Poor Economic Recovery – The Wrongologist

Saturday Soother – March 6, 2021

The Daily Escape:

Castle Hill Lighthouse, Newport, RI – photo by Ray Dickson

A few random Saturday thoughts: The Capitol wasn’t invaded by hordes of Trump dead enders on Thursday demanding that their leader assume the presidency. But the House of Representatives was fearful enough to take the day off. So mission accomplished!

Second, those dead enders were probably too busy digging through their mom’s basements looking for their old Dr. Seuss books. They heard that Dr. Seuss has been “cancelled” by Biden and the Democrats. According to Fox News’ Brian Kilmeade:

“The cancel culture is canceling Dr. Seuss….It’s out of control.”

There’s nothing like a culture war to distract the Republican rank and file from noticing that none of their House and Senate representatives voted for the Covid Relief Bill or for HR 1.

Dr. Seuss Enterprises is a private company. It made a private business decision about its private property, taking six Seuss books out of circulation. Republicans, those stalwart defenders of private property and free-market capitalism, of course, are going nuts.

OTOH, the Dr. Seuss tempest is capitalism in action. Dr. Seuss Enterprises is minting money off the conservative backlash to the sidelining of his six racist books: Nine of the top ten bestselling books on Amazon right now are Seuss books that aren’t being “cancelled”.

Third, on the economic front, we added 379,000 jobs in February, outpacing expectations. But we’re still about 9.5 million jobs behind where we were one year ago, before the pandemic hit. Even if we were to continue adding jobs at last month’s rate, it would take two full years just to get back to that level.

That should tell us that the only real answer to the jobs crisis is containing Covid. Too bad so many Republican governors are all about undermining that effort by refusing mask mandates. Here’s a map showing the states that have no mask mandate:

It shouldn’t be news that ALL these states have Republican governors, including WY and KS, who have limited mask mandates.

Fourth, here’s a great chart showing how many hours it took to pay rent back when the $7.25 minimum wage was new and how long people have to work for the same space now:

Source: WSJ

Back in 1968, no minimum wage worker had to work more than 20 hours/week to make rent. The chart makes it clear that even if a $15/hour minimum wage is passed, only workers in Toledo OH would be better off than they were in 1968. So, why can’t Republicans see this? Who are they afraid of? Certainly not their own economically distressed voters. Shouldn’t they get on board and say it’s time to pass the $15/hour minimum wage?

But enough of all that ails us, it’s Saturday, and time to take a break from the big questions of the day, and concentrate on smaller things, in other words, a Saturday Soother. Here at the Mansion of Wrong, we have finally taken down our Christmas tree. Since it’s a faux tree, we have zero dead needles on the floor.

We’re also looking forward to setting up our new treadmill today. Because of the pandemic, these babies are in short supply. The delivery team said yesterday that we were their 12^th stop of the day. Should have bought stock in that company.

Today we’re brewing up your coffee from the Brooklyn Roasting Company in Dumbo, on Brooklyn’s coffee waterfront. Today, let’s pop the top on a 12 oz. can of their 3D coffee, ($15) with its notes of berry, dark chocolate, and honey. The roaster says it pops out and pulls you in.

Now take a seat by a window and listen to “Meditation” from Jules Massenet’s opera, “Thaïs”. It is based on the novel “Thaïs” by Anatole France and was first performed in Paris in March 1894. Here it is played by Nathan Farrington on Bass, and Allison Allport on Harp, not the more traditional violin or orchestral version:

BTW, Wrongo checked, and today is the fifth time he’s featured the “Meditation” on a Saturday. He must really like it. If you’ve never listened to it before, please try it today!

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.

Getting Past Charlottesville

The Daily Escape:

Upper Peninsula MI, 2017 – photo by Otto Heldring

There’s a depressing overtone to Charlottesville that suggests the arc of history is the energy behind the story. Is the nation’s soul about to be divided as it has been many times before? Americans get two chits: One for the ballot box, and another for the soap box. Many people feel compelled to use both. The existential question is how best to use them.

