Inequality – Page 2 – The Wrongologist

Monday Wake Up Call – February 20, 2023

The Daily Escape:

Oatman, AZ on Route 66 – February 2023 photo by Laurel Anne Lindsay

Some of you may have heard about a study called “The Hidden Tribes of America” by the group More in Common. It’s trying to understand the forces driving political polarization in America today. They classify the American electorate into seven distinct groups, they call “Tribes”.

But their key conclusion is that most people don’t belong on the far left or far right: (brackets by Wrongo)

“…the largest group that we uncovered in our research has so far been largely overlooked. It is a group of Americans we call the Exhausted Majority…representing a two-thirds majority of Americans, who aren’t part of the Wings….most members of the Exhausted Majority aren’t [simply] political centrists or moderates. On specific issues, their views range across the spectrum.”

“But while they hold a variety of views, the members of the Exhausted Majority are also united in important ways: They are fed up with the polarization plaguing American government and society….. [they] are so frustrated with the bitter polarization of our politics that many have checked out completely….. they aren’t ideologues who dismiss as evil or ignorant the people who don’t share their exact political views. They want to talk and to find a path forward.

This chart from the study graphically illustrates the seven tribal groups of the American populace. As you can see, there is a left-wing group that is about 8% of the US population. And there are two right-wing groups that equal about 25% of Americans. That leaves four groups in what the authors call the “Exhausted Majority”. They are 67% of the American populace.

Here are some demographic characteristics of the seven groups:

Progressive Activists: younger, highly engaged, secular, cosmopolitan, angry.
Traditional Liberals: older, retired, open to compromise, rational, cautious.
Passive Liberals: unhappy, insecure, distrustful, disillusioned.
Politically Disengaged: young, low income, distrustful, detached, patriotic,
Moderates: engaged, civic-minded, middle-of-the-road, pessimistic, Protestant.
Traditional Conservatives: religious, middle class, patriotic, moralistic.
Devoted Conservatives: white, retired, highly engaged, uncompromising,

Wrongo identifies as one of the Traditional Liberals, their description rings true.

The authors say that in their research, this tribal membership predicted differences in Americans’ views on various political issues better than demographic, ideological, and partisan groupings. You can read or download the whole study here.

An “Exhausted Majority” may be a positive political development. Wrongo spends nearly every day thinking that there are just two opposing camps. And that they each view each other with fear and loathing, refusing to listen to anything that doesn’t fit their existing narrative. As we’re entering the next presidential campaign, it’s good to know that Wrongo’s view of our polarization might be well, wrong.

Is the “Exhausted Majority” merely a new response to our dysfunctional politics? Wrongo isn’t alone in thinking that what’s wrong with our country will take decades to overcome. Faced with that, people start to look for quick fixes, or a way to stop listening to the wrangling. And you don’t have to be unaligned with either Party to share this sense of exasperation.

The people described in the “Exhausted Majority” are similar. It’s also true that for most people, politics isn’t the be-all-end-all of their lives. They’d prefer that the business of government didn’t require their involvement. They’re trying to get their kids educated, and to keep them safe. They prefer to see political compromise happen without needing to be involved.

But if you can walk away from politics when it frustrates you, then you’re in the lucky minority:

There are large numbers of parents who have discovered that their child is addicted to opioids.
There are many people who had lost their health insurance when they were laid off.
Many sent their daughter to college in the South only to learn that she no longer has any reproductive rights.
Many are worried that books are being taken from public school libraries.
Some fear that they may lose the right to vote.

These people can’t simply throw up their hands and walk away. Only political action will help them. We all know that the political radicals are irredeemable. We also know they make the most noise, but they’re a minority.

The fed-up people on both sides and in the middle have to find a way to take the country back from the radicals, instead of allowing ourselves to be herded into existing opposing camps.

Time to wake up America! We can’t simply drop out. There’s too much at stake. Democrats need to find candidates and a message that can motivate an additional 5%-15% of the “Exhausted Majority” to vote with them. To help you wake up, watch, and listen to the RedMolly band play a very nice cover of Richard Thompson’s “Vincent Black Lightning 1952”. It’s a surprise how beautifully it adapts to a bluegrass idiom, and the dobro work makes it:

“Vincent Black Lightning” is one of the most perfect songs ever written. We saw Thompson perform it live at Tanglewood last summer.

Monday Wake Up Call – February 6, 2023

The Daily Escape:

Sea smoke, South Portland, ME looking towards Portland Head light – February 2023 photo by Benjamin Williamson Photography

On Saturday, Wrongo and Ms. Right went to a dinner party with friends and two generations of family. The after dinner talk turned to how quite a few of the kids and grandkids weren’t planning on having children.

We tossed around ideas about why they were unlikely to procreate, and somethings stood out. First, they see climate change as an existential threat that society is unwilling to solve, even though the technology already exists. Why bring a kid into that?

Second, society seems broken. Our group meant that we face simultaneous crises, layered on top of each other. This situation involving simultaneous global challenges, for which we have few solutions, is called Polycrisis.

And a crisis in one global system can spill over into other global systems. They interact with each another so that each new crisis worsens the overall harm. The Polycrisis environment weakens every individual’s sense of security and their place in the world.

One impact that seems related to the simultaneous climate, health, economic and geopolitical challenges are the effects on children. The needs for special education and special services for the very young has never been greater in America. It’s forcing big changes in public school budgets across the country.

No one is really sure why this is happening.

Wrongo isn’t proposing a solution, just suggesting we need to think more about how the problems of declining birth rates, coupled with the growing issues our young children are facing, might be interrelated.

Noah Smith an economist, has an interesting newsletter about how we define community:

“In the past, our communities were primarily horizontal — they were simply the people we lived close to….Increasingly, though, new technology has enabled us to construct communities that I’ve decided to call vertical — groups of people united by identities, interests, and values rather than by physical proximity.”

Smith says that in the past few decades, Americans became disengaged from their local communities, hunkering down in their houses, and failing to interact with the people around them. That led to a well-documented decline in Americans’ participation in civic organizations, local clubs, etc. Our neighbors can also be stifling and/or repressive because they impose uncomfortable community norms on us.

We’ve always had Smith’s vertical communities: “the Jewish community”, “the LGBT community”, and many others. But in the past, an identity grouping wasn’t a true community. We all have identities that connect us with faraway people — other Irishmen, other Taylor Swift fans.

Prior to the internet, we couldn’t have much contact with them. These loose vertical communities weren’t efficient ways to exchange ideas. Before email, text and streaming video, getting the word out was very slow, and our horizontal communities would decide whether what we wanted to share was worthwhile.

Now, we’re no longer isolated. The internet brought us a world of human interaction: social media feeds, chat apps, and so on. Suddenly we’re surrounded by people through their words, their pictures, and their videos.

Now we organize much of our human interaction around virtual vertical communities. Former occasional connections became Facebook groups, subreddits and personal networks on Twitter. And like our small towns back in the day, vertical communities use social ostracism to punish those who deviate from consensus norms.

But vertical communities can’t provide things like public education, national defense, courts of law, property rights, product standards, and infrastructure that we all depend on.

These require a government to administer them. And governments are organized horizontally; mostly defined by lines on maps. But what if we socialize, cooperate, and fall in love with the people from our vertical community? What if we grow apart from the people next door and the relationship is irreparable?

We see this every day in America when citizens go to a PTA meeting and discover a bunch of strangers saying things that they despise.

Wrongo isn’t saying that vertical communities are another enemy. But they can and do exacerbate the polycrisis by making truth harder to see. And by making effective action more difficult.

If you doubt this, remember how powerful the anti-vaxx vertical was at the height of the Covid pandemic. Today’s vertical communities are strong enough to keep our government from getting much of anything done. How can we work together with neighbors when we share few common bonds?

America today is a predatory society. We predate on politics, ideas, values, and culture. Biden’s trying to change this, but can he succeed? How many of us are trying to help? Changing a society that’s this broken, one that’s moving deeper into vertical communities will be a very heavy lift.

Time to wake up America! What can we do to maintain what Lincoln in his first inaugural address said:

“We are not enemies, but friends. We must not be enemies. Though passion may have strained, it must not break our bonds of affection.”

