Relevant and even prescient commentary on news, politics and the economy.

Medicare does “NOT PAY FOR ITSELF”

In the comments section of an earlier post 1/3 of Medicare Spending is Wasted, I had stated to everyone, “Medicare does NOT PAY FOR ITSELF.” This is what I meant by that comment:

“For more than a decade the the federal government has borrowed to pay for the rising cost of Medicare. Debt-financing of Medicare will increase sharply as the population over 65 doubles from 2010 to 2030 and the number of beneficiaries over 85—with the greatest medical needs—triple.”

Note, using borrowed money to finance Medicare is not something that will happen in the future. It began more than a decade ago. Yet, as the article notes: “Members of Congress are reluctant to argue with constituents who sincerely believe that they have ‘paid for’ Medicare with payroll taxes and premiums. Most find it more convenient to tiptoe around the minefield of Medicare financings.” So the charade continues even today.

People who believe that they have paid for their Medicare with payroll taxes and premiums are terribly naïve and do not realize how much Medicare actually costs or how much “Medicare for all” would cost.

The article goes on to explain the history of how we arrived where we are today and why I make the comment on Medicare:

“In the mid-1990s, Democrats proposed to balance the Medicare budget by limiting fees paid to physicians for services, while Republicans sought to contain the costs by transferring the program to managed care insurers and capping the annual per capita rise in premium subsidies.

In 1997 the leadership in both parties agreed to a plan that would eliminate borrowing for Medicare, principally by limiting the growth in the level of fees paid to physicians. That Medicare reform, along with increasing general revenues paid by taxpayers in the highest bracket, led to a federal budget that balanced in fiscal year 2000.

The balance turned out to be short-lived. In 2001 and 2003 Congress passed debt-financed reductions in income tax rates. And in 2003 it also suspended the application of ceilings on fees set in 1997. Later that year Congress used debt to finance a new Medicare prescription drug benefit and higher payments to Medicare managed care plans.

As a result, the portion of Medicare paid for with dedicated taxes dropped from 73 percent in 2000 to 53 percent in 2010, the year that the first of the Baby Boom generation became eligible for Medicare.”

“After the 2008 election of President Obama, Democrats sought Medicare ‘savings’ for the purpose of expanding other medical services rather than balancing the budget for Medicare. In order to offset the cost of expanded PPACA medical services for families with low incomes; they placed restrictions on reimbursement rates, provided incentives for more efficient delivery of medical care, raised the Medicare tax paid by taxpayers with high-earned incomes, and applied Medicare taxation to gains from investment.”

On the other side of the political spectrum, “Republican House Budget Chairman Paul Ryan exemplifies his party’s ambivalence toward Medicare reform. He ran as the vice presidential candidate on a ticket in 2012 that attacked the Affordable Care Act’s limits on Medicare reimbursements. Yet before and after that election, he incorporated those very cost-saving measures into his own budget plans.”

Incumbents from “both parties find it awkward to even talk about the practice of borrowing to pay for Medicare. Obviously, an extra layer of interest on debt simply increases the program’s long-term cost. Any attempt to highlight that issue naturally invites the question of whether to cut Medicare costs or raise tax revenue dedicated to the program. No mainstream politician seeks to cut benefits by almost half and down to the level payable by revenues from premiums and payroll taxes. Democrats condemn any increase in payroll taxation as ‘regressive,’ while most congressional Republicans have signed a pledge to oppose any tax increase.”

Both sides of the aisle feint a reluctance to either cut Medicare benefits or increase Medicare withholding taxes and an honest discussion with their constituents regarding Medicare financing knowing full well something must be done. Indeed, it is politically expedient to kick the can or the bucket into the next decade avoiding the third rail of Medicare.

What can we do? I will answer that question in my next post.

Notes and References:
1. “Pay As You Go” Medicare Washington Monthly, Bill White, June 23, 2014

2. Maggie Mahar writes the Health Beat Blog Maggie is also the author of Money-Driven Medicine: The Real Reason Health Care Costs So Much (Harper/Collins 2006). Mahar also served as the co-writer of the documentary, Money-Driven Medicine (2009), directed by Andrew Fredericks and produced by Alex Gibney. Before she began writing about health care, Mahar was a financial journalist and wrote for Barron’s, Time Inc., The New York Times, and other publications. Her first book, Bull: A History of the Boom and Bust 1982-2003 (Harper Collins, 2003) was recommended by Warren Buffet in Berkshire Hathaway’s annual report.

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Bill Clinton thinks corps will put people first, profits second…all on their own.

So, Bill baby thinks the corps are going to see the light and return to the good old days of having a social conscience.  Heck, they will even see the light regarding their role as a member of society in the US.   And, here is the best part.  This is all going to happen without the government!

