“Though treated Democrats exhibited slightly more liberal attitudes post-treatment (that increase in size with level of compliance), none of these effects were statistically significant. Treated Republicans, by contrast, exhibited substantially more conservative views post-treatment.”
Link to the study.
- Frank Pasquale, who shared the above study on Twitter, commented: “asymmetrical polarization derives from asymmetrical persuadability.” In a paper of his from last year, in which he takes stock of the state of polarization and platform controls and offers suggestions for regulation, he writes: “In a situation of asymmetrical persuadability, filter bubble inspired reforms will tend only to consolidate the power of the social group or political party most steadfastly committed to maintaining its own position.” Link to that paper.
- More along these lines from a study on variations to the hostile media effect. Link.
- Relatedly, a conversational but rigorous intervention in the “media literacy” discourse by Data & Society’s danah boyd: “I worry about how people judge those they don’t understand or respect. It also seems to me that the narrow version of media literacy that I hear as the ‘solution’ is supposed to magically solve our political divide. It won’t. More importantly, as I’m watching social media and news media get weaponized, I’m deeply concerned that the well-intended interventions I hear people propose will backfire, because I’m fairly certain that the crass versions of critical thinking already have.” Link.
+ + +
- A new paper on the minimum wage: “We find that raising the minimum wage increases earnings growth at the bottom of the distribution, and those effects persist and indeed grow in magnitude over several years.” Link.
- Mapping the laureate tree: most Nobel Prize recipients in economics (72 out of 77) can be directly linked through professor-student relationships. Link.
- “The first step towards transparency must involve attaching significant, standardized information about any dataset, API, or pretrained model. We concentrate specifically on datasets, and recommend a standardized description format with standard questions.” A new working paper co-authored by Kate Crawford, Jamie Morgenstern, Timnit Gebru and several others proposes new standards for fostering transparency in the creation and distribution of datasets. Link.
- On the increasing wealth gap in college attainment. Link.
- Facebook is facing a housing discrimination lawsuit over its targeted advertising tools, which allowed advertisers to exclude protected classes from seeing their ads. Link. (ProPublica’s reporting on this issue from last year preceded the suit. Link.) ht Lauren
- Google engineer Francois Chollet outlines his concerns about AI, and some paths forward. “Using AI as our interface to information isn’t the problem per se. Such AI interfaces, if well-designed, have the potential to be tremendously beneficial and empowering for all of us. The key factor: the user should stay fully in control of the algorithm’s objectives, using it as a tool to pursue their own goals (in the same way that you would use a search engine).” Link.
- A case for the “C-Word”: “Being explicit about the causal objective of a study reduces the ambiguity in the scientific question, errors in the data analysis, and excesses in the interpretation of the results.” Link.
- “Great homogeneity of income or wealth, a higher level of wealth, greater community stability, and more ethnic and religious homogeneity fostered high school expansion from 1910 to 1930. The pecuniary returns to secondary school eduction were high… The social capital assembled locally in the early part of the century, which apparently fueled part of the high school movement, continues to contribute to human capital formation.” Link. ht Will
- On digital forgeries and their detection. Link. ht Margarita
- 27 stories on “The Surprising Creativity of Digital Evolution.” “A paper recently published to ArXiv highlights just a handful of incredible and slightly terrifying ways that algorithms think. These AI were designed to reflect evolution by simulating generations while other competing algorithms conquered problems posed by their human masters with strange, uncanny, and brilliant solutions.” Link to the coverage in Popular Mechanics. ht Jay
Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: firstname.lastname@example.org.