Economic Policy – Page 6 – The Wrongologist

Thanksgiving Week

The Daily Escape:

Turkeys on the fields of Wrong – November 2018 photo by Wrongo

(This is the last column before Thanksgiving. Words from Wrongo will resume on 11/28.)

Thanksgiving is Wrongo’s favorite holiday. As a secular holiday, you’re not required to do anything. The celebration is subdued, and around here, we focus on gratitude. Wrongo always thinks about how grateful we should be to live in this wonderful country of ours, and how grateful we are for all of America’s gifts.

We’re lucky to live in a land of plenty: Most of us have employment, most have access to quality healthcare. Most of us have a warm place to sleep at night, most have hope for their kids’ future.

There are many of us who do not have those things, and it is our collective responsibility to help them get to a place where they are physically and mentally secure. They need our help. And we know what to do, and we know how to do it.

This is our 2498^th column. Wrongo wants to thank all who have stuck around since the beginning in 2010. He thanks all of you who read it now, and that includes readers in more than 60 countries. Special thanks to long haulers Monty B, Fred VK, David P, Pat M, and Terry McK, among others. Wrongo is very grateful to all of you!

Wrongo’s wish is that you allow yourself to feel gratitude today and share it with those around you. The secret of life is to affect others in a positive way.

We’re truly grateful for those who came before us, and to our family members and friends who we can’t be with today. We’re thankful to those who are on the front lines in military service, or at home in our hospitals, schools, firehouses, and police stations. Happy Thanksgiving!

The NYT has an article about how online gambling companies have gotten their noses under the tents at colleges and universities:

“In order to reap millions of dollars in fees, universities are partnering with betting companies to introduce their students and sports fans to online gambling.”

The Times says that Michigan State University’s athletic department inked a deal with Caesars Sportsbook in 2021. Caesars proposed a deal worth $8.4 million over five years. Michigan signed on the line. Other schools have also struck deals to bring betting to campus. More from the NYT:

“After Louisiana State University signed a similar deal in 2021 with Caesars, the university sent an email encouraging recipients — including some students who were under 21 and couldn’t legally gamble — to “place your first bet (and earn your first bonus).”

Since the Supreme Court’s decision in 2018 to let states legalize online betting, gambling companies have been working to convert traditional casino customers, fantasy sports aficionados and players of online games into a new generation of digital gamblers.

And universities, with their captive audience of easy-to-reach students, have emerged as an especially enticing target. So far, at least eight universities have become partners with online sports-betting companies.

And a dozen other universities’ athletic departments and booster clubs have also signed agreements with brick-and-mortar casinos. For example, Turning Stone Resort and Casino is the official resort of Syracuse University’s ‘Cuse Athletics Fund. These gambling partnerships bring in funds that schools can use to sign marquee coaches and build their sports teams.

Wrongo rarely gambles, but he has a mostly lassiez faire attitude about it. He’s skeptical about prohibiting it. But the idea by universities of “let’s introduce our students to online gambling for our profit” sounds, well, wrong. The hypocrisy here is that the sports betting companies are offering “a piece of the action” to schools that not long ago swore that gambling would ruin college sports.

It isn’t exactly the same, but do you recall that back in the 80s, banks introduced credit cards and credit card debt to students? And how did that work out? You can almost imagine hearing: “Want to go double or nothing on those student loans, kid?” The most relevant quote from the NYT is:

“College athletics have become profit maximizing opportunities for athletic directors and coaches.”

Wrongo thinks this has nothing to do with the educational mission of colleges and universities. OTOH, the ol’ ball coach is saying: “Wanna bet”?

Let’s cruise into the holiday by listening to a tune that is new to Wrongo, Josh Groban’s “Thankful” performed live from his “Noel” album. It’s on point with Wrongo’s thinking about Thanksgiving:

Lyrics:

Somedays we forget
To look around us
Somedays we can’t see
The joy that surrounds us
So caught up inside ourselves
We take when we should give.

So for tonight we pray for
What we know can be.
And on this day we hope for
What we still can’t see.

It’s up to us to be the change
And even though we all can still do more
There’s so much to be thankful for.

Look beyond ourselves
There’s so much sorrow
It’s way too late to say
I’ll cry tomorrow
Each of us must find our truth
It’s so long overdue

So for tonight we pray for
What we know can be
And every day we hope for
What we still can’t see

It’s up to us to be the change
And even though this world needs so much more
There’s so much to be thankful for

Is “Yellowstone” A Political Show?

