GOP Asks “Hillbilly Elegy” Author To Run For Senate

The Daily Escape:

Snow in the Sahara Desert, Algeria. The snow lasted only a few hours on the ground, since the average low winter temperature is 54°F – 2018 photo by Zinnedine Hashas

With the speculation about Oprah as a candidate, we knew it wouldn’t be long before the Republicans dredged up a celebrity non-politician too. Politico is reporting that Mitch McConnell wants JD Vance to run for the Senate in Ohio against Dem incumbent Sherrod Brown:

Top Senate Republicans have quietly reached out to J.D. Vance — the star author of “Hillbilly Elegy” — about running for Senate in Ohio after the abrupt withdrawal of GOP candidate Josh Mandel last week… McConnell has told associates that he would prioritize the race if Vance jumps in.

McConnell has a good idea. If Vance runs, he is interesting enough to force Democrats to defend an otherwise safe Senate seat. People seem to think Vance is a white working class whisperer.

Wrongo and Ms. Right were persuaded by many Eastern Liberal Elite friends to read Mr. Vance’s book. The pitch was that Vance explains to liberals why white Trump voters from southeastern Ohio and West Virginia wouldn’t vote for Hillary, and don’t lean progressive in their politics.

Maybe. Wrongo thinks that by writing his book, JD Vance was just pushing propaganda that fits the policy preferences of leading Republicans. Try reading this:

We spend our way into the poorhouse. We buy giant TVs and iPads. Our children wear nice clothes thanks to high-interest credit cards and payday loans. We purchase homes we don’t need, refinance them for more spending money, and declare bankruptcy. . . . Thrift is inimical to our being.

Or, this:

We choose not to work when we should be looking for jobs…

Vance’s stereotypes are shark bait for conservative policymakers. They feed the mythology that the undeserving poor make bad choices and are to blame for their own poverty, so why waste taxpayer money on programs to help lift people out of poverty? After all, Vance got out of hillbilly Ohio without them.

People shouldn’t decide policy based on Vance’s anecdotes; they should care about the bigger picture. After all, are conversations with cab drivers a sound basis for economic and geopolitical policy?

It is depressing that Vance places so much blame on welfare rather than, say, neoliberalism and corporatism. They are the ideologies that moved jobs offshore. Their firms leveraged, and later bankrupted manufacturing firms in the heartland. They are the ones who precipitated the economic holocaust in Middle America.

And despite what Vance tells us, most poor people work. Of the families on Medicaid, 78% include a household member who is working. People work hard in jobs that often don’t pay them enough to live on.

After graduation from Yale, JD Vance became a venture capitalist. First, he worked in Silicon Valley for Peter Thiel, and now works for Revolution LLC, a Washington, DC-based venture capital firm, co-founded by AOL founders Steve Case and Ted Leonsis.

It is fair to say that Vance’s hillbilly days are way back in the rear-view mirror. Yet, he remains naïve. He was on “Face The Nation” on December 31st, talking about the Trump tax cut:

When the president talks about tax reform, he talks about the people who will benefit…He talks about American jobs. He talks about the fact that we’re going to be taking money that’s overseas and bringing it back to the US so that it will employ American workers. I think that focus again on the American working and middle class is- is-is to me the most thoughtful and, in some ways, the most genius part of Trump’s approach to politics.

Vance just revealed himself to be another reptilian conservative. We should remember this quote from economist J. K. Galbraith:

The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.

The grift goes on.

 

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Monday Wake Up Call – January 8, 2018

The Daily Escape:

Frozen Waterfall in Adirondacks – 2018 photo by I_am_Bob

A December 29th WSJ article charted the growing gulf in health and well-being between urban and rural America:

About 1 in 7 Americans live in rural parts of the country—1,800 counties that sit outside any metropolitan area. A generation ago, most of these places had working economies, a strong social fabric and a way of life that drew a steady stream of urban migrants. Today, many are in crisis. Populations are aging, more working-age adults collect disability, and trends in teen pregnancy and divorce are diverging for the worse from metro areas. Deaths by suicide and in maternity are on the rise. Bank lending and business startups are falling behind

These rural counties now rank the worst among the four major US population groupings (the others are big cities, suburbs and medium or small metro areas). In November 2016, these rural districts voted overwhelmingly for Donald Trump, based in part on his pledge to revive these forgotten towns by scaling back trade agreements, ending illegal immigration and encouraging manufacturing companies to hire more American workers. He also promised a $1 trillion infrastructure bill that would help create jobs, but, like the other promises, it may never become a reality.

Back in the late 1970s – 1980s, the nation’s basket cases were its urban areas. A toxic stew of crime, drugs and suburban flight made large cities the slowest-growing and most troubled places. But violent crime in the cities (despite claims by a well-known, Very Stable Genius) have declined to the point that there no longer is any “safety premium” from living in rural America.

Today, by most key measures of socioeconomic well-being, the largest cities are as safe, and are much wealthier than our rural and small metro areas.

For decades, America’s small towns barely grew. Rural families had just enough children to offset losses from those who left, and those who died. The decline in median household income is reflective of that trend. The graph below is based on census data. It shows that household incomes (adjusted for inflation) peaked around the end of the Clinton administration and continue to decline, and not just in rural areas:

 

 

These rural parts of America are caught in the vise of limited economic opportunity coupled with terrible health outcomes.

About half of these counties would be called “failed states” if they were countries, meaning that the infrastructure of skilled labor, healthcare, privately owned commerce and aggregate demand for goods and services are not enough to make them economically viable.

Education gaps also have long-term consequences. More jobs, particularly full-time jobs with benefits, require a bachelor’s or advanced degree. Without a larger share of college graduates, small towns have little hope of closing the income gap.

Solution? We need to create a way to finance those who might be willing to move to economically viable regions. Many people today can make a living just by being connected by phone and internet.

If they were to choose to reside in a rural town, they would become an economic generator, helping these communities that truly need the help. If the nascent infrastructure proposals by the GOP include building up our nation’s broadband system, it could help to support a dispersed work group more easily.

Every demographic region except rural America has improved on most quality of life measurements. In those aspects where things have gotten worse, such as diabetes and suicide rates, rural America has the highest rates.

Time for America to wake up: We need a Marshall Plan right here at home to renovate our small towns and rural areas. To help you wake up, listen and watch the Philadelphia sextet The War on Drugs perform “Holding On” from their 2017 album “A Deeper Understanding”. Watch the atmospheric video:

Takeaway Lyric:

I went down a crooked highway
I went all outside the line
I’ve been rejected, now the light has turned and I’m out of time

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

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Distressed Communities: Another Divide In America

The Daily Escape:

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

The report concludes by saying:

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

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

And now, time’s up.

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

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Socializing The Losses: Part Infinity

The Wrongologist often writes about privatizing profits and socializing losses, a system where businesses and individuals can benefit from the profits earned by their business, while the public gets stuck with the consequences, the long-term bill. Governments all over America play into this, from doing deals to bring or keep jobs in the state, to underwriting the costs of sports areas, to building infrastructure when a new business comes to town.

Here is another object lesson in socializing the losses. Some towns in North Dakota (ND) are beginning to worry about the debt that they have incurred to build infrastructure to support the boom in shale oil production.

Oil Price reports that oil production in ND exploded in the past five years to well over a million barrels/day, making North Dakota the second largest oil producing state in the country. The likely fallout from the recent fall in oil prices may have serious financial side effects for ND’s towns.

Consider Williston, ND, a town in the center of the shale oil patch that finds itself planning for the worst. The town is deciding how to cope with $300 million in debt, money it borrowed to build infrastructure to meet the rapid growth of people and equipment working in the oil patch. That meant building new roads, schools, and a water-treatment plant, all of which were paid for by the city. The debt was expected to be repaid from increased sales and real estate taxes that suddenly may not be flowing into local and state coffers.

Williams County Commissioner Dan Kalil told NPR that he fears the town has overreached and won’t recover quickly, as global demand for oil is expected to grow slowly over the next few years, and shale oil prices may not bounce back to the mid-2014 levels. He may be correct. Production is down about 5% from its all-time high of 1.2 million barrels per day in December 2014. But more declines are expected with drillers pulling rigs and crews from the field. Rig counts in ND have fallen to 76, far below the 130 that state officials believe is needed to keep production flat.

And ND is experiencing the negative side effects of an oil boom. The huge increase in drilling brought a wave of cash and people to once sleepy towns, fueling a boom not only in oil, but also in crime, prostitution, and drug trafficking. Consider that Williston went from a population of 14,000 in the 2010 census to an estimated 24,000 in 2014.

On June 3rd, the US DOJ, in conjunction with ND’s Attorney General, announced the creation of a “strike force” that would target organized crime in the state. The effort is a direct response to the rise in crime in the shale oil field towns in ND and Montana, which has been fueled by:

Dramatic influxes in the population as well as serious crimes, including the importation of pure methamphetamine from Mexico and multi-million dollar fraud and environmental crimes.

Too many people, too much money, too little economic security in the local economy. The weak oil players pull out, and the debt, crime and now unemployment, remain. And the towns and state government have to sweep up after the companies go.

That’s not all. The boom/bust cycle makes estimating the future population of Williston difficult. How many kids and spouses of oil field workers will settle permanently in the area? Does the school district build, or stand pat? Will more classrooms be paid for by more taxes, or will they be a money loser? In a boom, most oil field workers are temporary; towns need permanent residents in order to build schools.

Even if a semblance of the oil boom returns, and Williston attracts more workers who come to stay, Dan Kalil fears another boom would mean even more people, traffic and crime.

So, who pays? The taxpayers. The people who don’t pull out when the companies leave. The people who stay have to cover the hole in the budget, and tolerate fewer services when the money guys hit the road. Williston isn’t Detroit, but in both cases, the little people are left holding the bag.

Once again, a town makes a long-term investment, hoping for a return down the road in the form of increased sales taxes and property tax revenues. They sacrifice quality of life, looking for a return in the form of more and better jobs, and better house values. They pay higher prices for most things.

On the other hand, Williston’s Walmart is hiring at $17/hour.

But when you think about it, that is now a subsistence wage in Williston.

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What Should We Do with Extra Firefighters?

A little known fact is that over the past 40 years, the number of fires in the US have dropped dramatically. Consider this chart from Vox, based on data from the National Fire Protection Association (NFPA):

Fires in US

 

The number of fires responded to by municipal fire departments in 2013, about 1.2 million, is roughly a third of the 3.3 million responses in 1977. Note that these numbers don’t include wildfires, which aren’t dealt with by local fire departments and as Vox reports, keep getting worse.

And since the US population has increased by 44% during that same period, this is a pretty remarkable trend. It seems that most of the improvement can be attributed to things we would expect: stricter fire codes, fireproof building materials, cars that catch on fire less often, and installation of protective devices like smoke alarms.

Yet, during the same period, the number of firefighters has increased:

# of paid firefighters

 

Paid firefighters have increased by roughly 48%, from about 230k in 1986 to about 340k in 2012, in line with the population growth. The number of volunteer firefighters has remained the same. We now have more firefighters fighting fewer fires. So, what are all these firefighters doing?

Firefighters now respond to many more medical calls per year than actual fires. In fact, the chart below shows that fires and false alarms held steady or declined, while medical calls grew from 5 million to about 22 million by 2012. There is also a slightly better chance that the fire engine is responding to a false alarm than to a fire:

What FF do The decline in fires has put firefighters in a curious position. What should they be doing to justify their (in most cases) growing budgets? Vox quotes Libertarian economist Alex Tabarrock of George Mason University:

Firefighters face what I’ve called the ‘March of Dimes’ problem. After polio was cured, the March of Dimes looked around and said ‘what do we do now?’ Firefighters have been facing the same problem.

Now, there is little in city life that is more reassuring than walking past the neighborhood fire house. It reminds us that there are people in our employ who are ready to strap on equipment and head into danger to help out one of our neighbors. But it wasn’t always that way:

The Wrongologist may be one of the last persons who remembers when homeowners paid a fee to a for-profit fire department to protect your property. That was in Brooklyn, NY in the early 1950’s. The fire company placed a medallion on the homes of their “clients”, and didn’t protect any homes without medallions. There was no public FD service in that neighborhood until the late 1950’s.

The Boston Globe reports that the Boston FD accounts for 7.5% of the city’s total budget, while NYC spends $1.72 billion on its FD. It is difficult to tell people that fewer firefighters will keep them just as safe, and the political fall-out for any mayor who tries to dramatically reduce firefighter head count would almost certainly be gruesome. Talk about poking the bear.

But what is the highest and best use for idle firefighters? Could cities work to slowly transfer firefighters to EMT, Park Rangers, Inspection Services or other city jobs? What about the pay differences? There are always efficiencies to be gained in public jobs. It seems sensible to start reducing staffing levels and adjust the number of fire stations, given the occurrence of fires.

Efficiencies might be found by using better processes, such as integrating the dispatch services operated by EMT and Fire, or by using different tools. For example, if cities want to use firefighters as extra paramedics, maybe sending smaller trucks or motorcycles equipped with oxygen for cardiac situations, might be workable. The motorcycle would likely get on site sooner, and the crackerbox EMT truck could follow behind for transportation of a patient to hospital. There would always be some extra portly people who can’t be carried down 5 flights of stairs by 2-3 people, so they would have to wait for reinforcements. But there should be no need to dispatch a fire truck just to be sure more lifting power is available if needed.

Natalie Simpson, a SUNY Buffalo professor who studies the history of emergency response, says that because of the nature of the demands we put on fire departments, we can’t really shrink their ranks, and there are problems with putting them in different vehicles too:

If you say, ‘there’s very few fires, so we don’t need as many firefighters or fire engines,’ a fire is still eventually going to break out…And without the same response resources, you’re going to have the same number of very few fires, but some of them are going to become catastrophic.

Her view is that we need to have a surge capability to respond in any given area to make sure that the few fires that do occur can be put out quickly. We can model those issues as we ALWAYS do in the private sector, to determine optimal staffing and equipment for the required level of response.

No one should be saying that firefighters aren’t heroes, or that they didn’t show amazing teamwork and bravery when on the scene of a fire. But all that bravery should not by itself, justify inefficient numbers. Every dollar we can save is a dollar that can be better used elsewhere.

 

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