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The Wrongologist

Geopolitics, Power and Political Economy

Category Archives: Economic Policy

Distressed Communities: Another Divide In America

The Daily Escape:

“Impressions of Lijiang” Show, Yunnan Province China. Lijiang Impressions is a cultural show about the traditions and lifestyles of the minorities in Lijiang. The open-air stage is at 10,000 ft. above sea level. The Dragon Snow Mountains behind the stage are higher than 16,000 ft.

The Economic Innovation Group (EIG) has an interesting report on Distressed Communities in the US. They have surveyed changes in counties in distress, from 2000-2015, using census data. The study notes:

America’s elite zip codes are home to a spectacular degree of growth and prosperity. However, millions of Americans are stuck in places where what little economic stability exists, is quickly eroding beneath their feet.

The study found that the majority of new jobs created as the recovery began came in the 20% of American ZIP codes that were already the most prosperous. The 20% of ZIP codes in the least prosperous areas generated just 1% of jobs created between 2011 and 2015.

This isn’t a Republican or Democratic problem. Both parties represent distressed areas. But the economic fortunes of the haves and have-nots have widened the political chasm between them, and it has yet to be addressed by substantial policy proposals on either side of the aisle.

The EIG study captured 99% of the US population. It covers 26,000+ US zip codes that have a population of at least 500 people, the more than 3,000 counties with at least 500 people, and the nearly 800 cities with at least 50,000 people.

Here is a map from the study showing areas of economic advance and retreat:

Our most significant modern recession and the subsequent deeply uneven recovery has exacerbated the gap between wealthy communities and poorer areas, creating a patchwork map of economic haves and have-nots around the country.

Here is another map from the study, showing the most disadvantaged small and mid-sized cities:

 

In Hartford, CT; Newark, NJ; Stockton, CA; and Trenton, NJ, more than one in five residents are now foreign-born. In general, cities with smaller foreign-born populations are more likely to be distressed: In the average distressed city, 15% of the population is foreign-born; in all other quintiles, the average is between 18 and 19%.

In the Northeast, more than two-thirds of the population living in distressed zip codes reside in high density neighborhoods, so distress in the Northeast is predominantly an urban phenomenon. In the South, nearly 60% of the distressed population resides in low density, mainly rural zip codes.  But, all types of distressed communities can be found in all regions.

A full two-thirds of distressed zip codes contained fewer jobs in 2015 than they did in 2000, while 72% saw more businesses close than open over that same time span. In total, 55% suffered net losses in both categories

Fifty-two million Americans live in the most distressed ZIP codes across the nation. Those people are more likely not to have graduated from high school. The poverty rate in those communities is 11 points higher than the national average. And adults in those communities are twice as likely to be out of work as in the wealthiest counties.

They are also far more likely to live near sites polluted or contaminated enough that the Environmental Protection Agency is working to clean them up. There are nearly 13,000 of these brownfield sites in distressed ZIP codes, compared to 3,700 in the most prosperous ZIP codes.

Those who live in distressed areas have a life expectancy almost five years shorter than those who live in prosperous areas. Rates of cancer, suicide and violence are all markedly higher in the poorest areas, and substance abuse disorders are 64% percent more likely, the report found.

The report concludes by saying:

It is fair to wonder whether a recovery that excludes tens of millions of Americans and thousands of communities deserves to be called a recovery at all.

The days of “pull yourself up by your bootstraps” are gone forever. You can’t use trickle-down economics arguments to fool all of the people all of the time, and you can’t even fool a majority of them for very long.

And now, time’s up.

Capitalism hasn’t worked for all of the people since well, never.

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Saturday Soother – September 23, 2017

The Daily Escape:

Sunndalsøra, Norway, best known for its aluminum factory, one of the largest in Europe – photo by Brotherside

WaPo reports that estimates say it will take about four months for electric power to be restored on Puerto Rico. You would hope that we could beat the estimate by quite a bit. What is the Congress’s plan to help out our Commonwealth?

Can you imagine living somewhere without power for several months? We had to do it once at the Mansion of Wrong, at the height of winter for 7 days. It got to 37°F one night inside the house. We now have a whole house generator.

What happens to the Puerto Rican economy if there is no power for multiple months? Can average people make a living? How will they pay the rent, or the mortgage?