The Daily Escape:

Early snow, Zion NP, UT, November 2022 photo by Bob Busund

After friends and many family members said that they really liked the TV show “Yellowstone”, Wrongo and Ms. Right watched the 2-hour season premiere on Paramount on Sunday night to see if we should commit to watching all five seasons.

Wrongo’s hot take is that the show is “The Sopranos” with horses. There’s some family intrigue like on “Succession” but the Logan Roy family isn’t directly responsible for killing people or animals at the volume of Montana’s John Dutton family.

Since its launch in 2018, Yellowstone has become one of TV’s most-watched dramas. January’s fourth-season finale had over 9 million viewers the night it aired. By comparison, HBO’s Succession drew 1.7 million for its third-season finale a few weeks earlier.

From the NYT:

“John Dutton, a Marlboro Man Tony Soprano, runs the Yellowstone Ranch like a quasi-mob. His wranglers, many of them ex-cons, are branded with a “Y” to mark them as his. When they’re not breaking horses, they’re breaking his enemies’ faces (and often one another’s).”

We watched the season-five opener where patriarch John Dutton becomes governor of Montana, basically running on a platform of “Why do I have to do everything myself”? He owns the largest ranch in Montana but feels that the whole world is conspiring against him. Specifically, it’s a cabal of greedy tycoons who want to buy Dutton’s property and build casinos, condos, and ski chalets on it.

So the main fight is between rich, white-collar city folk who have degrees and suits. The Dutton’s hate those people who fly in from California and then get their (relatively) small farms qualified for tax breaks. The Dutton’s enemies are the bankers and lawyers who are part of the scheming to take Dutton land.

It seems that John Dutton is defending his land and way of life from educated, monied outsiders who rarely actually go outside. Since his enemies mostly live on the coasts, the show is a kind of Red vs. Blue allegory.

Yellowstone’s message is that if you live in rural America, other Americans envy you. You have something they want. Even if you are land poor, you’re richer than they are. And they’ll try and take it from you if you let them.

There’s a market reality to that thinking. Nationwide, available farmland is scarce. Last year, values increased by 12.4% to an average price of $3,800 an acre. Elsewhere, the NYT reports that: (emphasis by Wrongo)

“… the supply of land is limited. About 40% of farmland in the United States is rented, most of it owned by landlords who are not actively involved in farming. And the amount of land available for purchase is extremely scant, with less than 1% of farmland sold on the open market annually.”

Both small and beginning farmers are being priced out of farmland. And Bill Gates is the largest owner of farmland in America. Like wealth, land ownership has become concentrated in fewer and fewer hands. And thus, land costs more, resulting in a greater push for more intensive industrial farming techniques to generate higher returns.

One report found that just 1% of the world’s largest farms control 70% of the world’s farmland. And the biggest shift in recent years from small to big farms was in the US. No wonder then, that Yellowstone has a big and loyal audience in America’s heartland. Land is power, land is wealth, and importantly, land remains a way to sort both race and class in America.

Yellowstone is described as a “red-state show”. Based on watching just two hours, Wrongo can see that, but as the NYT says:

“On one level, the appeal of “Yellowstone” is apolitical and as old as TV. It’s a big, trashy, addictive soap about a family business, like “Dallas”

It speaks the language of today’s culture wars with a country accent. We found the family members in Yellowstone both hard to like, or root for, but the show gives them enemies who seem worse. So you can maybe accept the amorality of it.

Wrongo doesn’t see it as a Conservative show in a political sense. The issues Yellowstone raises about land stewardship and big business are relevant, and not just in rural America. But from Wrongo’s limited experience with the show, the plot is more about romance, violence and feuds, along with beautiful horses and Montana scenery.

Dutton’s trying to conserve his family’s land. If you think about it, that’s not something today’s conservatives are at all interested in doing. Developers on the coasts are happy to pave over everything, and very, very few of them are liberals and/or Democrats.

And you don’t have to be politically conservative to want to preserve our natural world.

Will we watch more? Depends on what else is on.

What Was The Dems’ Closing Argument?

The Daily Escape:

Valley of Fire SP, NV – November 2022 photo by Carol Cox

It’s Election Day. Over the next few days, the mainstream media, and self-appointed pundits like Wrongo will try to make sense of what the vote tallies mean for America and for the two Parties. Regardless of the outcome, many things will be very different in 2023.

