Philadelphia Reflections

Making Money (6): The Laffer Curve

Arthur Laffer

Recall for a moment, the two Republican idols, economists Milton Friedman and Arthur Laffer. Friedman won a Nobel Prize by observing that inflation is "always and everywhere" caused by too much money in circulation. Thus, a potential remedy for inflation was suggested: central banks (i.e. the Federal Reserve) can restrain that by raising short-term interest rates at the first sign of inflation. It certainly seemed to work; by doing so, Federal Reserve Chairman Alan Greenspan was able to avoid inflation for eighteen years.

Arthur Laffer offered a second idea for Presidents to test. Laffer maintained that if taxes were too high, you would paradoxically collect more taxes by lowering tax rates. The younger George Bush took him up on it, reasoning that if tax collections did rise after tax rates were cut, it would be proof that taxes had been too high all along. The appeal to tax technicians in the Treasury Department was that, by observing tax collections, all changes in tax rates up or down might lead to the identification of the most efficient possible tax rates. So, although President Reagan had felt warm about Laffer, while the senior George Bush rudely dismissed such ideas, George W. was eager to test his gut feeling that tax rates were too high. Each year during his presidency, George W cut taxes. Gratifyingly, each year total tax revenue (adjusted for GDP) increased. Eight years are not the same as eighteen, but it certainly looks as though W proved that taxes had indeed been too high. If some future Congress has the courage to raise taxes, and then tax collections go down, the Bush legacy would seem pretty secure. Two iron laws of national economics would be enshrined: The tax rate should be whatever maximizes tax revenue. Interest rates should be whatever restrains inflation. Live with it.

True, none of this insight casts much light on how to cope with wars and depressions. Raising interest rates seemingly defeats inflation, but lowering interest rates has not always cured recessions. Furthermore, the fiscal and monetary direction of the country may have to be altered when we face war, famine, weather disasters, and demographic shifts. But at least we seem to know how to determine the optimum level of (overnight, interbank) interest rates and taxes, so have a compass for return to those levels after detours around uncertain events. Maybe economists, even Voodoo economists, can suggest some other principles which politicians can test in the real economy. And political science can then start to have some true scientific method in it; propose a theory, test it, revise the theory and test it again.

But there's one more thing that Art Laffer didn't understand when he was drawing his famous curve on the back of a paper napkin. One of the main reasons tax collections rose spectacularly when George Bush finally had the nerve to try lowering taxes -- was that the underground, tax-evading, economy was a great deal larger than anyone had suspected. Laffer made crooks into honest people.

International Visitors Council

Nancy Gilboy

The President of IVC, Nancy Gilboy, tells us it stands for International Visitors Council, now approaching its 50th anniversary. As you might suppose, it is located at 1515 Arch Street, near the old visitors center. Philadelphia has a new visitors center on 5th Street, of course, and perhaps it takes time to move or maybe moving isn't in the cards. We had another Visitors center on 3rd Street that came and went, so proximity between Center and Council perhaps isn't as important as rental costs, or leases, or other issues.

Philadelphia Art Museum

The Council has a modest budget, but a great idea. Anyone who has traveled much knows that you tend to follow the travel agent's set agenda for a town, you see a lot of churches and museums, but you can almost never get tickets for the local entertainment events, and you almost never meet any local people except taxi drivers and bellhops. That's even more true of young travelers, who don't have either the money or the experience to anticipate the issue, or enough local friends to guide them around the obstacles (This exhibit closed on Mondays, that event is all sold out, this event was spectacular, you should have been there yesterday, sorry we didn't know you were coming we have a wedding to go to, etc.). On guided tours, it is remarkable how few things seem to happen after 4 PM.

So, fifty years ago, some imaginative Philadelphia leaders got the idea that a lot of Philadelphia residents would enjoy taking some foreign tourists under their wing, maybe have somebody to know when they, in turn, make a reciprocal visit, maybe boast about our town a little. Furthermore, by getting involved with the US State Department, young visitors can be identified as potential future leaders in their country. If the guess is a good one, and the experience favorable, Philadelphia might prosper from the publicity and from the later return visits, now in the triumph of success. That was the founding spirit of the Philadelphia International Visitors Council.

