2015 Rain Control Works Scholarship Winning Essay

Essay Question: What is the biggest issue facing Florida’s economy, and how would you solve it?

Florida’s economy is in relatively good shape, compared to the rest of the country, and the long-term outlook appears even better.

Granted, Florida TaxWatch warns that economic slowdowns in China and Brazil, two of the state’s largest foreign trading partners, could have a negative impact here. And there has been some published speculation that another recession may soon rock the national economy. If so, it would wreak havoc in Florida, particularly since many segments of our economy rely heavily on disposable cash in the hands of people from other states. Those segments include tourism, the cruise ship industry and Florida’s role as a retirement destination for wealthy seniors seeking to escape bitter cold and snow.

But the issue here isn’t speculation about national and international economies.

Rather, it is to identify the weakest link in Florida’s economy and offer viable solutions.

Clearly, housing construction lags behind everything else. Indeed, The Tampa Bay Times says residential construction is only half of what it was a decade ago and, as a result, Florida is still 277,000 construction jobs short of the 2006 levels.

To reach a reasonable solution, we must understand current realities.

First, the state’s overall economy is booming. In fact, the Times recently quoted a Well Fargo Bank economist as saying Florida is adding jobs nearly twice as fast as the rest of the country.

And those aren’t just low-paying tourism and retail jobs. There also has been a dramatic increase in health care, investment services and other high-paying employment.

Why is Florida doing so well? It attracts people because of its beautiful scenery, mild winter climate and relatively low cost of living. Also, the combined state and local tax rates are low, which promotes prosperity among residents and businesses alike. The Tax Foundation, in fact, says Florida has the best business climate among the most populous states. Also, it has the fifth-best business environment overall, behind only Wyoming, South Dakota, Nevada and Alaska.

Florida TaxWatch predicts solid job growth and declining unemployment for this year.If that trend continues, increased wealth should eventually stimulate the housing market. That will take time, however, because there is a glut of housing on the market.

It’s important to remember how we got this problem. A recession swept the country in September 2008, and delinquent mortgages led to a surge of foreclosures. The problem persists, particularly in Florida.

During a 12-month period that ended in February, more than 120,000 Florida homeowners lost their properties in foreclosures, according to The Sarasota Herald-Tribune. That accounts for 20 percent of all foreclosures nationwide. Also, 3.4 percent of all homes in this state are under the foreclosure process. Only two other states, New York and New Jersey, have worse rates.

As long as there are a lot of houses on the market, and many potential buyers are not eligible for loans because of struggles paying previous mortgages, there will be very limited demand for new housing.

The good news, the Herald-Tribune says, is that foreclosure filings were down 35 percent last year. If that trend continues, there soon will be fewer houses on the market … and thus an increased need for housing construction.

That brings us to the solution: Government must avoid well-intentioned policies that in the past have pulled down the housing construction industry. Put another way, the goal should be to continue this upward economic trend, not to “fix” it.

The first step is to consider carefully the potential effect on housing before making major government decisions.

For example, sunshinestatenews.com reports that 38 percent of all the land in Florida is owned by government.

The most basic law of economics is “supply and demand,” which states in part that prices rise sharply when there is a shortage of a good or service.

When government takes more than a third of a state’s land permanently off the market, that creates a major shortage in the supply of property available for new housing. The result is higher prices for land, which inflates the cost of a house. Admittedly, some of that land is marshes and therefore couldn’t be used for housing anyway. But that is not true in all cases.

Government has a legitimate interest in owning some land or at least exerting control over access. Beaches should be open to the public, not fenced off by the owners of nearby homes. Some areas need to be “preserved” for environmental reasons. And many people enjoy the peace and tranquility, as well as educational offerings, of publicly owned “preservation parks.” I personally have fun hiking trails and taking canoe trips in Castaway Island Preserve, a pristine, 300-acre nature park located just a few miles from the home of my grandparents in Jacksonville. But, to keep housing prices affordable, government should take care not to accumulate too much public land.