Here’s Sherrilyn Ifill with a great closing argument for voting rather than standing on the sidelines:

“Voting this year is not only political, it’s personal. To vote is to speak. To vote is to declare that you will not be written out of the definition of who can claim their right to this national identity. To vote is to fight. Voting is not the only way to fight, but it is one of our most powerful weapons. Wield it with power and determination. And leave no power on the table.”

The one overriding issue in this midterm election has been inflation. The media won’t let go of it, and the glare effect of inflation makes some voters think that the economy is also terrible. And it hangs over the closing arguments of all Democrats because the Republicans falsely say that the sole cause of inflation is that the Biden administration’s spending like crazy.

The truth is that about 54% of the current inflation rate is due to elevated corporate profits.

Prices are rising not just because of worker’s wages. The cost of labor is increasing at a slower rate than inflation. Raw materials are not the prime driver of increased inflation either. Companies are raising prices above and beyond costs because they can.

Unless companies can reduce their cost of bringing products to market, the only way to increase the firm’s markup is by increasing its selling price. Kevin Drum has helpfully taken a look at that for us:

The blue line represents the total cost of employing somebody, including all wages and benefits. Since 2020 it’s risen at less than the rate of inflation. The red line represents after-tax profits as a share of gross value added, (markup to economists). Before 2020 it rose roughly in line with inflation, but since 2020 it’s skyrocketed.

From Drum: (emphasis by Wrongo)

“Corporations are increasing prices…and blaming it on inflation. But it’s not because of inflation. It’s a cause of inflation. Prices are rising….mainly because companies are raising prices above and beyond that for no special reason except that they can. And all of us are paying the price.”

Economist Robert Reich points out that corporations can jack up prices today without losing customers because we’ve allowed virtual monopolies to develop in many US industries. Since the 1980s, he says, two-thirds of all American industries have become more concentrated. Some examples:

Foods: Four companies control 85% of all meat and poultry processing. Just one corporation sets the price for most of the nation’s seed corn. Just two giant firms dominate consumer staples.
Drugs and prescriptions: Big pharma consists of just five corporations.
Air travel:The airline industry has gone from 12 carriers in 1980 to just four today.
Banking: Wall Street has consolidated into five giant banks.
Broadband: It’s dominated by three cable companies.

The US House Subcommittee on Economic and Consumer Policy released an analysis last Friday that spells out how some corporations have enacted price hikes and are enjoying record profits. What’s worse, the CEOs of the big firms openly admit on earnings calls with investors that they use inflation as a cover to raise prices. Here’s what a few CEOs of major companies are saying:

Michael McGarry, CEO of PPG, in response to a question whether prices will go back down when input prices are lower:

“…we’re not going to be giving this pricing back….So we’re telling people, this is the new price. And if you don’t like it, please don’t place purchase orders.”

William C. Rhodes, CEO of Autozone:

“It is also notable that following periods of higher inflation, our industry has historically not reduced pricing to reflect lower ultimate cost.”

Jim Snee, CEO of Hormel:

“…our Grocery Products pricing is very sticky and so the pricing that we’ve taken and that we’re in the midst of executing the additional price increase, that pricing will by and large stay.”

The inflation we’re experiencing is not due to wage gains, it’s due to profit gains from corporate pricing power.

It would be nice if the media reported on what’s really causing the inflation. Many people are going to the polls today thinking this is Biden policy-caused inflation rather than the reality of a corporate drive for higher profits.

Too bad so few Democrats are talking about this when they get hammered about inflation by their Republican opponents.

The Media’s Obsession With Inflation

The Daily Escape:

Dixie National Forest, UT – October 2022 photo by Garrett Cottam

As the countdown to the midterms rolls on, the mainstream media are obsessed with two things: The latest polls and inflation. Let’s start with inflation. From the Editorial Board of The WaPo:

“Congress and Biden have to help the Fed fight inflation“

They’ve made inflation a bogeyman, and they’re saying this two weeks before the midterms. Moreover, they can’t write the word “inflation” without putting “Biden” or “Democrats” in the sentence. They’re implying that both are failing in America’s inflation fight. The WaPo and the rest pair the i-word with adjectives designed to scare us: “runaway,” “record-breaking,” or “crippling.”

In their editorial, the WaPo Board admits that the Biden administration has done a reasonable job on the economy, that they’ve played a bad hand fairly well. And that they can’t be faulted for the current spasm of inflation. They note that Republicans are “not offering much in the way of a concrete anti-inflation plan” — that’s an understatement, since they’re not offering anything at all.