The Charlottesville incident left a woman dead, and many others badly injured from a car-ramming. It has the flavor of a “first shot” in a new civil war. And the president’s criticisms of counter-protesters in Charlottesville seem to be far outside the mainstream. Frank Bruni, NYT:

We’re stuck for now with a morally bankrupt plutocrat for president, someone so defensive and deluded that he’s urging more nuance in the appraisal of neo-Nazis.

Still, many Republicans have been reluctant to condemn Trump’s Charlottesville rhetoric. The right would do well to excise any association with the Hitlerites who chanted “blood and soil” in their torch-lit pseudo Nuremberg rally in Virginia. America remains the land of the free and the home of the brave, but Nazis? Nein, Danke.

We have two conflicts arising from Charlottesville:

Does every group still have the right to assemble (peacefully) and speak their minds?
What are we to do about the symbols from our divided past?

The 1st Amendment protects most speech, but not the sensibilities of those who are exposed to it. Some speech is guaranteed to be offensive. America has lived with neo-Nazis, the KKK, et al for Wrongo’s entire lifetime, and has survived it, no matter how odious. Even the ACLU assisted the neo-Nazis in Charlottesville.

But there are recognized limits. No one has a right to incite violence. Individuals have no right to defame someone. Some of the limits are easier to define than others: The concept of inciting a riot can lead to a subjective reading of the facts and the application of nebulous standards.

Today’s wrinkle are the armed demonstrators. They imply that a peaceful assembly could be placed at grave risk at any moment. It shouldn’t be difficult to foresee that local people will come out to confront neo-Nazis and white supremacists that are marching in their town. That creates even greater risk of physical violence, and requires that local police are well-trained and disciplined.

Second, there are Confederate statues all over America. The white supremacists who went to Charlottesville to “protect” Lee’s statue need to hear that we will not re-litigate the Civil War. The south’s and the nation’s history are what they are. The Civil War should be given due weight, learned from, pondered, and not shunted aside. Are Robert E. Lee’s existence, deeds, and historical relevance news to anyone?

A suggestion: In Bulgaria, the USSR monuments were removed and placed in a single museum park. The museum’s collection covers the period 1944 to 1989, from the introduction of communism in Bulgaria, to the end of the totalitarian regime. Herding those statues into one place makes a statement that speaks loudly about the era, and how the USSR deprived Bulgarians of their rights.

Maybe a few such statue parks could have a similar effect here.

Let’s not get sidetracked from the most important issue before us: How we remake the US economy so that it provides a decent standard of living and expanding opportunity to as many people as possible.

There are plenty of “deplorables” who would benefit from universal health care, inexpensive college tuition for their children, infrastructure that worked, and good-paying jobs. Uniting the US population around programs that achieve these goals would do much to subdue the angry ethnic divisions that these “political entrepreneurs” are trying to foment.

Moreover, this program is not of the right or the left.

It’s a path toward political stability and a better society – one that would allow people the opportunity to develop into contributing, thoughtful citizens, capable of fully participating in the Republic.

Ok, a tune to help you think about peaceful assembly and whether the statues should stay or go. Here is Depeche Mode with “Where’s The Revolution” from their 2017 album “Spirit”. Wrongo didn’t know they were still working, much less producing relevant tunes:

Takeaway Lyric:

You’ve been kept down
You’ve been pushed ’round
You’ve been lied to
You’ve been fed truths
Who’s making your decisions?
You or your religion
Your government, your countries
You patriotic junkies

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

IMF Reports US Standard of Living is Falling

The Daily Escape:

Haleakala Crater, Maui

Is it the best of times or the worst of times? This is no longer a partisan discussion. We have an economy in the midst of a long expansion, the third longest since 1850. The statistics say we are close to full employment. But, our mortality rate is moving in the wrong direction, and we have an opioid epidemic that is serious enough to cause jobs to go unfilled. The NYT reports that in Youngstown Ohio, middle class factory jobs go begging:

It’s not that local workers lack the skills for these positions, many of which do not even require a high school diploma but pay $15 to $25 an hour and offer full benefits. Rather, the problem is that too many applicants — nearly half, in some cases — fail a drug test.