And that brings us to a recent controversy in the state Legislature.

Last November, Florida voters overwhelmingly approved a state constitutional amendment that proponents said was designed to “keep drinking water clean, protect our rivers, lakes and springs, restore natural treasures like the Everglades, and protect our beaches and shores.” Some state lawmakers used that new amendment in an attempt to justify buying about 46,000 acres of land in the Lake Okeechobee and Clewiston areas.

Nobody can object to that proposal as a matter of principle. After all, it would possibly enhance the supply of clean drinking water.

But what are the practical consequences? If the state does not take that land, according to the Tampa Bay Times, the owner plans to build 18,000 homes and 25 million square feet of commercial buildings on it. That certainly would help the economy. It also would stimulate the construction industry. And, by using the land for construction instead of pulling it off the market, state inaction would put downward pressure on housing prices. That doesn’t mean the land purchase proposal was necessarily a bad one. The point is that the impact on housing prices should be considered carefully and objectively, among other factors, in making such decisions.

There are other mistakes to be avoided. For example, the American Enterprise Institute says federal “affordable housing” policies required that an increased number of loans be made to those with lower incomes, even if their finances and credit history indicated they were a poor credit risk. Government also made equity loans available, so that homeowners could use market-driven increases in the value of their homes to finance vacations and a variety of other purchases. That works fine when the market is going up. But when housing values fall, it puts some people “under water” — owing more on the house than it is worth. That encourages people to walk away from their loans.

Another example is the emergence of “boomerang kids,” young adults who, after a period of independence, return home to live with their parents. According to an NBC article: “A Pew Research Center analysis … found that 40 percent of 18- to 31-year-olds with a high school degree or less, and 43 percent of those with some college education, were living at their parents’ home in 2012. Another study found that 85 percent of college graduates move back in after school is over.”

Some of these young people have heart-rendering stories. A recent news story, for example, told of a young man borrowing nearly $80,000 to finance his college education. Then, after failing to find a good-paying job, he didn’t have enough money for rent payments, to say nothing of meeting his college loan obligations. His story sounds plausible. The University of Florida, where I plan to begin attending classes June, estimates that it costs $20,000 a year to work on a degree there.

In past times, young people were a major mover in the housing industry as they began their adult lives by getting a job, marrying and buying that first house This “boomerang kid” phenomena is partly to blame for the depressed housing market.

The Heritage Foundation, a Washington-based public policy research group, recently concluded that much of the blame for a lack of well-paying, full-time jobs lies with the federal government: its tax, regulatory, monetary, trade and health care policies.

Another long-term problem: The federal debt, according to Forbes magazine, has more than doubled, to $18.2 trillion, in the past decade. It comes to $154,000 debt per taxpayer — nearly a half million dollars for my three-member family. That is simply too high. When interest rates finally begin to rise again, interest payments will skyrocket and the debt will increase rapidly.

The federal government needs to get spending under control. If interest payments were lowered, that would free some resources for taxpayers, who could then better support themselves and perhaps emerge with enough money to buy a house or at least pay for the one they already own.

Government officials often perceive of themselves as the savior of their constituents … the solution to all problems, big and small. Without a doubt, state intervention sometimes is needed. Florida’s beaches no doubt would lose their pristine beauty, for example, without any government oversight. But, in other cases, government actions sometimes create problems worse than the ones they are intended to solve.

As the Heritage Foundation research paper concludes, the federal government’s goal should be to “do no harm.”

At any rate, Florida’s economy is on a healthy upswing. If it continues at the current pace, housing construction will soon cease to be a problem.

During a presidential campaign stop in Canton, Ohio, in September 1960, John F. Kennedy said: “A rising tide lifts all boats.” But that won’t happen if misguided policies lower the tide.


rain-control-aluminum-florida-works-scholarship-winner-2015Ms. Kiana Melendez submitted this winning essay in 2015 for the Rain Control Works Scholarship.