Still, the WaPo is calling on Biden to use fiscal policy to “help the Fed.” Coherent fiscal policy will take more than the next two weeks to put in place. Let’s review the difference between monetary and fiscal policy.

Monetary policy is about the actions the Federal Reserve can take. The Fed can tinker with the money supply, or they can raise or lower interest rates. This allows the economy to adjust to changing conditions, like inflation. It is necessary, but not sufficient since adjustments to interest rates are hard to control. Even minor rate adjustments can sometimes have major consequences.

Raising rates too quickly or too high might slow inflation but also trigger a recession where many jobs are lost.

Fiscal policy is what the Congress can do. It’s using legislative action to heat up or cool down the economy. When there’s a slump, Congress can approve new public spending, like infrastructure, to inject money into the hands of businesses and consumers. When there’s a deficit, new tax legislation can dampen the effects of overspending.

The trouble with fiscal policy is that it presupposes a willingness by Congress to legislate. But today’s partisanship prevents any discussion of fiscal policy. The WaPo article makes a case for Congress engaging in fiscal policy legislation:

“Until inflation is defeated, fiscal policy should push in the same direction as the Fed, with no new major spending that isn’t fully or mostly paid for with higher taxes or reduced spending elsewhere in the budget.”

Get Wrongo whatever the WaPo is having! Higher taxes? What are they smoking?

Inflation isn’t the only story. It’s just the only story Republicans want to tell. They’re telling it dishonestly, and the mainstream media are helping them tell it. If democracy happens to die, sorry, that’s just collateral damage.

Let’s turn to reporting on the latest opinion polls. It’s tough to take the breathless polling coverage by the TV anchors. There’s still plenty of evidence to support either Party exceeding expectations in the upcoming midterms. But what has Wrongo worried is the general trend in reporting on the polling. Some polls are showing late movement, in large chunks, away from the Democrats. One such poll is by the WSJ:

“White suburban women, a key group of midterm voters, have significantly shifted their support from Democrats to Republicans in the closing days of midterm campaigning because of rising concerns over the economy and inflation…”

The WSJ found that they favor Republicans in Congressional races by 15 percentage points.

OTOH, that poll was of only 297 white women. And since it’s from the WSJ, it might be biased against the Dems. Nonetheless the PBS Newshour reported about it without mentioning how small the sample size was.

Polls that focus on likely voters seem to be consistently looking better for Republicans than the polls focused on registered voters. Likely voters are a proxy for voter enthusiasm, or which Party’s faithful are more likely to vote.

Also troubling, issue polling consistently shows that inflation is the biggest issue driving Party preference. More than abortion, democracy, or any other factor particularly among independents.

While control of both Houses of Congress might change next Tuesday, the recent polling seems so one-sided that it looks wrong to Wrongo. The meme that “just about everything is breaking in Republicans’ favor” doesn’t seem in context with what’s happening.

Regardless, most of the crucial Senate races look very tight, which means we could be seeing some late calls, some recounts and maybe a week or so before we know the final outcome.

As national issues go, inflation isn’t on a par with the deliberate demolition of democratic institutions, or the trashing of women’s reproductive rights, or the growing violence against politicians.

And yet, the so-called credible mainstream journalists feign an urgency about inflation, just to keep us all glued to their reporting on the political horse race.

Saturday Soother, London Edition – October 29, 2022

The Daily Escape:

The Old Floral Hall, Covent Garden, Royal Opera House, London UK – October 2022 iPhone photo by Wrongo

We’re nearing the end of our week in London. Yesterday, we visited the Royal Opera House (ROH) in Covent Garden. We got to watch ballet rehearsals by the Royal Ballet Company which shares the ROH, and briefly listened in on a rehearsal by Lisette Oropesa who plays the title role in “Alcina” by Handel. Alcina turns her male lovers into plants, an idea that inspired much mirth from Ms. Right.

Wrongo saw Nureyev perform at the ROH in 1976, when he was working for the big American bank. That was ages before the remodel of the ROH which added a huge addition in 1997-1999. In the 1970s, the Old Floral Hall in the photo above was at street level. Now it has been refurbished, halved in size, and raised to the second floor inside the ROH addition. It is used as an event space and cocktail bar.

We heard over here about the good US economic news. And it wasn’t just about GDP growth. There was also good news on inflation. The Personal Consumption Expenditure (PCE) price index, which the Fed watches closely, increased by 4.2%, down significantly from 7.3% last quarter. And the CPI for the last three months rose by 0.5%, equating to an annual rate of 2%. If it were to keep up for the next nine months, that’s at the Fed’s inflation target. Pity that the media aren’t talking about this, but mostly about how the economy is still slowing.