“I think the government can have incentives that will encourage it, but I think by and large it will happen, if it does, because of proof that markets work better that way,” Clinton said…

Right out of the Milton et al, Republican, conservative free market text book.  (Hope you are all reading Beverly’s post.)

He quantified it with:  “This corporate change, Clinton said, will be one of the most important keys to building a better future.”   Well he sure has that correct.  It is important as a key to building a better future.

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Hillary Clinton (Obviously) Reads Angry Bear! Or at least she did yesterday.

Hillary Clinton will headline a fundraising dinner for Florida Democratic gubernatorial Charlie Crist next month, putting her in a key presidential state in the midterms battle, according to an invitation.

Crist, a Republican turned Democrat running for his old job, is in one of the toughest gubernatorial races in the country. He is facing incumbent Republican Rick Scott.

Clinton will headline a dinner Oct. 2 in Miami, according to an invitation.

She is holding a book-signing the same day in the state.

Hillary Clinton to campaign for Charlie Crist, Maggie Haberman, Politico, yesterday at 7:56 p.m.

Yesterday, as all you AB readers know, I posted this rant, I mean post, that was highly critical of both Hillary Clinton and Barack Obama.  About Clinton, I noted (among other things) the unseemliness of her current banalities in her public appearances, and said that because of the media attention she garners every time she opens her mouth, she actually could win elections for certain Dem candidates for senator or governor if she filled a six-year-long public-education-and-correction-of-misinformation void by Obama and actually educated the public about such things as that healthcare costs and healthcare premium rate increases have declined rather than increased since the beginning of the year.  I mentioned that in Florida, a TV ad is running claiming that the ACA has increased healthcare costs, taking money out “your” pocket, and that therefore “you” should vote to reelect Rick Scott as governor. Scott’s opponent, Charlie Crist, the ad points out repeatedly, has said the ACA is working well.

I posted that post at 3:34 p.m., about four hours before someone on Clinton’s staff—I’m not sure why she has a personal staff, other than that having a personal staff is what she does—announced that as long as Clinton was going to be in Florida for a book-signing event next month anyway, she might as well headline a fundraising dinner in the state.  You never know, after all; there might be some Miami-area donors who haven’t yet bought her book.  Not to mention a few members of the wait staff who will pay $30 (or whatever) to get a handwritten personal message from Hillary Clinton to show their grandkids one day.

But the idea hadn’t occurred to her until she read Angry Bear yesterday afternoon, which obviously she did, notwithstanding the very busy day she had yesterday.

The good news is that by then she will be a grandparent rather than an expectant grandparent, so, along with the giggly thinking-about-running-for-president entendres, she will regale the audience with new-grandparent stories.

The bad news is that she won’t actually correct any misinformation about the ACA and its effects, or about anything else, since that would require her to have had a staff member actually obtain statistics and such, and would necessitate her own preparation for the speech by reading a several-paragraph memo from that staffer that recites the information.  Sure, she’d be preaching directly to the choir, but she’d be preaching indirectly, and virally if videotaped, to undecided voters in Florida and beyond.*

She won’t, though.  Unless, of course, she reads Angry Bear again today.  Nah, even if she does, she won’t.  I’m tempted to say that Clinton’s fundraising and campaigning is only ostensibly for others but actually for herself.  But actually I don’t think she’s planning to run for president I think she’s just milking all this for the book sales and the fawning attention. In fact, I think that one reason she’s constantly talking about her impending grandparenthood—other than that she has to talk about something at these appearances—is that she wants eventually to invoke this new, exciting chapter in her life as her reason for deciding not to run for president.

And, if I’m right that she is not planning to run, that may actually be part of her reason.  In November 2016, Clinton will be 69 years old.  Most people are not looking, at that age, to undertake something all-encompassing like the presidency.

But also, I think that she and her husband want most of all to not have to deal with questions about their finances.  Hillary Clinton has achieved what she sought to achieve: extraordinary wealth and extraordinary fame and (in some quarters) adoration.  And running for president again would require her this time around to stay overnight at hotels in Waterloo, Davenport, and (even worse) Sioux City, rather than campaigning mostly in the Des Moines area during caucus season–as, I read recently, she did in 2008 in order to have sufficiently comfortable hotel accommodations.

The article in which I read about that Iowa-hotels-in-2008 thing contained an assurance from someone in her orbit—“orbit”; what an apt journalistic euphemism—that she wouldn’t make that mistake again and open herself up to charges of unapproachability.** But that’s just too much of a compromise, I suspect, and reason enough in and of itself for her to decide not to run.  Some members of her orbit may soon have to find another sun.