Our first concern should be providing them with supplementary power. Generators and the fuel to power them must be among the first things we deliver to the island. They are the cheapest, fastest way to deliver temporary power while the basic infrastructure of power lines and cell towers are rebuilt. Fuel (mostly diesel) will need to be brought in via ship. Health care facilities need power to operate, and the basic elements of government requires it as well. With power, they can begin to restore normalcy, communications and water for citizens.

People will need some form of temporary housing. Businesses will need to sell products and services, and help keep people employed. It’s also not clear how law and civil order will stand up to months without power, or to a situation where people can’t get their basic needs met.

Anyone with resources, or family connections on the US mainland is going to move away, many will come here. Will Puerto Rican immigrants be seen by the GOP base as simply more illegals coming to use our welfare system?

Will the GOP remind their base that Puerto Ricans are US citizens? It isn’t certain that Republicans all will say that. Think about what that says about the America we live in today.

The scale of this disaster would be unfathomable and unacceptable on the US mainland. Will we step up as a country and help our brothers back to their feet? Or, will we do something half-hearted because they are the “other“?

Before you answer, remember that Flint Michigan still doesn’t have safe drinking water. Maybe getting the help you need is mostly about whether you (and your town) are the correct color.

Time to get soothed after another really tough week. Try to find a bag of Beanstock’s Shucker’s Roast coffee (only available at retail during the Wellfleet Cape Cod Oysterfest) but otherwise available at great Cape Cod restaurants like C-Shore Wellfleet. Then, brew up a hot, strong cuppa. Settle back, put on the Bluetooth headphones, and listen to Tchaikovsky’s Trio in A minor, Op. 50. This will take about an hour, but you will be greatly rewarded.

Tchaikovsky wrote this between December 1881 and late January 1882. It is the only work Tchaikovsky ever wrote for piano, violin, and cello. Here it is performed live at the New England Conservatory’s Jordan Hall in February 2013, with Livan on piano, Zenas Hsu on violin and Yina Tong on cello:

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

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Monday Wake Up Call – August 28, 2017

The Daily Escape:

Rats Restaurant, NJ Grounds for Sculpture – 2017 photo by Wrongo

The politics of disruption brought us Donald Trump. With hindsight, the evidence was everywhere. Americans were unhappy with our political system. Voters had lost faith in the government and political parties. About 10% of voters believed Congress was doing a good job. Both political parties had favorability ratings of less than 40%.

In 2008, people were frustrated and angry. By November 2016, with continued economic discontent, worsening conflicts in the Middle East, and serious public policy issues left unattended, people voted for the guy who promised to break our politics.

Trump won 53% of the over-65 vote, but was supported by only 37% of 18-29-year-olds. He won the white vote by 58% to 37%. And 51% of American women voted for him.

Mark Leonard  says that the election was decided by pessimistic voters. They were attracted by Trump’s anti-free trade arguments, his anti-Muslim and anti-immigrant rhetoric, his (false) statistics about increased crime, and the loss of American jobs to Asian countries.

Trump said all of this was caused by Washington and could be fixed by a disruptive billionaire. The pessimists won, and felt very hopeful that Trump would change America.

Are they having buyer’s remorse today? No, most say that they still support their guy.

Yesterday, we highlighted some findings of the Public Policy Polling (PPP) national poll taken after Charlottesville. PPP found that Donald Trump’s approval rating was steady despite all of his backtracking around the Charlottesville attack:

40% of voters approve of the job Trump is doing to 53% who disapprove, little change from the 41/55 spread we found for him in July.

This despite that just 26% of Trump voters think he has delivered on his promise to “drain the swamp”, to 53% who say he hasn’t. When asked if Trump has come through on “Making America Great Again,” just 33% of his voters say he has, to 59% who say he hasn’t.

PPP found that 57% of Republicans want Trump to be the party’s nominee in 2020, compared to 29% who say they would prefer someone else. That 28 point margin for Trump against “someone else” is the same as his 28 point lead over Mike Pence. Both Ted Cruz, with a 40 point deficit to Trump at 62/22, and John Kasich, a 47 point deficit to Trump, are weaker potential opponents than ‘someone else’.

All in, Trump is keeping his base together, while losing a few moderate Republicans. So the question is, what will it take to make Trump a one-term president?