So that's how it came about that Margaret Thatcher, < Tony Blair, the current President of Poland, and the head of the Russian Space Program were once visitors in Philadelphia homes. People who like to do this sort of thing tend to like each other, so the monthly receptions (First Wednesday at the Warwick) are interesting Philadelphia social occasions in their own right. Success begets success, and the CCP (originally Business for Russia) has affiliated itself, along with the Philadelphia Sister Cities Program, the Consular Corps Association, The Philadelphia Trade Association, and probably others.

Look at it from the visitors' viewpoint. New York has larger colonies of foreign nationals than Philadelphia does, but New York is an expensive place to visit. Washington has dozens and dozens of embassies, but a visitor soon learns the last thing an embassy staff wants to see, is a citizen from home. So those places aren't really a typically American place to visit. Indiana is plenty American, but there isn't much to see there. So Philadelphia has many attractions, lots of history, it's as thoroughly American as a city can be, and all it needs is someone to open up and show it to you. Cleverly organized, the IVC has undoubtedly put the Philadelphia stamp on many foreign visitors, without their exactly recognizing they are being told This is America. If the State Department is shrewd in its assessment process, Philadelphia will in time be held in high esteem by the leaders of a lot of foreign nations.

In the spirit of announcing that Philadelphia is where you can find America, my own little daughter astonished me at a dinner party by telling the assembly the following story:" William Penn was nice to the Indians, so it was safe to land in Philadelphia. Pretty soon, so many people landed here they had to move West to settle down. And, folks, that's why the people to the North of us talk funny, and the people to the South of us talk funny -- but everybody else in America talks like Philadelphia!"

Christ Church and Elfreths Alley

Elthreths Alley

The north side of Dock Creek (now, Dock Street) was lower than Society Hillside and somewhat swampy. The tendency to flood caused the north side to have smaller and less permanent buildings, and so it became the Colonial waterfront area remaining more commercial, and in parts, shabby, even during the 19th Century. Still further to the north, this was not the case, but the waterfront and food market patch more or less marooned Christ Church, now the single most graceful and elegant Colonial building still standing. This formerly commercial area is now called Old City, with many loft apartments mixed among surviving warehouse outlets, and of course the ethnic restaurants characteristic of such gentrified areas.

Christ Church

Elfreth's Alley, running for one block east and west between Second and Front (1st) Streets. Some of the histories of this street is obscure, so some of it is probably synthetic because nothing particularly historic happened there to create detailed records. Elfreth's Alley claims to be the oldest street in America, a claim that can be substantiated back to 1702. The street is filled with little "workers houses", presenting a solid front of buildings on both sides of the cobblestoned street. Most of the houses could vaguely be called "father, son and holy ghost houses", looking as though they consisted of three rooms on top of each other, although in fact most of them are larger. A moment's consideration shows that the street consists of many double houses, with three doorways in front. Each house had a door to the interior, and most of them have a third door opening to a shared tunnel between the two houses, leading to the back yards. These tunnels were called "easements", a term that has migrated from its earlier usage. Although William Penn envisioned large single estates in his "Greene Country Towne", he sold considerable land to people who remained in England as absentee landlords, who soon found that many small houses produced more rent than one or two big ones. One of the houses on Elfreth's Alley acts as a museum, with tours; there is an active civic association, and once a year in June there is a street fair.

Because the land was swampy and the neighborhood congested, Christ Church soon outgrew its backyard burial ground, and burying important people under slabs in the walkways and corridors. Visitors who do not come from that sort of religious background are typically uncomfortable walking over such graves, a quite common arrangement in European cathedrals. But eventually, it was necessary to go several blocks westward to create a "new" burial ground. Most of the famous names from the Revolutionary era, like Benjamin Franklin and four other signers of the Declaration of Independence are found on the tombstones at Fifth and Arch, just across the street from the Free Quaker meeting house, and opposite the Philadelphia Mint. On the remaining corner of Fifth and Arch is the Constitution Center which will open July 4, 2003. It can already be seen that its architecture clashes with the rest of the historic area, but it is fervently hoped that its programs will redeem it.