To help you wake up, listen and watch the Nitty Gritty Dirt Band’s 2022 cover of Bob Dylan’s “I Shall Be Released” with Larkin Poe (Rebecca Lovell and Megan Lovell) on vocals and a fabulous slide guitar solo:

Sample of Lyrics:

Standing next to me in this lonely crowd
Is a man who swears he’s not to blame
All day long I hear him shout so loud
Just crying out that he was framed

Monday Wake Up Call, MLK Jr Day – January 16, 2023

The Daily Escape:

It’s MLK day, so let’s talk about a topic that was near to his heart: economic inequality. Since 1980, economic inequality has been increasing between the top 1% and the bottom 90% of Americans. It’s become so great that today, America now faces the same level of economic inequality that existed before the Great Depression.

Here’s a chart from Elise Gould and Jori Sandra of the Economic Policy Institute (EPI) showing the percentage change in annual wages by income group for the last 40 years:

From the EPI article: (emphasis by Wrongo)

“The level of earnings inequality that existed in 1979 could have simply continued…to today. Instead, we have seen a growing concentration of earnings at the…very top of the earnings distribution, while the bottom 90% has experienced meager gains. Wages for the top 1% grew more than seven times fast as wages for the bottom 90% between 1979 and 2021. The top 1% now amasses a record share of total earnings, while the bottom 90% share of earnings has hit a historic low.”

Slow growth in real (inflation-adjusted) hourly wages for the vast majority of workers has been a defining feature of the US labor market for most of the last 40 years. Only for about 10 years after 1979 did workers see consistent positive wage growth: in the tight labor market of the late 1990s and in the five years prior to the pre-pandemic labor market peak in 2019.

While some low-wage workers have experienced high wage gains after America reopened from Covid, the truth is that most haven’t even kept pace with where they were in 1979.

Today is Martin Luther King Day in America. We mostly celebrate Dr. King’s birth rather than acknowledging what he was arguing for when he was killed. His focus at the end was on both economic justice, and voting rights. Perhaps more than any other leader in American history, King could see the different strands of political and social injustice. He was able to tie them together to form a coherent narrative, one that was capable of leveraging dissent for concrete policy change.

Those were the enduring lessons of Dr. King’s life.

There’s less than three months between the observance of King’s birthday and his death. The way each is recognized by politicians reveals the contradictions in his legacy. Most politicians extol the virtues of racial equality, while most ignore King’s criticisms of economic injustice.

From his April 30th speech in Atlanta: (emphasis by the Wrongologist)

“A true revolution of values will…look uneasily on the glaring contrast of poverty and wealth with righteous indignation. It will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, ‘This is not just’…this business of…injecting poisonous drugs of hate into the veins of peoples normally humane….cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense
than on programs of social uplift is approaching spiritual death.”

As the EPI report above shows, over the last four decades, policies promoted by the GOP have reduced the opportunities for most workers to achieve wage growth at rate similar to the top 10%.

Time to wake up America! Develop your narrative, one that fights against economic injustice and for voting rights. Add any other issues that are pertinent to you. Take your narrative to your neighbors. Then work to get out the vote.

To help you wake up, watch “People Get Ready”, a Curtis Mayfield tune that foretold the turning tide in the battle for racial equality. It topped the R&B charts after its 1965 release by The Impressions. It’s been covered by scores of artists, including Bob Dylan, Bruce Springsteen and by Rod Stewart and the late Jeff Beck, who died last week. Early in their careers, in 1969, Beck and Stewart performed together in the Jeff Beck Group. Here’s Beck’s official music video for “People Get Ready” featuring Rod Stewart:

Jeff Beck was one of one as a guitarist. There was no one better. He had the mindset of a jazz musician playing blues rock. His guitar sound wasn’t anything like traditional jazz guitar. He didn’t cut his teeth playing the old jazz standards, but he could improvise something fresh every time. OTOH, Wrongo didn’t love Beck the recording artist.

Rod Stewart has a secret hobby; he builds model trains. He would take his trains on tour with him, requesting an extra room so he could work on them while staying in hotels. Stewart recently unveiled his 1,500 square-foot replica of post-war Chicago and New York railway systems that took him 23 years to build.

Monday Wake Up Call – November 14, 2022

The Daily Escape:

Bison at Grand Teton NP, WY – October 2022 photo by Kerry Key

As we peel the onion of the midterms we learned something from Massachusetts that’s worth thinking about:

“Massachusetts voters approved an amendment to the state constitution that will increase taxes on those earning more than $1 million a year…. The state’s constitution currently requires all income be taxed at uniform rates. The $1 million threshold will be adjusted each year to reflect cost-of-living increases.”

Fifty-two percent of voters approved the amendment which will add a 4% tax on annual incomes above $1 million, on top of the state’s current 5% flat income tax. It takes effect in 2023, and will fund public education, roads, bridges, and public transportation.

It’s expected the new tax will affect roughly 0.6% of Massachusetts households, according to an analysis from Tufts University. The new tax also applies to “one-time millionaires,” including people who make more than $1 million in taxable income from selling their homes or businesses. It’s estimated to bring in roughly $1.3 billion in revenue during fiscal 2023, according to Tufts.

Supporters applauded the new tax as a necessary step to address MA’s income inequality gap. The Economic Policy Institute ranks Massachusetts as the sixth-worst state in the country when it comes to income inequality.

It is true that the US is one of the most economically unequal nations in the developed world. Most of the income and wealth gains of the last decade have gone to the richest 0.1%—households with annual incomes of $2.4 million and wealth of at least $32 million.

So it isn’t surprising that a similar idea has floated around DC for some time. In October 2021, Biden introduced a “millionaire’s surtax,” bill that would raise taxes on all forms of income, including wages, capital gains, and dividends. It would have imposed a 5% tax on incomes above $10 million and an 8% tax on incomes above $25 million, raising $230 billion over 10 years from the wealthiest 0.02% of Americans.

Naturally, it didn’t pass.

So the effort moved to the states, with success in 2022 Massachusetts and failure in California, where its millionaire’s surtax was defeated, 59%-41%.

In some ways, the millionaire tax debate is emblematic of the nation’s deep political divide. Republicans everywhere only want to see taxes go down, and Democrats are seeking to raise them to fund long term problems like battling climate change and adding better infrastructure.

The GOP asks: If climate change is an existential issue affecting us all, does it make sense to address the issue by taxing only a handful of households? Your answer may be different from Wrongo’s who sees the question as a way to deflect the discussion into an endless loop of “whataboutism” regarding who pays taxes.

Republicans have refused to support carbon use taxes. They’ve refused to support cap-and-trade carbon taxes. Most of them deny that climate change is happening and refuse to pro-actively plan to moderate greenhouse gas emissions, here or anywhere else. So they aren’t engaging in a serious discussion when they ask the question.

Although efforts to raise taxes on millionaires have stalled in Washington, they haven’t gone away. That will happen if Republicans control the House in January 2023.

Time to wake up America! Deficits can grow to the sky at the national level but states have to balance their budgets yearly. That’s why some states are making the choice to raise taxes on millionaires, the very people who have gained the most in the past 50 years. Raising taxes is a must in most states for the remainder of this decade.

To help you wake up, watch, and listen to Molly Tuttle channel Grace Slick while covering the Jefferson Airplane’s “White Rabbit“. Tuttle was just named the International Bluegrass Music Association’s Guitar Player of the Year, so you’re seeing “White Rabbit” done as bluegrass, performed in October 2022 in Portland, ME:

Tuttle is an amazing performer. You can learn more about her here.

Democracy Fatigue

The Daily Escape:

Fall arrives in Ouray, CO – October 2022 photo by Gary Ratcliff

Why is authoritarianism growing at home and abroad? There is a relatively new notion called democracy fatigue: Political passivity and disgruntlement that stems from the exhaustion of seeing endless politicking, but never seeing change that makes lives better.

We’ve had a constant barrage of existential crises: Covid, climate change, Russian imperialism, immigration, inflation, and growing economic insecurity. With needing to act on all of these (and a few more), the ideals of political compromise and letting everyone have their say, seem sadly dated.

On the American Right, many joke that what would make things better is a ‘benign dictatorship.’ Because democracy doesn’t get things done. Politicians everywhere are taking the opportunity to go with “the big lie”. It’s become about lying until your ideas are accepted as fact. From Heather Cox Richardson:

“After World War II, political philosopher Hannah Arendt explained that lies are central to the rise of authoritarianism. In place of reality, authoritarians lie to create a “fictitious world through consistent lying.” Ordinary people embraced such lies because they believed everyone lied anyhow.”

And distrust of democracy is growing. From Hal Gershowitz:

“…in the US, Germany, and Japan, somewhere between 20% and 40%…would embrace “a strong leader who does not have to bother with parliaments and elections.”

Hal reminds us that last April In France, Emmanuel Macron managed to once again defeat right-winger Marine Le Pen, but by a much narrower margin than in their last face off in 2017. Elsewhere:

In traditionally liberal Sweden, a coalition of right-wing parties, anchored by the far-right Sweden Democrats, took control of Parliament.
Hungary’s uber authoritarian, Viktor Orbán secured his fourth consecutive term as Prime Minister.
And most recently, in Italy, a coalition led by far-right leader Giorgia Meloni won and will put together Italy’s first far-right government since World War II.

Beyond these are the far-right British National Party, and the Norwegian Progress Party. While these are fringe parties, they can exert influence on whatever party leads in parliamentary democracies.

Freedom House, founded in 1941 and primarily funded by the US, also paints a bleak picture. It publishes an annual assessment of “Freedom in the World” which notes that authoritarianism is having a great run. Freedom House says in 2020, the number of countries they listed as “no longer free” grew to the highest level in 15 years. Countries registering declines in political rights were also the highest in 15 years.

They note that a total of 60 countries suffered declines over the past year, while only 25 improved. As of today, some 38% of the global population live in Not Free countries, the highest proportion since 1997. Only about 20% of the world’s population now live in Free countries. The balance (41%) live in Partially Free countries.

The rise in authoritarianism may be due to the fact that in a sea of uncertainty, people are looking for a life raft. So they are willing to listen to and vote for those who articulate the importance of “traditional” values, and to assure them that the purported attack/assault on those values is a threat to them and their families.

The longing for benign dictatorship continues among America’s technology elites, whose denigration of politics flows from a Silicon Valley ideology that mixes libertarianism with authoritarian rule. They seem to want politics to work the way their products do: With elegant solutions implemented by smart, creative makers.

Their message is that surely, there’s a right way to get the job done: Fill the potholes, build the roads, keep our streets safe, get our kids to learn reading and math.

But whose potholes should get filled first? Should we keep our streets safe through community policing or long prison sentences? Should teachers be given merit pay, are small classrooms better, or should we lengthen the school day?

All of these issues can engender deep political fights. That’s because politics is disputes about values, not technical solutions. One person’s “right” is not another’s because people prioritize different values: Equity versus excellence, efficiency versus participation, security versus justice, short-term versus long-term goals.

Trump’s continuing control of the Republican Party is due to his ability to exploit grievance. His “America First” message continues to resonate with millions of voters who view the Democratic Party’s policies as an assault on America’s traditional values.

For the upcoming midterm elections we need to remember that constitutional democracy is not a gift from the gods.

It can be wrested away if we fail to uphold our democracy by voting this fall.

Saturday Soother – September 24, 2022

The Daily Escape:

Joshua Tree NP, CA – September 2022 photo by Bart Aldrich

This week, Wrongo and Ms. Right watched the Ken Burns program on the Holocaust on PBS. The three-part series is about how America responded to the Holocaust. An overriding theme in the film is that America’s aversion to immigrants framed much of our response to what Germany was inflicting on Jews throughout Europe.

You will not find a better or clearer narrative about the unfolding of the ideas and events that led ultimately to the Holocaust. Learning about America’s response in the run up to WWII is something we all should confront. It’s part of the ongoing conversation of what sort of country we believe the US to be, versus the kind of country it actually is.

From Tom Teicholz in Forbes:

“There are many revelations in the film. Burns, Novick and Botstein explore at length the connections between the American Eugenics movement, American genocidal policies towards Native Americans, and Jim Crow laws and Hitler’s policies and Nazi laws.”

Granted, the Germans didn’t need to learn racism or xenophobia from Americans. They did quite well on their own. They had already figured out how to export that to their African colonies. But, it’s true that here in America, we had the genocide of the Native Americans: Round them up, confine them, eliminate a major food source, and kill as many as you can. Genocide against Black people: Forced servitude, rape, and murder.

One thing that was beyond the scope of the film is why there was so much ambivalence by Americans to Hitler, and why we didn’t take in more European refugees. They show that until the late 19th century, America was a nation that welcomed immigrants. Then as the country grew and rates of immigration increased, by the turn of the 20th century, nativist sentiment was at an all-time high. Even Progressives, who prided themselves on helping the less fortunate, generally favored anti-immigration policies.

Ultimately, the US government’s anti-immigrant legislation normalized xenophobia in America. Nationalism and fear of immigrants has apparently been with us ever since. The film says that Hitler copied our tactics (!) and took them to a new extreme while the world watched.

On the last night (of 3), the film reminds us of the irony that Russia benefited from Roosevelt’s “Lend-Lease” arms program to help defeat the German invasion in WWII. A supreme irony now is that Russia’s complaining about our 2022 version of “Lend Lease” where the US is sending weapons to Ukraine to use against Russia.

We’re often inconsistent in our policies, but here we are in 2022 with a similar interest: The continued existence of an attacked sovereign nation. Only this time Russia is the aggressor, not Germany.

The last five minutes of the film provides a montage of the rising white supremacism and antisemitism in the US (including a clip of the marchers at Charlottesville in 2017) that, regrettably makes “The US and The Holocaust” all too relevant to today. It’s a very difficult history, but it’s also important that it is not forgotten.

Despite what’s going on in Ukraine and Russia, or with Trump’s many legal quagmires, let’s shut down the politics and posturing for this week. It’s time for our Saturday Soother.

Here on the fields of Wrong, the lawn has greened up from several decent rainstorms over the past few weeks. The bluebird houses are coming down for the winter. As we bid farewell to summer, leaves are beginning to turn color and fall. The summer classical music venues that we love have ended their seasonal programs. Wrongo wore a down vest this morning.

Time to grab a mug of Ethiopia Nano Genji Bergamot coffee ($25.50/12 oz.) from Sacramento, CA’s Temple Coffee. The roaster says it has flavors of tangerine and ginger with a long finish.

Now grab a seat by a south-facing window, put on your wireless headphones and listen to Van Morrison perform “When the Leaves come Falling Down” from his 1999 album “Back on Top”. We usually feature classical music on Saturdays, but this effort by Van the Man is very mellow and features wonderful fall photos:

The string section in the tune is by the Irish Film Orchestra.

Sunday Cartoon Blogging – September 11, 2022

It’s 21 years since the attack on the World Trade Center and the Pentagon. As Michael de Adder says:

Twenty one years on, America is more at war with itself than with any foreign terrorists, despite having troops deployed in 80 countries. Our society and our democracy are threatened from within in a way that Osama bin Laden could never have managed. And where are we today? Cartoonist Mike Luckovich has a thought:

If ever so briefly after that fateful day. Today we face threats that might end our democracy:

We’ve nearly lost our social cohesion
We aren’t dealing with income inequality
We’re seeing racism grow
We see clear threats to the right to vote, or whether our votes will even count if we cast them

In these 21 years, Republicans have moved from being the Party of national security to the Party of grievance and anger. As Elliot Ackerman wrote last year in Foreign Affairs:

“From Caesar’s Rome to Napoleon’s France, history shows that when a republic couples a large standing military with dysfunctional domestic politics, democracy doesn’t last long. The US today meets both conditions.”

MAGA asks the wrong question:

When you have no policies, this is what you get:

Let’s close today with a song by Mary Chapin Carpenter that she wrote back on the first anniversary of 9/11. Carpenter was inspired by an interview with Jim Horch, an ironworker who was among the early responders at the WTC site. Here’s part of what Horch said:

“My responsibility at the site was to try to remove big pieces of steel. The building fell so hard there wasn’t even concrete. It was dust….I started to feel the presence of spirits…not very long after I was there. The energy that was there was absolutely incredible and…it was more than just the people that I was working with…it was energy left behind….One day when I was working, I felt this energy and it felt lost and it wanted to go home but it didn’t know how to go home and it came to me to go to Grand Central Station. When I got off the subway, I walked into the Great Room. Into where the constellation is in the ceiling. And I walked around the perimeter and…out of the building. I didn’t feel the energy anymore. I could feel it leave.”

And here’s Carpenter’s “Grand Central Station”:

Monday Wake Up Call – April 3, 2022

The Daily Escape:

Makapu’u Lookout, Oahu, HI – January 2022 photo by TwoBongs on Tour

Let’s talk about the “Wealth Effect”. It’s the notion that when households become richer as a result of a rise in asset values, such as stock prices or home values, they spend more and stimulate the broader economy. The idea is that consumers feel more financially secure and confident about their wealth, even if their income and costs are the same as before.

This concept has been endorsed by two recent former Fed Chairs, Janet Yellen and Ben Bernanke. It’s simply another term for trickle-down economics.

In 2019, after nearly 11 years of the Fed’s policy of adding money to the economy, by “Quantitative Easing” (QE), the National Bureau of Economic Research (NBER) did a study on the Wealth Effect, to quantify how much richer the rich would have had to become to have x% impact on the overall economy, and how long this boost lasts before it fades.

They found that QE makes 10% of the population a lot richer, producing immense concentration of wealth at the top 1%, and mind-boggling concentrations of wealth at the billionaire level. After which, there were some very muted trickle-down effects on the economy.

Wolf Richter used the Fed’s wealth distribution data to create a chart he calls the Wealth Effect Monitor. The Fed divides the US population into four groups by wealth: The “Top 1%,” the “2% to 9%,” the “next 40%,” and the “bottom 50%” to report on wealth.

Richter divides this data by the number of households in each category, to obtain the average wealth per household in each category. Here’s his chart for the past 21 years:

Note the immense increase in the wealth for the 1% households after the Fed’s latest QE effort that began in March 2020. They have been the primary beneficiaries of the Fed’s policies since 2020.

True to the Wealth Effect’s concepts, the Fed’s policies helped to inflate asset prices, and thus only asset owners benefited: The more assets held, the stronger the benefit. Here’s Richter’s analysis of average wealth (assets minus debts) per household, by category in the 4^th quarter, 2021:

“Top “1%” household (red): $36.2 million
The “2% to 9%” household (yellow): $4.68 million
The “next 40%” household (purple): $775,000
The “bottom 50%” household (green): $59,000

The Fed doesn’t provide separate data on the 0.01% and the Billionaire class, but they were the biggest beneficiaries of the Fed’s monetary policies. The top 30 US billionaires have a total wealth of $2.12 trillion, sliced into 30 slices for a wealth of $70.8 billion per billionaire, according to the Bloomberg Billionaires Index.

Compare that to the bottom half of the US population (the “bottom 50%”) who have a combined wealth of just $3.7 trillion, divided into 165 million slices for each individual. The way percentages work, you would think that households in the bottom 50% would have the largest percentage gains since they start from a lower base. But because they own fewer assets, when adjusted by population, they stay mired in last place. From Richter:

“When the wealth of the bottom 50% increases by 5%, they gain about $3,000. And when the average wealth of the top 30 billionaires increases by 5%, they on average gain $3,500,000,000.”

Are Freedom and Democracy Still Compatible in America?

The Daily Escape:

Henniker Covered Bridge, Henniker, NH – February 2022 photo by Jurgen Roth Photography. It is a footbridge across the Contoocook River.

Trucker anger is coming to America. From Politico:

“Canada’s truckers have paralyzed Ottawa and unsettled the country’s politics over vaccine and mask mandates. Now Americans want in on the action. A nationwide convoy — starting in California before heading toward Washington, D.C. — is expected to get underway on March 4 amid a growing clamor from those who believe their freedoms are under threat from government Covid-19 restrictions.”

The trucker protests in Canada seem to have become a rallying point for those who are irate about what they view as Covid-inspired overreach by their governments. Momentum seems to be building for a similar convoy in the US. The NYT reports that:

“…several right-wing figures, including Dan Bongino, Michael Flynn and Ben Shapiro, have promoted the protest and shared links to fund-raising sites that have collected millions of dollars. American anti-vaccine groups have also begun forming local wings of the movement and have urged truckers in the United States to adopt the tactics in Canada.”

The US organizers are now calling it “the People’s Convoy“. They have formed Telegram encrypted channels to use for building support in multiple states. The group says it’s working with two other groups: Freedom Fighter Nation and Restore Liberty, whose founders are closely tied to right wing politics. They include Leigh Dundas, founder of the Freedom Fighter Nation. She gave a speech in DC on the eve of the Jan. 6 Capitol Hill insurrection, claiming it would be “within our rights” to murder “alleged American turncoats” who interfered with the 2020 election.

She seems nice.

Trucker protest convoys have become a rallying cry for far-right and anti-vaccine groups around the world. They seem to be gathering strength from growing Covid fatigue, something that is nearly universal in the developed world.

Their message is that “government has been overreaching for too long, and we’re not going to take it anymore”. They’re expressing an old, bad idea: That individual freedom cannot be limited by government.

Let’s spend a minute on whether freedom and democracy are compatible. “Freedom” normally means freedom of the individual while democracy is a communitarian concept. Democracy is a system of government while freedom is about either not being governed or being governed as lightly as possible.

But a society without democracy would be autocracy or worse. With no government, it would be anarchy. And a society without freedom couldn’t possibly be a democracy. So maybe the question isn’t whether they are compatible, but whether each is a co-requisite for the other to exist.

Elizabeth Anker in the NYT opined on the changing nature of the language of freedom, saying that many political actors are using the concept of freedom to justify anti-democratic politics. She calls them the “ugly freedoms”. In American politics they increasingly justify minority rule, prejudice, and anti-democratic governance. And their popularity is growing.

This is highly relevant to the impending trucker convoys and how we think about “free speech” and the rights of non-experts to try and force their opinions on the majority. Perhaps the alternative to the ugly freedoms should be our beautiful freedoms, like the Bill of Rights, or the Voting Rights Act of 1965.

A third of Americans make up their own facts, so we’re bound to hear a few lies expresed as truth. These same people believe they don’t have to consider what’s happening in their communities. They think opinions are equal to facts. They get angry enough to threaten violence or to commit violence.

Many of them, despite outward tough guy appearances, are simply too soft mentally and emotionally. Life can often be harder than we want it to be. Sometimes, you’ve got to do what’s good for society, not just what’s good for you.

OTOH, these trucker rallies could conceivably draw support from others who are angry at governments at all levels. Think about restaurant workers, first responders and all of the “essential’ employees who have been unevenly impacted by Covid.

Think of it as the laptop workers vs. those who have to leave the house to earn a living. They each have experienced Covid and the jobs crash in far different ways. If the trucker protest casts a wide net, it will rope in small business owners and parents who are angry that their children have lost so much when schools were closed.

There’s plenty of anger fermenting out there.

Going back to Wrongo’s US Army days, you weren’t required to like everyone in your platoon, but duty demanded you bear the responsibility of fighting beside and for them. That was considered patriotic. Once we had the ability to pull together and sacrifice in the midst of national crisis. Now it’s everyone for themselves.

On Jan. 6, the right of free speech produced lies that led people to commit federal crimes. That’s the downside of the Bill of Rights: An individual has a protected right to lie to the public. We see many career politicians and social media entrepreneurs lie every day.

Assuming that there are protests in the US in coming weeks, Biden will face the same dilemma as Canada’s Prime Minster Trudeau faces now. Will Biden demonize the truckers? Will he listen to their grievances?

The shift of emphasis in America from an expanding democracy with protected individual rights/freedoms to an ad hoc (and sometimes illogical) version of freedom is what may create a failed American state.

It’s a movement that’s long on energy, and short on facts and judgment.

Biden’s Economy is Booming

The Daily Escape:

Sunrise with moon, Utah Lake, UT – December 2021 photo by Karen Lund Larsen

Bloomberg reported on Monday that the US economy is outperforming the world by the biggest margin in the 21st century. Surprisingly, they say that there’s a good reason:

“America’s economy improved more in Joe Biden’s first 12 months than any president during the past 50 years…”

They say that the objective economic data are pretty convincing about the Biden Boom of 2021, notwithstanding the contrary media narrative that seems to be driving poor public opinion. Biden is either in first place compared to recent American presidents, or at number 2 on all the big economic indicators, says Bloomberg’s Matt Winkler:

“Exceptional returns…especially the S&P 500 Index in both absolute terms and relative to its global counterparts, can be attributed to record-low debt ratios enabling companies to reap the biggest profit margins since 1950. Corporate America is booming because the Biden administration’s Covid-19 vaccination programs and $1.9 trillion American Rescue Plan reduced the jobless rate to 4.2% in November from 6.2% in February, continuing an unprecedented rate of decline during the Covid-19 pandemic.”

Also, inflation-adjusted GDP surged at an average annual rate of 5.03% in each of the first three quarters of 2021 and is poised to hit 5.6% for the year based on the preliminary estimates of more than 80 economists surveyed by Bloomberg. If that forecast holds up, it would be more than 2.8 times the average performance between 2000 and 2019. And double the average since 1976.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Inequality

Monday Wake Up Call – November 14, 2022