If you want to defeat Trump, focus on how his political disruption has only caused destruction. It isn’t enough to tear shit down. Any president has to be a builder, and not just for a phony wall.

Have there been any gains from the disruption? Is there any evidence that Trump has the leadership skills to bring policies into law that will improve the lives of those who voted for him?

The winning message is about building: Build unity. Build the economy. Build a vision for a growing middle class.

Be a builder, not a disruptor.

Wake up America! Find a builder, or be a builder. To help you wake up, here is John Mayer with his 2006 Grammy-winning hit “Waiting On The World To Change”:

Takeaway Lyric:

It’s hard to beat the system
When we’re standing at a distance
So we keep waiting
Waiting on the world to change

Now if we had the power
To bring our neighbors home from war
They would have never missed a Christmas
No more ribbons on their door
And when you trust your television
What you get is what you got
Cause when they own the information, oh
They can bend it all they want.

Don’t wait to be a builder. Dr. King didn’t wait, neither did Mandela. They changed the world. WE have the power to change America.

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Silicon Valley Will Escape the Revolution

The Daily Escape:

Waterfall Jumping Competition (from 69 feet up), Bosnia, August 5th – photo by Amel Emric

Antonio Garcia Martinez:

Every time I meet someone from outside Silicon Valley – a normy – I can think of 10 companies that are working madly to put that person out of a job…

Well, that makes most of us “normies”. In context, we are the people who do not work in Silicon Valley. We are the people who use technology, rather than invent technology, and many of us ought to see technology as a threat to our jobs and our place in society.

We are not in the beautiful peoples’ club. Our names are not on the list. We’re not software engineers who work just to pay the taxes on their company stock.

And who is this Martinez guy? From Mashable:

He’d sold his online ad company to Twitter for a small fortune, and was working as a senior exec at Facebook (an experience he wrote up in his best-selling book, Chaos Monkeys). But at some point in 2015, he looked into the not-too-distant future and saw a very bleak world, one that was nothing like the polished utopia of connectivity and total information promised by his colleagues.

Martinez pointed out that there are enough guns for every man, woman and child in this country, and they’re in the hands of people who would be hurt most by automation:

You don’t realize it but we’re in a race between technology and politics, and technologists are winning…

Martinez worries about how the combination of automation and artificial intelligence will develop faster than we expect, and that the consequences are lost jobs.

Martinez’s response was to become a tech prepper, another rich guy who buys an escape pod somewhere off the grid, where he thinks he will be safe from the revolution that he helped bring about. More from Mashable: (brackets by the Wrongologist)

So, just passing [after turning] 40, Antonio decided he needed some form of getaway, a place to escape if things turn sour. He now lives most of his life on a small Island called Orcas off the coast of Washington State, on five Walt Whitman acres that are only accessible by 4×4 via a bumpy dirt path that…cuts through densely packed trees.

He’s not alone. Reid Hoffman, co-founder of LinkedIn told The New Yorker earlier this year that around half of Silicon Valley billionaires have some degree of “apocalypse insurance.” Pay-Pal co-founder and venture capitalist Peter Thiel recently bought a 477-acre escape hatch in New Zealand, and became a Kiwi. Other techies are getting together on secret Facebook groups to discuss survivalist tactics.

We’ve got to expect that with AI and automation, our economy will change dramatically. We will see both economic and social disruption until we achieve some form of new equilibrium in 30 years or so.

It will be a world where either you work for the machines, or the machines work for you.

Robert Shiller, of the famous Case-Shiller Index, wrote in the NYT about the changing meaning of the “American Dream” from the 1930s where it meant:

…ideals rather than material goods, [where]…life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement…It is not a dream of motor cars and high wages merely, but a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable…

That dream has left the building, replaced by this:

Forbes Magazine started what it calls the “American Dream Index.” It is based on seven statistical measures of material prosperity: bankruptcies, building permits, entrepreneurship, goods-producing employment, labor participation rate, layoffs and unemployment claims. This kind of characterization is commonplace today, and very different from the original spirit of the American dream.

How will the “Normies” survive in a society that doesn’t care if you have a job? That refuses to provide a safety net precisely when it celebrates the progress of technology that costs jobs?

The Silicon Valley survivalists understand that, when this happens, people will look for scapegoats. And we just might decide that the techies are it.

