Urban Economics of Baltimore, Maryland

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12th Jun 2020 Business Assignment Reference this

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1. Baltimore, Maryland has many location related factors.  Baltimore settled in the early 17th century (About Baltimore, n.d.).  From a historical standpoint, as a major seafaring and trading community the natural harbor and waterfront, made Baltimore a hub for tobacco trade with England in its earliest days (About Baltimore, n.d.).  By the 18th century, according to the visitors’ website, Baltimore had also become a granary for sugar-producing colonies in the Caribbean (About Baltimore, n.d.).  The city experienced phenomenal growth after the Revolutionary War.  By 1825, there were dozens of flour mills (About Baltimore, n.d.).  According to the website, the National Road (currently U.S. Route 40) now linked Baltimore to major markets in the Midwest by land (About Baltimore, n.d.).  Baltimore businessmen established the first common carrier railroad in the nation, the Baltimore & Ohio (B&O) Railroad, making Baltimore a major shipping and manufacturing center, and the second largest municipality in the country (About Baltimore, n.d.).  Baltimore served as an important shipbuilding and supply-shipping center during World Wars I and II, however, “Suburban flight” led to a rapid decay in the 1960s and 70s (About Baltimore, n.d.). The city lost so much in population, the website states, and business it became as financially depressed as it had been during the Depression (About Baltimore, n.d.).

Baltimore came back strong and resilient, beginning in 1979, with urban renewal efforts, the website claims, that rank among the most ambitious in the United States (About Baltimore, n.d.).  Historically a working-class port town focused on steel processing, shipping, auto manufacturing, and transportation, Baltimore now has a modern service economy, led by high-tech, biotech, medicine, and tourism (About Baltimore, n.d.). The new “Inner Harbor” – so important in the city’s first days – has become a model for cities around the world and the visit Baltimore summary also highlights that several Fortune 1,000 companies like T. Rowe Price, Constellation Energy, Black & Decker, and Legg Mason call Baltimore home (About Baltimore, n.d.).

Baltimore lies just north of the nation’s capital, Washington, D.C. a large metropolitan area and is on a major north-south goods transit corridor, Interstate I-95, which runs up and down the coast through the eastern seaboard states.  According to the Bureau of Labor Statistics NAICS subsectors, location quotients by subsector for the Baltimore City, MD MSA, 2018 Annual Average data shows that Educational Services has the highest location quotient value of 4.13, followed by hospitals, warehousing and storage, museums, historical sites, zoos and parks, and utilities.  Baltimore is also home to the Baltimore Ravens NFL franchise, a major economic driver, as well as the world-renowned Johns Hopkins Hospital.

2. Mainstream Economists believe that the allocation of resources to their various uses is, for the most part, best handled by the market (McDonald, 2011).  Markets can produce unequal income distribution, so society may decide to address this issue.  However, there are some very important exceptions to this rule that call for intervention into the economy by the government (McDonald, 2011, p. 31).  I feel mainstream economists would argue that providing public health services is a very expensive method for improving the health care of low-income households and the use of healthcare vouchers as a form of subsidy to access health services in the private market is far more efficient (McDonald, 2011).

Behavioral Economists make policy recommendations that take human behavioral tendencies into account.  People are influenced by how problems are framed.  They generally believe the economy is best run by markets, but that government policy should be designed to protect people from the extreme risks that can arise in a market system. (McDonald, 2011, p.33).  Within behavioral economics, I believe that people make decisions using rules of thumb that are based on conventional wisdom that is a social contagion (McDonald, 2011).  I believe a behavioral economist would recommend that people need better financial information to make informed decisions, but also that the government should have a stopgap like the Financial Product Safety Commission.

Conservative Economist basic proposition, according to the textbook, is that human freedom is the ultimate end and that competitive capitalism is a system of economic freedom that is a necessary condition for political freedom (McDonald, 2011). The secondary proposition is that the scope of government must be limited to functions that Friedman outlines and that governmental power must be dispersed rather than concentrated at the federal level (McDonald, 2011, p.34).  I think a conservative economist would endorse a hands-off laissez-faire approach because government programs may be intended to do good, but they can be captured by special interests and used to promote private interests.

According to Marxists, conventional economics, including both the mainstream and conservative varieties, omits class conflict as an important factor to consider (McDonald, 2011).  Marxist emphasize social classes and assert that social classes are in conflict, and that class conflict possibly leads to revolution (McDonald, 2011). Marxists believe capitalist “rig the game” and see class conflicts in controversy over the use of land in cities and in this case, the funding of urban public health services (McDonald, 2011, p.36)

3. Following data from the Bureau of Labor Statistics on employment by industry for the Kansas City, MO-KS MSA. I used the results of the search on the BLS Quarterly Census of Employment and Wages, Table 8 – NAICS sub-sectors, one area (I used Annual Average 2018 data and sorted the Annual Average Employment Location Quotient column).  The MSA has strength in Warehousing and storage, Management of companies and enterprises, Printing and related support activities, Data processing, hosting and related services, and Insurance carriers and related activities sub-sectors. In all of these sectors, they are a net exporter, having an annual average employment location quotient of greater than 1.1 for services. Kansas City, MO-KS MSA is weak in Support activities for mining, Animal production and aquaculture, Primary metal manufacturing, and Oil and gas extraction. They are net importers in all of these areas because the annual average employment location quotient is less than 0.9 in these industries. In terms of the Noyelle-Stanback typology, they would likely be a Very Large Diversified Service Center as they have strengths mainly those in service area industries, and because the metropolitan area has a population greater than 2 million.

4. The state of Texas population distribution to me does not fit the data fairly well outside of the first city of Houston.  The remaining 14 cities seem “too large” and all have rank-sizes that exceed at least a million or more than the population of each city.  According to the model, larger cities have industries with large scale economies with more diverse employment bases.  My guess is that this is likely because the state is so large in area these cities support many smaller surrounding cities and have to serve much larger populations than the urban hierarchy model would predict.

City Rank Population Rank x Population = Rank-size
Houston 1 2,267,336 1 x 2,267,336 2,267,336
San Antonio 2 1,461,623 2 x 1,461,623 2,923,246
Dallas 3 1,300,122 3 x 1,300,122 3,900,366
Austin 4 916,906 4 x 916,906 3,667,624
Fort Worth 5 835,129 5 x 835,129 4,175,645
El Paso 6 678,266 6 x 678,266 4,069,596
Arlington 7 388,225 7 x 388,225 2,717,575
Corpus Christi 8 322,726 8 x 322,726 2,581,808
Plano 9 281,566 9 x 281,566 2,534,094
Laredo 10 255,305 10 x 255,305 2,553,050
Lubbock 11 247,323 11 x 247,323 2,720,553
Garland 12 235,965 12 x 235,965 2,831,580
Irving 13 235,648 13 x 235,648 3,063,424
Amarillo 14 197,823 14 x 197,823 2,769,522
Grand Prairie 15 188,664 15 x 188,664 2,829,660

Sources:

  • About Baltimore. (n.d.). Retrieved from https://baltimore.org/info/about-baltimore
  • McDonald, J. F., & McMillen, D. P. (2011). Urban economics and real estate: Theory and policy. Hoboken: Wiley.

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