Category: Inequality

Saturday Soother – January 14, 2017

You may have noticed that the Wrongologist has not posted a column since Monday. Life intervened, as we began a to-the-studs kitchen renovation this week. Think about it, no kitchen in January in the Northeast. It’s like camping, but you sleep in your own bed, and use your own shower.

This week, the Trumpathon marched forward, with each day giving us something unique to consider, to react to with disbelief as our Overlord moves to fully take the reins of power.

The commonly accepted story is that the Russians hacked Podesta and the DNC, and that might have helped Trump defeat Clinton. Then there is the “Dossier” of possibly incriminating info that the Russians may, or may not, have on Trump. The story could be false or true, and there is no solid evidence either way.

Trump’s plan to place his business in “trust” is ridiculous, but he has no plan to abide by the spirit of a blind trust, and he’s exempt from the rules for other public servants, so deal with it.

The Democrats didn’t lose to the Republicans because of a Russian conspiracy, but because they didn’t do a good job of governing, for two reasons: First, the economy hasn’t recovered for quite a few Americans. Second, Obama’s record on foreign policy is at best, mixed and is possibly a failure.

Despite his success with Obamacare, we should remember that insurance coverage is not health care. Consider that the US mortality rate is going up. And there is still considerable economic uncertainty: Elevate’s Center for the New Middle Class looked at how much money in the form of an unexpected expense would be a crisis for ordinary Americans. Their study asked 502 nonprime (credit score below 700) and 525 prime Americans (credit score of 700 or above) how they could handle an unexpected expense. They found that:

A bill becomes a crisis for nonprime Americans at $1,400. For Primes, it’s $2,900…

160 million Americans come under the nonprime category, according to the study. That’s half of our population who would have difficulty paying for a trip to the emergency room with a broken arm. Two-thirds of Americans would struggle to cover a $1000 emergency expense. Half of Americans find it hard to pay over $100 a month for health insurance, while the average price nationally in 2017 for a bronze plan is $311 per month for a 30-year-old nonsmoker who does not qualify for subsidies. That means without subsidies, half of America is at serious risk of being uninsured under repeal and replace.

This speaks to our uneven economic recovery better than any average wage or unemployment statistics.

In short, Democrats lost to a very flawed person because they (Dems) ran the country badly for people like those in this study, and those people are upset.

If that didn’t bring you down far enough, there are just six days until the inauguration.

Wow, with all this going on, we need something to help us relax. Today’s soother is Samuel Barber’s “Knoxville: Summer of 1915“, with soprano Dawn Upshaw and the Orchestra of St. Luke’s. Barber was a 20th century American composer, perhaps our best. He was twice awarded the Pulitzer Prize for Music.

He wrote this piece in 1947, based on a prose poem by James Agee. Agee would later use the poem as a preamble to his Pulitzer Prize-winning book, A Death in the Family, published posthumously in 1957. Agee was also the screenwriter for the movie, the African Queen. Here is Knoxville: Summer of 1915:

While this feels operatic, the lyrics are in English. Here is a sample:

It has become that time of evening when people sit on their porches, rocking gently and talking gently and watching the street…People go by; things go by. A horse, drawing a buggy, breaking his hollow iron music on the asphalt; a loud auto; a quiet auto; people in pairs, not in a hurry, scuffling, switching their weight of aestival body, talking casually, the taste hovering over them of vanilla, strawberry, pasteboard and starched milk, the image upon them of lovers and horsemen, squared with clowns in hueless amber.

“Aestival” means of, or occurring in the summer.

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Saturday Soother, January 7, 2017

Happy Birthday today Kelly!! Other than that happy fact, little went right in America this week. Our Overlord, Donald I, rode to a presidential win by saying he would bring jobs back to America that have been lost to automation and offshoring by US companies.

But economists have said for years that creating jobs for low skilled Americans will be difficult. Here is further evidence that bringing back jobs may be tougher than Trump thinks. Salon reports that for men ages 25 to 54, the work statistics are poor:

For this group, labor force participation has sunk to 88.5% from a 1954 peak of 97.9%. Most of that loss has occurred among men who have a high school degree or less, according to a report this year by the Obama administration.

And there are interesting facts to consider where unemployed men are concerned. The NYT’s Upshot reports that the jobs that have been disappearing, like machine operator, are predominantly those that men do, while the occupations that are growing, employ mostly women. More from Upshot:

Of the fastest-growing jobs, many are various types of health aides, which are about 90% female. When men take these so-called pink-collar jobs, they have more job security and wage growth than in blue-collar work, according to recent research. But they are paid less and feel stigmatized.

Upshot quotes David Autor, an economist at M.I.T.:

The jobs being created are very different than the jobs being eliminated…I’m not worried about whether there will be jobs. I’m very worried about whether there will be jobs for low-educated adults, especially the males, who seem very reluctant to take the new jobs.

The issue is America’s culture of masculinity. Andrew Cherlin, a sociologist and public policy professor at Johns Hopkins says:

Traditional masculinity is standing in the way of working-class men’s employment…We have a cultural lag where our views of masculinity have not caught up to the change in the job market.

Why is it that men can get away with saying that they deserve better than women? Perhaps that is a rhetorical question. After all, we elected Donald Trump, who can get away with anything.

The Salon article had this snippet: (emphasis by the Wrongologist)

Health problems and the opioid epidemic may also be a major barrier to work, according to research by Alan Krueger, a Princeton economist and former Obama adviser. Nearly half of men ages 25 through 54 who are neither working nor looking for work, take pain medication daily.

Some of these men may have been injured on the job and were subsequently laid off. But some may also represent part of the huge increase in opioid use in America. They may be part of the increase in disability cases since the Great Recession: More than 10 million Americans received Social Security disability benefits in 2014 (most recent statistics). Benefits paid to disabled workers totaled $11.4 billion per month nationwide, a substantial increase from the $6.1 billion paid monthly in 2004. The top three states receiving disability benefits are West Virginia, Alabama and Arkansas.

We became this society honestly. Our politicians hold our corporations in high esteem. The corporations repay us by automating most jobs and shipping other jobs overseas. They do this with little or no responsibility to help displaced workers retrain, or find new work. They do this while asking for bigger tax breaks to remain domiciled in the US. They do this while blaming our education system for not providing trained, ready-to-work job entrants at no cost to them.

We just cannot count on them to be good corporate citizens.

Those on pain killers may or may not have disabilities that prevent them from working. But in any case, society does not owe unemployed working age men permanent, high paying manufacturing or mining jobs, despite whatever efforts Trump may make.

It is time for them to adapt.

We need a soother. Here is Grex Vocalis a Norwegian chorus formed in 1971. Grex Vocalis has reached the finals of the BBC contest “Let the Peoples Sing” three times. In this video they are performing “An Irish Blessing” (May the road rise to meet you) written by an American, James E. Moore in 1987, live at the Amadeo RoldĂĄn Theatre in Havana Cuba:

A Norwegian chorus performing an Irish tune, written by an American, in Cuba. That’s gotta be soothing.

For those who read the Wrongologist in email, you can view the video here.

Sample Lyrics:

May the sun make your days bright

May the stars illuminate your nights

May the flowers bloom along your path

Your house stand firm against the storm.

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Wrongo’s Useless 2017 Predictions

“It’s tough to make predictions. Especially about the future.” – Yogi Berra

Since you have already plunged a stake into the heart of 2016, it is time for some predictions about 2017, which most likely, won’t happen. We can expect the following:

  1. There will be more global political and social turmoil:
    1. The EU could collapse. France is a Marine LePen government away from pursuing an exit from the EU, so there would be a Frexit to go along with Brexit.
    2. China’s economy is wobbling, and China’s president Xi has leaned into a populist message:

On this New Year, I am most concerned about the difficulties of the masses: how they eat, how they live, whether they can have a good New Year…

  1. The US will continue to lose influence globally despite “Mr. Unpredictable” becoming our Orange Overlord: Trump brags about winning when he negotiates. That has been undeniably true in his real estate and name brand licensing. He will find that when the other side doesn’t need access to his brand in order to succeed, he will have to resort to instilling fear. That may work once, but it will not work consistently.
  2. A corollary: Trump arrives in the Oval Office as an overconfident leader, the man with no plan but with a short attention span, and within six months, he will have his first major policy failure. Getting his hand burned will make him more subdued, more conservative and less populist thereafter.
  3. A second corollary: The triumvirate of Russia/Turkey/Iran will elbow the US firmly out of the Fertile Crescent, and secure friendly regimes in Damascus, Baghdad and Tehran. This will push American influence in the Middle East back to just the Gulf States, a weakened Saudi Arabia, and an increasingly isolated Israel.
  4. Domestically, drug abuse, suicide, and general self-destructive behavior will continue to climb and become impossible to ignore.
  5. The Trump stock market rally has already turned into the Santa Selloff. The Dow peaked on December 20 at 19,975, 25 points away from party-hat time. But since then, Dow 20,000 slipped through our fingers like sand. It closed the year at 19,719, down 281 points from 20k.
  6. Regarding the stock market, many people who want to sell stocks waited until 2017 in order to pay lower capital gains tax. Selling in January could lower prices further.
  7. The growing antibiotic resistance to main stream drugs will impact health in the US.

Meta Prediction: It is certain that few Trump voters will get the results they voted for. Some people who voted for Trump have incompatible outcomes in mind, so it’s a virtual guarantee that a sizable minority are going to feel cheated when they fail to get what they were promised.

OTOH, when Trump fails, most of his base will blame anyone but the Donald. The question is, when disillusionment sets in, will the reaction be a turning away, or a doubling down on the anger?

Wrongo thinks anger will win out.

The coming Trump administration will seem like a fractious family outing: Just under half of the family (the “landslide” segment) wanted to go out, but now, the whole family has to go. Those who wanted to stay home will sulk in the back seat while Daddy tells them to stop bitching.

Meanwhile, once we are out of the driveway, it dawns on everyone that Daddy hasn’t decided yet where to go. Everyone pipes up with suggestions, but Daddy again tells everyone to shut up, because it’s his decision alone. There will be the usual “are we there yet?” complaining, some motion sickness and incessant fighting over who is touching whom.

Daddy won’t reveal the destination, but insists everyone will love it once they get there, even those who wanted to stay home, those who wanted to go the beach, and those who wanted to head over the cliff like Thelma and Louise.

Time for our Monday Wake Up Call, “Wake Up Everybody”, originally by Harold Melvin and The Bluenotes, featuring Teddy Pendergrass. Teddy left the group for his solo career after this album.

But, today we will hear and watch John Legend’s cover of the tune, backed by the Roots Band along with Melanie Fiona, and Common. The song is as strong as it was 42 years ago when it was released:

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

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How Do You Solve a Problem Like Ohio?

Our industrial heartland has withered away, in that there are fewer manufacturing jobs than ever, while manufacturing revenues have never been higher. Forty years of promises by politicians have come to nothing: These people are victims of a world order in which corporations have either exported or automated those jobs, with no responsibility to workers. It is left to the towns of Middle America and the federal government to clean up their mess.

This world order we live in today was born in 1980, with Thatcher and Reagan. According to Ian Welsh, the world order made a few core promises:

If the rich have more money, they will create more jobs.

Lower taxes will lead to more prosperity.

Increases in housing and stock market prices will increase prosperity for everyone.

Trade deals and globalization will make everyone better off.

Those promises were not kept, and in America’s Midwest, economic stress is now the order of the day. That stress has contributed to rising rates of drug addiction and falling life expectancy.

Understandably frustrated, Ohioans and other Midwesterners gave Donald Trump a victory in November. His win has refocused attention by pundits and pols on the plight of our failing de-industrialized areas. While we have economic growth, we also have growing inequality. Here is a graphic illustration of the problem, comparing the US with the EU:

The Economist reports that from 1880 to 1980, the incomes of poorer and richer American states tended to converge, at a rate of nearly 2% per year. The chart above shows that the pattern no longer exists. This causes us to ask if the shift of resources and people from places in decline to places that are growing is simply taking longer to adjust, or has the current world order failed our people? In econo-speak, the gains in some regions should compensate those regions and towns harmed by the shift, leaving everyone better off.

But that is a political and financial lie promulgated by the very corporations that benefited, and by their political and economist cheerleaders.

With economic decline, some towns and cities became poverty traps. A shrinking tax base means deterioration in local services (think Detroit). Public education that might provide the young with new skills and thus opportunities, fails. Those that remain are on government subsidies or hold low-wage service jobs, or both. It is impossible to tell these citizens that the decay of their home town is an acceptable cost of the rough-and-tumble of the global economy.

Politicians are short on solutions. Since housing costs have risen sharply in towns and cities that are growing, underemployed Americans are less likely to move, and those who do, are less likely to head for richer places. Enrico Moretti of the University of California, Berkeley and Chang-tai Hsieh of the University of Chicago argue that our GDP could be 13.5% higher if this wasn’t the situation in America.

But if moving isn’t an option, what can be done to improve the outlook for those who are left behind?

Would more government subsidies help? Prosperous tax payers already support poorer ones. Subsidies for health insurance costs with Obamacare, as well as industrial tax incentives provide some cushion, but they are not likely to deliver long-run economic recovery, and they have not stemmed the growth of populist political sentiment.

To be fair, many people in Ohio and elsewhere want good jobs, but without having to move too far to get them. That may be impossible.

In the 19th century, the federal government gave land to states, which they could sell to raise proceeds for “land-grant universities”. Those universities, including some that are among our finest, were given a practical task: to develop and disseminate new techniques in agriculture and engineering. They went on to become centers of advanced research and, in some cases, hubs of local innovation and economic growth.

Politicians and academic economists might disdain a modern-day version of the program, one that would train workers, foster new ideas, and strengthen weakened regional economies.

But if our politicians do not provide answers, our populist insurgents will.

Time for a Christmas song. Here is Elvis with “Santa Claus Is Back in Town & Blue Christmas”, from his comeback special on NBC. This was recorded over six days in June, 1968 and aired on December 1, 1968. Elvis flubs “Santa Claus is Back in Town”:

https://www.youtube.com/watch?v=WgLpMwkfOgw

Despite his flub, he does get this line right:

“You don’t see me comin in no big black Cadillac”

Kind of like out-of-work Ohioans.

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Capitalism Is Past Its Sell-By Date

“This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations…” – Rutherford B. Hayes (March, 1888)

Nearly 130 years ago at the height of the Gilded Age, President Hayes had it right. Capitalism then was an economic free-for-all. Today, capitalism again is rewarding too few people. And data show that the problem is worse than we thought. The WSJ reported on a study by economists from Stanford, Harvard and the University of California that found:

Barely half of 30-year-olds earn more than their parents did at a similar age, a research team found, an enormous decline from the early 1970s when the incomes of nearly all offspring outpaced their parents.

Using tax and census data, they identified the income of 30-year-olds starting in 1970, and compared it with the earnings of their parents when they were about the same age. In 1970, 92% of American 30-year-olds earned more than their parents did at a similar age. By 2014, that number fell to 51%. Here is a chart showing the results:

wsj-30-year-olds-make-less

And we know that real median household income in the US today is basically the same as in 1989. The paper doesn’t provide specific reasons for the decline in incomes for younger Americans, but it generally blames slower economic growth and, especially, the rapidly widening income gap between the top 20% and the rest of society.

They found that the inability of children to out-earn their parents is greatest in the Midwest. This underlines that those who voted for Trump have a point: The Midwest has been hit harder by import competition, especially from Japan and China, and by technological changes, than other regions of the US.

When looking only at males nationally, the decline is even starker: In 2014, only 41% of 30-year-old men earned more than their fathers at a similar age.

There are some issues with the study worth mentioning: Most kids born in the 1940s did well in their thirties, maybe because their parents were 30 during the Depression and WWII. By the 1960s, an industrialized economy brought significantly higher wages to 30 year olds. A high denominator in the ratio of parent’s income to child’s income (compared to the past) made it more difficult for succeeding generations to exceed their parents’ incomes.

The economy also has shifted in the past 30 years and is now service-based, as factories moved overseas, and automation became prevalent. This change swapped higher wage manufacturing jobs for mostly lower wage service jobs. That alone could make it all but impossible for young adults to hit the ratios that their parents did relative to their grandparents.

Maybe the American Dream didn’t die; it just never really existed in the sense of broadly-based income mobility. Have another look at the chart, upward mobility (as measured by making more than your parents) has been declining since the mid-1940s.

Why? Between rising globalization and rapid advances in automation, we now have more people than jobs. And no matter whom we elect, this trend will continue. Those manufacturing jobs are never coming back. Even in China, robots are now displacing workers in factories.

We don’t need “good paying manufacturing jobs”; we need good paying jobs.

This is the most serious challenge capitalism has faced in the US. Without improving personal income, there will be fewer who can afford college, or afford to buy the things that capitalism produces. Low personal income growth puts sand in the gears of our economy.

The left offers a critique of contemporary global capitalism but no real practical alternative. Neither does the right, but their memes of America First, nostalgia for a golden (gilded?) age, and more tax cuts seem like less of a stretch than a Bernie Sanders-like frontal assault on capitalism.

No one in either party has a plan for a world in which robots displace the demand for labor on a large scale. And the under-30 cohort is now spending at least 4 times more (in the case of Wrongo’s university, 10 times) for a college education than what their parents paid, and they are earning less.

If people matter at all to our leaders, and if 90+% of them lack the means to live without working, America must make employment our top priority, despite the fact that many have been deemed redundant by capitalists in the private sector.

Surplus labor drives the price of labor down; allowing the employer class to afford a pool boy, or a nanny, or another cook.

And it makes the waiters more attentive to Mr. Trump.

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Monday Wake Up Call – November 28, 2016

Someone once said that if the Republican Party was a refrigerator, it would say its job was to let ice melt.

Apparently Ben Carson was offered the job as head of Housing and Urban Development (HUD). This is a cabinet-level appointment. Carson had initially turned down a cabinet appointment at Health & Human Services (HHS) because, (according to his staff) he was unqualified. But he’s changed his mind: (brackets by the Wrongologist)

Ben Carson has demonstrated the ability to do two things at a world-class level: perform surgical operations, and run [several] lucrative scams. By his own admission, he is patently unqualified to run a federal agency. Nonetheless, he is apparently on the verge of accepting a job as secretary of Housing and Urban Development…

History tells us that HUD has had just one use in Republican administrations. The agency’s program structure lends itself to profiteering. HUD works closely with private developers to build affordable housing. Without careful oversight, the agency can easily become a slush fund to distribute sweetheart contracts to the administration’s buddies.

Samuel Pierce, Ronald Reagan’s HUD secretary, did just that. Reagan’s HUD regularly handed out loans and grants on the basis of political contacts. Ultimately, some Reagan-era HUD officials were convicted, including three assistant secretaries, for such crimes as accepting illegal loans, obstructing justice, and illegal gratuities.

George W. Bush’s housing secretary, Alphonso Jackson, resigned in 2008 after a series of scandals, including sweetheart deals and inflated salaries for his friends. He instructed his staff to steer contracts to Bush supporters. Jackson was investigated by HUD’s inspector general, the Department of Justice and the FBI, none of which resulted in a conviction.

Since Trump says that he will continue running his real estate empire in office, a loyalist like Carson, someone with no experience in government, but who has relevant experience in bilking, will oversee an agency whose mission lends itself to corruption.

One of the reasons to appoint Carson is because HUD will likely cease its anti-segregation and anti-discrimination activities as soon as the Trumpets assume control. He is on record supporting ending that mission. This from the WSJ:

Under the Obama administration, the department has beefed up enforcement of fair-housing regulations to combat zoning policies that result in segregation, threatening the loss of millions of dollars in federal funding to municipalities that don’t comply. Mr. Carson sharply criticized those policies as “mandated social-engineering schemes” that repeated a pattern of “failed socialist experiments in this country,” in a 2015 op-ed published in The Washington Times.

If there is a bright side to Ben Carson running HUD, it is that he’s not running HHS with the second largest share of the federal budget. Imagine him saying: “I’m a physician. Med school taught me everything there is to know about health care.”

Remember, HUD spelled backward is DUH…

It’s time to wake up America! The writing is on the wall, Trump’s cabinet hires are terrible, and we have to pressure him to do better than Ben Carson.

You can go to social media and complain directly to your Orange Overlord at: #therealDonaldTrump.

To help you wake up, listen to the Crystals from 1962 singing “Uptown”. Phil Spector originally recorded the song with Little Eva, the 19 year-old babysitter to Carole King and Gerry Goffin. The end result didn’t meet Spector’s standards, so he produced it a second time with the Crystals. Here is “Uptown”:

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

Sample Lyrics:

He gets up each morning
And he goes downtown
Where everyone’s his boss
And he’s lost in an angry land
He’s a little man

But then he comes uptown
Each evenin’ to my tenement
Uptown where folks don’t have
To pay much rent
And when he’s there with me
He can see that he’s everything
Then he’s tall, he don’t crawl
He’s a king

Downtown he’s just one of a million guys
He don’t get no breaks
And he takes all they got to give
‘Cause he’s got to live

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Can a Main Stream Party Win Millennial Voters?

Millennials seem to be on the fringe of the political action in 2016. A new survey “The Millennial Economy” by Ernst & Young (E&Y) shows that they are also on the fringe economically, and that they distrust many American institutions.

That may explain why they are disaffected with the current Presidential race. A mid-June survey of 1,200 18-34 year olds was conducted online and via cell phone buy E&Y. It has a margin of error of ± 2.83%. E&Y found that coming of age during an historic economic downturn has severely impacted Millennials:

  • 30% of respondents live with their parents, and it’s 40% if they are still single.
  • Nearly one­-third believe their local community is still in a recession.

Millennial stress levels are high:

  • 78% of Millennials are worried about having good-­paying job opportunities.
  • 74% are worried they won’t be able to pay their healthcare bills if they get sick.
  • 79% are worried they will not have enough money to live on when they retire.

Millennials are the most educated generation in US history, but they are not convinced of the cost/benefit of higher education. Instead of education opening doors, many Millennials feel that student debt has boxed them in. The WSJ reported that among college-educated Millennials, 81% had at least one source of long-term debt, while The Atlantic reports that real wages have fallen for Millennials (and only Millennials) in the past five years, even as education costs have skyrocketed.

E&Y surveyed Millennials’ views of the establishment. They find that Millennials have very little confidence in many of our established institutions, but they are patriotic and supportive of a leading role for the US in the world. This chart is from the study:

millennial-view-of-institutions-png

Millennial men have greater confidence in US institutions than women, with 34% of men expressing confidence in the institutions polled compared to only 25% of women. Overall, Millennials:

  • Had the least confidence in the News Media (73%) closely followed by the Federal Government, Governors, and Corporate America (72%).
  • Had the most confidence in the Military (55%), followed by Colleges and Universities (51%) and Professional Sports (32%).

Millennial men remain more optimistic than Millennial women, although the clear majority of both genders think the country is headed in the wrong direction:

  • Men are nearly twice as likely to believe that the country is headed in the right direction (33%) as women (17%).
  • Hispanic men and black women are the most optimistic group within each gender, with 41% of the former and 27% of the latter believing the country is headed in the right direction.

So the $64 question is: How to win the vote of Millennials? E&Y says that economic uncertainty greatly influences Millennials’ political priorities. They found that Millennials are looking to politicians to alleviate their financial insecurity:

  • 64% of Millennials believe public education should be a top priority for federal tax dollars, a consensus that crosses party lines.
  • Social Security and Medicare were their second priority (46%), while National Security was third at 45%.
  • 47% of Millennials identify as independents.

Finally, as a crib sheet for debate prep, E&Y have this checklist for Millennial hot-button issues:

millennial-vote-checklist

Politicians always play to a checklist. Trump mentioned every battle ground state in the last debate, but fell in the polls. And playing generational politics can result in the candidate seeming completely inauthentic. That has been Hillary Clinton’s problem with Millennials. Al Gore tried it with Social Security in 2000 vs. GW Bush, and it did not work.

Polls show Clinton running far behind where she would hope to be with Millennials. She is winning just under half of Millennial votes, while Obama got over 60% in both of his campaigns.

As we have said, Hillary is not Bernie, and doesn’t stand for what Bernie stood for. So while millennials loved him for it, Hillary will not do as well with them.

Wrongo is concerned about how many young people are considering voting for Gary Johnson. Johnson’s libertarian views are far worse for their interests than anything Hillary stands for.

Johnson certainly would never support the government doing anything with student debt. Yet apparently, many young people will be voting for him, with no apparent concern about how it might help elect Donald Trump.

Perhaps Millennials and the rest of us need to have a busload of faith to get by between here and Election Day in order to survive. Here is Lou Reed live on Letterman in 1989 with “Busload of Faith”:

https://www.youtube.com/watch?v=qNZm89wLaBw

True to Lou, he sang about a busload of faith, minus the bus, and minus the faith.

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

Sample Lyrics:

You can’t depend on your family
you can’t depend on your friends
You can’t depend on a beginning
you can’t depend on an end

You can’t depend on intelligence
ooohhh, you can’t depend on God
You can only depend on one thing
you need a busload of faith to get by

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Who Moved My Cheese?

Some may remember the book by this name by Spencer Johnson, published in 1998. The underlying message of the book is “Don’t waste time fighting against change: accept that bad stuff will happen to you for no good reason and just keep moving”.

This outdated and simplistic message remains the message of the Democratic Party to the White Working Class (WWC). Donald Trump’s message is different. He offers them nothing but a dream, to limit immigrants working in the US and to cut off the US market from China. And since the WWC knows that more of the same isn’t going to work, they’re voting for Trump.

It is useful to remember that since our “Most Favored Nation” trade deal with China in 1979, we have lost 35% of all manufacturing jobs in this country.

The WWC thinks that the Democrats have not been able to do anything to help them keep their jobs. The reasons for failure can be at least equally shared by the Parties, but since Dems have said for years that they are the party of the working class, they are getting the greater share of the blame for 35 years of no results.

There are two issues that dominate the discussion: Illegal immigration and transition assistance when jobs are lost. Regarding Immigration:

  • The WWC knows that Dems need the political support of the Hispanic community, and that requires Dems to show sympathy with illegal immigration.
  • The WWC believes that illegal immigration has put downward pressure on job opportunities and wages in the trades, in restaurant and hotel work, and in service sectors where immigrants may be overly represented.
  • That’s why Trump’s stance on immigration is so popular with the WWC. They probably know in their hearts that kicking all the Mexican workers out, or building a wall is ridiculous. But the Democrat’s position on immigration is diffuse, and is viewed as “soft” on illegals by the WWC.

Despite anything the Dems say about retraining or “transition assistance”, the WWC knows that someone on job transition assistance can’t earn enough to support a family. Other problems:

  • Identifying the fields/industries that workers can train in that will produce stable, living wage employment is an inexact science. So, demand for retrained workers is often less than the supply for any given job type.
  • Businesses have been very successful at shifting the burden (and cost) of training displaced workers from themselves to society. This is helped along by a corporate critique that public and not-for-profit private schools are failing to maintain standards, and they can’t churn out sufficient grads with qualifications that meet the corporations’ highly specific requirements.
  • Hence the continuing financial opportunities for for-profit technical schools and for-profit universities, (can you say Trump University?)

And Ford Motor Co. just gave Trump a big wet kiss:

Ford Motor Co. says it’s moving all of its US small car production to Mexico…The company is building a new $1.6 billion assembly plant in San Luis Potosi, Mexico. It will make small cars there starting in 2018.

What can the Pant Suit say about this that would go beyond what the Pant Load will certainly say? And if she did, would WWC people believe her?

On the macro level, our current capitalism has turned to technology to produce much of what is needed with far less human labor input than ever before. That leaves job growth (and job opportunity) in only the low-skilled, low-paid “service” jobs; or in highly advanced, specialized jobs requiring very advanced training/skills/talent.

This means that the dogma of Endless Economic Growth, which we have accepted since the Industrial Revolution, is dead. Along with killing that, we need to kill off the current organizing principle of our economic system, where humans exist solely to fulfill the needs of businesses.

Work helps us find our place in society. It is something that we see as having an inherent value, something that fills a basic human need, similar to food and shelter. But our current economic system no longer recognizes that, and our economy provides little opportunity for fulfilling that basic need for a large portion of American citizens, including many in the WWC.

The idea of government deploying under-utilized labor to build and repair our infrastructure, or to re-tool our country to reduce carbon emissions would be a step that might return the WWC to jobs and a place in society. It would cost a ton.

But the idea that the government would create demand is too socialist for most politicians to accept, despite the fact that the rest of the tools just haven’t worked in 35+ years.

Tell me again why Bernie Sanders was a terrible choice.

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Capitalism, It’s Not You, It’s Me

There is a meme that has gone global since the early days of the Occupy movement. Here it is as a wall graffiti from Greece that uses the same meme we first saw in NYC in 2011:

Capitalism Lotek

Just kidding capitalism, it really is you.

The artist is a Greek who styles himself as Lotek. The name Lotek is derived from the short story (and later, a film) by William Gibson called Johnny Mnemonic. The story is set in 2021, in a world ruled by corporations. An anti-authoritarian gang that are called Lo-Teks, fight the power. They are in fact not low tech at all, but are high tech hackers. Sound familiar?

Greece is surely a place at war with neoliberalism and free market capitalism. So is it also time for us to reconsider capitalism?

Consider this from Mark Blyth in Foreign Affairs:

An inherent tension exists between capitalism and democratic politics since capitalism allocates resources through markets, whereas democracy allocates power through voting.

The compromises both systems have struck with each other over recent history shapes our contemporary political and economic world. Blyth observes:

  • In the three decades that followed World War II, democracy set the rules, taming markets with the establishment of protective labor laws, restrictive financial regulations, and expanded welfare systems.
  • Starting in the 1970s, a globalized, deregulated capitalism, unconstrained by national borders, began to push back.

And today, capital markets and capitalists are setting the rules, and democratic governments follow them.

Some background: Cutting taxes in the 1980s caused government revenues to fall. Deficits widened, and interest rates rose as those deficits became harder to finance. At the same time, conservative govern­ments, especially in the UK and the US, dismantled the regulations that had reined in the excesses of the financial service industry since the 1940s.

The financial industry began to grow unchecked, and as it expanded, investors sought safe assets that were highly liquid and provided good returns: the debt of developed countries.

This allowed governments to plug their deficits and spend more, all without raising taxes.

But the shift to financing the state through debt came at a cost. Since WW II, taxes on labor and capital had provided the foundation of postwar state spending. But, as govern­ments began to rely more on debt, the tax-based states of the postwar era became the debt-based states of today.

This transformation had pro­found political consequences. The increase in government debt has allowed capitalists to override the preferences of citizens:

  • Bond-market investors can now exercise an effective veto on policies they don’t like by demanding higher interest rates when they replace old debt with new debt.
  • Investors can use courts to override the ability of states to default on their debts, as happened recently in Argentina
  • They can shut down an entire country’s payment system if that country votes against the interests of creditors, as happened in Greece in 2015.
  • Citizens United dictates who runs for office in the US, and in many cases, who wins.

Now that the financial industry has become more powerful than the people, should we blindly follow capitalism’s meme as the only way forward?

Free-market rhetoric hides the dependence of corporate profits on conditions provided for, and guaranteed by, governments. For example:

  • Our financial institutions insist that they should be free of meddlesome regulations while they depend on continuing access to cheap credit from the Federal Reserve.
  • Our pharmaceutical firms have resisted any government limits on their price-setting ability at the same time that they rely on government grants of monopolies through our patent system.

To use a sporting metaphor, it’s as if the best football team purchased not only the best coaches and facilities, but also bought the referees and the journalists as well. Those responsible for judging economic competition have lost all authority, which leaves the dream of ‘meritocracy’ or a ‘level playing field’ in tatters.

In our country, the divide between the business oligarchs, the political class and “the people” increasingly appears unbridgeable, marked by hostility and deep distrust. When people are told for a generation that government mustn’t make decisions that interfere with free markets, it is inevitable that people will lose faith in democratic governance, and in government’s capacity to help them solve their problems.

Capitalism in its current form no longer works for the people. We have seen a reaction in the start of movements by Occupy, by Bernie, and by others in Europe.

Remember that the greatest prosperity in living memory in the US came during the brief social democratic moment, in the 1950s and 1960s, when the constraints on business were the greatest.

More democracy and more economic justice are the necessary foundations for the path to a more prosperous, and sustainable economy.

A reformed capitalism must be a part of what emerges from that fight.

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The Pant Suit vs. The Pant Load – Budget Edition

Now that both presidential conventions are history, the real discussion about the merits of the candidates and their programs begins. The first question to answer is: What are the costs of the promises made to America by Donald Trump and Hillary Clinton?

Both candidates have made political promises that, if implemented, have both costs and benefits to the nation. While the analysis of benefits may be difficult to assess, the costs are not.

The Committee for a Responsible Budget (CRB) has issued a report, “Promises and Price Tags: A Fiscal Guide to the 2016 Election” that estimates how our national debt would rise under the programs of both presidential aspirants. It shows that gross debt held by the public would rise from about $19 trillion today to $23.9 trillion by 2026 under Hillary Clinton’s plan and to $35.2 trillion under Donald Trump’s plan.

They based the estimates on the public positions taken by each campaign as of June 24, 2016. They also generated a low, central, and high cost estimate of the fiscal implications of Trump’s and Clinton’s proposals.

We need to stop and say that our gross debt will rise no matter who is elected, since under existing law, gross debt is projected to rise from about $19 trillion today to about $29.1 trillion by 2026, about a 50% increase. With that in mind, here is CRB’s summary of the impacts of both candidate’s plans on the national debt:

Debt Under Candidates Proposals

Donald Trump has expressed concern about the dangers of our current $19 trillion debt. Yet his plan would increase that number significantly. Under CRB’s central estimate of Trump’s plan, gross debt would more than double from $19 trillion today to $39.5 trillion by 2026.

The increase in gross debt under Clinton’s plan would be smaller but still significant. Under the central estimate of Clinton’s plan, gross debt would rise by more than 50%, from $19 trillion today to $29.6 trillion by 2026, in line with the current law. So, her promise to pay for new spending seems to be true.

Digging a little deeper, here is CRB’s breakdown of both candidates’ plans by revenue, costs and spending. Most of Hillary Clinton’s increased costs come from spending in non-health, non-retirement programs:

  • She would spend $350 billion more on college education, $300 billion more on infrastructure, another $300 billion on paid family leave, and nearly $500 billion on a variety of other initiatives.
  • Clinton would also make several health-related changes that would cost about $150 billion.
  • To offset these costs, Clinton proposes a variety of tax increases – mostly on higher earners and businesses – totaling $1.25 trillion.

The largest share of Trump’s deficit impact comes from his proposed individual and business tax reforms, which would reduce revenue by about $9.25 trillion:

  • His plan to reform the veteran’s affairs system and increase veterans’ access to private doctors would cost about $500 billion.
  • And his plans to repeal and replace the Affordable Care Act and reduce illegal immigration would cost about $50 billion each.

So, what happens to the total amount of our national debt?

Donald Trump wants to dramatically reduce taxes for most Americans while maintaining spending relatively near its current levels. As a result, under CRB’s central estimate, he would add $11.5 trillion to the debt through 2026.

Hillary Clinton wants to increase both spending and taxes, adding about $250 billion to the debt over 10 years under CRB’s central estimate. Under their low cost estimate, Clinton’s plan would reduce 10-year deficits by $150 billion.

Increases in debt are not always a bad thing, particularly in times of economic slack, if the debt accumulation is driven by stimulative fiscal policy. But a 40 percentage point of debt to GDP increase, from 87% of GDP to 127% of GDP, seems unlikely to give us a positive outcome.

But, if we elect The Pant Load, that’s what we will get. Trump said to the WaPo in May:

I am the king of debt. I do love debt. I love debt. I love playing with it.

This should worry you. Trump went on to say:

Look, I have borrowed, knowing that you can pay back with discounts. And I have done very well…I would borrow, knowing that if the economy crashed, you could make a deal, and if the economy was good, it was good, so, therefore, you can’t lose.

So, Trump would stiff the nation’s creditors. Haven’t we had enough of Republican mis-leadership on the nation’s finances?

Haven’t we had enough of Republican tax cuts for the most comfortable among us at a cost to the least comfortable among us?

Remember that it was the GOP-led Congress that threatened not to raise the debt ceiling in 2011. That led to the Standard & Poors rating agency’s lowering of the US credit rating.

Think carefully about what Trump’s glib plans imply for America.

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