Seventeen years ago the Red River flooded caused immense damage in Grand Forks and East Grand Forks. It seems natural to take a look at the state of the economy. Certainly there were major changes, and it is important to note which changes had more impact or longer durations than others. The time patch of the Grand Forks experience is also important. Lessons for other communities about what went right, and what went wrong could be gleaned from this nearby history.
Asymmetric information is a feature of many, if not most, transactions. My bank regulation students are particularly tired of hearing about AI issues. Purchase of any product entails some risk, even of a standardized product. There are situations where asymmetric information can create problems for transactions. The classic used car model of Akerloff, the so-called “lemons” problem is one market where there is such a problem. In the past callers to my radio visits expressed a similar concern with donations to charity.
The shale oil expansion began in North Dakota, and the expansion of oil output in the U.S. has been nothing short of revolutionary. However, I think it is time to recognize that the fanciful notion of “energy independence” is less and less likely to happen, if it ever really had a chance. We are surely less dependent on foreign oil as the graph shows, but it is not clear that it is going to go to zero anytime soon, if ever.
My bank regulation students received their final paper topic today. This is a big one. Let me preface this by saying that I have high regard for my students. They have excellent analytical and technical abilities and I think, generally speaking, they are able to bring these skills to bear on important problems. So I decided to give them a big one in bank regulation. I asked them to solve the problem of “Too Big to Fail” (TBTF).
Economic development and economic growth are key ideas in any state or area, but clearly are a hot topic in North Dakota. The economic success in North Dakota represents an incredible opportunity to catch up in areas perceived to behind and to move into areas that will define the future. It is essentially North Dakota’s opportunity to write its own ticket. What I see missing from the discussion right now is a meaningful discussion on the fiscal side.