One thing that caught Wrongo’s eye from abroad was Harvard’s Kennedy School of Government’s release of its 44th youth poll: (emphasis by Wrongo)

“A national poll released today by the Institute of Politics at Harvard Kennedy School indicates that 40% of 18-to-29-year-olds state that they will “definitely” vote in the November 8 midterm elections, on track to match or potentially exceed the record-breaking 2018 youth turnout in a midterm election. Young voters prefer Democratic control of Congress 57% to 31% (up five points for Democrats since spring), but 12% remain undecided.”

John Della Volpe, Kennedy School director, believes we will see a Gen Z wave in November:

“Youth today vote at levels that far exceed millennials, Gen X, and baby boomers when they were under 30.”

In the 2020 presidential election, voters 18-29 voted in even greater numbers than in 2018: closer to 50%. Yet, if turnout by younger voters is in the 40% range, that’s not something to celebrate. It means that younger voters are leaving a lot of political power on the table.

According to the US Census, people over 65 outvoted them by over 15 points in 2018. Political power is right there waiting for people to grab it. That only will happen if more people turn to vote.

Wrongo got an email from his Democratic Congressperson Jahana Hayes, saying that she was trailing by one point in the highly respected Emerson College poll which says:

“The economy is the most important issue for 46% of Connecticut 5th District voters, followed by abortion access (16%), and threats to democracy (14%).”

Hayes is a first-term Representative who was comfortably elected in 2020. While the results are within the ± 4.3% margin of error in the poll, this isn’t a seat the Dems thought was in play. This is more proof that the Dems are flailing with their messaging on inflation and the economy, despite the fact that inflation is falling and the economy is still growing.

But we also have to remember that if the GOP takes the House, they’ll have absolutely no incentive to even try to help make economic conditions any better.

In fact, they are actually incented to try to make it worse. Why? Because the Democrats will still control the White House and may also control the Senate for the next couple of years. It’s a safe bet that Republicans will do whatever they can to increase the chaos on the economic front, so that they can continue to blame Democrats when Trump runs again in 2024.

But we really have no idea which Party will control the House and Senate, and we may not know for sure until a week or two after November 8.

With Wrongo and Ms. Right in London, you’re on your own for how to relax on this Saturday. To help with that, watch and listen to Sinfonity TV Guitar’s incredible performance of Bach’s “Toccata & Fugue”, recorded live in Segovia, Spain. To watch 15 rock guitar musicians playing it in unison is astounding. Take your collective hats off to the musicians who play it:

Who says rock and classical music don’t mix?

Sunday Cartoon Blogging – October 23, 2022

(Today we’re leaving for London. Regular columns will resume on 11/1. In the meantime, if turbulence occurs, keep your tray tables in their upright and locked position and your hands inside the blog.)

John Dick, CEO of Civic Science, has a weekly newsletter that is worth your time. This week he asks:

“What if we’re just talking ourselves into all of this? Admittedly, I partied too much in college to get good enough grades to go to a respectable grad school to become an economist. I’m out of my league here.”

Dick wonders why economists are so sure that we can’t escape inflation unless we head into a deep recession. He also wonders (as does Wrongo) if currently, there’s a doomsday loop at work. It’s true that there are times when regardless of the news, the stock market goes down. More from Dick:

“Oh no! The job market is too good. Wages are growing too fast! Employees have too much leverage in the workplace! The dollar’s too strong! People’s homes are worth too much! We’re all screwed!!!”

The news media dutifully reinforces the doomsday loop. And who proffers answers? Very few. So, around we go, blaming the politicians in one Party for something they cannot solve, and neither can the other Party. And thus, the prophecy fulfills itself. On to cartoons.

This passes for an answer from the elephant:

How to solve a problem like Hershel:

When you weren’t worried about democracy:

The GOP’s scariest story:

There are waay too many political ads:

Turkeys are where you find them:

Saturday Soother – October 22, 2022

The Daily Escape:

Sunset, Cranberry bog, Yarmouth, MA – October 2022 photo by Jean Burns

Wrongo and Ms. Right are leaving on Sunday for a week in London. We’re arriving there just as the horse race for whoever will become the UK’s next prime minister will be clear to all. We’re expecting it to dominate the British news while we’re there.