REFERENCES

Shakspere's Last Will and Testament

The Last Will and Testament of William Shakspere

"During the winter of 1616, Shakespeare summoned his lawyer Francis Collins, who a decade earlier had drawn up the indentures for the Stratford tithes transaction, to execute his last will and testament. Apparently, this event took place in January, for when Collins was called upon to revise the document some weeks later, he (or his clerk) inadvertently wrote January instead of March, copying the word from the earlier draft. Revisions were necessitated by the marriage of [his daughter], Judith... The lawyer came on 25 March. A new first page was required, and numerous substitutions and additions in the second and third pages, although it is impossible to say how many changes were made in March and how many currently came in January. Collins never got round to having a fair copy of the will made, probably because of haste occasioned by the seriousness of the testator's condition, though this attorney had a way of allowing much-corrected draft wills to stand" (@ Schoenbaum 242-6).

Words which were lined-out in the original but which are still legible are indicated by [brackets]. Words which were added interlinearly are indicated by italic text. The word "Item" is given in the bold text to aid reading and is not so written in the document.

From the first line of Shakspere's will

In the name of God Amen I William Shakespeare, of Stratford upon Avon in the country of Warr., gent., in perfect health and memory, God be praised, do make and ordain this my last will and testament in manner and form following, that is to say, first, I commend my soul into the hands of God my Creator, hoping and assuredly believing, through the only merits, of Jesus Christ my Saviour, to be made partaker of life everlasting, and my body to the earth whereof it is made. Item, I give and bequeath unto my [son and] daughter Judith one hundred and fifty pounds of lawful English money, to be paid unto her in the manner and form following, that is to say, one hundred pounds in discharge of her marriage portion within one year after my decease, with consideration after the rate of two shillings in the pound for so long time as the same shall be unpaid unto her after my decease, and the fifty pounds residue thereof upon her surrendering of, or giving of such sufficient security as the overseers of this my will shall like of, to surrender or grant all her estate and right that shall descend or come unto her after my decease, or that she now hath, of, in, or to, one copyhold tenement, with appurtenances, lying and being in Stratford upon Avon aforesaid in the said country of Warr., being parcel or holder of the manor of Rowington, unto my daughter Susanna Hall and her heirs forever. Item, I give and bequeath unto my saied daughter Judith one hundred and fyftie poundes more, if shee or anie issue of her bodie by lyvinge att thend of three yeares next ensueing the daie of the date of this my will, during which tyme my executours are to paie her consideracion from my deceas according to the rate aforesaied; and if she dyes within the said term without issue of her body, then my will us, and I doe give and bequeath one hundred poundes thereof to my niece Elizabeth Hall, and the fifty poundes to be set fourth by my executours during the life of my sister Johane Harte, and the use and profit thereof coming shall be paid to my said sister Jone, and after her decease the saied l.li.12 shall remain amongst the children of my said sister, equally to be divided amongst them; but if my said daughter Judith be living at the end of the said three years, or any use of her body, then my will is, and so I devise and bequeath the said hundred and fifty poundes to be set our by my executors and overseers for the best benefit of her and her issue, and the stock not to be paid unto her so long as she shall be married and covert baron [by my executours and overseers]; but my will is, that she shall have the consideracion yearly paied unto her during her life, and, after her decease the said stock and consideracion to be paid to her children, if she has any, and if not, to her executours or assignes, she living the said term after my decease. Provided that if such husband as she shall at the end of the said three years be married unto, or at any after, do sufficiently assure unto her and tissue of her body lands answerable to the portion by this my will given unto her, and to be adjudged so by my executors and overseers, then my will is, that the said cl.li.13 shall be paid to such husband as shall make such assurance, to his own use. Item, I give and bequeath unto my said sister Jone xx.li. and all my wearing apparel, to be paid and delivered within one year after my decease; and I doe will and devise unto her the house with appurtenances in Stratford, wherein she dwelleth, for her natural life, under the yearly rent of xij.d. Item, I give and bequeath Shakspere's 1st signature

