Category: Abandonment of Middle Class

The Ethics of Responsibility

The Daily Escape:

John Muir Wilderness, CA -August 2019 photo by petey-pablo

Nobody in America should be rooting for a recession, and no political party should root for one either. Shame on those who are.

US economic policy is often driven by ideology, and those operating policies can change whenever the party in power changes. That seems to be more likely to occur in 2020 than it has at any time since Reagan. Like it or not, Bush I, Clinton, Bush II, and Obama all followed similar economic policies.

Trump has disrupted much of them, returning to a vigorous trickle-down policy, aggressive deregulation and the imposition of unilateral tariffs.

Max Weber, in his 1919 essay on “Politics as a Vocation”, made a distinction between politicians who live by the “ethics of responsibility” and those who follow the “ethics of conviction”. The ethic of responsibility is all about pragmatism; doing the right thing in order to keep the show on the road. But the ethic of conviction is all about moral (ideological) purity, about following the playbook despite the impacts.

An example is the Kansas Experiment, where Sam Brownback, following right-wing convictions, cut taxes to produce a “shot of adrenaline into the heart of the Kansas economy.” Economic growth was below average, state revenues crashed, and debt blew up. But, still a believer, Brownback vetoed the effort to repeal of his laws.

You don’t need more from Wrongo to paint the picture. We’re in a time of the ethics of conviction.

Let’s take a look at two recent articles about the economy. First, from the Economist, which is telegraphing the possibility of a US recession:

“Residential investment has been shrinking since the beginning of 2018. Employment in the housing sector has fallen since March….The Fed reduced its main interest rate in July and could cut again in September. If buyers respond quickly it could give builders and the economy a lift.”

But housing is not the only warning sign. The Economist points to this chart, showing the change in payrolls in the 2nd Quarter of 2019:

It’s clear that much of America is doing quite well. It is also clear that most of the 2020 battle ground states are not. Indiana lost over 100,000 manufacturing jobs in the last downturn, almost 4% of statewide employment. It is among a growing number of states experiencing falling employment: a list which also includes Ohio, Pennsylvania and Michigan.

In 2016, those last three states all delivered their electoral-college votes to Trump, and were decisive in his electoral victory. Trump’s trade war may still play well in these states, but if the decline in payrolls continues, it suggests a real opening for Democrats, assuming they are willing to hammer on pocketbook issues.

Second, the Wall Street Journal had an article about winners and losers in the 10 years since the Great Recession. It isn’t a secret that those left behind are in the bottom half of the economic strata, and there is little being done to help them:

“The bottom half of all U.S. households, as measured by wealth, have only recently regained the wealth lost in the 2007-2009 recession and still have 32% less wealth, adjusted for inflation, than in 2003, according to recent Federal Reserve figures. The top 1% of households have more than twice as much as they did in 2003.”

We also call wealth “net worth”. It is the value of assets such as houses, savings and stocks minus debt like mortgages and credit-card balances. In the US, wealth inequality has grown faster than income inequality in the past decade, making the current wealth gap the widest in the postwar period. Here is a devastating chart from the WSJ showing the net worth of the bottom 50% of Americans:

There’s a big difference between the 1% and the bottom 50%: More than 85% of the assets of the wealthiest 1% are in financial assets such as stocks and bonds. By contrast, more than half of all assets owned by the bottom 50% comes from real estate, such as the family home.

Economic and regulatory trends over the past decade have not only favored stock investments over housing, but they have also made it harder for the less affluent to even buy a home. The share of families in the bottom 50% who own a home has fallen to 37% in 2016, (the latest year for which data are available), from 43% in 2007. OTOH, homeownership among the overall American population is higher since 2016.

Weber’s ethics of conviction have driven our politics since well before the 2008 recession. We know what it caused: inequality, demonstrated by lower wages for the 90%, and a devastating decline in net worth for the bottom 50%.

Can we turn the car around? Can we elect politicians who will follow Weber’s ethics of responsibility at the local, state, federal and presidential levels in 2020?

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Tuesday Wake Up Call – September 3, 2019

The Daily Escape:

Clouds and light, Zion NP, Utah – 2019 photo by walkingaswind

It’s fair to ask, “What happened to the Wrongologist?” He’s taken a long break from posting, in part due to fatigue brought on by our toxic political environment. But beyond that, Wrongo has (at least temporarily) despaired of seeing a path forward to meaningful political change.