On September 10, Wrongo said he wasn’t a fan of the now departed Liz Truss. He also said it was hard to believe her effort to revive the zombie concept that is trickle-down economics would go well with the UK already in a recession. She lasted just 44 days in office. Here’s a hot take from England:

Seems like a lot of turmoil for a small, low growth, densely populated country.

Truss’s sin was simple. Her economic plan was designed to satisfy libertarian think tanks and fans of Ronald Reagan and Margret Thatcher rather than to be something workable. Republicans in America do this kind of thing because we can, since the dollar is the world’s reserve currency. That means we can go almost as far into debt as we want without the markets panicking.

But the UK doesn’t have that luxury. So there’s a limit to how many favors they can do to their own fabulously rich citizens.

The policy that got Truss thrown out of No. 10 Downing Street was a copy of the foundational Republican US domestic agenda, as practiced from Reagan to Trump. That is, cut taxes for the rich and corporations, then hope it eventually creates tax revenue before it forces spending cuts.

And the British financial markets seem to actually care about the well-being of their country’s economy. However, American markets seem to care only about maximizing share prices and the after-tax compensation of top-level executives.

US Conservatives were delighted when Truss became PM. On September 23, Larry Kudlow said on FOX:

“The new British prime minister, Liz Truss, has laid out a terrific supply-side economic growth plan which looks a lot like the basic thrust of Kevin McCarthy’s Commitment to America plan.”

Needless to say, like Truss, Republicans are also willing to do unfunded tax cuts and call it a growth agenda. They’re also willing to fail to extend America’s borrowing limit, in order to make their agenda happen. The GOP would try to hold the Democratic president hostage in order to share some political responsibility for that action, never mind that an American debt default would also hold a gun to the global economy.

That isn’t possible in the country that brought you Maggie Thatcher. They toss out their incompetent supply-siders. The elephant in the room of the UK’s chaos and crisis is 2016’s Brexit. Even though Brexit has brought about low GDP growth, it remains a hard right political project rooted in a mythical British past.

Brexit’s Tory supporters didn’t care about the hard economic evidence that Brexit would be an act of economic self-harm. And the political divisions Brexit caused in the Tory party remain a problem as they now seek to unite behind another sacrificial PM. From David Frum:

“The problem is that you’re not eligible for the captaincy unless you agree it was a brilliant idea to scupper the ship in 2016 – and can convincingly act baffled why it has been sinking ever since,”

If America still has the ability to learn, it would be great if they studied this Tory disaster.

It would be nice if American voters would really punish Republicans when they fuck up and tank the economy again. And not just by electing a Democratic president, as they did in 1992 and 2008 when the economy went south.

OTOH, if anything can get Joe Biden reelected, it’s a Republican-led Congress in 2023 and 2024. They will screw things up just as thoroughly as Liz Truss has screwed the pooch in Britain. Then, we’ll have to see if they’ll ever be blamed for it.

Enough foreign politics for today. It’s time for our Saturday Soother, where we consider raking the leaves that are suddenly carpeting the Fields of Wrong but decide to put it off until we return.

Let’s start by brewing up a big mug of Costa Rica Cerro Dragon Geisha Honey ($12.00/4oz.) from RamsHead Coffee Roasters of Bozeman, Montana. It is said to be an invitingly complex Costa Rica honey-processed cup with notes of tropical fruit, sweet herbs, and crisp cocoa.

Now grab a seat by a south-facing window and listen to Khatia Buniatishvili play Schubert’s “Impromptu No. 3 in G-Flat Major, Op. 90, D. 899”. It isn’t played in front of a live audience, so no coughing, etc.

Schubert wrote eight solo piano pieces called impromptus. An impromptu is a musical work, usually for a solo instrument, in this case, piano. Schubert composed this work the year before he died:

An Economic Closing Argument for Democrats

The Daily Escape:

Snake River, Grand Teton NP, WY – October 2022 photo by Hilary Bralove

Yesterday, Wrongo said that the Dems should add a focus on inflation and the economy to their closing argument when asking voters to keep them in power. Here’s a suggestion of what that argument might look like from David Doney (@David_Charts on Twitter). Doney draws his stats from the Federal Reserve Economic Data (known as FRED) and the Congressional Budget Office (CBO). Below is an extract from his Twitter feed:

Jobs: More Americans are working than at any time in history: 153 million. The economy now has 500k more jobs than it did before the pandemic. The unemployment rate is 3.5%, the lowest since 1969. With more people working there’s more spending.