The Fed’s regular Beige Book surveys of economic activity across the country in April, May and July all noted the inability of employers to find workers able to pass drug screenings.

So the best of times? Probably not. Bloomberg reports that the International Monetary Fund (IMF) looked at the US economy. This is what they see:

For some time now there has been a general sense that household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy. This sense is generally borne out by economic data and when comparing the US with other advanced economies.

The IMF then goes on to compare the US with 23 other advanced economies in the Organization for Economic Cooperation and Development (OECD) in this chart:

The chart is a bit of an eye test unless it’s viewed on a big monitor, but its overall point is that the US has been losing ground relative to its past OECD reports by several measures of living standards. 35 countries make up the OECD. The members include all of Western Europe, Russia, Japan, Australia, and several developing nations like Korea and Panama.

This from Bloomberg:

And in the areas where the US hasn’t lost ground (poverty rates, high school graduation rates), it was at or near the bottom of the heap to begin with. The clear message is that the US — the richest nation on Earth, as is frequently proclaimed, although it’s actually not the richest per capita — is increasingly becoming the developed world’s poor relation as far as the actual living standards of most of its population go.

This analysis is contained in the staff report of the IMF’s annual “consultation” with the U.S., which was published last week. The IMF economists haven’t turned up anything shocking or new, it’s just that as outsiders, they have a different perspective than what we hear from our politicians and economists.

For example:

Income polarization is suppressing consumption…weighing on labor supply and reducing the ability of households to adapt to shocks. High levels of poverty are creating disparities in the education system, hampering human capital formation and eating into future productivity.

What is to be done? Well, the IMF report concludes:

Reforms should include building a more efficient tax system; establishing a more effective regulatory system; raising infrastructure spending; improving education and developing skills; strengthening healthcare coverage while containing costs; offering family-friendly benefits; maintaining a free, fair, and mutually beneficial trade and investment regime; and reforming the immigration and welfare systems.

In other words, they suggest substantial reform. It’s doubtful that America can take care of these things anytime soon.

The subtext to most of their suggestions is that other affluent countries have found ways to improve in these areas, while the US has not. We don’t have to look too far into the past to see when those countries were modeling their economies on ours. But today, on all sorts of issues, like taxation, labor markets, health care, and education, the opposite is now true.

One major difference between the US and the rest of the developed world is ideological: Voters and politicians in the US are less willing to raise taxes to finance a better life for our citizens.

Other wealthy countries have figured out how to raise revenue, provide quality education, help the the unemployed, reduce poverty, and keep their citizens healthier than America has.

We must catch up, or admit our time as the world’s indispensable economy is over.

Today’s music (dis)honors the turmoil in the White House. See ‘ya Mooch! Remember that in just six months, Trump has gone through two National Security Advisers, two Chiefs of Staff, two Communications Directors, two Press Secretaries, and two Directors of the FBI.

Here is “Disorder in the House” by the late Warren Zevon and Bruce Springsteen:

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

Democrats Have Failed

The Daily Escape:

Lavender in Provence – 2017 Photo by Fabio Antenore

This week, Wrongo wrote that 50% of US births are paid for by Medicaid, and how worry about hunger and homelessness has never been higher among Americans. Both of these issues are symptoms of how our economy fails low-income and lower middle class Americans, and neither political party is truly interested in addressing the problems.

Trump won because he led people who used to vote for Democrats to believe that they had nothing to lose if they voted for him. Below-median income voters had long ago lost faith that Democrats, and Hillary in particular, would ever do anything to change their plight.

Trump said he would look out for them. Whether he does or not, remains an open question, but even before Trump, Democrats had already lost a big swath of America. From the American Prospect:

In the race for the White House, the Democratic presidential candidate has won…fewer US counties with average incomes under the national median and with populations that are more than 85% white in every general election since 1996. Concentrated in the Midwest, Appalachia, and the upper Rocky Mountains, there are 660 such counties today. Hillary Clinton won two of them.