Here’s a few relatively connected changes to ponder on Labor Day.

We’re in the midst of a big demographic change. Demo Memo reports that Non-Hispanic Whites (that’s white people to us non-demographers) will account for just 47% percent of the nation’s 2019 public school students, according to the National Center for Education Statistics. That means the majority of students (53%) in grades K through 12 will be Hispanic, Black, Asian, or another minority.

That’s a big drop since 2000, when 61% of public school students were non-Hispanic White. Their share fell below 50% in 2014. The non-Hispanic White share of public school students will continue to fall. In 2027, non-Hispanic Whites will account for 45% of students, according to projections by the National Center for Education Statistics.

It’s not a coincidence that nearly 32% of Americans aged 18 or older can speak a language other than English. According to the 2018 General Social Survey, this figure is up from 28% a decade ago. Asians and Hispanics are most likely to say they can speak a language other than English, 83% and 69%, respectively. By generation, the youngest Americans are most likely to be able to speak a language other than English, with the iGeneration at 43%, Millennials at 39%, and GenX’ers at 33%.

Times they are a-changing.

Changes on the jobs front have already occured. Here is chart from Visual Capitalist showing the largest non-government employer in all 50 states. Sadly, even in this time of economic progress, Walmart is the largest employer in 21 states:

In many states, either the state or federal government is the top employer. California employs 250,000 federal workers. New York State is unique, since NYC’s municipal workforce is the state’s top employer. And then, there is the US Department of Defense: Eight states have more active military personnel than any single private employer.

Universities and hospitals are top employers in nearly half of the states.

But Walmart is the biggest private employer, with 1.5 million workers. They employ about 1% of private sector workforce in the US. Amazon is a distant second with more than 500,000 employees.

How are the facts about majority/minority schools and Walmart as  our largest employer linked? According to Walmart’s 2019 diversity report, 44% of Walmart employees are people of color. This means that after graduation, Walmart is a likely workplace for many of them. People of color account for 61% of Amazon employees.

And the average wage for a full-time Walmart employee in the US is $14.26. Recent full-time pay in a New Jersey Amazon warehouse was $13.85. Both sound fine until you realize that these are average pay rates for full-time workers. Many earn far less. And few actually are full-time workers, most are part-time.

Are these good jobs at good wages? They are not.

Our schools are getting more diverse, and the jobs we hold now are increasingly fragile. What’s more, for many Americans, one job doesn’t provide a living wage. As the NYT reported in a Labor Day opinion piece by Binyamin Appelbaum and Damon Winter:

“More than eight million people — roughly 5 percent of all workers — held more than one job at a time in July, according to the most recent federal data.”

Dignity. Shouldn’t America strive to make working at one job pay enough to provide for a person’s family? We tout the low unemployment rate, and the statistics that show millions of available and unfilled jobs. But, except for a few jobs involving high barriers to entry, “worker shortage” is a euphemism for “this job doesn’t pay well enough, or have good enough conditions to attract enough workers.”

There’s no worker shortage in America, there’s a pay and good working conditions shortage. Work doesn’t have to be absorbing, but it should be free of fear, and it should be worthy of one’s talents.

It’s baffling to Wrongo that supposedly smart politicians have facilitated a system that has robbed wealth from the bottom 90% of Americans and funneled it to the top 1%, largely through holding down workers’ wages, when our economy is driven by consumer spending.

All of us are wage slaves to a degree, we all sell our time and talent for money. Our schools are the basis for building talent. That, plus job experience, is what the average American offers to sell to employers.

So this is mostly a post about future Labor Days.

Time to wake up America! Without profound changes to how we educate our kids, and how we reward capitalists and capitalism, our country of tomorrow will bear little resemblance to the nation of today.

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Can US Workers Bridge A Cultural Divide?

The Daily Escape:

Peaks Island, ME – August 2019 photo by Kendall Lavoie. Peaks Island is a popular destination for day trips on the ferry from Portland. As you might expect, it has a small population in winter, tripling in summer, with many more day trip tourists. There is one taxi, a relatively new Ford Flex. It was purchased through donations by townspeople last year.

(Apologies for the sustained period of no reporting, the longest since the Wrongologist’s founding in 2010.)

Wrongo and Ms. Right watched “American Factory” on Netflix last night. The story begins with the closing of a Dayton Ohio GM truck plant in 2008, and the layoff of 2,000 plant workers. Seven years later, Fuyao Glass, a Chinese company that manufactures glass for trucks and automobiles opened in the Dayton factory. Cao Dewang, the Chinese Chairman of the Fuyao Group had a bold idea: Pair American workers with Chinese workers, who are brought to Ohio to train and work alongside their American counterparts.

The former GM workers are initially ecstatic. They’re happy to land a new factory job. Never mind that the closed GM plant was unionized, and paid more than $25 an hour, while Fuyao is non-union, with starting pay of $14 an hour. But, the laid-off people of Dayton are happy to have a new job.

Soon it’s clear that the operating results aren’t meeting Fuyao’s plan. There is an obvious and growing culture divide. First, Chinese workers have no problem working 12+ hours a day and at least six days a week, while the Americans are used to five days in eight-hour shifts.

Second, individual expression is difficult for the Chinese but hardly for Americans. During a seminar for Chinese workers to help them understand American culture, a Chinese manager assures them:

“You can even joke about the president. No one can do anything to you.”

That’s followed by amazed looks.

The movie starts by trying to learn, “will the new plant succeed?” But success has different meanings: Success for the Chinese owner is different from success for the American worker, who only wants to know, “will these be steady jobs?” Success for the management means something different. Can the factory fulfill their orders at the same volume and quality as Fuyao’s Chinese factory? What will it take for the new factory to become profitable?

These different goals, and the pressure to meet them drives the film. As one frustrated Chinese manager complains:

“American workers are difficult, and their output is low. I can’t train them.”

The American view? One fired US manager says:

“You can’t spell Fuyao without FU”.

OTOH, a move to start a union was soundly defeated.

American Factory is really about how culture drives what we expect to get from a job. Everyone wants to get paid, but what the Americans want from a job is different from what the Chinese are looking for. Americans see the job as an extension of self, and a way to earn. The Chinese see the job as part of the company’s drive to succeed. And also as a means for China to succeed.

There is a quite a bit of soul-searching in the film. The soul of the American factory worker, of American manufacturing in general and the future soul of the global economy are at stake. In addition, late in the film, Cao Dewang, the Chinese CEO wonders aloud:

“I don’t know if I’m a contributor or a sinner.”

He’s reflecting on what was lost between his young life in rural China and his later outstanding business success.

But, Cao and his Chinese managers aren’t villains in “American Factory.” It is a nuanced story, although clearly its sympathies are with the American workers. The film raises many issues: How can companies remain competitive in a global economy? Is it worth it to give taxpayer breaks for companies that relocate? Can global companies bridge the culture gaps that occur whenever a firm locates abroad?

Much of the interest in the film is due to its production company, Higher Ground, formed in partnership with Netflix by former President Barack Obama and Michelle Obama. The filmmakers,  Steven Bognar and Julia Reichert began shooting independently in 2015 while Obama was still president.

In closing, note that at its high point, GM’s Dayton plant employed 10,000 people. Fuyao Glass America’s Dayton plant now employs 2,200 Americans and 200 Chinese. They had originally promised 5,000 employees, and received tax incentives to open the plant.

Some of the Chinese have now moved their families to Dayton, and their kids attend Dayton’s public schools.

By adding automation and fully Chinese management, the plant turned a profit in 2018, three years after it opened.

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Current and Future Job Growth Will Be In Cities

The Daily Escape:

Breezewood, PA – 2008 photo by Edward Burtynsky. Each year, 3.5 million passenger vehicles and 1.5 million trucks drive the half-mile Breezewood strip on Route 30. That’s because a law in the 1950s prohibited spending federal funds to connect a free road to a toll road. So, highway planners designed an interchange that routes drivers onto Route 30 for a half-mile.

An interesting article from Market Watch shows how nearly all job growth is in big cities, while rural America is being left behind:

“Since the economy began adding jobs after the Great Recession nine years ago, about 21.5 million jobs have been created in the United States, the second-best stretch of hiring in the nation’s history, second only to the 1990s. But….Most of the new jobs have been located in a just a few dozen large and dynamic cities, leaving slower-growing cities, small towns and rural areas — where about half of Americans live — far behind.”

MarketWatch cites a July 2019 study by McKinsey forecasting that 25 cities that are home to about 30% of Americans will capture about 60% of the job growth between 2017 and 2030, just as they did between 2007 and 2017. In typical McKinsey fashion, they break cities and towns into many categories. Please read the report for full details. Here are their top-line findings about where the largest growth is happening:

  • Twelve mega-cities (and their extended suburbs) top the list: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Philadelphia, Phoenix, San Francisco and Washington.
  • Another 13 are high-growth hubs in or around smaller cities: Austin, Charlotte, Denver, Las Vegas, Minneapolis, Nashville, Orlando, Portland (Ore.), Raleigh, San Antonio, San Jose, Seattle, and Tampa.
  • Smaller, fast-growing cities and a few privileged rural counties will also add jobs, while vast swaths of the South, Midwest and Plains will lose jobs.
  • The New York metro area, home to 20 million people, added more jobs over the past year than did all of America’s small towns and rural areas, with a population of 46 million people, combined.

McKinsey’s forecast reinforces concerns about persistent economic inequality in America. Inclusive growth is a must, or it is likely that our society will fall apart. The problem: No one, and certainly not Republicans, have a magic wand that will bring back jobs to rural and small-town America.

Anyone who’s been paying attention knows that job growth is mostly occurring in places that vote for Democrats, while the stagnation is mostly in places that vote for Republicans. In 2016, Trump was smart to tailor a pitch to those parts of America, but their situations haven’t improved since his election.

And the divide is getting larger. Over the past year, only 12% of 389 metro areas had any significant job growth, according to an analysis of Bureau of Labor Statistics data by Aaron Sojourner, a former White House economist, now an associate professor at the University of Minnesota:

So, after 17 years of significant and broadly-spread growth, fewer towns and cities are now doing so well. And, of the 47 metros that gained significant numbers of jobs over the past year, 21 were on McKinsey’s top 25 list.

Meanwhile, the regional jobs data from the BLS shows that non-metropolitan areas, which account for 18% of jobs, had just 5% of job growth over the past year.

OTOH, income inequality is greatest in those cities with the highest jobs growth. But, we can’t write off one quarter of the US population simply because they live in low-growth areas. And politically, it’s essential. Rural America is overrepresented politically — we can’t ignore them.

But, what to do? Sanders and Warren have addressed this by trying to raise tax revenues from corporations, and funding free college. They along with others, believe in some form of Medicare-for-all, which could help address the fact that rural America is older, sicker, and poorer than ever before.

Yang proposes a universal basic income of $1,000/month for everyone.

Trump proposes tax cuts for the wealthy, tariffs and weakened environmental regulations, but despite all three, the situation has gotten worse since his election.

McKinsey suggests that communities that are being left behind ought to try almost everything: improved transportation to get residents to jobs, rural broadband, and lifelong job training.

Building consensus about how to address job growth and income inequality is the key to America’s future. This is what the 2020 presidential election should be about.

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Saturday Soother – August 3, 2019

The Daily Escape:

Wotans Throne, North Rim, Grand Canyon NP, AZ – photo by phantomcloud.

The WSJ has an important story on how people with what seems like pretty good household incomes, are getting more and more indebted trying to keep up a middle class lifestyle:

“The American middle class is falling deeper into debt to maintain a middle-class lifestyle.

Cars, college, houses and medical care have become steadily more costly, but incomes have been largely stagnant for two decades, despite a recent uptick. Filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy.

Consumer debt, not counting mortgages, has climbed to $4 trillion—higher than it has ever been even after adjusting for inflation. Mortgage debt slid after the financial crisis a decade ago but is rebounding.

Student debt totaled about $1.5 trillion last year, exceeding all other forms of consumer debt except mortgages.

Auto debt is up nearly 40% adjusting for inflation in the last decade to $1.3 trillion. And the average loan for new cars is up an inflation-adjusted 11% in a decade, to $32,187, according to a Wall Street Journal analysis of data from credit-reporting firm Experian.”

The Journal gives a generally sympathetic portrayal, provided you don’t go deeply into their comments section, where readers spout platitudes about Millennial’s lack of fiscal responsibility. Here’s a chart from the WSJ using some recent work by Georgetown bankruptcy law professor Adam Levitin showing how much certain costs have risen relative to wages:

More from the WSJ:

“Median household income in the U.S. was $61,372 at the end of 2017, according to the Census Bureau. When inflation is taken into account that is just above the 1999 level.

Average housing prices, however, swelled 290% over those three decades in inflation-adjusted terms, according to an analysis by Adam Levitin, a Georgetown Law professor who studies bankruptcy, financial regulation and consumer finance.

Average tuition at public four-year colleges went up 311%, adjusted for inflation, by his calculation. And average per capita personal health-care expenditures rose about 51% in real terms over a slightly shorter period, 1990 to 2017.”

Of course, in Wrongo’s youth, few young people were carrying large amounts of student debt. And if they went to coastal cities to build their careers, the cost premium over living in a city in the heartland wasn’t as high as it is now (except for San Francisco and New York, which have always been very expensive). Also, it isn’t just tuition that has gone up. All the other college costs, housing, meals, books, and fees, have also gone up more than 300% in the past 30 years.

It is notable that college costs have far outpaced the ability of those in the middle class to afford them. That is why student loan debt has become so high: working your way through college is no longer as realistic as it once was.

Turning to housing, the WSJ quotes Domonic Purviance of the Federal Reserve Bank of Atlanta, who says that people earning the median income can no longer afford the median-priced new home, which cost $323,000 last year, and barely have the means to buy the median existing home, which is now about $278,000.

Failure of wages to keep up with costs is a huge problem, and it has to be emphasized that this is not some inevitable outcome of our so-called “free markets” – it is driven by neo-liberal policy.

A few of the Democratic candidates are addressing the health and education cost burdens now adding to the debt load of all Americans. But we need more discussion that leads us to better policy.

With so much wrong in the world, we surely need to take a step back, and de-stress. To help with that, here’s your Saturday Soother. Let’s start by brewing up a large mug of Finca Las Nieves Green-Tip Geisha coffee ($35.00/8 oz.). This coffee is grown and roasted in Mexico. Located at an elevation of 4,000 feet, Finca Las Nieves is a 1,000-acre coffee farm located in Oaxaca State. It is completely off the grid — both solar- and hydro-powered. In addition to growing, harvesting, processing and roasting coffee, the farm also offers vacation bungalows for rent on the property.

Now, settle into a comfy chair and listen to Bach’s unaccompanied Cello Suite No. 1 in G Major, movements 1-3 of 6, by Yo Yo Ma. The video uses a painting by Hudson River School painter, Thomas Cole. It is called “The Oxbow”, located on the Connecticut River in Massachusetts near Northampton, MA. Here is Yo Yo Ma:

Those who read the Wrongologist in email can view and listen to the video here.

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Fixing Social Security

The Daily Escape:

Tahitian Gardenia, Maui – 2013 photo by Wrongo

On June 13th, The New York Times had an article on the Social Security (SS) shortfall: (emphasis by Wrongo)

“Unless a political solution is reached, Social Security’s so-called trust funds are expected to be depleted within about 15 years. Then, something that has been unimaginable for decades would be required under current law: Benefit checks for retirees would be cut by about 20 percent across the board.”

With life expectancy increasing, by 2035, Social Security estimates, the number of Americans 65 or older will increase to more than 79 million, from about 49 million today. This is the high point of eligibility, as the number of Baby Boomers will start to decline by then.

Americans are counting on Congress to fix this problem. As usual, there are two answers, one offered by each Party. The GOP thinks that we can’t afford SS and Medicare. In fact, they’ve been trying to cut our SS checks since the Reagan presidency. The right-wing Heritage Foundation offered a new policy paper in May. As in the past, they favor cuts to benefits and siphoning money from payroll taxes into individual investment accounts. This is a recycling of George W. Bush’s 2005 idea, that the Democrats blocked at the time. The Heritage Foundation overlooks that at one time, pensions were widespread, and SS was a supplementary source of income for many retirees, not their primary source as it is for most today.

The Democrats have suggested an increase in Social Security benefits, along with higher taxes for the wealthy. Taken together, these measures would eliminate the SS program’s financial shortfall.

Millions of words have been written about how to deal with the shortfall. Here is one idea from Dale Coberly posted at the Angry Bear:

“All we have to do is pay an extra dollar per week per person per year.  After next year It will be more like a dollar and ten cents.  And if we wait another year it will be about a dollar and twenty cents for the first few years, then a great deal less than a dollar per week on average. This would keep Social Security solvent essentially forever.  The Deputy Chief Actuary at Social Security agrees that this is true.”

Most of the political discussion is about “we can’t afford it”. They mean the US government. But, when we think that if the individual wage earner CAN afford it, there’s no reason why the government can’t pay for it. This isn’t socialism, and the US government doesn’t have to come up with $ Trillions all at once.

Social Security was not designed to be welfare. It isn’t an “entitlement”, as though it’s an unearned benefit. People contribute a hefty portion of their annual income for their entire working lives to the SS fund, and they have the right to their SS payments in retirement. The original intent was for workers to save enough money to pay benefits when they were too old to work. Today, even the “rich” are not paying in more than they will get back with reasonable interest.

The Times article doesn’t mention that the easiest, and most obvious solution is raising or eliminating the SS cap. Most people forget that only the first $132,900 are taxed. Anyone earning more than that is paying into Social Security at the same rate as the rest of us.

Here’s a message to Jeff Sommers, who wrote the NYT article: You are fanning the flames of a false emergency when there is a sound solution to be implemented.

Several studies have shown that simply removing the cap, which affects less than 10% of US taxpayers, would solve the SS program’s solvency issues indefinitely. No benefit cuts needed. No political horse trading needed between the Republicans and Democrats, except that the GOP base will scream bloody murder if they are forced to pay in more than they will get back.

But, why should we give a pass to the rich, when the rest of us depend disproportionately on social security income to meet basic needs?

Now all we need is the political courage to get it done, which is in absurdly short supply these days.

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Monday Wake Up Call – June 24, 2019

The Daily Escape:

View from Angels Landing summit, Zion NP Utah – 2019 photo by SurrealShock. 86,000 people visited Angels Landing over the four-day Memorial Day weekend in 2018.

On Sunday, the NYT reported: (emphasis by Wrongo)

“In the last decade, private land in the United States has become increasingly concentrated in the hands of a few. Today, just 100 families own about 42 million acres across the country, a 65,000-square-mile expanse, according to the Land Report, a magazine that tracks large purchases. Researchers at the magazine have found that the amount of land owned by those 100 families has jumped 50 percent since 2007.”

The West is a patchwork of public and private lands. Land ownership in the West has always been concentrated in the hands of the federal government, which owns about 50%. Now we learn that the rest of the West is quickly moving into the hands of a very few people.

The large purchases by these new private landholders come as the region is experiencing the fastest population growth in the country. That drives up housing prices and the cost of living. Some locals are fearful of losing both their culture and economic stability.

Rocky Barker, a retired columnist for The Idaho Statesman, has said this is a clash between two American dreams, pitting the nation’s respect for private property rights against the notion of beauty-rich publicly-owned lands set aside for the enjoyment of all.

In the West, there is an evolution of an economy based in minerals extraction, to one based on recreation; from a working class culture to a more moneyed one. The NYT article focuses on one family, the Wilks brothers, Dan and Farris, who made their money ($3.5 billion) in fracking. They sold out, and bought a vast stretch of mountainous land in southwest Idaho.

The Wilks brothers see what they are doing as a duty. God had given them much, and in return, “we feel that we have a responsibility to the land.”

The Wilkses now own 700,000 acres across several states, and have become a symbol of the out-of-touch owner. In Idaho, they have closed trails, and hired armed guards to patrol their land, blocking or stymieing access not just to their property, but also to some publicly owned areas. They also hired a lobbyist to push for a law that would stiffen penalties for trespass, and the bill passed.

This has made locals angry, as they have hiked and hunted on these lands for generations. Some emailed the Wilkses, asking permission to cross their property. They were surprised to receive a response suggesting they first visit PragerU, a right-wing website that was financed by the Wilkses and share their opinions of its content.

This is an example of a test for land use. Should you have to tell landowners your political views before you get to use their land?

Welcome to the future. Concentration of land ownership is a natural consequence of our free market capitalism. Our capitalist system isn’t designed to prevent concentration of ownership, whether it be of corporations or land.

That requires politicians who are not beholden to corporations and capitalists.

Our ancestors left Europe because by the 1600s, much of the land had already been bought up and was either inaccessible, or available in small lots for rent. America has been in the process of being divided up in the same way since the 1700s.

We talk about wealth inequality, and this story shows again that it is much more than numbers on a ledger. It is the power to own vast chunks of America, to decide how that land will be used, and to charge for that usage if they desire.

Battles over both private and public land have been a defining part of the West since the 1800s. For years, fights have played out between private individuals and the federal government.

OTOH, Americans in the West have made private ownership of wilderness a sacrament. They even contend that private use of public lands should be a right. Now, when the results of concentrated private land ownership become clear, when suddenly, a river or a mountain range they’ve enjoyed using for decades has a fence around it, their bellyaching begins.

But when the Wilkses, who made their money in fracking talk about how they feel they have a responsibility to the land, that has to be seen as hypocrisy.

The people in the West should Wake Up and give thanks for every inch of every national park. They should willingly pay additional taxes to keep our national parks in prime condition.

And they should finally see the wisdom in higher income taxes on corporate profits, and in Elizabeth Warren’s taxes on individuals with greater than $50 million in assets .

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Sunday Cartoon Blogging – June 23, 2019

Iran’s solution to possible war with the US. If this happened, Trump would say he got a love letter from the Ayatollah:

Little-known technology shows Pentagon the best story to use about its reasons for war:

This week, the Trump administration argued in court that detained migrant children do not require basic hygiene products like soap and toothbrushes in order to be held in “safe and sanitary” conditions:

Mitch ain’t willing to discuss reparations:

Reparations are a difficult subject. As the historian Howard Zinn said, “You can’t be neutral on a moving train.” He meant that you either abide the status quo, or you oppose it. You either commit yourself to be the best anti-racist you can be, or you don’t. Whichever you choose, you should be honest in how you frame your choice. Saying that reparations are not worth pursuing, or simply doing nothing about them, is an implicit defense of the policies and systems that have created our present-day racial inequities.

The Supremes held 7-2 that a cross located in a war memorial could be displayed on public property (at a traffic circle). They said that some crosses are merely historic icons. Their decision favors one religion over others, and it seems hostile towards religious minorities. And why won’t Christians act like Christians?

How the Capitalism game actually works:

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Is Ending Income Inequality a “Radical” policy?

The Daily Escape:

Mount Robson & Berg Glacier, BC, Canada – June 2019 photo by DrTand the women

New York Magazine’s Eric Levitz writes: (brackets and emphasis by Wrongo)

“…the Federal Reserve just released…its new Distributive Financial Accounts data series [that] offers a granular picture of how American capitalism has been distributing the gains of economic growth over the past three decades. Matt Bruenig of the People’s Policy Project took the Fed’s data and calculated how much the respective net worth of America’s top one percent and its bottom 50 percent has changed since 1989.

He found that America’s super-rich have grown about $21 trillion richer since Taylor Swift was born, while those in the bottom half of the wealth distribution have grown $900 billion poorer.”

This is what a few of the Democratic presidential candidates have been talking about, some loudly and some quietly, for the past few months. Levitz asks the right question:

“So, is an economic system that distributes its benefits in this manner consistent with Americans’ common-sense views of economic justice? If not, would incremental changes be sufficient to bring it into alignment with the median American’s values? Or would more sweeping measures be required?”

In a sense, Democrats are testing whether advocating for changing Capitalism is an argument that voters will accept in 2020. More from Levitz:

 “Some Democratic presidential candidates say that America’s economic system is badly broken and in need of sweeping, structural change. Others say that the existing order is fundamentally sound, even if it could use a few modest renovations. The former are widely portrayed as ideologues or extremists, the latter as moderates.”

Essentially, the question is “who’s the extremist?” in the Democratic Party. This conflation of “extreme” or “radical” with “bad” is what the GOP and the Main Stream Media do every day, and it weakens our policy-making.

We use “extremist” or “radical” as a way of signaling that a policy position is too awful to consider.

If you simply say that something is bad, then you are forced to defend your position. But, when you describe it as “extreme“, you’ve called it bad, and people will HEAR that you think it’s much too big a change to even discuss.

Respectable talking heads like Judy Woodruff will ask: “Will Americans really go for THAT?”

This is bad faith messaging about important questions. This is so ingrained into people who talk about politics that it largely goes unquestioned. We shouldn’t care about pundits and broadcasters saying how extreme or not extreme something is. We should care about the merits of the argument.

Republicans have been calling Democrats “extreme” “radical” and “Socialist” for decades. They’re using bad-faith tactics; de-legitimizing an idea or a candidate without having to debate on the merits.

Bernie Sanders and Elizabeth Warren are offering “extreme” policies only if our baseline is what the average Congress critter’s economic agenda looks like. It’s not clear why that’s an appropriate yardstick.

Did we think calls for sweeping change in Egypt were extremism when students took to the streets demanding basic civil rights? Do we think the young people demonstrating today in Sudan are radicals?  Our assessment (and support) of these dissenters’ ideologies has more to do with how far their values are from those of their corrupt political and military leaders.

And also by how close they seem to be to our core values.

Whether it is extreme or moderate to propose sweeping changes to American capitalism should depend on how close our existing system is to how a just economic system operates. And these latest data show that the one percent have gotten $21 trillion richer since 1989, while the bottom 50% have gotten $900 million poorer.

This is what economic class warfare looks like. Saying that isn’t hyperbole. The earnings and wealth of a majority of our citizens has been systematically declining with the complicity and power of our government, in order to benefit the rich.

It shows how bad things are when the “radical” in American politics is anybody who argues that the American economy isn’t working for a huge percentage of the population.

Judy Woodruff may think that the economy is great, but incrementalism has failed most of us for the past 40 years.

Given all this, any politician who insists that American capitalism is “already great” is clearly someone who is indifferent to economic inequality.

We need to adopt redistributive economic policies. That may sound like an extreme position, but the alternative of continuing our growing wealth inequality, should really be thought of as far more radical.

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Fed Study Shows Rising Financial Desperation in Poorer Zip Codes

The Daily Escape:

Aliso Creek State Beach, near Laguna Beach, CA – 2019 photo via

Simon Johnson observes at Project Syndicate: (emphasis by Wrongo)

“To defeat populism requires coming to grips with a fundamental reality: bad economic policies no longer necessarily result in a government losing power. In fact, it is now entirely possible that irresponsible populists may actually strengthen their chances of being re-elected by making wilder and more impossible promises – and by causing more economic damage.”

Johnson, former chief economist for the IMF, believes that structural economic factors, including automation, trade, and the financial crisis have left many people feeling neglected by those who control economic policy.

When politicians back policies that add economic uncertainty, or that discourage investment, we see lower economic growth, and fewer good jobs. Ordinarily, dissatisfaction shows up at the ballot box, holding that government accountable at election time.

But this is no longer reliable, because politicians wiggle out of the trap by saying that the media are biased, that the experts are wrong, and that the facts are not the facts. And the angrier people become, the easier it is to persuade them to accept that no one is to blame, and vote again for those who helped to cause their economic distress in the first place.

A new study by the St. Louis Federal Reserve Bank examined American financial distress by Zip Codes. It sheds light on a topic we regularly debate: Why are there so many signs of distress in a supposedly robust economy? And this time, will politicians be held to account?

Since 2015, the lowest income households have been taking on more debt. Their wealth has become even more concentrated in home ownership. The level of distress in lower-income households has also increased, despite the official story of increasing prosperity.

The study drills into Zip-Code level data to show that even adjacent Zips show striking divergence in wealth accumulation (or erosion). For instance, they looked at the percentage of people within a Zip Code that have reached at least 80%t of their credit limit on their bank-issued credit cards.

That is believed to be a good proxy for financial distress.

Before the 2008 crisis, analysts missed the rising levels of household debt. That debt was often funded by borrowing against home equity. Rapidly falling home prices after 2008 showed how fragile many of those borrowers were.

The contrast between national averages and Zip Code households is stark. Looking at averages, the recovery appears to be quite broad.  But zooming in by Zip Code showed a bifurcated economy still suffering from the 2008 crisis. The researchers found that looking at the value of assets and reliance on debt shows a clearer picture: (emphasis by Wrongo)

“…the poor and high-leverage ZIP codes that are more affected by wealth shocks may still be vulnerable. What’s more, trends in less affluent groups are masked in nationally aggregated statistics by groups with more wealth.”

“May be vulnerable”? They will certainly be vulnerable when the next downturn begins.

Since 2015, debt and financial distress have been rising the fastest in these low-wealth areas, while it rose the slowest since 2015 for the wealthiest households. We already see softness in economic indicators like retail sales, home sales and housing construction. It’s reasonable to expect that the next recession isn’t far away.

We’ve had a long economic recovery, but its gains were not distributed as broadly as they had been in previous downturns. What we got was an uneven economic recovery, with most gains going to an increasingly narrow group.

More people are left out of this supposedly robust economy than the politicians and most economists think. The Fed study shows that the averages conceal plenty of pain. Maybe this isn’t an earthshaking idea. We all see income and wealth disparities in our communities, it’s not that unusual. But the fact that the differences are now extreme enough to show up in ZIP Code level data seem significant, and worrying.

So, will politicians pay any price in 2020 for the continuing maldistribution of gains since the 2008 recession? Or, will politicians tell the people that no one’s to blame, that the Laffer curve will surely work this time?

The miracle of modern Republican economic theory allows for both the Laffer curve, and “pulling oneself up by the bootstraps” not only to be truths, but to be the desired outcome.

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