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*This paragraph and the following one were edited slightly for clarity after posting.  9/23 at 8:22 p.m.

**Sentence edited for clarity in light of confusion by a commenter about whether this was a true anacdote or instead facetious. It was reported as a true anacdote.  9/23 at 10:29 p.m.

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Keynes, Fisher, Duy, DeLong & the Fed Rate

http://www.themoatblog.com/wp-content/uploads/2013/07/l.gif

Is the message high or low?

It all started with an article about a speech by Dallas Fed President, Richard Fisher, in the Business Insider last Friday. Mr. Fisher basically said that wages could start rising once unemployment hits 6.1%. He then said that the Fed should start raising the effective Fed rate earlier than projected. The idea is that the Fed should get ahead of wage inflation before it affects price inflation.

Then Tim Duy and Brad DeLong replied to Fisher’s view. They say that the Fed rate should not cut wage inflation short before it even starts. As Duy and DeLong say, we should actually strive for a 4% wage inflation alongside 2% price inflation.

Slow and Gradual is the Key

But there is an idea from Mr. Fisher that both Tim Duy and Brad DeLong did not address. Here is what Mr. Fisher said at the end of the article in the Business Insider…

“”I’d like to do it in a slow and gradual way, rather than rapid and sharp,” he said. “Historically within the Fed, whenever we’ve waited til we believe we are at some measure of full capacity utilization and then we’ve raised rates, every time we’ve done it we’ve brought about a recession.”

Mr. Fisher’s concern is waiting too long to raise rates, and then having to do it too fast. So he prefers to start raising rates early and proceed more slowly. Isn’t he being wise or at least proactive?

On the other hand, do Duy and DeLong prefer the risk of having to raise rates too fast later? Yes, they do. But wouldn’t that cause a recession? Most likely, but it is a risk worth taking.

But then again… as I look into the psychology of the issue, I see a Fed rate that will most likely start rising later than Mr. Fisher would like, and that will rise slowly and gradually even if data warrants a faster rate rise. The Fed does not want to trigger a recession. So they will always keep the Fed rate on the low side… ALWAYS. Is this wise?

Will a higher Fed rate cause a contraction? Will a lower Fed rate keep the economy healthy?

Let’s read a little Keynes… Chapter 22 of General Theory

“But I suggest that a more typical, and often the predominant, explanation of the crisis is, not primarily a rise in the rate of interest, but a sudden collapse in the marginal efficiency of capital… Moreover, the dismay and uncertainty as to the future which accompanies a collapse in the marginal efficiency of capital naturally precipitates a sharp increase in liquidity-preference — and hence a rise in the rate of interest. Thus the fact that a collapse in the marginal efficiency of capital tends to be associated with a rise in the rate of interest may seriously aggravate the decline in investment.”

Tim Duy posted graphs that wage inflation does not really lead to price inflation. So the Fed rate need not respond to wage inflation. Keynes points out that the Fed rate would respond instead to liquidity-preference  resulting from “dismay and uncertainty” about the future. Yet that combination “aggravates the decline in investment”. So the solution would be just to keep the Fed rate low, as Duy and DeLong say.

Keynes continues…

“Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.”

Duy and DeLong would agree with this view. They see Fisher calling for a permanent “semi-slump”. Whereas they are preferring a permanent “quasi-boom”. Yet Fisher’s concern is that eventually there is a recession, and it is best to go into it cautiously with gradually rising interest rates, instead of rates that are too low to respond effectively to a crisis. If rates are too low going through a recession, it will be very difficult for monetary policy to cultivate socially efficient investments, not that they are at the moment, but still, investments would be even more socially inefficient.

Keynes continues…

“Furthermore, even if we were to suppose that contemporary booms are apt to be associated with a momentary condition of full investment or over-investment in the strict sense, it would still be absurd to regard a higher rate of interest as the appropriate remedy. For in this event the case of those who attribute the disease to under-consumption would be wholly established. The remedy would lie in various measures designed to increase the propensity to consume by the redistribution of incomes or otherwise; so that a given level of employment would require a smaller volume of current investment to support it.”

“Moreover, I should readily concede that the wisest course is to advance on both fronts at once. Whilst aiming at a socially controlled rate of investment with a view to a progressive decline in the marginal efficiency of capital, I should support at the same time all sorts of policies for increasing the propensity to consume.”

So if we were to combine a persistently low Fed rate with higher real wages to distribute income to labor, we should be able to avoid a recession and keep growing. I think Duy and DeLong would be happy with this approach.