Think about that: The Democratic Party’s influence in mostly white, lower-income America has eroded to nearly nothing since Bill Clinton was president. This chart documenting their fall is stunning:

The Parties basically split below-median income counties that were 85% white in 1996. Over a 20-year period, the erosion of the Democrats’ control was steady, and complete. This isn’t just the result of a poor 2016 presidential candidate, it is an indictment of the Democratic Party, its leadership, and its strategy.

The American Prospect article is about Montana’s Democratic Governor, Steve Bullock, who won his state by 4 points while Trump was beating Clinton by 20. Bullock is a rural populist in a party of technocrats. Obama lost Montana by 2 points in 2008. Bill Clinton won Montana in 1992.

But, the electoral failure of Democrats is worse than its showing in these below-median income white counties. The following graphically illustrates the abject failure of Democrats to be competitive in political contests at all levels:

Nothing that Barack Obama did by holding on to the White House for that entire period compensates for these terrible losses.

Democrats remain divided about their Party strategy, many clinging to the thought that if Hillary could have turned about 80k voters in Michigan, Pennsylvania, and Wisconsin, where white working-class people are abundant, she would be president.

But she would not control either legislative branch, and she would have had to propose Supreme Court Justices similar to Neil Gorsuch to get one confirmed by the Senate.

The question is where will the DNC be taking the Party in 2018? In a 2018 mid-term election where the president has a historically poor approval rating with independents and Democrats, like Trump has now, victory is possible.

If Democrats want to win back Congress, and the White House in 2020, they need to field candidates who believe in jobs and economic growth first. The candidates need to be authentic people, who listen more than they talk. And when they do speak, they should use PIE as a metaphor for America’s economy, as in: (H/T Seth Godin)

How big is the pie?
Is the pie growing?
What will my share of the pie be tomorrow?
Who allocates the slices of pie? Can they be trusted?

When voters think the economy isn’t growing, things begin to feel zero-sum. People begin to think that they may permanently lose their place in our society.

If the Democrats want to win back Congress, they need to describe concretely what they plan to do when they say they support their working-class constituents, regardless of color.

They need to get to be better than Trump on jobs, economic growth and finding a peace dividend.

All of that, and Medicare for all. In Wrongo’s Thursday column, Gallup found that health care concerns ranked highest across all income cohorts.

Shouldn’t these principles be credible with working-class people—including whites?

A song about pie: Here is D’Angelo with “Devil’s Pie” from 1998. It’s a dystopian vision of capitalism, where everybody’s fighting for more of the tasty, materialistic dish. All is fair in pursuit of a bigger paycheck:

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

Takeaway Lyric:

Fuck the slice we want the pie
Why ask why till we fry
Watch us all stand in line
For a slice of the devil’s pie

Worry About Hunger and Homelessness Higher Than Ever

The Daily Escape:

White-Faced (Capuchin) Monkey, Costa Rica, 2015 – photo by Wrongo

The American economy has never been very kind to people at the lower income levels. In most ways, since 2008’s Great Recession, the economy has become riskier, and more tension-filled for lower income Americans, those making $30,000 or less per year. Nothing makes this clearer than this Gallup poll conducted March 1-5, 2017. Gallup surveyed 1,018 adults in all 50 US states. From Gallup:

Over the past two years, an average of 67% of lower-income US adults, up from 51% from 2010-2011, have worried “a great deal” about the problem of hunger and homelessness in the country.

Will Take-Home Pay Grow?

One of the big questions that we must force Hillary Clinton and Donald Trump to address is: Where will growth in take-home income come from?

If we look at pay, despite recent improvements, real average hourly earnings have declined since the 1970s:

Real Hourly Earnings 2016

Source: Advisorperspectives.com

At the same time, the average hours per week have trended down from around 39 hours per week in the mid-1960s to a low of 33 hours at the end of the last recession. It is 33.7 hours today. After eight years of economic recovery, it is only up by 42 minutes.

So, take-home pay has stagnated (or worse) for the average American since the Nixon administration. People have coped by having both spouses work, by borrowing under a Bank of America heloc, and by refinancing mortgages when interest rates declined.

But, by 1995, spousal participation in the job market had peaked, at about 60%. Borrowing under home equity lines of credit peaked in 2005 at $364 billion. These loans that were used to pay for remodeling, education costs, or new Ford F-150s were less than half of that amount in 2015, at $150 billion.

After the Great Recession, The only remaining way to boost household cash was mortgage refinance. There were windows to refinance a mortgage in 2009, and again in 2013. The reason was that mortgage interest rates stayed very low. In fact, US 10 year treasuries were at a 60 year low in 2013 at 1.50%, and mortgage rates are tied to the treasury rate. Refinancing mortgages can happen to many people, this is where companies like Polar Mortgage come in to help homeowners out. Homeowners also have the ability to get financial help from the government through the use of federal credit union home loans in order to refinance their homes.

As an example, a 1.5% decline in a mortgage payment on a $250,000 house would save $3750 a year, or a little over $300 a month added to the pockets of the average hourly worker. Taking income tax into consideration, it would take an additional 17.5 hours of work at the $21.45 rate to equal that amount. But that’s not practical. It would require a 52% increase in hours, if you are working the national average number of hours, which isn’t going to happen.

So, if the Federal Reserve raises interest rates, as they seem set to do this month or next, mortgage refinance will no longer be helpful to the vast number of working people. CoreLogic tracks the interest rates on outstanding mortgages, collecting data from mortgage servicers. Their data track the volume of outstanding mortgages by interest rate level for both the number of mortgages, and the unpaid principal balance on those mortgages (UPB).

Their analysis says that few mortgages will be refinanced if rates go up: Most borrowers have mortgages with rates below 4.50%, with 62% of mortgages and 72% of UPB in this range. There are an additional 14% of borrowers and 13% of UPB with mortgage rates between 4.5 and 5.0%.

Since refinancing has costs (legal, title search and insurance, and points), a simple rule of thumb is to add 1% to the current mortgage rate to get a rate at which borrowers would have a financial incentive to refinance. The current Freddie Mac mortgage rate is 3.57%, so the point of indifference for a borrower would be ~4.5%. CoreLogic estimates that only about 28% of the UPB of America’s outstanding mortgage loans are worth refinancing today. And should the Fed live up to their plan, and increase rates by ½% in 2016, an additional 5.5 million borrowers will lose their incentive to refinance.

So, if mortgage rates rise in 2016 as predicted, refinancing won’t improve the financial situation for very many of us.

New Deal Democrat sees all of this and says:

So the bottom line is, we are already in a period…where real gains by average Americans won’t be available from financing gimmicks, but must come from real, actual wage growth. At the moment I see little economic or political impetus to make that happen, even though average Americans understand via their wallets the issue all too well.

We’ve killed our economy.

You’d think after 8 years where most US job growth was in part-time jobs, where hourly income is at the same level as in the Ford administration, where we have the most people ever in poverty, where student debt exceeds credit card debt and automobile debt, people would catch on.

Maybe, but not unless we demand real answers of Hillary Clinton and Donald Trump, and not let the candidates say the plan is to rearrange the deck chairs on the Titanic.

Monday Wake Up Call – November 23, 2015

Earlier in the month, the Wrongologist wrote a column asking: “Shouldn’t Democrats Be Doing Better?” Over the last few days, we have seen others ask the same question. Notably, Alec MacGillis asked “Who Turned My Blue State Red?” in Sunday’s NYT.

He pondered why poor areas vote for politicians who want to slash the safety net, and mentioned two major points: That the “have-littles” have no interest in helping the “have-nothings”, and that the “have-nothings” rarely vote.

MacGillis quotes State Auditor Adam Edelen, a Democrat who lost his re-election bid this year:

People on Medicaid don’t vote.

The numbers show that the bottom 20% in socioeconomic status aren’t voting for anyone, while the next quintile wages a class war aimed at their inferiors. The poorest aren’t voting to shred their own safety net, they’re not voting at all. They have been demobilized, and the middle and upper classes are taking advantage of low turnout to drive their political programs:

• Maine re-elected a guy who ran on a platform of not helping the poor
• Kentucky voted in a governor who will dismantle Obamacare
• Kansas re-elected a guy who has nearly tanked their economy, and got elected after promising to hurt them some more

Democrats were counting on Obamacare to galvanize the bottom quintile of the population in red states to vote for them by 2016, but it isn’t happening. One issue that MacGillis does not address is how the politics of resentment is fanned and fostered, mainly by right wing propaganda. Otherwise, why are people a few steps up from the bottom blaming the poor rather than blaming the rich, when it is the rich who have gamed the system, not the poor?

The answer is that they are victims of welfare queen paranoia.

Their perceptions have been manipulated over the past 30 years by a steady diet of social Darwinism, led by the GOP, the Club for Growth, Fox News, and others. But Democrats and progressives have failed to develop ANY effective counter that gives people a reason to vote, or to vote their economic interests.

And this may be a good time to point out that the arguments that helping the poor disincents them have little empirical foundation:

For as long as there have been government programs designed to help the poor, there have been critics insisting that helping the poor will keep them from working. But the evidence for this proposition has always been rather weak.

And a recent study from MIT and Harvard economists makes the case even weaker. Abhijit Banerjee, Rema Hanna, Gabriel Kreindler, and Benjamin Olken reanalyzed data from seven randomized experiments evaluating cash programs in poor countries and found “no systematic evidence that cash transfer programs discourage work.” Attacking welfare recipients as lazy is easy rhetoric, but when you actually test the proposition scientifically, it doesn’t hold up.

We know that most people form their opinions about whole groups of people (such as people living under the poverty line) from their anecdotal experience. They do not develop an understanding of the policies, or the statistics that describe the outcomes of specific policies.

Thus, well-known facts such as increasing the minimum wage doesn’t decrease jobs, and that Obamacare has not decreased jobs, are unknown to them.

There is no such thing as a well informed electorate, at least not in the US.

So, time to wake up American voters! To help you get the sleep out of your eyes, here is “The Times They are a-Changing” the great Dylan song interpreted by Flogging Molly, an American Celtic punk band from Los Angeles, led by Irish vocalist Dave King.

They add a sense of energy, hope and joy to Dylan’s old classic. Those who read the Wrongologist in email can view the video here.

The 1% Are Heading to Galt’s Gulch

(Galt’s Gulch was the sanctuary in Atlas Shrugged where Ayn Rand’s Real Men of Genius spurned American socialism for their own libertarian paradise.)

Welcome to the economy that has just turned the page. But not that page.

The World Economic Forum ended in Davos Switzerland. This is their 45th annual meeting at Davos. Who attends? 2,500 business leaders, politicians, diplomats and a few celebrities take part in the meeting. As in the past, 73% of the delegates are men, and almost 800 of the attendees are from the US.

According to CNN, most of the 1% flew in to Davos on private jets. Roughly 1,700 private flights landed in Switzerland, 5% more than last year. The Guardian reported that, for Davos insiders, the big story was the world economy, but this year, they weren’t concerned all that much about income inequality. From The Guardian’s live blogging at Davos: (emphasis by the Wrongologist)

A year ago, Davos attendees said income disparity was the top threat to world stability, as years of lobbying by the likes of Occupy Wall Street hit home. Today, though, the issue doesn’t appear in the top 10. The Ukraine conflict, and the turmoil in the Middle East, have elbowed it out.

However, another Guardian article described that many of the global oligarchs attending Davos are already planning their escape. These people know full well that the current game won’t last forever. Their response is to take as much money as possible, and flee before the pitchforks emerge. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were going to create an oasis of uber-wealth and then lock the doors:

I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.

They want to leave to live in a Galt’s Gulch of their own creation. And Hedge fund managers are just a small part of the Plutocracy. The concentration of wealth and ownership in very few hands is growing, and that process has reached epidemic proportions.

In fact, according to the anti-poverty charity Oxfam, the wealthiest 1% will soon own more than the rest of the world’s population. Oxfam’s research shows that the share of the world’s wealth owned by the richest 1% increased from 44% in 2009 to 48% last year. Based on the current trend, Oxfam says it expects the wealthiest 1% to own more than 50% of the world’s wealth by 2016.

But, hasn’t our economy turned the page? Apparently, the Davos 1% types are way ahead of the Obama administration. From Monday’s NYT: (Brackets by the Wrongologist)

The middle class has shrunk consistently over the past half-century. Until 2000, the reason was primarily because more Americans moved up the income ladder. But since then, the reason has shifted: [Now] there is a greater share of households on the lower rungs of the economic ladder.

The Times uses yearly income of $35,000 to $100,000 to define middle class. The $35k amount is about 50% higher than the official poverty level for a family of four.

Here is the NYT’s graph of the current breakdown by income:
(All numbers on the solid black lines in the chart are percentages of the US population and do not add to 100% due to rounding)

From the NYT:

Even as the American middle class has shrunk, it has gone through a transformation. The 53 million households that remain in the middle class — about 43% of all households — look considerably different from their middle-class predecessors of a previous generation…

Recently, the fastest-growing component of the middle class has been households headed by people 65 and older. Today’s seniors have better retirement benefits than previous generations. Also, older Americans are increasingly working past traditional retirement age. More than eight million were in the labor force in 2013, nearly twice as many as in 2000.

A December New York Times poll showed that 60% of people who self-identify as middle class think that if they work hard, they will get rich. But the income and census data suggest that goal is moving increasingly out of reach.

If 60% of the middle class still think they can get rich, despite clear evidence to the contrary, the Plutocrats and lobbyists have successfully brainwashed the American public. They are unable to see just how systematically and catastrophically they have been played.

We may be able to take back control from the Plutocrats and the Oligarchs. But they now have control of our militarized police, they control cyber spying programs aimed at American citizens, and they control a byzantine political system completely removed from the average person’s day-to-day.

Gone are the days when we could storm the castle with torches and pitchforks, demanding change, and win.

If we succeed in bringing about real change, and not the faux change marketed by politicians, it will not be a pretty affair. They will fight. And they have the means to do so.

Sunday Cartoon Blogging – November 30, 2014

Thought for today: “We are what we repeatedly do.” Aristotle

And some things, we repeatedly do over and over. Take Ferguson, possibly becoming a new Selma. Or take our bad economy, or take Afghanistan.

This month, Americans got some news the media spun as good: The US unemployment rate fell to the lowest level since late 2007. The 5.8% unemployment rate has been seen as proof of economic recovery. But, the jobs created were mostly part-time work, often at low pay. Yes, these jobs provided employment, but did little to improve the overall economy.

As a result, an increasing number of Americans – 800,000 more than last year – have taken a second or third job, according to the BLS. This is Americans taking jobs they don’t really want, unable to pay their bills despite work, and relying on food banks and welfare to make up the difference.

And the problem is growing. In October, about 7 million Americans had part-time jobs but wanted to work full-time. Over 2.1 million Americans rely on two part-time jobs to see them through. Another 4 million have one full-time job and one part-time job, a number that increased by 444,000 since last year.

These workers earn minimum or near-minimum wage, bringing home less than $1,000 a month. In 2013, 468,000 retail workers earned minimum wage or lower. According to Pew Research Center, 1.4 million cashiers – the most common part-time job – earn less than $10.10 an hour. Part-time Walmart workers often bring home between $200 to $400 every two weeks. This is a weak contribution to our economy. These workers, despite being employed, end up relying on government assistance in the form of food stamps and housing subsidies. And when the food stamps run out, they turn to their communities and the local food banks. So, there were Black Friday demonstrations atWalmart stores all across America, and some cities had this response:

Part of your taxpayer dollars are paying Wal-Mart employees the money that the Walton’s refuse to pay them. This isn’t complicated. If you have a job at Wal-Mart and you still need Medicaid, food stamps and subsidized housing, then you aren’t just getting shafted by the Walton’s. You’re also being paid your missing wages by the federal government. Another piece of your tax dollars supported military-style protection at Walmart as a partial response to the Black Friday demonstrations.

As Aristotle said, we are what we repeatedly do. Americans aren’t deadbeats. The Walton’s are the deadbeats.

Black Friday means something radically different to the homeless: