Millennials – The Wrongologist

Democratic Party Messaging

The Daily Escape:

Pikes Peak, Colorado Springs, CO – December 2024 photo by Monica Breckenridge.

The Democrats are meeting this week to decide on who will lead them into the 2026 midterms and the 2028 general election. Wrongo thinks it’s time for a revolution.

The key question is how do Democrats go back to winning presidential elections? And it may not be the way you think. From Jon V. Last:

“Since Trump’s emergence in 2016 the opposition has responded by acting as if it were still 2015. The Biden administration pursued a vigorous, bipartisan agenda filled with popular legislation designed to promote economic growth across the board. Biden spent money on infrastructure and manufacturing—much of it in red states and rural areas where Democrats had little support.

The Biden administration’s theory was that by governing from the center and focusing on employment and economic growth, Democrats could retain the support of the majority….”

But that theory didn’t work, and Trump won, running on zero ideas about growth, prosperity, or progress. His campaign was posited on the infliction of pain to outsiders. Trump didn’t promise to improve the lives of his voters. He promised to punish the people his voters wanted to hurt. That was the entirety of his electoral proposition, and none of it was subtext. Instead it was bold-face, ALL CAPS text.

Last says it worked because America has changed and the majority of voters are no longer motivated by wanting progress for themselves. Instead they’re motivated primarily by anger that out-groups—the people they do not like—might be succeeding or getting benefits they’re not getting.

If this is true, and at least some evidence suggests it is, how do Democrats persuade voters not to be quite so angry and to vote for them? From Brian Beutler: (emphasis by Wrongo)

“…winning the next election will require Democrats to persuade some as-yet unpersuaded voters that they’re worth voting for. Whatever policies Democrats think are popular, whatever affects they associate with normalness and affability, if they can’t do the delicate work of changing a mind, they can’t get anywhere.”

“Democrats are about to have as little power as they’ve had at any time in the past two decades for a simple reason: Most Americans weren’t convinced that they’d be better off under Democratic rule. That’s it. And there’s no shortcut back to power that avoids the difficult task of convincing people to change their minds.”

More: (emphasis by Wrongo)

“The Democrats need more and better communicators, and, crucially, it needs the people who don’t understand their potential to influence conventional wisdom and public opinion to get with the times. Most persuasion doesn’t happen person to person, it is mediated. When it does happen person to person, it is most often between people who already know each other, and usually one of those people is regurgitating ideas they picked up….And the ripest targets are no longer classic swing voters who are happy to talk politics with strangers….”

Couple all of this with the problem of where people get their news, and you have Dems digging out of a ditch partially of their own making. What Democrats are missing more than anything is creative thinking about how to reach people who will never answer a telephone call from a number they don’t recognize, never answer the door for a canvasser, and never form lasting political beliefs by watching or reading professional newscasts (because they rarely, if ever do).

This time around, Democrats either need their leaders to adapt, or else they need new leaders.

Jon Last thinks what will win votes in this environment is a lefty demagogue akin to what Bernie Sanders has been selling for years with his “millionaires and billionaires” rants. Sanders’s pitches resonated with younger voters. He got quite a lot of traction in 2016, but Democratic Party primary voters were not ready for him.

Who should the Dems support to lead them into the next round of elections? It should be a group of people in the 30’s, 40’s and 50’s. And thank God there is at least some movement among “younger” Democrats on the Hill to challenge the party’s gerontocracy.

Billy Ray is a screenwriter. His Captain Phillips screenplay earned him an Oscar nomination. He thinks the Democrats’ storytelling ought to start with:

“Whoever is going to be our next presidential candidate needs to look to the American people and say, ‘You matter. Not me, not Trump. You matter. You matter to your family, you matter to your community, you matter to your country,’” he adds. “‘You matter to our collective future, and you matter to me. And what I’m going to do for the next four years is just work for working families. I’m going to do the things that made the Democratic Party your party for so long.’”

Working families. Who among the Democrats out there can build on and carry this message home?

Evolve or Die, Dems.

Cartoons of the Week Plus Commentary – October 6, 2024

Cartoons this week were mostly about Vance failing to answer the “Who Won?” question. Here’s one Wrongo liked:

There’s always something in October:

Wrongo wants to update his last column about why Harris needs to speak with more empathy to Gen Z and younger voters. Friend of the Blog John S. left this comment:

“I believe Harris is speaking but perhaps not loud enough or Gen Z isn’t listening. Her plans do include downpayment money for new housing, tax incentives for builders to sell to first time home buyers, 3 million new homes constructed, business startup credits, earned income credits for low wage earners, newborn tax credits, food price regulations, and reduction of medical debt. Maybe you can say it won’t be enough or that some of these things can’t be implemented but nonetheless they are in “the plan”. Perhaps if her message was stronger on social media, as you mentioned in another column, the “Z’ers” would listen.”

He’ s right but Harris like most Dem politicians, isn’t offering sufficient “feel your pain” context to get people to listen. Obama was one of the few Democrats to place policy in a human context, but most of the time, the Democrats are relying on a laundry list of policies that may or may not ever be enacted.

America had good economic news yesterday, but no Republican was willing to cede that to Biden or the Democrats. Sen. Rubio (R-FL) claimed in a post on Twitter/X that the great jobs numbers were “fake” because past months had to be revised (most jobs reports are revised in subsequent months).

It’s true that the economy added jobs. But most were low-income service jobs. Meanwhile, the pathways to the middle class, manufacturing and white collar jobs, actually shrank. The Gen Z and younger workers suspect that the American Dream is fading because middle class jobs are going away, and they’re precisely correct in that intuition.

The GenZ’ers can’t square their lived reality with the commentary that comes from on high, particularly regarding the economy. Over time, they’ve come to distrust institutions. That’s true at a social level—levels of trust have cratered over time. And this is a key reason why this gulf between what young people live, experience, feel, and the skin-deep recitation of the miracle of the “Booming Economy”. It doesn’t reach deeply enough into their lives.

Harris shouldn’t cede any of this ground to Trump. Wrongo quoted Vance during the VP debate:

People are struggling to pay the bills. Times are tough.
The American Dream is fading, and feels unattainable.
We should stop shipping jobs offshore.

And Republicans understand the task at hand is to peel younger voters in swing states away from Harris. FWIW reports that a constellation of Right-wing groups are spending millions online to get their messaging in front of swing state voters. Probably the biggest line of attack being used against Harris has to do with inflation and the state of the economy: (brackets by Wrongo)

“For example, Duty to America is specifically targeting Gen Z and Millennial men in battleground states with ads bemoaning the state of the economy, saying: ‘According to…Harris, the economy is fixed [repaired]…at our age, our parents owned a home, had kids, saved for retirement, and we can barely buy groceries, gas, or pay our rent.’”

“This ad is running across platforms like Facebook, Instagram, and Google, but also on Roku devices and streaming services where young people actually watch TV shows. Duty to America has spent the majority of its ad dollars targeting Michigan, Pennsylvania, Georgia and North Carolina.”

“Similarly, Preserve America is running direct-to-camera video ads on Facebook and Instagram from a trio of white women who are complaining about high inflation and grocery prices, sometimes tying the issue to illegal immigration. You can browse through some of those ads here.”

FWIW adds a chart about ad spending: (note that the red and blue here are 100% pro-Trump spending)

A few other groups have also emphasized economic attacks among younger members of the electorate. One from Our American Century says “Kamala Harris thinks young people are stupid” when it comes to the economy, and Right for America is also running with the “stupid” line.

FWIW notes that Harris is outspending Trump on Facebook and Instagram: Harris spent $8.1 million to Trump’s $1.1 million between September 21 to 28. Meanwhile, political campaigns spent $40.3 million on Google and YouTube ads last week, with Harris and affiliates spent $10.8 million to Trump’s $2.8 million.

Here’s a recap of spending by both campaigns:

The Democrats instead should invest more money where the young people are. They should challenge the Republicans by admitting that things look pretty dire for Gen Z and younger people. That over time, the American Dream’s faded. That times are rough. That people are struggling.

They should use exactly those words like Vance did, because they’re the ones that count. They resonate. You have to hope that the Harris brain trust will match Trump’s initiative by spending some of this money targeting Gen Z and younger voters with empathetic messaging like the Republicans are already doing.

The policy details can come once they’re listening.

Will The Protagonist Win?

The Daily Escape:

Let’s start with some definitions. According to Proofed, a writing tips blog:

“The protagonist is often (though not necessarily) referred to as the story’s “hero” or central character. At the other end of the spectrum is the antagonist, the character responsible for opposing the protagonist’s objectives.”

Marcy Wheeler, who writes as Emptywheel, had one of the most perceptive columns of the election cycle last week. Speaking about the debate and its aftermath Wheeler said: (brackets by Wrongo)

“…[what] the Vice President did with her animated, often mocking facial expressions….She kept the camera on her the entire time. And more often than not, even her facial expressions conveyed far more than Trump’s rants did.”

The media were surprised, since they had conceived of the debate almost exclusively about how Harris would react to whatever Trump would do. That’s the way they’ve treated Trump since 2015: As the protagonist in a global political drama.

But since the debate, something important happened to the media. Back to Wheeler: (brackets by Wrongo)

“And they left [ the debate] with the certainty that Vice President Kamala Harris was the protagonist of that story.”

Harris the protagonist. Harris, the main character, who’s actions drive the story forward. It wasn’t Trump giving the orders that got the press scurrying. They were marveling at Harris’s crowds, at her command of the issues, at her looking and sounding presidential. At the big energy in the big crowds at her rallies.

But a second possible assassination attempt could have delivered the role of protagonist up for grabs again. Does Wrongo have this right? The guy who was apprehended never had a line of sight on Trump and never shot his weapon. But somehow, Trump has become the victim of another assassination in the Mainstream Media.

It’s most probable that the second assassin is just another mentally ill person looking to give his life meaning. But regardless, Trump worked hard to get the protagonist role back. He tried to use the second attempt to return to being the protagonist. He’s alleged that Democrats have inspired the recent up tick of political violence by characterizing him as a risk to American democracy, as truthfully, he is.

There’s zero evidence that the would-be assassins were motivated or radicalized by Democrats.

The Springfield story is Trump’s second effort to return to being the protagonist. Since it’s predicated on a lie, he can run with it. If the tale of Haitian immigrants stealing people’s pets and eating them were true, then it would only have been a one-day affair. We’d see the police reports. Local and state governments would take some sort of action. The Harris campaign would formulate a response. The story would have a beginning, a middle, and an end.

But then? We’d be back to talking about Harris.

But because it’s a lie, the story doesn’t end. It swirls and gathers strength. The media and local governments try to debunk it. Lots of people believe it anyway. The narrative progresses, trying to get Trump and Vance to admit that they’re lying. They refuse; or equivocate.

And there is no advantageous angle for the Harris campaign to take. If she engages, then it gets even better for Trump, because she becomes a supporting character in his story. And we go from having a conflict between Trump and objective truth to a conflict between Trump and Harris.

And Harris would be no longer talking about the future. She’d be stuck litigating the (obvious) lies of a madman. Just like everyone else has for the last nine years.

But a big lie doesn’t have to change things, no matter how many times Trump plays that card.

Since becoming the protagonist, Harris has leaped in the polls. The New Yorker’s Philip Gourevitch reported on the Morning Consult’s polling of 11,022 likely voters with a margin of error of +/-1 percentage point, taken Sept. 13-15 2024. They summarize:

“Harris leads Trump by a record-high 6 percentage points among likely voters, 51% to 45%, up from a 3-point advantage before their debate last week. Her 51% of support among likely voters, which is also at a record high, is driven largely by her best figures to date among Democrats, Biden 2020 voters, liberals, women, 18- to 34-year-olds and millennials.”

Here’s their chart:

And her image is better than ever: 53% of likely voters have a favorable view of Harris, the largest share they’ve measured this cycle. By comparison, just 44% of voters view Trump favorably.

So one big challenge is for Harris to hold on as the protagonist in the political brawl of 2024. Something that Biden never did, nor have large groups of Trump wanna-be’s over the past nine years.

35% of Americans Meet The Criteria To Be Middle Class.

The Daily Escape:

Stoney Brook Grist Mill, Brewster, MA – February 2024 photo by Michael Kerouac

Wrongo and Ms. Right spent Sunday with one of our daughters and son-in-law. We spoke about the Ezra Klein op-ed in the NYT about why Biden should step aside. One of Klein’s points is that in presidential campaigns, the candidate is always the campaign’s biggest asset, and that Biden isn’t being used by Democrats as if he is their biggest asset.

Elsewhere, some pundits are saying that the Democrats need to forget campaigning on policy: Dems always try to find things people like and tell them they’re going to help them — and after that, show them the candidate’s character, biography, and qualifications for office.

Instead, the Republicans campaign by appealing more to emotion than intellect, using a negative message to develop enthusiasm.

While Wrongo is happy that Dems want to campaign again on an anti-Trump message, he still thinks policy is the right way to appeal to at least two types of voters: Those who rarely vote, and those who voted Democratic last time but are less enthusiastic this time. These voters think our political system hasn’t produced results for them, and they’re looking for promises to change that in order to get their votes.

While we keep touting Biden’s economic performance, Wrongo recently found a very important poll taken last November by the WaPo that asked Americans how they defined being in the middle class:

“About 9 in 10 US adults said that six individual indicators of financial security and stability were necessary parts of being middle class….Smaller majorities thought other milestones, such as homeownership and a job with paid sick leave, were necessary.”

They also asked how many of those markers of being in the middle class people said they had achieved, and the results are a staggering rejection of how well the US economy is working for many people:

“Just over a third of Americans met all six markers of a middle-class lifestyle. While about 9 in 10 Americans had health insurance, only three-quarters had health insurance and a steady job. With each added measure of financial security, more Americans slipped away from the middle-class ideal.”

Let’s get into the findings. Here’s the WaPo chart about what factors Americans think it takes to be in the middle class:

It’s arbitrary to pick six, but they were the most frequently mentioned. A secure job. The ability to save. To afford an emergency. Paying the bills without worrying. Healthcare. Retirement. It’s a sensible list. And in the poll, huge majorities agreed those are the key criteria for a middle class life.

The Very Big Problem with this is that when the WaPo asked the same respondents if they had the ability to meet those criteria, the numbers are startling. Here’s the second WaPo chart:

Just 35% of people say that they meet the criteria that almost everyone, (~90%) agree should make someone middle class. If that’s true, America needs to redefine “middle” class. The majority in this survey did not have the financial security associated with being in the middle class. More from WaPo:

“The most common barrier was a comfortable retirement, something that about half of middle-income Americans over 35 felt they were on track to achieve.”

Think about what this research is really showing us. America no longer has a middle class. While ~90% of people agree on what a middle class life is, only a minority can afford it. This means we have a “phantom” middle class: Americans want to be middle class, but only a minority of them are. So what class does that make the majority?

What this research appears to show is that America is building something more like a permanent underclass.

Acknowledging this issue would be a great starting point for Biden to gain traction with low propensity voters and with the Gen X and younger voters who make up most of the low enthusiasm cohort of Democratic voters.

As Anat Shenker-Osorio puts it:

“Democrats rely on polling to take the temperature; Republicans use polling to change it.”

This time around the Democrats need to emulate Republicans who work at moving the needle instead of chasing it. And this middle class problem is an issue that will move the needle.

Fortune Magazine’s Tiffani Potesta writes that Gen Xers personify the problem of middle class life: (emphasis by Wrongo)

“Gen Xers expect to keep working longer than they planned–and will be the first generation to go into retirement with less financial security than their parents and grandparents.”

Gen X will be the first to reach retirement under a new paradigm: the widespread move from Defined Benefit plans to Defined Contribution or 401(k) plans in the US. This is a barely cited yet fundamental societal change that shifted the responsibility to save for retirement from employers to individual employees. More:

“…the numbers do not add up: Gen Xers reported that on average they will need roughly $1.1 million in savings to retire comfortably, yet they expect to stop working with only about $660,000 saved–a savings gap of around $450,000.”

Still more:

“According to a report from the National Institute on Retirement Security, the average account balance in 2020 for private retirement accounts among working Gen Xers was $129,994. This is woefully short of the amount of savings most of us will need to be secure in retirement.”

What’s worse is that the median account balance was scarier: $10,000–and 40% have zero savings.

For a society to be staring at the next few generations not being able to retire and not to be members of the middle class is very troubling, particularly in terms of what’s likely to happen if that’s the case. Losing our middle class is almost a sure path to autocracy, possibly through the rise of fascism and/or authoritarianism.

Biden and the Democrats need to acknowledge these problems are real and pledge to do everything possible to return America to having a true, bell-curve shaped middle class. They can run generally against Trump as “order vs. chaos”, but Trump is running on “America’s decline”, which includes the financial insecurity of millions of Americans. Biden needs to call that out specifically, along with ideas on how to fix the problem. That would make financial insecurity an issue for Democrats equal to abortion, something that targets a specific group and encourages them to get to the polls in November.

If Bernie Sanders isn’t too old to rage against economic insecurity, then Biden is old enough to do the same.

The Coming $73 Trillion Wealth Transfer

The Daily Escape:

We’ve been on Cape Cod for a few days visiting daughter Kelly. Here’s a sunset photo taken this week at Campground beach, Cape Cod, MA – August 2023 iPhone photo by Wrongo. Smoke from Canadian wildfires made the sunset colors more vibrant.

Welcome to our Saturday Soother! But first, let’s talk about the coming generational transfer of wealth that’s underway as the wealthiest generation (the boomers) retire. According to Ben Carlson, 10,000 baby boomers will be retiring every day between now and the end of this decade.

The first boomers were born in 1946, meaning they’re 77 and on the fast track to 80 years old. Fortune Magazine pegs the wealth transfer from boomers to their kids at $73 trillion (with another $12 trillion going to charity). That means the boomers have $85 trillion in personal wealth!

That sounds great, since so many in our younger generations really could use a little help right now. But fewer people than you might expect will actually receive a sizable inheritance. This is due to the fact that the top 10% of America’s wealthy own something like 90% of the stock market. The concentration of today’s wealth will lead to fewer people benefiting from the generational handoff.

Here’s a chart from the NYT:

According to the NYT, ultra-high net worth households — people with $5 million to $20 million in liquid net worth — make up 1.5% of the population but will constitute 42% of the money that gets passed down in the years ahead. Many of them are boomers. From the NYT:

“A key reason there are such large soon-to-be-inherited sums is the uneven way boomers superbly benefited from price growth in the financial and housing markets. The average price of a US house has risen about 500% since 1983, when most baby boomers were in their 20s and 30s, prime years for household formation.

As US corporations have grown into global behemoths, those deeply invested in the stock market have found even bigger returns: The stock market, as measured by the benchmark S&P 500 index, is up by more than 2,800% since the beginning of 1983…”

Those rates of growth in financial and real estate assets will probably never be seen again. We’re passing a slow growth economy on to the next generations, while their own salaries and savings are having trouble keeping up with inflation.

Some worry that retiring baby boomers will crash the stock market by spending down their portfolios in retirement, leaving nothing to inherit. While it could happen, it’s unlikely that it will. The inequality of stock ownership means few people in the top 10% will never come close to spending all of their wealth in retirement.

So the wealth transfer will be more of a stream than a tsunami. Given the longevity of the wealthy, the money is going to be passed down slowly over time. A married couple that is retiring today has a 50% chance of at least one spouse living into their 90s.

Wrongo sees more and more people in the younger generations talking about how much they need help from their parents right now rather than decades down the road. The challenge is that parents need to be sure that if they make early transfers of wealth, that they keep enough on hand to maintain themselves securely in their advancing old age.

This can only be done by families having honest discussions around very awkward subjects. Talking about it can be helpful. It may be possible to work something out where some of the inheritance is parsed out slowly so the parents can enjoy seeing the kids (or grandkids) use some of the money while they’re still here.

Enough! It’s time for our Saturday Soother, where we ignore the also-ran candidate show that the Republicans put on in Wisconsin, and where we also ignore the perp walk in Atlanta. Instead, let’s focus on clearing our heads for next week’s outrages.

To help clear your head, grab a comfy chair by a window, and pour a mug of cold brew over ice. Now, watch and listen to Beethoven’s “Septet, op. 20”. It had its first performance in 1800 and was one of Beethoven’s most popular works during his lifetime, much to the composer’s dismay! He ultimately wished he had never written the piece.

Today we listen to the first movement, “Adagio – Allegro con brio” played in 2014 by the WDR Symphony Orchestra in Cologne, Germany. The WDR is a German radio orchestra:

Monday Wake Up Call – April 24, 2023

The Daily Escape:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sample lyric:

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

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

It’s Impossible To Buy A $200k Home Anymore

The Daily Escape:

Mt. Hood sunrise – February 2023 photo by Mitch Schreiber Photography

Happy Valentine’s Day for those who celebrate! If you don’t celebrate, find someone or something to give a little bit of love to.

In all of the hype about the Super Bowl and Rihanna’s halftime show, you may have missed that homes selling for less than $200k have basically disappeared in America.

John Burns, a real estate consultant, reports that they are now 0% of the new home market. They were 40% of the market 10 years ago. Burns also says that $500k+ new homes have grown from 17% of the market to 38% of the market during Covid. He provides this handy chart showing how average home prices have changed since 2010:

At the same time, sales of homes going for $500k or more (red line) have shot up from less than 10% to nearly 40% of the new homes market and represent the largest share of new home sales.

This isn’t great for Millennials looking to buy their first homes, or for retirees who have to downsize. It also explains why many first-time homebuyers are angry.

It’s not only the $200k and under segment that has fallen off a cliff. New homes going for between $200k – $300k now make up just 11% of the total, down from 80% of all new home sales in the year 2000.

Ben Carlson shows Federal Reserve new home price data going back to 2000 that breaks down new homes price points more clearly. He says that those being sold for $750k and up have gone from less than 1% to more than 10% of the market.

A few reasons for the shifts: First, we’re not building enough new houses anymore. Second, we’ve seen changing tastes drive demand toward larger homes, helping move the market to a new floor in home prices. Inflation didn’t help either.

We overbuilt in the 2000s housing bubble, and that led to more than a decade of underbuilding ever since. There was a brief spike during the pandemic housing craze but that has abated with mortgage rates rising so rapidly in the past year.

In 2002-2006, we were building around 120,000 new homes per year. In 2022, it was more like 65,000 units per year. Tastes have changed as well. Houses today are substantially larger than they were in the 1950s, 1960s, and 1970s.

In his book The Fifties, David Halberstam talks about how the housing market played a huge role in the rise of the suburbs following World War II. Then houses were about 1,300 square feet. In the 1970s, the median size of a new home in the US was 1,525 square feet. Today it’s around 2,500 square feet.

Tastes have changed. People want bigger houses. They want open floor plans for entertaining, bigger bedrooms with more bathrooms, and more storage space for all of their stuff.

It’s also true that homebuilders aren’t incentivized to build starter homes anymore. In the 1950s the government helped out the troops and their families. With the GI Bill, the federal government took some of the risk that homebuilders wouldn’t be able to find mortgages for all the new houses they were building.

Local zoning regulations have made it difficult to get approvals to build new homes. So builders have moved upmarket in home size to justify those upfront expenses. Starter homes aren’t as profitable as they once were.

There’s a big change in the buyer’s market as well. The WSJ quotes John Burns: (emphasis by Wrongo)

“You now have permanent capital competing with a young couple trying to buy a house.” Burns estimates that in many of the nation’s top markets, roughly one in every five houses sold is bought by someone who never moves in.”

The Atlanta Journal-Constitution in an article last week entitled: “American Dream For Rent: Investors elbow out individual home buyers. Metro Atlanta is ground zero for corporate purchases, locking families into renting’. The Journal says a generational housing shortage, inflated construction costs and a surge in consumer demand all contributed to the historic rise in prices.

But there’s little doubt that a flood of cash from institutional investors has exacerbated it. They quote Maura Neill, a realtor in Alpharetta:

“They go after every listing under $500,000…it’s like clockwork…The property gets listed and, sight unseen, they make offers within an hour.”

This is late-stage capitalism at work. Young working couples are increasingly shut out of buying homes. America is failing them. It would be helpful for families to build equity by purchasing homes instead of renting.

Pricing families out of home ownership carries risks to a cohesive society.

We should have a federal tax policy that disincentivizes ownership of multiple single-family homes, by investment funds. The way to remedy this is to steer investors to other assets that don’t directly impact individual welfare to the same degree as single family housing.

Saturday Soother – March 26, 2022

The Daily Escape:

Crocus in bloom, Holliston, MA – March 2022 photo by Karen Randall

Let’s take a look at three stories that didn’t get their due this week. First, from the LA Times, about gang infiltration of the LA County Sherriff’s department:

“The top watchdog for the Los Angeles County Sheriff’s Department has identified more than 40 alleged members of gang-like groups of deputies that operate out of two sheriff’s stations…..Inspector General Max Huntsman said his office has compiled a partial list that includes 11 deputies who allegedly belong to the Banditos, which operate out of the East L.A. sheriff’s station, and 30 alleged Executioners from the Compton sheriff’s station.”

Huntsman told the LA Times that about a third of the 41 deputies on his list had admitted that they had gang tattoos or belonged to the groups. Allegations aren’t proof but apparently, there is a long history of allegations like this one surrounding the LA Sherriff’s department.

Also consider this article in the WaPo about police wrongdoing:

“The Post documented nearly 40,000 payments involving allegations of police misconduct in 25 departments, totaling over $3 billion. Departments usually deny wrongdoing when resolving claims.”

They found that more than 1,200 officers in the departments surveyed had caused problems resulting in at least five payments each by their municipalities. More than 200 had 10 or more payments for actions that resulted in lawsuits. New York City leads the way with more than 5,000 officers named in two or more claims, accounting for 45% of the money the city spent on misconduct cases. There are 36,000 officers in the NYPD. That’s 13.8%.

Settlements rarely involve an admission of guilt or a finding of wrongdoing. City officials and attorneys representing police departments say settling claims is often more cost-efficient than fighting them in court. Since there’s no formal list of bad actors, there’s little reason to hold these officers accountable.

Law enforcement throughout America gives itself a black eye whenever stories like these are written.

Second, the NYT reported that several of the Republican Senators who suggested that Judge Ketanji Brown Jackson had given uncommonly lenient sentences to felons convicted of child sex abuse crimes had all previously voted to confirm judges who had given out similar prison terms below prosecutor recommendations, the very problem they had with Judge Jackson:

“But Mr. Hawley, Mr. Graham, Mr. Cotton and Mr. Cruz all voted to confirm judges nominated by President Donald J. Trump to appeals courts even though those nominees had given out sentences lighter than prosecutor recommendations in cases involving images of child sex abuse.”

You can read the article for the examples.

Hypocrisy is fuel for politicians, so maybe we shouldn’t be surprised. We know that Sen. Graham had voted only a year ago to confirm Judge Jackson, despite the sentencing decisions she had made as a district judge, the same ones that he now objects to.

Third, Bloomberg reported that private equity money is again pouring into residential real estate markets. They cite Phoenix, AZ as a prime example: (brackets by Wrongo)

“The median home [in Phoenix] was worth about $285,000 at the beginning of the pandemic; it was valued at $435,000 two years later.”

That’s a 53% increase. This is also true in NJ, where Wrongo’s son just got an all-cash offer from an investment group for his home, sight unseen, at 11% higher than the closest offer from a retail home buyer who needed a mortgage.

This is turning first-time home buyers into long-term renters, with real-world consequences.

Home equity represents a huge portion of individual wealth in the US, especially for moderate-income families that have few other opportunities to use borrowed money to purchase assets that can increase in value over time. Price appreciation lets owners accrue wealth which can be tapped later on when they have a large or unexpected expense.

Wall Street’s spin is that there just aren’t enough rentals for families who want to live in good neighborhoods but can’t afford a down payment. So they’re providing a necessary economic service. You be the judge.

Enough of this drama! It’s time to find a way to let go of the tragedy in Ukraine and the clown show surrounding Judge Jackson for a bit. It’s time for our Saturday Soother.

Here on the fields of Wrong, it’s time to take down the deer fencing and put up the bluebird nest boxes. We also need to watch what we can of college basketball’s March Madness.

To help you get ready for the weekend, grab a chair by a large window and listen to Mozart’s “Turkish March” played here on bamboo instruments. It was performed in 2015 by Dong Quang Vinh on a bamboo flute along with the Bamboo Ensemble Suc Song Moi, in Haiphong, Vietnam:

Monday Wake Up Call – January 10, 2022

The Daily Escape:

Kohler-Andrae State Park, Sheboygan, WI – January 2022 photo by Nick Schroeter Photography

Wrongo rarely delves into religion, but since Pope Francis had comments on the slowing global population growth, Wrongo has thoughts. From the Guardian:

“In a move likely to raise the hackles of millions of cats, dogs and their human cohabitees, Pope Francis has suggested that couples who prefer pets to children are selfish.”

The Pope said that owning a pet instead of having kids meant that:

“…civilization grows old without humanity because we lose the richness of fatherhood and motherhood, and it is the country that suffers”.

Ouch. As someone who has had both children and dogs, Wrongo knows that taking care of a pet is far from selfish. As Bloomberg’s Lara Williams said:

“…the Pope could do better than to rhetorically kick puppies. There are solid economic reasons for the decline of birthrates across the world, and they need addressing.”

This isn’t a new trend. Despite optimistic predictions for a post-pandemic baby boom, last year, the US recorded the lowest rate of population growth since we began gathering data. In the year from July 2020 to July 2021, only 392,665 people were added to the US population. That’s about a tenth of one percent growth. It’s also the first time since 1937 that the population grew by fewer than 1 million people.

Here’s Bloomberg’s graph of our reproductive performance:

Meanwhile, pet ownership has been increasing, especially among younger generations. The American Pet Products Association’s annual survey revealed that millennials are now the biggest cohort of American pet owners. A 2021 AlphaWise survey revealed that 65% of 18-to-34 year-old Americans plan to acquire or add another pet in the next five years, driving a predicted 14% increase in US pet ownership by 2030.

But the falling birth rate is concerning. According to the US Census Bureau the proportion of married couple households with children fell from 40% in 1970 to 20% in 2012. While seven in 10 households included a pet.

So why are people delaying having children? A Morning Consult survey revealed that, no surprise, money is the top reason for millennials being childless, followed by the other key ingredient to starting a family: a willing and appropriate partner. The poll showed that 38% of millennials say that children are too expensive, while 33% of millennials said they hadn’t found a suitable partner.

Millennials face more economic hurdles than the older generations: high levels of student debt, stratospheric real estate prices and career instability all have been exacerbated by the pandemic. The recent rise in inflation also makes the cost of living, and thus the costs of raising a child, more expensive.

Here’s the comparison of the average cost of raising a child versus owning a dog. Pets are way cheaper:

This shows that pets aren’t cheap, but they’re far less expensive than having a child. The lifetime cost of a dog is just 15.6% of the cost of a baby. Cats are cheaper, but that isn’t necessarily a reason to choose to have one in your life.

The cost differential makes it clear why millennials might not feel financially secure enough to bring a child into the world, while the financial costs of adopting a pet is much more achievable. A few things to remember:

Pope Francis took the name of the patron saint of animals
Having children is a choice, it shouldn’t be an obligation
Catholic opposition to birth control and abortion rights hasn’t led to “loving families”

The Pope shouldn’t weigh in on the intensely personal decision about whether to have a child, any more than parents, or family friends should. And the Pope shouldn’t be condemning the childless pet owners of the world as selfish when people are simply struggling to make good life choices.

He, along with politicians, should be committed to doing more to tackle the underlying reasons why the people who might want children feel that they have to delay it.

Time to wake up, Pope Francis! How many times does the Roman Catholic Church need to hear that they should stay out of people’s bedrooms?

To help him wake up, let’s all listen to Billy Bragg perform “Ten Mysterious Photos That Can’t Be Explained‘ from his 2021 album, “The Million Things That Never Happened”. In the 1980’s, Bragg was described by Rolling Stone as “a contemporary, urban British folksinger”. Still true today:

Sample Lyric:

The conspiracy acts
The cyberchondriacs
Gripped by their fevered imagination
They switched the filters off
Too much is not enough
You know that you can overdose on information

But you know that you can’t overdose on The Wrongologist!

The Coming Wealth Transfer

The Daily Escape:

Storm at North Clear Creek Falls, CO – April 2021 photo by mattbnet

Our current economic worries tend to overlook that Baby Boomers are retiring in increasing numbers, and quite a few are beginning to die. They’re leaving a giant pile of money to their heirs, what the media have called “the greatest wealth transfer” in modern history. OTOH, we should remember that it will probably cost $500,000 to pay the projected private college tuition in 20 years.

From the WSJ: (emphasis by Wrongo)

“Baby boomers and older Americans have spent decades accumulating an enormous stockpile of money. At the end of this year’s first quarter, Americans aged 70 and above had a net worth of nearly $35 trillion….That amounts to 27% of all US wealth, up from 20% three decades ago. Their wealth is equal to 157% of US gross domestic product, more than double the proportion 30 years ago…”

It gets better: In a 2019 report, Cerulli Associates projected that older generations would hand down some $70 trillion between 2018 and 2042. Roughly $61 trillion will go to their Millennial and Gen X heirs, with the balance going to philanthropy.

Millennials, (at least, some Millennials) are one day soon going to be a lot richer than they are today. A key question is whether this new-found wealth will change them. Looking at Millennials’ voting patterns, they gave Biden about 60% of their ballots in 2020, while voters over 45 gave him 48%. In Blue America, it was even more striking. Voters under 40 voted overwhelmingly for Bernie Sanders in both of his Democratic nomination bids.

Turning to wealth, Millennials’ have relatively meager financial assets. The St. Louis Fed calculated that in 2016:

“…the typical older Millennial family was 34% poorer than we would have expected”

Millennials’ home ownership rate trails their predecessors at the same point in their life cycles, with roughly half of millennials still paying rent. Such statistics have led a few headline writers to declare Millennials “one of the poorest generations ever.”

Many in politics think that the Millennials will remain political lefties and that they will soon be the most politically influential generation. But if Millennials do retain their leftist leanings, it won’t be because of their lack of wealth. When the Boomers finish their wealth transfer, Millennials will go from the poorest to “the richest generation in human history.”

Will this change their politics to be more like those of their Boomer parents? Will the family “trickle down” of wealth redraw the lines in American politics? That’s doubtful. The impending wealth transfer will be regressive: A Federal Reserve study of intergenerational transfers in the US found that Americans in the top 10% of the income distribution were twice as likely to receive an inheritance as those in the bottom 50%.

But even though the wealth transfer is concentrated at the top of the pyramid, some of it will reach a broader base. Capitol One estimates that more than half of the estates that will transfer over the next 30 years will go to low or middle-income households.

That means a substantial group of lower income Millennials are going to get some money from their parents.

About 48% of Millennials own their homes. Those who secured homeownership early have generally seen their net worth rise: Between 2015 and 2020, the median sales price for a US house increased by 14.5%. And of course, one Millennial’s rising home equity is another’s rising rent.

College-educated Millennials are much closer to matching the Boomers’ rate of saving than non-college-educated Millennials. And the racial divide in Millennial wealth is huge. White Millennials lag White Boomers in wealth accumulation by just 5%. Black Millennials, meanwhile, own 52% less wealth than previous generations of Black Americans had accrued by their age. Worse, Black Millennials have been losing ground on their predecessors in recent years.

The “great wealth transfer” will exacerbate all these inequities. Wealthy, White Millennials will claim a massively disproportionate share of the impending inheritances and gifts. And as familial wealth is transferred, the Millennial rich and upper-middle class will be the wealthiest generation that America has ever known. While working-class Millennials, meanwhile, are poised to enjoy less economic security than their parents, as their wages fail to keep pace with the rising costs of housing and health care.

Wrongo’s and Ms. Right’s kids stand to inherit a significant chunk of change if we were to die today. The missing piece of this analysis is that we don’t know how long we will live, and what long term care will cost to keep us going. That may eat up a significant amount of the money we’ve saved in our lifetime.

But let’s hope that whether it’s a little money or a lot, it won’t stop them from fighting for universal health care and an expanded right to vote.

Let’s also hope that they won’t suddenly start voting for a death cult peopled by morons and Ted Cruz.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Millennials

Monday Wake Up Call – January 10, 2022

The Coming Wealth Transfer