But what constitutes a “socially controlled rate of investment”? Well, as the marginal efficiency of capital decreases, interest rates should rise wisely to keep investment from becoming socially inefficient. China looks to have this problem after years of financial repression to favor over-investment. But are the low rates in the US creating this problem? Well, it would be nice and ideal to have the Fed rate reach at least 3% at full-employment. Then the natural real rate is balanced, and investments would be socially balanced. However, if the Fed plans to start raising the Fed rate next summer, and then increase it by 25 basis points per quarter, the Fed rate will reach 3% in 2018. Hopefully the stock market can maintain its record-setting pace for 4 more years.

Nipping in the Bud?

In the end, it seems that Fisher envisions a Fed rate reaching that 3% at full-employment, while Duy and DeLong envision a Fed rate below that, due to having to keep the Fed rate from rising too fast and triggering a contraction. Fisher wants to nip price inflation and inefficient investment in the bud. Is it at all possible that Keynes could agree with Mr. Fisher?

“If we rule out major changes of policy affecting either the control of investment or the propensity to consume, and assume, broadly speaking, a continuance of the existing state of affairs, it is, I think, arguable that a more advantageous average state of expectation might result from a banking policy which always nipped in the bud an incipient boom by a rate of interest high enough to deter even the most misguided optimists. The disappointment of expectation, characteristic of the slump, may lead to so much loss and waste that the average level of useful investment might be higher if a deterrent is applied. It is difficult to be sure whether or not this is correct on its own assumptions; it is a matter for practical judgment where detailed evidence is wanting.”

It seems here that Keynes would side with Fisher’s desire for a gradually rising Fed rate for social balance and efficiency in the economy.

So the debate will continue. Should the Fed rate nip in the bud socially inefficient investments and the prospect of inflation? or Should the Fed rate stay low to encourage investment and consumption for a quasi-boom? Will a low Fed rate even prevent a recession if income distribution does not raise the propensity to consume through a higher labor share? Will the marginal efficiency of capital run its course sooner than wage inflation takes off?

To wrap up: Keynes was able to see both sides of this issue… Either way, I would choose a gradually rising Fed rate. I think Duy and DeLong would too. But is there enough time left in the business cycle to get the Fed rate to a socially optimum level by keeping the Fed rate low? I don’t think so, and that shortfall would haunt us for years.

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comment on Krugman

Most of what I type below is stuff I’ve typed at Angrybear many times. It’s here because I ran into the Krugman blog 1500 character limit over there.

I’m commenting on two bits

intertemporal equilibrium all the way, with consumers making lifetime consumption plans, prices set with the future rationally expected, and so on. That’s DSGE — and I think Glasner and I agree that this hasn’t worked out too well.

and

Glasner says that temporary equilibrium must involve disappointed expectations, and fails to take account of the dynamics that must result as expectations are revised. I guess I’d say two things. First, I’m not sure that this is always true. Hicks did indeed assume static expectations — the future will be like the present; but in Keynes’s vision of an economy stuck in sustained depression, such static expectations will be more or less right. It’s true that you need some wage stickiness to explain what you see (which is not the same thing as saying that sticky wages are the cause of unemployment), but that isn’t necessarily about false expectations.

my comment

I think it might be useful to stress the two very different relevant meanings of the word “equilibrium”. Sometimes it means Nash equilibrium. Sometimes it means Walrasian equilibrium. Sometimes it means stationary around a unique stable flexible price equilibrium.

I think this is relevant to the post at two points. One is “plans, prices set with the future rationally expected, and so on. That’s DSGE. ”
The other is “in Keynes’s vision of an economy stuck in sustained depression, such static expectations will be more or less right.”

I think it is possible to write down a model of an economy with a Nash equilibrium that is to be stuck in sustained depression. This can happen with intertemporal optimization all the way.

The DSGE models in the mainstream macro literature share strong assumptions other than intertemporal optimization. The modelling strategy includes the assumption that there is a unique flexible price equilibrium and that (correctly scaled) actual outcomes have a stationary distribution around it. The shared assumption isn’t just Nash equilibrium. So for example, with the same assumptions about tastes and technology and with monetary policy a Taylor rule, the equilibrium can be determinate or indeterminate depending on the parameters of the Taylor rule. So it is standard to assume parameters such that it is determinate. This is part of the approach called DSGE but it does not follow from D, S or GE. Here “equilibrium” has the third meaning which is not implied by Nash equilibrium.

I think part of the problem with macro theory is that the meaning of equilbrium is elastic so the meaning of “equilibrium models are useful” is slippery– the broad unfalsifiable meaning is used when it is to be tested and the narrow plainly false meaning is used when it is to be applied.

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Sense on Stilts: Eight Graphs Showing a Quarter-Century of Wealth Inequality and Age Inequality

Scott Sumner made a very important point a while back (and repeatedly since) in a post wherein he makes a bunch of other (IMO) not very good points:

Income and wealth inequality data: Nonsense on stilts

His crucial (and I think true) point, in my words: you can’t think coherently about inequality — especially wealth inequality — if you don’t think about age. Older households have more wealth, because they’ve had more time to accrue wealth. There’s always gonna be wealth inequality based on that alone. It’s inevitable, and to a greater or lesser extent (warning: normative claim here), that’s as it should be.

I’ve been pondering this dynamic ever since, trying to figure out how to portray it in ways that let us think clearly about it. I’ve searched for presentations and studies, but — perhaps my Google skills need work — I’ve come up with almost nothing. Matt Bruenig’s recent post is a notable exception. Suggestions are very welcome. In any case, kudos and thanks to Scott for planting that seed.

But the anecdotes, surmises, arguments, and thought-experiments in Scott’s post don’t give us much in the way of systematic data and facts. He gives us “data” from his own personal Social Security history, and suggests that to evaluate the inequality dynamic we should drive around the country, “Go into poor people’s houses,” and eyeball their consumption bundles.

Right.

Where’s the beef? I find it hard to think about such things without facts, so I’m hoping I can provide some.

The September 4 release of the Fed’s  latest (2013) Survey of Consumer Finance data finally prompted me to dig into it. We now have nine triennial SCF samples starting in 1989, encompassing 24 years — most of the period following the Reagan Revolution. What kind of changes and trends have we seen over that quarter century? How did the wealth/age dynamic look in 1989? What does it look like today? How has it changed?

I’m going to concentrate on real (inflation-adjusted) household net worth — assets minus liabilities, things households own minus what they owe others — because:

1. It’s a good measure of prosperity.

2. There are many ways to to think about income (e.g., Does it include capital gains? Unrealized or realized only? What about undistributed corporate earnings? They belong to the shareholder households, right, so should they be imputed to household income? And etc.) Net worth is much more straightforward: assets at market value (with corporate firms’ value imputed to their ultimate household shareholders), minus debt.

I’ll say again some more: every economic assertion should be preceded with the words “by this measure” — different measures tell us different things, explain things differently — so I’ll give you a bunch of different household net worth measures in hopes that together, they tell some kind of coherent (perhaps even causal) story.

I’ll start with simple measures that are hopefully easy to grasp, and then move into more complex measures that my gentle readers may find illuminative.

First: how wealthy is the typical (median) American household, and the typical household in each age group, compared to 1989?

Screen shot 2014-09-21 at 9.30.02 AM

Key to understanding this graph: it’s not showing how individual households have changed — the age groups aren’t moving cohorts — it’s showing how the wealth of age groups has changed. People who are 65 today and have circa $232K (pink line, 2013) were in the 35-44 age group in 1989 and had circa $100K (dark red line, 1989).

The most obvious point: the typical American household is less wealthy today than the typical household in 1989 — down 4% from $85K to $81K. (So much for “the shining city on the hill” and the vaunted promises of trickle-down, supply-side, baby-drowning government, etc. etc. Would this measure look better if the Reagan Revolution had never happened, or never reached the fever pitch it has attained? That is the question, isn’t it? My answer: Yes. Profoundly better.)

Next: The typical elderly household (65+) is richer today than the typical elderly household was in 1989. The typical younger household (under 65, but especially under 55, and especially under 45) is poorer than it would have been in 1989.

(If you’re 65 or 66, please excuse me calling you “elderly.” It’s just a convenient shorthand.)

Another significant feature to note: the lines are more spread out on the right than they are the left. So elderly households are more richer relative to the youngest households than they were in ’89.

You may wish I’d zoom in so you can better see change in the youngest age group, but I’ll do you one better. Here’s a graph that shows changes in median wealth for different age groups:

Screen shot 2014-09-21 at 9.53.53 AM

The typical elderly household is circa 60% richer than they would have been in 1989. All other age groups are poorer than their 1989 equivalents. 35-to-44-year-olds in 2013 are almost 60% poorer than that age group was in 1989 — exactly the inverse of older households. (The dotted line shows the aforementioned 4% decline for all households.)

“We’ve been transferring money to the elderly!” Right? That’s certainly or probably true, but it ignores a key demographic trend: people are living longer. So: 1. They have more time to accumulate wealth, and 2. Their children inherit later in life. And the proportion of people in the higher age groups is larger than it was in the past. How should we think about that, analytically and normatively? Further research needed.

Also worth noting in this graph: before the recent…debacle of 2007–2009, the median wealth of older households grew a lot, while younger households held generally steady. No age group got (much) worse off, while older groups got much better off. Sounds okay, though not stellar. The Great Whatever greatly accentuated that old-young distinction, eviscerating the median wealth of all but the aged while leaving the typical elderly household mostly untouched. (See: Recessions Are Nature’s Way of Keeping the Little Guy Down.)

Next, average (mean) net worth by age group:

Screen shot 2014-09-22 at 10.16.28 AM

Similar, but quite different.

Older households are a lot richer today, by this measure, as they were by the median measure. (Much less true for the 75+ group.) Younger groups didn’t dive post-2007; they’re closer to the same.  The 45–54s fall somewhere in between, and All Households are up a reasonable amount.

This is mostly explained by increased (and varying) wealth concentrations at the top — across all households and within each age group — which I’ll look at below. The shape of the wealth distribution has changed. Just to help visualize that, here’s how income distribution has changed.

Screen shot 2014-09-22 at 11.31.27 AM

(The right side of this graph is cut off because the CPS doesn’t break out income levels at the upper end of the spectrum. )

Like the median graph, the mean graph shows a big increased spread going from left to right — older households are generally more richer today relative to younger households. Here’s a look at that change:

Screen shot 2014-09-22 at 10.50.42 AM

There are too many possible interactions going on in this for me to say much. But it seems to be influenced by the rising importance of big incomes at the top of certain groups when it comes to wealth building. Means get pulled around by big concentrations at the top, and that may be what’s happening, for instance, with the 65-74 group — a relatively small number of households in that group (company-owner and CEO-headed?) building extraordinary wealth in recent years. Those over 75 and 55-64, not so much.

All this shows us differences between age groups, now versus then. But what about inequality? Here’s a shot at that:

Screen shot 2014-09-22 at 11.17.32 AM

This is a fairly standard measure of inequality, wealth concentration at the top, here showing that measure within age groups over the years. (You could also compare the top 10% to 50%ers or to the bottom 90%, pull a GINI index, etc. This one’s handy.)

The most pronounced change is in younger groups. In 1989, the average (mean) 35-44 household was 2.6x richer than the typical (median) 35-44 household. In 2013, the ratio is 7.4x. The ratio has grown for every age group except 75+, though not nearly as much as for households under 35. For all households, the ratio has gone up from 3.9x to 6.6x.

And finally, just so you can collect the whole set, here’s the change in Mean:Median ratio over the years:

Screen shot 2014-09-22 at 11.48.48 AM

If you were in the 35-44 age group in 2010, or are in it now, you were, are, in a very competitive winner-take-all group compared even to similar households in 2007 — much less 1989.

All of these measures tell us that wealth inequality/concentration, growing wealth inequality, is a very real thing, even when you take age into account. Matt Bruenig came to a similar conclusion about the current state of age and wealth, presenting it in a graph that you may find more useful if less detailed than mine:

If you’ve read this far, you should read Matt’s whole post. It’s short and sweet.

Wealth inequality is extreme within all age groups. And as I’ve shown, it’s been getting more extreme. This especially for young households — both competing with their peers, and competing with older households.

Those are important conclusions. Wealth inequality data, pace Sumner, is not “nonsense on stilts.” It just requires some plodding, diligent legwork. Isn’t that what professional economists are supposed to do for a living?

Here’s the Excel source file I used (22mb). See Table 4:

http://www.federalreserve.gov/econresdata/scf/files/scf2013_tables_internal_real.xls

Here’s my spreadsheet, with the mean/median net worth data in more tractable form:

 http://www.asymptosis.com/wp-content/uploads/2014/09/Mean-median-wealth-age-scf.xls

I’d be delighted to hear suggestions about other ways to look at this, and conclusions that might be drawn. And of course, please point out any errors.

Cross-posted at Asymptosis.

 

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Dear Greg Sargent: “Re your Morning Plum reference to Krugman’s column today”

Update appended below.

—-

After a two-and-a-half-month hiatus from regular blogging here—most of my few posts this summer related to my passion about animal rescue and animal welfare—I’m once again feeling like posting about politics, at least more regularly than I posted this summer. (And maybe soon I’ll once again feel like posting about legal issues, but I don’t yet, so y’all who’ve been waiting for that with bated breath, well ….)

I wanted a break from all-politics-and-law-all-the-time, and (mostly) took one.  My active reentry here at AB began with two posts within the last few days—one that I thought would get some attention, but did, not; the other that I thought would get little attention, but got more than a little.

After reading emailed Greg Sargent this afternoon an embarrassingly long… eeeek … rant about that post of mine that got little attention—and, while I was at it, about two of my current political obsessions: the silly Hillary Clinton presidential-nomination anointment, by the press and (unwittingly, I think, courtesy of the press) the Democratic Party; and the silly six-year failure of our current White House standard bearer to ever trouble himself to … y’know … like … engage in any refutation of misinformation by … y’know … stating facts, coherently and specifically—I jumped all-in (to use an “in” cliché that really annoys me, but fits here) today.

But since emails from no-names are treated, I’m sure, as emails from no-names, and because, well, I’m just really in the mood right now, I’ll share my rant with all you AB readers, should any of you actually be interested:

Greg, you write this morning in the Morning Plum:

“REPUBLICANS AND THE ‘LAZY JOBLESS’:  Paul Krugman’s column today marvels at the ways GOP lawmakers continue to suggest the unemployed are choosing their plight, even as benefits have been slashed and we’re treating them with “unprecedented harshness.” But why?”

The answer to your question is, of course, that most people have no idea that unemployment compensation benefits have been dramatically slashed and are, as Krugman highlights, far lower than they have been in relation to the level of involuntary short-term and long-term unemployment in many decades.

Just as most people have no idea about one after another after another other facts concerning public policy—in Florida, for example, there is a TV ad asking people to vote for Rick Scott against Charlie Crist because “Obamacare has raised healthcare costs” and is “taking money from your pocket,” or words to that effect.

And of course most people think government employment—federal, state, local—has increased during Obama’s presidency; of course, actually, it has decreased, dramatically.

And on and on.  Which has been the case throughout Obama’s presidency.  Neither of our two current Democratic national standard bearers, Obama and Hillary Clinton, would be caught dead actually educating the public about, y’know, actual facts; neither one will speak in anything other than banal generalities.  Clinton, who probably could actually educate the public about such things as facts, instead talks incessantly about how excited she is about her daughter’s pregnancy—because, y’know, we’re all so deeply interested in this–and makes childish jokes about her failure to declare an intention to run for the presidency, deigning to add a few banalities about such things as income inequality so that we all know that her heart is in the right place.

And because the punditry insists that Dem presidential candidates are fungible, Clinton’s home free.  Clinton, Warren, and male longtime progressives such as Sherrod Brown, who can’t run because, well, Hillary Clinton probably will run, are all the same; one’s as good as the other.  After all, didn’t Clinton say in some speech back in November 2007 that, yeah, maybe income inequality has become a problem? I mean, who needs any more evidence that she’s an economics progressive than that?!

Giving speeches is, of course, what Clinton does.  In November 2007 she had been a senator for nearly seven years.  During which she voted for a really bad bankruptcy bill, and did nothing at all, at least to my knowledge (or, I think, to anyone else’s), that could matter to, say, people who aren’t upscale women trying to break corporate-hierarchy glass ceilings and such.

I’m a contributor to the blog Angry Bear, and last Friday, after learning about Boehner’s comments from Krugman’s mention of it on his blog, I posted an item about it titled “John Boehner Says the Obama Economy Has Eliminated Involuntary Unemployment!  Seriously; that’s what he said. The Dems should use this in campaign ads.”  The title was not facetious; I pointed out that Boehner’s representation of fact necessarily presumes a thriving economy in which jobs are available for anyone who wants one; in other words, we really have full employment now.  My post gained no attention, best as I can tell, so I’d like to see someone whose blog posts do get attention make the point—because it is an important one. Isn’t it?  My post is [here].

Apologies for this lengthy rant.

Beverly Mann

As for Obama, coherency and specificity, which require actual explanation rather than sound-bite-speak, are just not his thing; I understand that.  By which I mean that I understand that that is so—and by which I don’t mean that I understand why it is so, although I suspect that the culprit is a stunning lack of mental agility coupled with an apparently overriding belief that he need not do anything by way of outreach, education and persuasion, that he doesn’t really feel like doing.

As for Clinton … well … speaking in specifics is not her thing, either.  It doesn’t pay well, and policy specifics would entail her actually learning specifics (better late than never, but, whatever) and maybe even proposing specifics of her own.  Okay, specifics that someone in her quarter-century “orbit” (the media’s euphemism for closed circle of decades-long Clinton operatives) learning specifics.  Sorta like what Warren and Sherrod Brown have done by themselves!

We’re all, of course, tremendously happy for Clinton and her husband that they’re about to become grandparents.  It’s just that we’re interested in other things, as well.  And just that other thing that she’s interested in: ridiculous, cutesy, will-she-or-won’t-she games.

I’m a progressive who cares about more than 1980s-and ‘90s-era women’s issues. (And not just because I’m aware that it is no longer the 1980s or ‘90s; some of those issues remain potent and important, but they are not the end-all-and-be-all of progressive economic concerns, some of which actually have to do with men as well as women.)  I don’t want any more generic, look-at-who-I-am-rather-than-what-I’ve-actually-done theater-of-the-ridiculous. Been there, done that. (Okay, I was never a big fan of Obama, but supported him against Clinton because I feared another triangulator president—one who would be hemmed in by her husband’s 1990s policy choices, no less. One who still is hemmed in by her husband’s 1990s policy choices.)

I’ll end this rant by asking this question: Why have the progressives who want so badly to see a Warren draft not trying to encourage, say, a Sherrod Brown draft?  Wrong gender? Really?? Warren’s popularity comes not from her gender but instead from her economic population and deep knowledge of, emersion in, and passion for actual specific policy issues.  Brown has that, too.  And he, unlike Warren, may simply be waiting for someone to ask him to run.

Take a look, progressives. I’m serious.  It’s time now to support an economic progressive who’s the real deal, not someone’s who really just a political celebrity.  My dream ticket is Brown and Jeff Merkley.  Both have been in the economic-progressive trenches for decades. Neither is the spouse of a former president, even a popular and still-popular one who actually knows how to make a point without using a denegrating, condescending manner to do it.

That said, if what Dems are looking for, and if Dem presidential candidates really are fungible, then how about Kim Kardashian?  Who knows?  She may even be a genuine economic progressive.

We economic progressives finally have the ear of a large segment of the population.  And we’re going to squander it by nominating for president someone who’s little more than just a professional political celebrity?  Why?  Seriously; why?

—-

UPDATE: Turns out that I’m a few days late to this party, at least as it’s host.  Molly Ball posted a piece on Sept. 19 on The Atlantic’s website titled “Does Hillary Clinton Have Anything to Say?” Ball reaches the same conclusion that I do: The anwer is, no.

But there are, as I noted above, national politicians in addition to Elizabeth Warren, who do.

I mean, look: Just because your husband was a popular president in the 1990s doesn’t mean that you get to be the Democractic presidential nominee yourself.  Your prsumption to the contrary notwithstanding.

Although Molly Ball, Bernie Sanders and I are, thus far, the only partiers. Want to join us?

Updated 9/22 at 4:10 p.m.

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What are people — and the Post Office — for?

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Guest Post by Mark Jamison retired Postmaster Webster, N.C.

It’s likely that I will be the last postmaster to serve the town of Webster, North Carolina. The first postmaster, Allen Fisher, began his term in 1857, shortly after Jackson County was founded and Webster became the county seat. The names of the postmasters that follow read like a county census. In a rural mountain county that was fairly isolated well into the 20TH Century, the same family names filled many a civic obligation.

Miss Eugenia Allison was the longest serving postmaster, from 1914 until 1948. Mildred Cowan served from 1950 through 1976. When I became postmaster, I found letters Ms. Cowan had written to the old Post Office Department begging for a new building or at least better heat in the shack that served as a post office.

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Guest post: “It’ll be okay: Trust me”, redux

Dan here….The Largest climate march in history is happening today.  Jan Galkowski responds to a Wall Street Journal editorial.   He requested that comments be written at his website in order to consolidate questions and answers.

by Jan Galkowski

“It’ll be okay: Trust me”, redux

Professor Steven Koonin offers up another dollop of vague, specious criticism of climate science in his editorial in The Wall Street Journal. He is credentialed, no doubt authoritative. But compelling arguments for a position should be judged as if the speaker’s identity were unknown and, so, for the most part, I’ll leave it to the reader to find out who Koonin is, or was, by consulting the Wall Street Journal article itself. (Hey, they published it. They deserve a few extra clicks to appease their profit-demanding owners. And, while I respect his career, the editorial he writes is in many ways thoroughly disappointing, not reflecting the deep knowledge no doubt Koonin has. Did the Wall Street Journal get nervous about an earlier, more honest version?) No doubt it is entirely coincidental this op-ed appeared on the weekend the largest climate march to erupt on the planet yet. (Professor Koonin could have published it at any time. But nay.) The actual argument is the latest of a long series of reasons for why climate science should not convert to climate policy.

Let’s see what’s been admitted in this rendition of Tom Petty’s “Yer So Bad” (in reference to climate science).

Early on Koonin admits key points, often opposed by so-called “climate deniers” of the past (*):

  • Climates can change, and they can change very rapidly, sometimes as quickly as a decade.
  • Climates change because there are causes. Koonin glosses “causes” by using the term “influence”. That might reveal his prejudice, but it grants the case. Koonin grants that the “impact today” is comparable to natural climate variability. Koonin leaves completely open what the impact might be in future years. (See the discussion of “lags”below.)
  • The “influence” of carbon dioxide emissions will continue “for several centuries”. I fault Koonin seriously here, because there is plenty of evidence that some of the human generated carbon dioxide will remain in atmosphere for millenia, and that science isvery basic.

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