Today’s music is “Guest List” by the Eels from the 1996 album “Beautiful Freak”:

 Takeaway Lyric:

Are you one of the beautiful people
Is my name on the list
Wanna be one of the beautiful people
Wanna feel like I’m missed

Are you one of the beautiful people
Am I on the wrong track
Sometimes it feels like I’m made of eggshell
And it feels like I’m gonna crack

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

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IMF Reports US Standard of Living is Falling

The Daily Escape:

Haleakala Crater, Maui

Is it the best of times or the worst of times? This is no longer a partisan discussion. We have an economy in the midst of a long expansion, the third longest since 1850. The statistics say we are close to full employment. But, our mortality rate is moving in the wrong direction, and we have an opioid epidemic that is serious enough to cause jobs to go unfilled. The NYT reports that in Youngstown Ohio, middle class factory jobs go begging:

It’s not that local workers lack the skills for these positions, many of which do not even require a high school diploma but pay $15 to $25 an hour and offer full benefits. Rather, the problem is that too many applicants — nearly half, in some cases — fail a drug test.

The Fed’s regular Beige Book surveys of economic activity across the country in April, May and July all noted the inability of employers to find workers able to pass drug screenings.

So the best of times? Probably not. Bloomberg reports that the International Monetary Fund (IMF) looked at the US economy. This is what they see:

For some time now there has been a general sense that household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy. This sense is generally borne out by economic data and when comparing the US with other advanced economies.

The IMF then goes on to compare the US with 23 other advanced economies in the Organization for Economic Cooperation and Development (OECD) in this chart:

The chart is a bit of an eye test unless it’s viewed on a big monitor, but its overall point is that the US has been losing ground relative to its past OECD reports by several measures of living standards. 35 countries make up the OECD. The members include all of Western Europe, Russia, Japan, Australia, and several developing nations like Korea and Panama.

This from Bloomberg:

And in the areas where the US hasn’t lost ground (poverty rates, high school graduation rates), it was at or near the bottom of the heap to begin with. The clear message is that the US — the richest nation on Earth, as is frequently proclaimed, although it’s actually not the richest per capita — is increasingly becoming the developed world’s poor relation as far as the actual living standards of most of its population go.

This analysis is contained in the staff report of the IMF’s annual “consultation” with the U.S., which was published last week. The IMF economists haven’t turned up anything shocking or new, it’s just that as outsiders, they have a different perspective than what we hear from our politicians and economists.

For example:

Income polarization is suppressing consumption…weighing on labor supply and reducing the ability of households to adapt to shocks. High levels of poverty are creating disparities in the education system, hampering human capital formation and eating into future productivity.

What is to be done? Well, the IMF report concludes:

Reforms should include building a more efficient tax system; establishing a more effective regulatory system; raising infrastructure spending; improving education and developing skills; strengthening healthcare coverage while containing costs; offering family-friendly benefits; maintaining a free, fair, and mutually beneficial trade and investment regime; and reforming the immigration and welfare systems.

In other words, they suggest substantial reform. It’s doubtful that America can take care of these things anytime soon.

The subtext to most of their suggestions is that other affluent countries have found ways to improve in these areas, while the US has not. We don’t have to look too far into the past to see when those countries were modeling their economies on ours. But today, on all sorts of issues, like taxation, labor markets, health care, and education, the opposite is now true.

One major difference between the US and the rest of the developed world is ideological: Voters and politicians in the US are less willing to raise taxes to finance a better life for our citizens.

Other wealthy countries have figured out how to raise revenue, provide quality education, help the the unemployed, reduce poverty, and keep their citizens healthier than America has.

We must catch up, or admit our time as the world’s indispensable economy is over.

Today’s music (dis)honors the turmoil in the White House. See ‘ya Mooch! Remember that in just six months, Trump has gone through two National Security Advisers, two Chiefs of Staff, two Communications Directors, two Press Secretaries, and two Directors of the FBI.

Here is “Disorder in the House” by the late Warren Zevon and Bruce Springsteen:

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

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Today’s Conservatives’ Southern Roots

The Daily Escape:

Vasconcelos Library – Mexico City

From The Atlantic’s Sam Tannenhaus:

…the most populous region in America, by far, is the South. Nearly four in 10 Americans live there, roughly 122 million people, by the latest official estimate. And the number is climbing. For that reason alone, the South deserves more attention than it seems to be getting in political discussion today.

Ain’t demographics great? Tannenhaus continues:

The South is the cradle of modern conservatism. This, too, may come as a surprise, so entrenched is the origin myth of the far-westerners Barry Goldwater, Richard Nixon, and Ronald Reagan as leaders of a Sun Belt realignment and forerunners of today’s polarizing GOP. But each of those politicians had his own “southern strategy,” playing to white backlash against the civil-rights revolution—“hunting where the ducks are,” as Goldwater explained—though it was encrypted in the states’-rights ideology that has been vital to southern politics since the days of John C. Calhoun.

Tannenhaus is reviewing Nancy MacLean’s Democracy in Chains, and using it as a jumping off point to explore the roots of modern conservatism. Why does all this matter today? Donald Trump.

Tannenhaus points out that Trump won the South bigly:

Lost amid the many 2016 postmortems, and the careful parsing of returns in Ohio swing counties, was Donald Trump’s prodigious conquest of the South: 60% or more of the vote in Alabama, Arkansas, Kentucky, Oklahoma, Tennessee, and West Virginia, with similar margins in Louisiana and Mississippi.

And we need to look at Trump’s Cabinet: 10 Cabinet appointees are from the South, including Attorney General Sessions (Alabama) and Secretary of State Tillerson (Texas).

MacLean’s view is that modern conservatives draw on Southern resistance to 1954’s Supreme Court decision in Brown vs. Board of Education. After the New Deal, conservatives pushed back hard against the expanding federal government. Tannenhaus says:

But it was an uphill battle; the public was grateful for Social Security. Brown changed all that. More than the economic order was now under siege…A new postwar conservatism was born, mingling states’-rights doctrine with odes to the freedom-loving individual and resistance to the “social engineering” pursued by what conservative writers in the mid-1950s began to call the “liberal establishment.”

MacLean focuses on James Buchanan, a Virginian, and a Nobel Prize-winning economist, who argued that the crux of the desegregation problem was that “state-run” schools had become a “monopoly”.

Buchanan argued for privatization of schools. If local towns and cities limited their involvement in education to setting minimum standards, then many kinds of schools might flourish. Each parent “would cast his vote in the marketplace and have it count.”

Sounds like Betsy DeVos.

But, Buchanan wasn’t done. In his book “The Calculus of Consent” (1962), he argued that politicians were looking out for themselves, and they could do real damage that citizens were unable to avoid. The high-priced programs they devised were paid for by taxes, and citizens had little choice but to pay them. Reinforced by the steep progressive tax rates of the time, he called it licensed theft. Not long after Buchanan’s book, Medicare was passed, then the War on Poverty, and then the Great Society— each another example of social engineering delivered by the liberal establishment.

Buchanan’s ideas live on today. The right believes that liberal values cost us our liberty.

Today’s Freedom Caucus is Buchanan’s ideological descendant. They believe they are the guardians of liberty, that drastic measures, like shutting down the government, or defaulting on the national debt are legitimate uses of political power that serves their higher objective. More from Tannenhaus:

This is what drives House Republicans to scale back social programs, or to shift the tax burden from the 1% onto the parasitic mob, or to come up with a health-care plan that would leave Trump’s own voters out in the cold.

Conservatives and Libertarians say that “government is trampling our way of life”. That sets people against government programs, even when the specific program doesn’t need to be attacked. Consider Medicaid. It is attacked as both social engineering and a gift to minorities, even though the majority of those benefiting from it are elderly or white.

Conservatives and Libertarians prefer “individual choice” for poor elderly, or children who can’t afford healthcare. A broadly-based social safety net isn’t consistent with their ideological purity.

They fail to see the value of government as a moderating force in markets.

Accordingly, their thinking cannot advance human society in any meaningful way.

Today’s tune: “Revolution” by The Beatles recorded in September 1968. It was released as the B-side of the “Hey Jude” single in late August 1968, and we hear the live studio version from a month later:

Takeaway Lyric:

You say you’ll change the constitution
Well, you know
We all want to change your head
You tell me it’s the institution
Well, you know
You better free you mind instead

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

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Saturday Soother – May 13, 2017

The Daily Escape:

Bluebells, Brussels Belgium April 2017 photo by Francois Lenoir

In many ways, it is too easy to criticize Donald Trump. While we can have differing opinions on matters of policy, they only account for a few of the issues Wrongo has with Trump. Most are his unfathomable attempts to avoid telling the truth. Consider his interview with The Economist which posted the entire transcript on Thursday. Let’s focus on this excerpt:

The Economist: Another part of your overall plan, the tax reform plan. Is it OK if that tax plan increases the deficit? Ronald Reagan’s tax reform didn’t.
Trump: Well, it actually did. But, but it’s called priming the pump. You know, if you don’t do that, you’re never going to bring your taxes down.

[Snip]

Economist: But beyond that it’s OK if the tax plan increases the deficit?
Trump: It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?

Yes.
We have to prime the pump.

It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?

Priming the pump?
Yeah, have you heard it?

Yes.
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

Ok, so how did the guy from the Economist keep a straight face? The reporter is thinking John Maynard Keynes, the great British Economist, who came up with the idea of “priming the pump” in the 1930’s. By the way, Keynesian pump-priming is temporary government spending to boost temporarily weak demand. It is designed to boost growth, (and jobs) during a downturn, but we can’t assume that it will boost the economy’s growth rate.

Trump’s idea for pump-priming is more tax cuts. He’s following classic trickle-down economics, and claims that his tax cuts will boost investment, productivity growth, and labor supply, and thus raise the long-term growth rate of the economy. In this regard, Trump conflates Keynes, who’s been proven right, with Arthur Laffer, who wasn’t.

But, didn’t Trump graduate from Wharton with a business degree? Nobody gets out of Wharton without knowing that Keynes was the “pump primer”. And his saying that he coined the phrase ‘prime the pump’ a few days ago? Unfortunately, there are only two explanations: first, Trump is 70 years old and his cognitive skills are starting to desert him. Or second, he is a pathological liar.

Wrongo wants to go with #2.

He just wants to sell America something with his name stamped on it. But since America isn’t buying a hotel, he’s trying to sell Trumponomics, Trumpcare, etc. He does not really care about the details, he just wants to pass it, and to claim it is a success. That’s America’s tragedy.

So with Comeygate, Trumpcare and pump-priming, we all need to unplug and try, just try to relax on Saturday. We had a full moon and clear skies over the fields of Wrong on Thursday, so today we listen to “Claire du Lune” by Claude Debussy. It is the third movement of “Suite bergamasque”. Its name comes from Verlaine’s poem Clair de Lune, “moonlight” in French. Here it is played by Dame Moura Lympany, British pianist, who died in 2005:

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

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Sunday Cartoon Blogging – April 30, 2017

It only took 100 days for Donald Trump to reduce the office of the presidency to the point of near-zero credibility. Unfortunately, it appears as though his base and Republicans in Congress remain very accepting of him as president. In Twitter speak, #So Sad.

Back to the administration’s one page tax plan: The plan works if we assume 6% annual GDP growth for the full 8 years of a Trump presidency. Since the end of the Great Recession, annual GDP growth has been about 2%. More to the point, we now have a 3.5% (of GDP) budget deficit, and we are at the top of the current business cycle, with a 75% debt-to-GDP ratio.

Republicans used to refer to that as being broke.

Mostly, what has been accomplished in the last 100 days are a blizzard of executive orders and proclamations. We all remember when executive orders like Trump’s were considered tyranny by Fox News. On to cartoons. The GOP walks out on its long-term companion, the deficit hawks:

Trump’s first 100 days did NOT include tons of winning:

The clown show about trickle-down economics continues:

Trump explains his new tax brackets:

Arkansas needs help after botching another execution:

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Thoughts on Tax Day

The Daily Escape:

Tu Lien Bridge (design, to be built) – Hanoi, Vietnam

Today is officially the day our federal income tax returns are due. That’s because April 15 was a Saturday, while Monday is a holiday in Massachusetts. And as the Bay State goes, so goes America when it comes to filing taxes. Wrongo appreciated the extra time.

Americans shouldn’t mind paying their taxes. We live in a great country, and if you want to fly first class, you gotta pay the fare (unless, of course, you’re flying Air Force One).

The process of filing taxes could (and should) be simplified, but reducing taxes would be a mistake. America has deferred spending for social needs and for infrastructure, and not just on the federal level. Wrongo sits on his town’s Roads Committee. If we were to continue to fix our local roads at the same rate going forward as we have for the past few years, it will take us 40 years to fix just the roads that are rated “poor” quality or worse. Still, many in town think we should spend less, so they could be taxed less. As Justice Oliver Wendell Holmes noted in a dissenting opinion in a 1927 Supreme Court case:

Taxes are the price we pay for a civilized society.

Some of us are still learning that.

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Democrats Have Failed

The Daily Escape:

Lavender in Provence – 2017 Photo by Fabio Antenore

This week, Wrongo wrote that 50% of US births are paid for by Medicaid, and how worry about hunger and homelessness has never been higher among Americans. Both of these issues are symptoms of how our economy fails low-income and lower middle class Americans, and neither political party is truly interested in addressing the problems.

Trump won because he led people who used to vote for Democrats to believe that they had nothing to lose if they voted for him. Below-median income voters had long ago lost faith that Democrats, and Hillary in particular, would ever do anything to change their plight.

Trump said he would look out for them. Whether he does or not, remains an open question, but even before Trump, Democrats had already lost a big swath of America. From the American Prospect:

In the race for the White House, the Democratic presidential candidate has won…fewer US counties with average incomes under the national median and with populations that are more than 85% white in every general election since 1996. Concentrated in the Midwest, Appalachia, and the upper Rocky Mountains, there are 660 such counties today. Hillary Clinton won two of them.

Think about that: The Democratic Party’s influence in mostly white, lower-income America has eroded to nearly nothing since Bill Clinton was president. This chart documenting their fall is stunning:

 

 

 

 

 

 

 

 

 

 

 

 

The Parties basically split below-median income counties that were 85% white in 1996. Over a 20-year period, the erosion of the Democrats’ control was steady, and complete. This isn’t just the result of a poor 2016 presidential candidate, it is an indictment of the Democratic Party, its leadership, and its strategy.

The American Prospect article is about Montana’s Democratic Governor, Steve Bullock, who won his state by 4 points while Trump was beating Clinton by 20. Bullock is a rural populist in a party of technocrats. Obama lost Montana by 2 points in 2008. Bill Clinton won Montana in 1992.

But, the electoral failure of Democrats is worse than its showing in these below-median income white counties. The following graphically illustrates the abject failure of Democrats to be competitive in political contests at all levels:

Nothing that Barack Obama did by holding on to the White House for that entire period compensates for these terrible losses.

Democrats remain divided about their Party strategy, many clinging to the thought that if Hillary could have turned about 80k voters in Michigan, Pennsylvania, and Wisconsin, where white working-class people are abundant, she would be president.

But she would not control either legislative branch, and she would have had to propose Supreme Court Justices similar to Neil Gorsuch to get one confirmed by the Senate.

The question is where will the DNC be taking the Party in 2018? In a 2018 mid-term election where the president has a historically poor approval rating with independents and Democrats, like Trump has now, victory is possible.

If Democrats want to win back Congress, and the White House in 2020, they need to field candidates who believe in jobs and economic growth first. The candidates need to be authentic people, who listen more than they talk. And when they do speak, they should use PIE as a metaphor for America’s economy, as in: (H/T Seth Godin)

  • How big is the pie?
  • Is the pie growing?
  • What will my share of the pie be tomorrow?
  • Who allocates the slices of pie? Can they be trusted?

When voters think the economy isn’t growing, things begin to feel zero-sum. People begin to think that they may permanently lose their place in our society.

If the Democrats want to win back Congress, they need to describe concretely what they plan to do when they say they support their working-class constituents, regardless of color.

They need to get to be better than Trump on jobs, economic growth and finding a peace dividend.

All of that, and Medicare for all. In Wrongo’s Thursday column, Gallup found that health care concerns ranked highest across all income cohorts.

Shouldn’t these principles be credible with working-class people—including whites?

A song about pie: Here is D’Angelo with “Devil’s Pie” from 1998. It’s a dystopian vision of capitalism, where everybody’s fighting for more of the tasty, materialistic dish. All is fair in pursuit of a bigger paycheck:

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

Takeaway Lyric:

Fuck the slice we want the pie
Why ask why till we fry
Watch us all stand in line
For a slice of the devil’s pie

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