Wealth: The bottom half of US households have an average real net worth of $67,200, the highest ever. Under Trump, it was just $34,648. (While Trump gave tax cuts to the wealthy. Biden gave them to the middle and lower class.) Even those in the 50th to 90th percentile are doing better under Biden: average real net worth is now $747,010 vs. $699,530 under Trump. It’s important to remember that these are averages not median net worth numbers, which are lower. Median net worth in the US is $121,700, up 17.6 % from 2016.

Income: Real wages are higher than before the pandemic. Despite what some pundits say, they have outpaced inflation. From February 2020 to last month, wages for production and non-supervisory workers have risen 15.6%, while the Consumer Price Index (CPI) has risen 14.6%. So Americans’ purchasing power is greater today than it was in 2019.

The deficit: Our annual federal budget deficit is 50% lower than it was last year. It was $2.8 trillion in fiscal year 2021 and is $1.4 trillion this year, according to CBO estimates. Government income is up and government spending is down: Revenues are $850 billion (or 21%) higher and spending is $548 billion (or 8%) lower.

This continues the historical pattern of Democratic administrations being more fiscally responsible than Republicans. Yet the GOP’s closing argument includes screaming about Democratic spending which they say caused inflation. They are trying to convince Americans who either don’t read or bother to check facts that it’s the Democrats who spend like crazy. The opposite is true.

The economy: The Gross Domestic Product (GDP) hit an all-time high of $20 trillion in the fourth quarter of 2021, and currently is $19.9 trillion (for the second quarter of this year). The Atlanta Fed thinks GDP will grow 2.8% in the third quarter. So no recession just yet. In fact, Doney reports that the six key indicators that the National Bureau of Economic Research (NBER) uses to decide if we’re in a recession were all up from June to September.

Health insurance: Biden revived the Obamacare signup campaigns and advertising that Trump had eliminated. And now 92% of Americans (and more than 98% of kids) have health insurance, an all-time high. Before Obamacare, close to 18% of Americans had no health insurance.

There’s no doubt that many Americans are worried about the high prices at the grocery store and at the gas pump. But one reason inflation has increased is because people have more money in their pockets. Americans have $4 trillion more in their bank accounts than they did before the pandemic. So they’re working, earning money, and spending it.

The other factor driving inflation is the consolidation of companies into just a handful of major corporations, and the ability of those corporations to jack up prices. Corporate profits are at a 70-year high, yet American corporations are still raising prices. They’re doing so because there’s so little competition.

Republicans in Congress won’t stop corporate price gouging. And we know the GOP will blame Dems for high federal spending (which, as said above, is down 8% so far vs. last year). But the GOP won’t let the facts get in the way of their bad policies. They’ll use this manufactured crisis, along with refusing to raise the debt ceiling, to try to force Democrats to support cuts to Social Security, Medicare, and other social safety net programs.

As blog reader T. Grosso commented yesterday: (Brackets by Wrongo)

“It is such a good question to ask what the Republicans will do if they gain control. We obviously know the answer. They will block anything and everything that might help people so they can blame Biden for [it in] 2024.”

The Democrats’ closing argument needs to include a strong, populist message. They should be saying that Democrats believe people must come before profits. Dan Pfeiffer reports:

“The folks at Data for Progress tested a series of messages on inflation and found that emphasizing corporate greed was an effective pushback on concerns about inflation.”

OTOH, the inflation and economic message must be carefully crafted. It could backfire with some who have missed the current jobs market and are struggling to pay their bills.

Democrats should acknowledge the pain caused by high prices while pointing out that a strong economy and the Party’s fiscal responsibility are helping many people cope with higher prices today and will help to reduce inflation in the near future.

Dems Have To Talk About Inflation

The Daily Escape:

Blueberry barrens, Sedgewick, ME – Via. The blueberry plants turn red like trees because they’re also preparing for winter dormancy.

We’ve been writing about how the threat of losing both the House and Senate weighs on Democrats. Inflation and the economy are said to be voters’ top concerns in recent polls. This week’s NYT/Siena College survey showed that 26% of respondents cited the economy, while another 18% chose inflation as their No. 1 issue.

The Dem’s lack of messaging about inflation needs to be adjusted because inflation is hitting hardest in a few swing states like Georgia, Arizona, and Florida. From the Right-leaning Washington Times:

“The Phoenix metropolitan area has the highest inflation rate in the nation at 13%, the worst of any US city in more than 20 years and twice as high as the rate in San Francisco. It’s a high hurdle for Democratic Sen. Mark Kelly of Arizona as he tries to fend off a challenge from Republican Blake Masters.”

Kelly currently holds a one-point lead in the latest survey.

Wallet Hub says that the US metropolitan area with the second-highest inflation rate is Atlanta, where consumer prices are 11.7% higher than a year ago. Senate Democratic incumbent Raphael Warnock holds a four point lead. One message that’s lost in the inflation debate is, as Georgia’s Sen. Warnock says:

“While we are seeing record prices, a lot of our corporate actors are seeing record profits in the gas industry and the pharmaceutical industry.”

Two metros in Florida: Miami, Ft. Lauderdale, and West Palm beach (10.7%), along with Tampa-St. Petersburg (10.5%), are in the top four highest inflation cities, and Marco Rubio (R) holds a 4.7-point lead, with Democrat Val Demings having an uphill fight.

Philadelphia ranks 14^th in metropolitan area inflation, at 8.1%. Democratic Senate candidate John Fetterman leads by 2%.

Nationally, the inflation rate is 8.2%.

Nearly two-thirds of consumer spending goes to services rather than products. Services are now the key driver of US inflation. The CPI for services increased in September for the 13th month in a row, and by the most since 1982. Housing costs spiked, but so did other services, such as health insurance (up 28% year-over-year). Airline fares rose by 42.9%, while motor vehicle maintenance and repair rose by 11.1%.

One of the worst categories is the CPI for “food at home”, or food bought in stores and at markets. It spiked by 0.7% in September from August. Year-over-year, the CPI for food at home jumped by 13.0%, led by eggs which are up by 30.5%. Food inflation is particularly insidious because it hits lower-income consumers the most, since they spend a larger share of their budget on food.

The key question for Democratic candidates in swing states during the last weeks before the midterms is how to talk about the economy when inflation remains above 8% and maybe is even higher in their state.

Democratic strategist Mike Lux has warned that Democrats can’t duck talking about inflation at a time when it’s the Republicans’ primary campaign issue. Lux says how Democrats should explicitly address inflation:

Wealthy corporations with monopoly power are jacking up their prices, and their profits are going through the roof.
Drug prices and health insurance premiums are going to go down because of the Inflation Reduction Act…while Republicans have no plan of their own.
Seniors will be getting the biggest increase in their Social Security payments (8.7%, more than current inflation) in 40 years…while Republicans are talking about ending Social Security.

But Dems should also ask why voters think that if Republicans return to power that they will actually fight against inflation and improve the economy? If they get back in power all they’ll offer is tax cuts and financial austerity. They’re saying they will jeopardize the future of Social Security and Medicare.

Their House Speaker-in-waiting, Kevin McCarthy (R-CA) has said in an interview with Punchbowl that he will hold the national debt ceiling hostage next year, a move that the WaPo’s Catherine Rampell warns “could easily precipitate a global financial catastrophe.”

The economy is a difficult issue for Dems this year, and many are afraid to talk about inflation. But they have an excellent legislative record to run on and the best job market in 40 years. Democrats have plenty to say about inflation if they connect it to broader economic themes where they have a strong message.

For sure, Dems can talk about Republicans’ appalling destruction of reproductive rights, but we can’t expect to win the election on that alone.

Sunday Cartoon Blogging – September 25, 2022

Liz Truss’s big bet since taking over as UK prime minister is to lower taxes just like St. Ronnie and Trump did in the US. Said Truss:

“Lower taxes lead to economic growth, there is no doubt in my mind about that,”

Trickle down will work this time, we promise, say UK Conservatives.

The tax reductions will require the UK government to borrow bigly to balance their budget. They hope that there will be so much growth that the UK will make it all back in future tax payments. Just like in the US, the lie is that these tax cuts will pay for themselves! Something that has never happened.

The UK Treasury said that the top personal rate will be cut from 45% to 40%. That will be more beneficial for the wealthy than the majority of British society. Shortly after the cuts were announced on Friday, the pound sank almost 2.6% to its lowest level against the US dollar since 1985. Wrongo hates to quote Larry Summers, but he said this:

“The UK is behaving a bit like an emerging market turning itself into a submerging market…it is pursuing the worst macroeconomic policies of any major country in a long time.”

Bloomberg’s Mark Gongloff tweeted:

“Liz Truss just announced the UK’s biggest giveaway to the rich since 1972, which resulted in an IMF bailout. Now the pound is crashing in the middle of the worst inflation since the 70s. Bold strategy….Let’s see if it pays off.”

It’s hard to believe this will go well with the UK already in a recession. On to cartoons.

Russian men are facing tough choices: