Category: Daily Escape

Prepaying Taxes? Don’t Be Stupid

The Daily Escape:

Saguaro in bloom, Gold Canyon, AZ – May 2023 photo by Karin Ingebrigtsen Hetsler

In the discussion about the Debt Ceiling, it’s become clear that America has a problem with tax collections, which are running behind what was forecast. While tax receipts were always expected to be below 2021’s robust levels, they are even weaker than forecast, down around 35% so far.

That means absent a deal between the Parties, we will hit the Debt Ceiling sooner than we thought. This is largely due to a weaker stock market and lower economic growth than the country had in 2021.

But it’s also true that America has an enormously complicated tax code, built by decades of lobbyists working with the Congress to carve loopholes into the Code to provide legal tax avoidance strategies to their corporate clients.

Imagine a world where corporations and individuals didn’t try to weasel out on their tax obligations to the government…Impossible, you say?

Well, consider Ukraine. We’ve been told that Ukraine is rank with corruption and a large informal economy. Both may be true but read what The Economist has to say about tax receipts during their war with Russia: (emphasis by Wrongo)

“After Russia invaded in February last year, Ukraine’s finance minister, Serhiy Marchenko, braced…for government revenues to “plummet”. He says he expected them to fall by roughly as much as economic activity. That did not happen. Although Ukraine’s GDP plunged by 29% in 2022, the state pulled in just 14% less than the year before.”

Of course the war led to drops in tax revenues from imports and tourism. Blackouts caused by Russian attacks on power plants and the grid disrupted automated reporting of taxable transactions. More from The Economist:

“What, then, is behind the state’s “unique results”, as an official puts it, in wartime revenue collection? One explanation is that firms and taxpayers, eager to support their country’s defense, are paying more tax than required.”

Still more: (brackets by Wrongo)

“According to Ukraine’s finance ministry, in March last year such donations came to 26b[illio]n hryvnias ($880m), rising to 28b[illio]n in May.”

Why are Ukrainian businesses and individuals motivated not to avoid taxes like in the US, but to make donations and pay taxes in advance? The Economist quotes a tax partner with Price Waterhouse Coopers, with responsibility for Ukraine:

“…if Ukraine wins, you’ve got your country; if Russia wins, thuggish authorities will take your money anyway, so why not help out now?”

A lawyer at a Ukraine law firm says that many of his corporate clients have asked for guidance on how to prepay taxes. And now a year later, the lawyer says that nearly all the 100-odd clients he serves have begun to prepay. According to the lawyer, efforts to seek loopholes to lower tax bills have decreased.

Finally, The Economist reports that Ukraine’s State Tax Service continues to receive payments, through its online portal, from the territories occupied by Russia (except for Crimea). Despite the pressure to pay Russian taxes, apparently, last year 2.3 million individuals and organizations in occupied areas paid $9.5 billion in taxes to Ukraine.

They are doing this despite the risk of retribution from their Russian overlords. Can you imagine anything like this happening in the shell of a country we call the United States?

There are other factors at work. Taxes on gas production were raised last year. The Economist quotes Danil Getmantsev, chair of the Ukrainian parliament’s Committee on Finance, Taxation and Customs Policy, who says that a crackdown on corruption also may have had something to do with it.

No one should think that Wrongo is saying that Ukraine is a better place to live and work than is the US. The key point is they are demonstrating that in a country that was thought to be barely unified before the war, it now acts as one. Try to imagine how, under similar circumstances what it would take for companies and citizens in the US to freely prepay their taxes. (Wrongo knows about the need in the US for some Americans to file quarterly returns, which is a form of prepayment).

Or imagine people willingly donating to the government in an effort to keep us free.

Nope. We’re addicted to fiscal gimmickry. Anything to pay less to the government. After all, Trump said not paying taxes showed that he was a smart guy.

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Immigration Reform Has To Happen

The Daily Escape:

Eastern Sequoia Canyon NP viewed from Mt. Whitney trail, CA – April 2017 photo by Peerman Craft Photography

The federal government is expecting a surge in migrants at the southern border after next week’s lifting of Title 42, a pandemic-era policy that has allowed the US to refuse to process asylum claims on public health grounds. In anticipation, the Biden administration is preparing to deploy an additional 1,500 troops to the southern border for 90 days.

Those troops are on top of about 2,500 who are serving there currently. None of the soldiers are armed. They are largely performing administrative tasks that free up Customs and Border Protection (CBP) staff to handle the anticipated surge of migrants.

This could be a critical political moment for Biden, who’s just launched his 2024 reelection bid. We seem to be on the verge of another potential border crisis, which brings the certainty of new attacks by Republicans. The GOP has been hammering the administration, saying Biden’s immigration plans are too little too late.

When Title 42 is lifted, CBP will rely on the existing Title 8 law, under which any individual who is deemed ineligible to be in the US faces a five-year ban on readmission – and criminal charges if found crossing illegally.

On Wednesday, US and Mexican officials agreed on new immigration policies. Under the agreement, Mexico will continue to accept up to 30,000 migrants from Venezuela, Haiti, Cuba and Nicaragua who are turned away at the US border; and up to 100,000 individuals from Honduras, Guatemala, and El Salvador who have family in the US will be eligible to live and work in Mexico.

The US is accepting 30,000 people per month from Cuba, Haiti, Nicaragua, and Venezuela for two years and offering them the ability to work legally, as long as they enter legally, have eligible sponsors and pass vetting and background checks. We’re continuing to turn away migrants from those four countries who cross the border illegally.

We’ve been following the same ad hoc approach to immigration for the past several administrations: We find a temporary solution that can handle a surge in migrants while not providing an open door for all who wish to enter the US.

We share this problem with most other rich countries. On Tuesday, the World Bank’s latest World Development Report said that about 184 million people across the world now live in countries where they’re not citizens. About 37 million of the total are refugees, a number that has tripled over the last decade.

Most of the transit happens through Central America before migrants reach the southern US border. Border security isn’t rigorous enough there to stem the northward flow. Recognizing that problem, the administration announced that it will set up regional processing centers for migrants to apply to come to the US. These centers will be located in Colombia and Guatemala, two countries migrants often pass through on their way to the US-Mexico border.

Deciding who gets to stay in the US is a bigger challenge when the migrants have few job skills and they’re not seeking asylum. We differentiate between asylum seekers and economic migrants. With a current backlog of 1.3 million asylum cases to be heard (equal to 4.25 years), the system is clearly broken.

The question is what should we do to stop/slow the flow of hundreds of thousands of migrants attempting to cross our southern border? Bloomberg shows the scale of the problem:

What’s the answer to this? Wrongo doubts that there is ONE answer.

Do we create a kind of reverse Berlin Wall like Trump tried to do? If it became a militarized border, we could surely cut down on the migration and the southern border would be controlled. This is the wet dream of the anti-immigration hawks. But the cost of building and manning the wall with soldiers would be ruinous, and to date, militarized borders aren’t who we are as a country.

Do we undertake nation building in Central and South America, hoping that those countries can become more attractive to their potential migrants? America’s track record with nation-building is terrible. And think about the cost, which could be far greater than the cost of a militarized wall. Think about how much money would be skimmed into the pockets of local politicians.

But we can’t just leave our borders open. Open borders are a sign of a government that has lost control of its geography. It would ultimately lead to a reality that no American wants. This is the specter that instills fear into most Americans about the growing migration problem.

It appears that we’re going to continue using an orderly throttling and vetting process at the southern border to decide who among this new surge of migrants is allowed into the country. The bigger question is what should our immigration policy be going forward?  We haven’t had immigration reform since the 1980s. We’re unlikely to have reform any time soon.

Biden and the Democrats are vulnerable if they can’t articulate a plan (that they can back with numbers) that shows the American people what we’re doing to control immigration. Developing a clear position on immigration could draw significant public majority support.

There are plenty of Democrats and Independents who are strongly against migration. So Biden needs to show progress soon by demonstrating that we’re controlling the problem.

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Monday Wake Up Call – May 1, 2023

The Daily Escape:

The Schooner Surprise, built in 1918, is listed on the National Registry of Historic Places, Camden Harbor, ME – April 2023 photo by Daniel F. Dishner

A few words about Biden, McCarthy and the Debt Ceiling. We all know that the clock is ticking on a US default of our debt sometime in June. There are multiple opinions in DC about who has the leverage in the coming debate between the House GOP, Senate Dems and Biden.

The institutionalist view is that McCarthy and the House GOP have taken the Debt Ceiling hostage and they plan a hostage negotiation with Biden. Some think that McCarthy is doing it badly. Others take the darker view that the Republicans are actually trying to crash the economy so that America blames Biden and returns the GOP to power in 2024.

If you think, based on what we’ve seen so far, that the GOP doesn’t plan to negotiate, that like terrorists, they will kill as many hostages as possible until their terms are 100% met, what they’re doing makes sense.

The NYT reports that McCarthy has been open about the fact that this is not a real bill:

“This bill is to get us to the negotiations….It is not the final provisions, and there’s a number of members who will vote for it going forward…say there are some concerns they have with it. But they want to make sure the negotiation goes forward because we are sitting at $31 trillion of debt.”

For the umpteenth time, we’re watching a game of chicken about raising the debt limit. There are something like 45 days until the Debt Ceiling must be raised. You know the “or else” sentence that follows: Or else, the US will face potentially calamitous economic consequences.

McCarthy’s bill may get the Republicans a seat at the table in the negotiations over raising the debt limit, but Biden’s position remains: “Send a clean debt limit bill, or pound sand.”

Has McCarthy overplayed a bad hand? If he had failed to get anything passed he would have looked completely incompetent. Nevertheless, passing a bill filled with devastating cuts and manifestly unpopular positions that will be difficult to defend except to the Party faithful, it is arguably worse than getting nothing done at all.

If the Dems are smart they will take the GOP’s messaging bill and come up with a message that has broad appeal that can be used to hurt the GOP in swing districts for the next two years. McCarthy’s bill shows that Republicans’ ultimate goal is to gut health care, food stamps and education, and even veterans benefits. The Vote Vets organization is out with a message:

“And now, it is the fringe MAGA party that voted for a budget that would gut health care and support for our Veterans. 217 of them voted for it, and just 4 against. They talk tough when it comes to Military action, but go AWOL when it’s time to take care of those who served.”

This bill isn’t intended to pass. Republicans had an opportunity to aim a productive salvo at swing voters to convince them that GOP majorities can deliver normalcy, and give them some sign that the Party was tacking away from the extremist positions that alienated voters in the last midterm elections.

Instead, their message is that the Party is about owning the libs and slashing aid for veterans and the poor. The GOP can’t even fake being a Party interested in governing anymore. That’s bad news for McCarthy, the man chained to the GOP canoe that’s heading over the falls. As Succession’s the late Logan Roy would say “You are not serious people.”

Instead the GOP’s message to the world is that America’s commitment to paying its debts is contingent on an underlying political negotiation about the size of the budget deficit.

  • Republicans believe they can win the political standoff by making Biden and Democrats look petty by refusing a basic negotiation.
  • Democrats also seem to be betting that Senate Republicans will step in as more mature political actors and defuse this situation.

The NYT quotes Sen. Chuck Schumer, (D-NY) and majority leader:

“Discussion of spending cuts belongs in talks about the budget, not for bargaining chips on the debt ceiling….The speaker should drop the brinkmanship, drop the hostage taking, come to the table with Democrats to pass a clean bill to avoid default.”

Time to wake up America! This kabuki play will run through at least mid-June. It’s a DC big boy fight. And we the little people, will have no say until November 2024 when we can escort the GOP flame throwers out of the House. To help you wake up, watch Crowded House perform “Don’t Dream It’s Over” from their first (of three) farewell tours, played at the Sydney Opera House in November 1996:

One of the greatest songs of the 80s and it still hits hard today.

Sample Lyrics:

There is freedom within, there is freedom without
Try to catch a deluge in a paper cup
There’s a battle ahead, many battles are lost
But you’ll never see the end of the road
While you’re traveling with me

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Saturday Soother – April 29, 2023

The Daily Escape:

Crab Apple tree, Fields of Wrong, CT – May 10, 2013 photo by Wrongo. This year, the trees are in full bloom two weeks earlier. The petals will be long gone by May 10, 2023. Climate change?

The new Democratic governor of Arizona, Katie Hobbs, appears to be on the wrong foot with her take on food safety. The NYT reports that she vetoed a bill that would have allowed Arizona’s informal network of home cooks to sell perishable food legally:

“Though the state promotes itself as a low-tax, low-regulation haven for private enterprise, it does not allow the sale of perishable foods made at home. So for years, a thriving economy of working-class, mostly Latina home cooks has operated underground, selling tacos, tres leches cakes and chile-dusted corn illegally from living rooms and outside laundromats and soccer games.”

Earlier in April, Republicans who control the state legislature came together with Democrats in a moment of bipartisan accord to pass a bill that would let Arizona’s home cooks register with the state to legally sell perishable foods like salsas and tamales.

And Hobbs vetoed it. Naturally, there was a backlash. Why would the new governor alienate Arizona’s large Latino population? Even a few Democrats have criticized her for killing what is widely being called the “tamale bill.” More: (emphasis by Wrongo)

“They said her move was a slap in the face of Latino constituents who voted for Ms. Hobbs, and whose support was crucial in a politically fractured state that is about 32% Latino. Critics said her veto would hurt the working-class immigrants that Ms. Hobbs had championed during her campaign.”

We can debate the merits of Arizona’s food safety laws. You might say, “I’ve seen my kitchen, and I’m against it.”

But when we debate the merits, it ought to be in the context of a) the minimal acceptable standard for public safety, and b) what the people want. Arizona’s informal food network is very popular. People aren’t stupid: They know that eating food purchased from the trunk of a car or from a roadside stand carries a risk of a possible night on the toilet, yet no one complains. And if something happens the city or town can always trace it and shut someone down.

BTW: You haven’t lived until you’ve bought tamales from the trunk of a nice lady’s car in a Home Depot parking lot.

The Arizona food safety reform bill appealed to both Parties: Republicans could stand up for fewer regulations, while Dems could show that they understood and supported the working class. This is particularly relevant in Arizona, where working people have a long tradition of making money through selling food informally.

So, what was Hobbs thinking? The selling of home-cooked food is primarily practiced by people of color or immigrants. Banning sale of their cooking could be seen as institutional racism, something we might expect in Arizona, but from a Democratic governor?

Maybe roadside vendors could display a warning sign saying that the Office of Food Inspection isn’t inspecting their garage BBQs, or their kitchens, or their basement bakeries, so you’re on your own. Besides, the Feds allow Big Food to put pink slime in our ground beef.

Enough about Katie Hobbs, someone who we were thrilled to see beat Kari Lake last November.

It’s time to forget about politics and whatever Ron DeSantis was doing in Israel. Focus instead on finding some relaxing time before the week starts all over again. Here on the fields of Wrong, the spring cleanup continues, along with our working to convince a pair of house finches that building a nest under the walkway to our door is – well, wrong. Wrongo expects to prevail as he has in prior years.

But now, it’s time for our Saturday Soother!

Let’s start by brewing up a hot steaming mug of Ethiopia Basha Bekele coffee ($23/12oz.) from Virginia’s Roadmap CoffeeWorks, an award-winning artisan roasting company based in Lexington, VA. It is said to be chocolaty and fruit-toned in the very long and satisfying finish. Who doesn’t like a long finish?

Since there’s rain in Litchfield County today, grab a chair by a large window. Now watch and listen to “Simple Gifts” from Aaron Copland’s  “Appalachian Spring” conducted by Leonard Bernstein. In 1942, Martha Graham commissioned Copland to write a ballet with “an American theme”. It premiered at the Library of Congress on October 30, 1944, with Graham dancing the lead role.

In 1945, Copland was commissioned by conductor Artur Rodziński to rearrange the ballet as an orchestral suite. “Simple Gifts” was a Shaker Hymn that Copland brought to life. He called the piece “Ballet for Martha”, and Graham gave it the title “Appalachian Spring”, after a line in a poem by Hart Crane:

“Tis’ a Gift to be Simple“….indeed.

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Late Stage Capitalism

The Daily Escape:

A 20 feet x 9 feet sign placed in Times Square, NYC in Sept. 2013. Created by Steve Lambert.

In yesterday’s column about Bed Bath and Beyond’s (BBBY) bankruptcy, Wrongo used the term “Late Stage Capitalism” to describe some of the factors that led to the firm’s demise. Several readers asked what Wrongo meant.

First, some history. A German economist named Werner Sombart seems to have been the first to use the term “Late Capitalism” around the turn of the 20th century. A Marxist theorist named Ernest Mandel popularized it in the 1960s. For Mandel, “late capitalism” described the economic period that started with the end of World War II and ended in the early 1970s, a time that saw the rise of multinational corporations, mass communication, and international finance.

In America the terms “Late Capitalism” and “Late Stage Capitalism” are used interchangeably. Late-stage capitalism is characterized by greed, corruption, and a focus on profits over people.

The current crisis of capitalism’s legitimacy stems from business pursuing the aberrant form of capitalism known as shareholder capitalism, which began in the 1970s. It causes firms to seek maximizing shareholder value as reflected in the current share price, at the expense of all other stakeholders and society.

Some of the problems with late-stage capitalism include wealth inequality, environmental destruction, and financialization. Financialization refers to the increase in size and importance of a country’s financial sector relative to its overall economy. In the US, the size of the financial sector as a percentage of GDP grew from 2.8% in 1950 to 21% in 2019. The financial services industry, with its emphasis on short-term profits, has played a major role in the decline of manufacturing in the US. Financialization has created “unproductive” capitalism. According to economist Michael Roberts: (brackets by Wrongo)

“…financialization is now mainly used as a term to categorize a completely new stage in capitalism, in which profits mainly come not from…production, but from financial [engineering]

Today, capitalism is no longer the heart of a free market. Algorithms run the stock and foreign exchange markets. Large players in these markets operate freely with the expectation that they will eventually be caught. They then pay off the DOJ or SEC, chalking up the fines to the cost of doing business.

Lobbyists on Capitol Hill curry favor with politicians. Companies then receive substantial tax breaks and move their ever larger profits to offshore tax havens. The revolving door between Wall Street and the banking sector allows former Federal Reserve Chairs to charge speaking fees of $500,000 and earn seats on the boards of the algorithmic trading firms. The Pentagon continues to benefit from budgetary increases while the profits of Boeing, Lockheed Martin, and other defense contractors continue to swell.

Late stage capitalism helped create the current distortion of wealth. From the wealthy one percent living in multiple homes and flying private, to the plight of the working poor in America. In a 2020 survey by Edelman, a marketing and public relations firm, 57% of people worldwide said that:

“capitalism as it exists today does more harm than good in the world”

When you have money, capitalism is your wing man. It opens doors to business leaders and helps develop political influence, all with the goal of amassing more wealth and power.

Late stage capitalism has allowed oligopolies and the oligarchs that run them, to rig the system in their favor. They’ve won Supreme Court cases, such as Citizens United v. FEC (2010), that give corporations the same speech rights as people, allowing them to spend millions on political ads to elect compliant politicians.

In recent years, capitalism’s shortcomings have become more apparent: Prioritizing short-term profits has sometimes meant that the long-term well-being of society and the environment has lost out. Indeed, if you judge by measures such as inequality and environmental damage, as economists Michael Jacobs and Mariana Mazzucato wrote in their book “Rethinking Capitalism”:

“…the performance of Western capitalism in recent decades has been deeply problematic…”

There’s also no denying that this strain of capitalism has led to increased economic growth worldwide, while lifting a significant number of people out of poverty. At the same time, its tenets of lowering taxes and deregulating business has done little to support investment in public services, such as crumbling public infrastructure, improving education and mitigating health risks.

Watch Paul Tudor Jones, a successful hedge fund manager describe why we need to rethink capitalism:

He’s concerned about capitalism’s laser focus on profits. He says that it’s:

“….threatening the very underpinnings of society.”

More people are aware of the term “late, or late-stage capitalism,” due to the growing wealth gap. People now have access to information that exposes the defects of capitalism, and the effects of political and elitist interference in the monetary policy of a country. There is a popular Reddit community devoted to it.

And calling something “late” implies the potential for significant change or revolution, A “late” period always comes near the end of something. Calling it “Late capitalism” says:

“…This is a stage we’re going to come out of at some point…”

Perhaps we’re on the cusp of society dictating that capitalism provide us with a more equitable way of life. Or maybe the wealth gap will continue to grow, and the corporations will continue to seize more power.

Whenever late-stage capitalism eventually comes to an end, you can be sure of one thing – it won’t be a soft landing.

 

Sources and reading list:

https://wrongologist.com/2023/04/bed-bath-and-beyond-another-retailer-bites-the-dust/

https://en.wikipedia.org/wiki/Werner_Sombart

https://www.theatlantic.com/business/archive/2017/05/late-capitalism/524943/

https://www.investopedia.com/terms/f/financialization.asp

https://www.linkedin.com/in/prof-michael-r-roberts/

https://www.fec.gov/legal-resources/court-cases/citizens-united-v-fec/

https://www.wiley.com/en-gb/Rethinking+Capitalism%3A+Economics+and+Policy+for+Sustainable+and+Inclusive+Growth-p-9781119120957

https://www.bbc.com/future/article/20210525-why-the-next-stage-of-capitalism-is-coming

https://www.edelman.com/sites/g/files/aatuss191/files/2020-01/2020%20Edelman%20Trust%20Barometer%20Global%20Report.pdf

https://www.reddit.com/r/LateStageCapitalism/

Alternative Views:

https://tomdehnel.com/crushing-the-myth-of-late-stage-capitalism/

https://www.nytimes.com/2023/04/20/opinion/american-capitalism-good.html

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Bed Bath And Beyond: Another Retailer Bites The Dust

The Daily Escape:

Super bloom, Carrizo Plain NM, CA – April 2023 photo via Today’s California

Bed Bath and Beyond (BBBY) filed for Chapter 11 bankruptcy on April 23. It said it will liquidate its assets and close its remaining stores unless it can find a bidder for the 360 Bed Bath and Beyond stores and for the 120 buybuy BABY stores.

A little history: A year ago, the prices of their bonds began to collapse. By August 2022, suppliers halted shipments due to unpaid bills. When this became public, its 30-year bonds, issued in 2014, plunged to 16 cents on the dollar (last Friday, they were at about 5 cents on the dollar).

From Wolf Richter:

“While all this was going on, the company promoted its latest turnaround plan and closed hundreds of stores. But you can’t turn around a failing brick-and-mortar retailer. On January 5th this year, the company issued a “going concern” warning.”

There are at least three lessons to take away from the BBBY story: First, they are the latest victim of the move to online shopping. People trusted Bed Bath & Beyond, and they had a pretty good e-commerce business. They could have done very well with it if they had accepted 10 years ago that they needed to phase out of their brick-and-mortar stores.

But brick-and-mortar retailers have difficulty letting go of their brick-and-mortar storefronts. They just can’t explain to their investors that their huge, fixed investment in physical stores are doomed and need to be closed.

Wolf has two great charts comparing the rapid growth in e-commerce and the steep drop in sales by brick-and-mortar retail over the past 15 years:

These two charts show that e-commerce basically replaced $5-9 Billion in annual in-store sales for the retail industry. The top chart shows that e-commerce had reached about $115 billion by 2023. The lower chart shows that in-store sales fell from $17 billion per year in 2008 to a low of $8 billion in 2020 before recovering to nearly $12 billion in 2023.

The second issue was that rather than investing in their business, BBBY spent $11.6 billion on share buybacks from 2005 to 2021. Since 2010, BBBY basically burned $9.6 billion in cash on its share buybacks. Like other companies, BBBY used share buybacks to drive up its share price, as “demanded” by its large shareholders and Wall Street. In addition, by not using that money to transition to e-commerce, they began driving the company towards April’s Chapter 11 filing.

A third problem was that the activists that won control of the BBBY board created a self-imposed disaster. While BBBY had withstood competition from Amazon earlier, in 2019, activist investors in control of its board hired a CEO who implemented a private-label product strategy. This led to customers no longer finding the national branded goods they expected on BBBY’s shelves. Products like AllClad, Kitchen Aid, Rowenta, Miele, Corning, Wustof and Braun. So customers bought them elsewhere. That sent sales down even further, and left BBBY in a cash-poor position.

Wrongo and Ms. Right occasionally shopped at our local BBBY stores, both here in CT and earlier in CA. We always thought it was a good value proposition, particularly for towels, sheets and pillows. Back then, the stores seemed well-stocked and the 20% off coupons didn’t hurt.

BBBY followed a classic path to failure: The retail founders preside over rapid growth. Then when Wall Street and the financers get involved, the founders step back. They then hire “professional” CEOs from their big retail rivals who apply whatever worked at their previous employer.

The new leadership skips the crucially important step of giving customers more of what they need than competitors do, focusing instead on sophisticated financial engineering.

All the while their aggressive rivals are going after their customers. This leads to a loss of market share, ultimately sending a once-proud retailing icon into bankruptcy. To BBBY’s credit, they outlasted far older, bigger and better financed competitors from Sears to Montgomery Ward to pretty much everyone else in their household-goods space.

Is late-stage Capitalism at fault in the BBBY story? You betcha.

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How To Look At The Electorate

The Daily Escape:

Aurora seen from Purgatory Overlook, Blue Ridge Parkway, VA on Sunday. The aurora was visible in 30 states on Sunday – April 2023 photo by Jason Rinehart

(Wrongo and Ms. Right are very happy for friend and blog reader Gloria R. who is making a great recovery from a life-threatening illness.)

Yesterday, Wrongo pointed out that independent voters were the fastest growing segment of the eligible voter population. With the partisan vote evenly divided between the two Parties, this means there are serious challenges ahead if either Party is to establish a sustainable majority with American voters.

But independents aren’t the only group we need to discuss. Doug Sosnik’s latest in the NYT talks about the “diploma divide”:

“…college educated voters are now more likely to identify as Democrats, and those without college degrees — particularly white voters….support Republicans.”

Sosnik says education level has become the single best predictor of how Americans will vote, and for whom.

Part of the reason for this shift is economic. According to the Federal Reserve Bank of St. Louis, since 1989, families headed by college graduates have increased their wealth by 83%, while for households headed by someone without a college degree, there was relatively little or no increase in wealth.

That has opened non-college homes to the grievance messaging of the Republican Party.

In the 2022 midterm elections, Democrats carried White voters with a college degree by three points, while Republicans won White non-college voters by 34 points, a 10-point improvement from 2018.

Today 42 states are firmly controlled by one Party. The only states that voted for the winning presidential candidates in both the 2016 and 2020 elections rank roughly in the middle on educational levels — Pennsylvania (23rd in education attainment), Georgia (24th), Wisconsin (26th), Arizona (30th) and Michigan (32nd).

Sosnik says that in 2024, Democrats are likely to enter the general election with 222 electoral votes, compared with 219 for Republicans. That means the presidency will be decided by whomever does best in just eight states, comprising 97 electoral votes: Arizona, Georgia, Michigan, New Hampshire, North Carolina, Nevada, Pennsylvania, and Wisconsin. Sosnik says that:

“…for these states, education levels are near the national average — not proportionately highly educated nor toward the bottom of attainment.”

This means that they are up for grabs by the Party with the stronger candidate and message. It also means that the Parties should look beyond education for like-minded voters in these states, so they should also focus on independents. Independent voters disproportionately live in suburbs. More from Sosnik:

“….the suburbs are the last battleground in American politics.”

We said yesterday that most of these independents are younger voters, millennials and Gen-Z. Many have also experienced weaker job markets than their elders, so they may be more disillusioned than most in the suburbs. So they are likely up for grabs.

Suburbs voting was decisive in determining the outcome of the last two presidential elections: Voters in the suburbs of Atlanta, Detroit, Milwaukee, Philadelphia, Pittsburgh and Phoenix helped determine the winner in those two presidential elections. They are likely to play the same role in 2024.

Since the 2024 presidential election will likely be won in those eight states, turnout is also a huge issue. Econofact says that richer people are more likely to vote than poorer people. The chart below shows turnout by income level for the 2016 presidential election:

The 48% voting participation rate for families in the lowest income category in 2016 was a little better than half of the 86% rate for families in the highest income category. Econofact states that the ratio of differences across income groups is similar for other election years as well.

Finally, there is an emergent anti-MAGA segment of the population. Michael Podhorzer writes a Substack newsletter about politics and economics. He says that:

“In 2016, despite losing the popular vote, Trump became president by virtue of his Electoral College victory. That election made clear that Arizona, Georgia, Michigan, Pennsylvania and Wisconsin had become the fulcrum of American politics.

In those five states, on the day that Trump was sworn in, only one state had a Democratic governor (Pennsylvania), only four Democrats served in the Senate, and Democrats did not constitute a majority in any of the 10 state legislative chambers.”

Now, four of the five governors are Democrats, nine of the ten Senators will be Democrats, and three of the state legislative chambers will have Democratic majorities. Podhorzer attributes this to Dems winning a big share of the anti-MAGA cohort.

It’s far too early to know how independents, or the non-college educated, or the relatively poorer Americans will vote in 2024.

But the winning Party had better be able to speak to and for the working classes.

Democrats say they’re a big tent, that all classes are welcome. They seem willing to back everything from trans rights to expanded Medicaid. But that messaging isn’t getting through to less educated, or to working class folks. They don’t believe it.

The Party’s political future requires Dems to speak up loudly on behalf of working men and women.

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Monday Wake Up Call – April 24, 2023

The Daily Escape:

Mountain Park in Globe, AZ  – April 2023 photo by Karen Coffelt

(Earth Day was yesterday. Wrongo was at the first Earth Day on April 22, 1970 in NYC. Then-mayor John Lindsay closed Fifth Avenue from 59th Street to 14th Street. Nearly one million people marched downtown. It was an upbeat and friendly crowd. In July of 1970, Nixon established the Environmental Protection Agency by executive order.)

Today let’s return to talking politics. Axios had an interesting chart from Gallup on the distribution of voters by party preference:

We spend our days listening to politicians who’s Parties, individually, now represent a minority of Americans. This trend means there are serious challenges ahead for our two traditional Parties. It also adds some context to our evenly split politics.

Here’s an analysis of the vote share of independents by Party in recent elections: (the numbers do not total to 100% because voters who chose “another” or didn’t vote aren’t shown)

Interestingly, the Democrats have lost 10 points of independent support from 2020 to 2022, but the GOP only gained 1%. At the time, the Associated Press reported:

“Republican House candidates nationwide won the support of 38% of independent voters in last month’s [2022] midterm elections, VoteCast showed. That’s far short of the 51% that Democrats scored with the same group in 2018…picking up 41 seats. The GOP’s lackluster showing among independents helps explain why Republicans flipped just nine seats…”

Going back to the trends in the first chart, Axios reports that Gallup analyst Jeff Jones says a big reason for this change is driven by the younger generation:

“It was never unusual for younger adults to have higher percentages of independents than older adults….What is unusual is that as Gen X and millennials get older, they are staying independent rather than picking a party, as older generations tended to do.”

So who are these independents? Krystal Ball explains in a YouTube video that most of these “independents” are younger voters, millennials and Gen-Z. They’ve also stayed more disillusioned than their elders.

This means that the nation is evenly split between those who think that one of our two political parties is telling the absolute truth, while the 49% majority basically don’t trust either to have their back.

The question with independents is whether they are truly a part of some mythical center or if they are a segment (half) of the population that isn’t politicized, meaning they don’t believe they have a personal stake in elections.

Or are independents simply that half of the US electorate that just doesn’t bother to vote?

The American political system is dysfunctional. That’s making people opt for being independent rather than Democrat or Republican. They see the choice between the Parties as choosing between the red shit sandwich and the blue shit sandwich.

Time to wake up America! Democracy is our country’s feedback mechanism, but just 46.8% of us voted in the 2022 mid-terms. So it’s clear our current brand of democracy isn’t working. More of us need to vote, and that means we have to help our Parties change. We don’t need a third Party; we need our two Parties to reflect what grassroots America needs. More about this tomorrow.

To help you wake up, and in honor of Earth Day, watch and listen to Neil Young perform “After the Gold Rush”, live at the Shoreline Amphitheater in 1993. He’s playing a pump organ, which generates sound as air flows past the vibrating reeds.  Also, he’s wearing Uggs:

Sample lyric:

Look at Mother Nature on the run In the twentieth century
Look at Mother Nature on the run In the twentieth century.

She’s still trying to outrun us 50 years later.

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Saturday Soother – April 22, 2023

The Daily Escape:

Rainbow, Blue Ridge Parkway, VA – April 2023 photo by Tim Lewis

American carnage is real, my friend. Just not in the way that Trump stated in his inaugural rant. The American carnage Wrongo speaks of is the gun attacks made on others by angry or fearful lone American gunmen. From Charlie Sykes at The Bulwark:

“Ringing the wrong doorbell, making a wrong turn, getting in the wrong car, and an errant basketball. A wounded teenager, a dead young woman, cheerleaders in critical condition, and a 6-year-old girl and her father shot.”

The Indiana man who shot a 16-year-old boy for knocking on his door is described by his grandson as a conspiracy theorist and avid consumer of right-wing media: (emphasis by Wrongo)

“I feel like a lot of people of that generation are caught up in this 24 hour news cycle of fear and paranoia perpetuated by some…news stations. And he was fully into that, sitting and watching Fox News all day, every day blaring in his living room…..that doesn’t necessarily lead people to be racist, but it reinforces and galvanizes racist people. And their beliefs.”

Right wing propaganda is about fear. And some people bathe in it for hours a day. So, while the rest of us enjoy walks in the park or a trip to the market, they’re terrified of every swarthy stranger at the Publix or Home Depot.

Add this level of fear to the implicit permission given gun owners by “stand your ground” laws, and you have the elements of an environment of violence.  Vox provides background:

“Some of these shootings took place in states with so-called “stand your ground” laws, which offer expansive legal protections for people who use deadly force against others out of self-defense….and experts have noted that the laws can bolster a “shoot first, ask later” mentality.”

More: (emphasis by Wrongo)

“Under such laws — which exist in some form in 38 states — people can use lethal force if they reasonably believe their life is under threat, and they don’t have to take steps to retreat or avoid the confrontation first. That’s a stark change from prior laws….In the past, the “castle doctrine,” which has been adopted by most states, allowed people to use deadly force if a person entered their home.

Stand your ground laws take that idea one step further, with some making such allowances no matter where a person is, whether that’s a public place, their vehicle or their office.”

Add pervasive fear and permission to stand your ground to the proliferation of guns in America (aided by the Supreme Court’s expansive reading of the Second Amendment) and the US has come undone. From Umair Haque: (emphasis by Haque)

“Did you know that America isn’t just the most violent nation in the industrialized world — but an off the charts extreme outlier? Iceland is the world’s most peaceful society. Canada is the world’s 12th most peaceful society. America is the… 129th.”

That’s 129 out of 163 countries tracked. Further evidence is in the recent TSA statistics about intercepting guns about to be carried on to planes:

“Officers with the Transportation Security Administration confiscated more than 1,500 guns at airport security checkpoints in the US during the first quarter of the year, more than 93% of which were loaded. The 1,508 firearms equate to an average of 16.8 intercepted each day during the first three months of the year…”

The gun gives its owner the power of life and death. No training needed. The power of God right there in your hand. It’s very attractive to a certain type of person. And we cultivate that type of personality in America.

We have no safety nets, no social bonds, no norms of decency. That means we ask each other to bear the unbearable.

We don’t invest enough in safety nets, insurance, public goods, healthcare, education, and, in most states, gun laws. According to Haque, it’s all justified by politicians saying, “I can bear the unbearable — why can’t they?” But we can’t do that forever. Someone will snap, and the frustration of bearing the unbearable pours out as rage that’s visited on whomever is nearest, or easiest to hurt. That’s American Exceptionalism at work. America’s extreme violence, caused in large part by the twisted ideology that asks Americans to bear unbearable things.

Enough about guns and people snapping. It’s time for our Saturday Soother! Here on the Fields of Wrong, our crabapple trees are in bloom. They’re being visited by both birds and bees, each looking for high calorie snacks. The bees for the flowers, the birds for the buds. Our spring clean-up is lagging, so there’s still much to do.

But first, let’s relax for a few minutes. Grab a comfy chair near a big window and watch and listen to Valentina Lisitsa, a Ukrainian-American pianist, play “Rustle of Spring”, a solo piano piece written by Norwegian composer Christian Sinding in 1896:

If you are interested in amazing piano technique, watch Lisitsa perform Liszt’s Hungarian Rhapsody No. 2.

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My Way Or The Highway

The Daily Escape:

Azalea gardens at the Biltmore, Asheville NC – April 2023 photo by Sherry Maddock

We all know that the US is staring down a series of domestic threats to American democracy. Here’s a short list: Corruption on the Supreme Court, fundamental rights being lost via Supreme Court decisions, and voting rights being on the ballot in many states. Then there’s the question of whether any high level politician will ever be held to account for the Jan. 6, 2021 coup attempt.

These threats require that we convince every voter to turn out in 2024. Even so, surprisingly the presidential race in 2024 could be very close.

All of this could be undermined by the plans of the emerging political party called No Labels. They are gathering signatures to get on the presidential ballot in all 50 states in 2024, while recruiting both Democrats and Republicans to run as a bipartisan ticket. The WaPo reports that the group has already gained ballot access in Arizona, Colorado, Alaska and Oregon. Apparently, they are backed by shadowy donors who have provided them with $70 million in seed money.

Former Connecticut Sen. Joe Lieberman is associated with No Labels. Other names often mentioned as possible No Labels candidates are Sens. Joe Manchin (D-WVA), Kirsten Sinema (I-AZ), Susan Collins (R-ME), and former Republican Governor of Maryland, Larry Hogan.

Here we go again. Another centrist third party effort to create a “unity” ticket that supposedly appeals to those Americans who say they want to end the partisan bickering in Washington. This year, it’s No Labels who are trying to throw a big monkey wrench onto our Electoral College map. If they are successful, it could possibly send Trump back to another term in Washington.

All in the name of unity, of course.

Lieberman is acutely aware of the impact third-party bids can have on presidential elections. He ran as Gore’s VP candidate in 2000, when the Democratic campaign fell 537 Florida votes short of an Electoral College victory. That year, Ralph Nader, the Green Party nominee, won more than 97,000 Florida votes.

It might be useful for Lieberman et al to remember that in the 2016 presidential election, Jill Stein got 50,000 votes in Michigan, allowing Trump to win Michigan by 14,000 votes. Ross Perot in 1992 arguably shifted the race to Bill Clinton.

The No Labels website specifically describes itself as an “insurance policy against a Trump-Biden rematch.” From Larry Hogan:

“The vast majority of people in America are not happy with the direction of the country and they don’t want to see either Joe Biden or Donald Trump as president.”

Hasn’t Biden worked productively with Republicans to pass a broad array of bipartisan legislation? His main partisan domestic initiative was essentially written by Manchin, who now wants a larger voice with No Labels.

First, it seems bizarre for No Labels to equate Biden with Trump. Comparing the two when Trump is under indictment in NY and likely to be indicted in several more cases, after having incited an insurrection is crazy. What’s Biden’s crime? Not paying off porn stars?

Second, why is a group dedicated to promoting moderate, bipartisan legislation working against a president who has actually accomplished just that? Jonathan Chait in NY Magazine reports that No Labels’:

“…own polling suggests its candidacy would serve as a spoiler on behalf of Republicans. In December, it found an unnamed moderate third-party candidate would win just 20% of the vote, against 33% for Trump and 28% for Biden.”

This result seems completely logical given Biden’s greater reliance on moderate voters than Trump. But still they persist. For Wrongo, you only needed to say “Joe Lieberman” to convey that this organization is wrong-headed on its face. When politically marginal people like Lieberman and Manchin are interested in a new political organization, you know they’re looking for a way to insert themselves more deeply into our politics, despite how little actual support they have.

They’re willing to cause great harm for an outside shot at real power.

We need to understand that political centrism isn’t the halfway point between today’s median Democrat and today’s median Republican. Biden has governed basically as a 21st Century centrist; otherwise, the left of his Party wouldn’t be so frustrated with him. The No Label people need to realize that there’s already a perfectly good moderate Party in America, and it’s called the Democratic Party.

The No Label centrists seem to be living in some kind of dream world where the Electoral College isn’t closely divided and today’s political stakes aren’t monumental.

This is a vanity political project that could easily lead to a political disaster. Let’s hope it fizzles like most centrist third party bids have done in the past.

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