unto her three sonnes, William Harte, ---- Hart, and Michaell Harte, five pounds apiece, to be paid within one year after my decease [to be sett out for her within one year after my decease by my executors, with advice and direction of my overseers, for her best profit, until her marriage, and then the same with the increase thereof to be paid unto her]. Item, I give and bequeath unto [her] the said Elizabeth Hall, all my plate, except my broad silver and gilt bole, that I now have at the date of this my will. Item, I give and bequeath unto the poor of Stratford aforesaid ten pounds; to Mr. Thomas Combe my sword; to Thomas Russell esquire five pounds; and to Frauncis Collins, of the borough of War. in the county of Warr. gentleman, thirteen pounds, six shillings, and eight pence, to be paid within one year after my decease. Item, I give and bequeath to [Mr. Richard Tyler thelder] Hamlett Sadler xxvj.8. viij.d. to buy him a ring; to William Raynoldes gent., xxvj.8. viij.d. to buy him a ring; to my dogs on William Walker xx8. in gold; to Anthony Nashe gent. xxvj.8. viij.d. [in gold]; and to my fellows John Hemynges, Richard Burbage, and Henry Cundell, xxvj.8. viij.d. a piece to buy them rings, Item, I give, will, bequeath, and devise, unto my daughter Susanna Hall, for better enabling of her to perform this my will, and towards the performance thereof, all that capital messuage or tenement with appurtenances, in Stratford aforesaid, called the New Place, wherein I now dwell, and two messuages or tenements with appurtenances, situate, lying, and being in Henley street, within the borough of Stratford aforesaid; and all my barns, stables, orchards, gardens, lands, tenements, and hereditaments, whatsoever, situated, lying, and being, or to be had, received, perceived, or taken, within the towns, hamlets, villages, fields, and grounds, of Stratford upon Avon, Old Stratford, Bishopton, and Welcome, or in any of them in the said counties of Warr. And also all that messuage or tenemente with appurtenaunces, wherein one John Robinson dwelleth, situate, lying and being, in the Balckfriers in London, nere the Wardrobe; and all my other lands, tenementes, and hereditamentes whatsoever, To have and to hold all and singuler the said premisses, with their appurtenaunces, unto the said Susanna Hall, for and during the term of her natural life, and after her decease, to the first son of her body lawfully issueing, and to the heires males of the body of the said first son lawfully issueing; and for defalt of such issue, to the second son of her body, lawfully issueing, and to the heires males of the body of the said second son lawfully issueing; and for default of such heires, to the third son of the body of the saied Susanna lawfullie yssueing, and of the heires males of the bodie of the said third son lawfully issueing; and for defalt of such issue, the same to be and remaine to the fourth [son], ffyfth, sixte, and seaventh sonnes of her bodie lawfullie issueing, one after another, and to the heires Shakspere's 2nd signature

males of the bodies of the said fourth, fifth, sixth, and seventh sonnes lawfully issuing, in such manner as it is before limited to be and remain to the first, second, and third sons of her body, and to their heirs males; and for default of such issue, the said premises to be and remain to my said niece Hall, and the heir males of her body lawfully issuing; and for default of such issue, to my daughter Judith, and the heirs males of her body lawfully issuing; and for default of such issue, to the right heirs of me the said William Shakespeare forever. Item, I give unto my wife my second best bed with the furniture, Item, I give and bequeath to my said daughter Judith my broad silver gilt bole. All the rest of my goods, chattels, leases, plate, jewels, and household stuff whatsoever, after my debts and legacies paid, and my funeral expenses discharged, I give, devise, and bequeath to my son in law, John Hall gent., and my daughter Susanna, his wife, whom I ordain and make executors of this my last will and testament. And I do entreat and appoint the said Thomas Russell Esquire and Frauncis Collins gent. to be overseers hereof, and do revoke all former wills, and publish this to be my last will and testament. In witness whereof I have hereunto put my [seale] hand, the date and year first above written.

Witnes to the publishing hereof Fra: Collyns Julius Shawe John Robinson Hamnet Sadler Robert Whattcott

Shakspere's final signature, 'By me ...'

Due North of Philadelphia, More or Less

Google Earth

Airplane pilots tell us the main streets of quite a few cities seem laid out as if with a compass, north, and south, east and west. Philadelphia probably started that tradition in America, although Google Earth will show anyone who doubts it that Beijing, China was laid out along the same grid two thousand years earlier. It seems possible that Thomas Holmes was aiming at the Delaware Water Gap when he drew his famous map for William Penn, but there are troublesome objections. Broad Street, itself due North-South, when extended is called Route 611, heading straight for Doylestown, and then for the Water Gap. While there's a second pass through Blue Mountain at Wind Gap, it was a hard climb in the 17th Century. Until the Lehigh Tunnel was built, the water gap was the only practical way to go north for three centuries. The gap's existence had been known to the Indians for centuries, and the dividing line between East and West Jersey terminates at Dingman's Ferry, essentially the same place as the Delaware Water Gap. Since Penn's Proprietorship of New Jersey was seven years older than his ownership of Pennsylvania, he definitely knew about the main landmark of the area which he used as a fixed boundary marker. In fact, it is a tradition among modern proprietors that he unsuccessfully pressured the boundary negotiation in order to get both sides of the Delaware Gap into West Jersey, taking advantage of the sharp bend in the river for the purpose. Since he eventually owned or controlled all of the regions, it seems entirely plausible that he could arrange the direction of the roads as he pleased. There is one big problem with such a unifying hypothesis, however. If the Water Gap was to be made due North of Broad Street, and Broad Street was to be the center of the city, there was no way to accomplish it except by adjusting the location of the whole City of Philadelphia. That was within his power as owner, but it seems an extreme way to get maps tidy. The alternative explanation is that these mapping niceties were just a series of coincidences, and that is equally hard to believe. Present-day proprietors are often engineers and surveyors, so even to mention these issues is likely to lead to indignant dispute.

The Allegheny Mountains run from Georgia to the Adirondacks, presenting a sheer face to the East with very few gaps except for the major rivers. The water gap was a busy place for all North-South travel, whether on riverboats, canals, railroads or Interstate highways -- or mocassins. From there up to Canada, the simple explanation for a continued northerly path was there was scarcely any other way to go. The rivers and finger lakes have a due north orientation between mountain ridges as a result of advancing glaciers and receding glacier melt. That's the whole idea of global warming and global cooling; the polar ice cap advances and recedes from the north pole. When you are standing on the North Pole, everything else is South of you.

With logic plus a little imagination, it's thus possible then to see why a compass points you from City Hall, Philadelphia to Kingston Ontario, but how fast you go is your decision. The rest of this article argues that this seemingly desolate trail is peppered with an interesting history; even if you drive straight and fast, you ought to know a little about what you are passing. In this suggested trip, the traveler is urged to consider stopping for half a day in Doylestown, followed by the Water Gap, or Jim Thorpe, PA. You might alternatively duck off the Pennsylvania Turnpike extension into Wilkes-Barre and Great Bend, or toward Ithaca and Cornell University's famous bird sanctuary, then onward to Skaneateles and Marcellus over good local roads, tipping your cap toward Apalachin the gangster headquarters as you go. People in a hurry to get to Canada will take Interstate 81 most of the way, but at least consider taking secondary roads along Lake Ontario. It's a very pleasant drive, including a stop in Sackets Harbor for at least a meal. And then, detour to Clayton and Alexandria Bay before going over the international bridge to Canada. Finally, go down along the northern shore of Lake Ontario to Kingston. You're there.

Getting home after a long weekend is a hard drive, four-lane highways suggested, stopping at some of the places mentioned on the way home rather than using them all up on the way north. The detours add perhaps a half day to the trip in each direction. If you have the time, a trip westward along the northern or southern sides of Lake Ontario to Niagara Falls would be very nice, but not the subject of this topic.

It's pleasant to wander and stop at interesting places on impulse, but it's also nice to have a fairly clear idea of the day's outlines. You can eat in nice restaurants or grab a burger in a fast-food outlet; it often makes little difference which you choose. If you are traveling with children, tell the waitress to bring some crackers for the kids when she brings the menu. But by all means avoid the dreadful experience of watching it get darker and darker in the evening, with all the hotels full and adamant about it. By at least four o'clock in the afternoon, pick out a likely place to spend the night and call ahead for a reservation.

If you are traveling on a tight budget, at lunch don't go to a fast-food place, but to a supermarket. Pick up ingredients of tomorrow's breakfast and today's lunch; at the check-out counter, ask where the town park is, for a picnic lunch. With an assured place to spend the night, it's a lot easier to take a bath there, and then go out on the town for dinner. The main reason people drive like demons and thus miss the most interesting parts of a vacation trip comes from not knowing how to manage the children, and the details of travel life.