Now that Andrew Yang has made it into the first debate by meeting the fundraising threshold, and being on Morning Joe this morning, it is time to post this interview of him via Freakonomics.
I was impressed by his thought approach. He is the first person who is talking about the economy as a ecosystem of society. That is, it’s not just about making money. He does not come out and say it as I would but I think he is thinking about a question I have asked here in the past: What do we have an economy for? Is it to just produce the biggest most powerful engine in the world and watch it run?
My concern is that the MSN is not prepared to do a proper interview with a person who actually wants to discuss a comprehensive idea regarding social structure and present a plan for it as observed on Morning Joe today. You could just tell they wanted to throw out the memes of name calling: “socialist”, “taxing the rich”, “taxing business”, “far left”. But, I think Mr Yang handled it well considering the short time he had vs his scope of policy. Plus Mr. Yang had facts noting his “freedom dividend” is what Alaska has.
I don’t expect him to win, but I do hope he and his ideas get more coverage and thus pushes the Overton window back toward society. The problem is, his idea is very comprehensive. It’s talking about society. Unfortunately, our mindset wants discussion boiled down to the “1 item” reductionist meme. You know: How are you going to bring the nation together? My answer: Oh, I don’t know. How do you handle a 2 year old that always says No? (Mitch McConnell et al)
For decades we have been hearing about the loss of industrial production through out what is called the “Rust Belt”. It’s presented, even as recent as the prior presidential election as a relative regional problem that only began post Reagan. What gets me though is that the reporting and ultimately the politics are as if the rust belt is/was unique in their experience with the west and east coast experiencing nothing of the sort. The presentation is of the west coast Hollywood economy and now the “tech” economy, the east coast (namely New York/Boston) being the money economy. The south east is not considered other than Disney and orange production. The north west? Microsoft and Starbucks. Well I think it used to be lumber.
Wiki notes that the rust belt is not geographic but is a term that “pertains to a set of economic and social conditions“. It includes the northeast which is proper in that industry started there but I have had the feeling for a few decades now that such history is forgotten and thus no longer considered when we look to understand what the hell happened to the middle class.
Let me start with this fun fact. Rhode Island was the most industrialized state per capita in the nation at one point. Wiki notes that:
…Aldrich, as US Senator, became known as the “General Manager of the United States,” for his ability to set high tariffs to protect Rhode Island — and American — goods from foreign competition.
We were where the super rich came to escape the heat and play. And then it started to die. Not just here though. Neighboring Massachusetts was hit as was Connecticut. If you ever get a chance, come visit the New Bedford Whaling museum and read about the massive industry that was there. Example, the worlds largest mill of weaving looms. Some 4000+! Whaling from that city in the later 1800’s generated some $71 million per year! Not impressed? Well, using the GDP deflator it’s $1.480 billion per year!
I had heard about a video series on NPR’s Fresh Air regarding the origin and current issue with the concept of Fake News via Russia. You can listen and read the interview of the author, Adam Ellick here.
There are 3 videos of 15 to 17 minutes each. The series is titled: Operation Infektion, Russian Disinformation: From Cold War to Kanye You can watch them here. It begins with the AID’s hoax that it was a biological weapon developed and released by the US Military and how the KGB planted it and got it to spread such that it was ultimately reported on a US national news broadcast. This hoax still has it’s believers.
We learned about propaganda from our experience with Nazi Germany. With the advent of the internet, propaganda has become a more effective and a less costly means of waging war. Based on the reporting in the last episode of this series the US is vastly behind the curve when it comes to protecting our self from the harm it causes.
This really is an issue as large and significant as any of those most directly effecting us such as health care, climate change, income inequality. Unfortunately unlike those whose effects are directly experienced, propaganda/fake news has a virtual reality cover. Which leads to me to the question: What happens as humanity becomes more accustom to experiencing life via virtual reality than naturally? I suspect we become more susceptible to the intent of propaganda/fake news.
Listen to Mama Cass and John Denver talk about the need to register and vote in August of 1972. Gee, what was happening then? Maybe this vote will be the one that sets us on a path to not repeat history.
“The official actuaries of the Social Security system say in order to get our Social Security and retirement funds in balance, they’d have to cut benefits by 25 percent indefinitely into the future,” he says. “Do I think it’s going to happen? Well I don’t know, but this is one of the reasons why inflation is the major problem out there. So long as you don’t do it, you’re going to cause the debt overall — the total government debt — to rise indefinitely, and that is an unstable situation.”
He adds: “In the book … discussing what the long-term outlook is all about, we say that the issue of the aging of the population and its consequences on entitlements is having a significant negative deterioration over the long run. The reason for that is what the data unequivocally show is that entitlements — which are mandated by law — are gradually and inexorably driving our gross domestic savings, and the economy, dollar for dollar. And so long as that happens, we have to borrow from abroad, which is our current account deficit.”
He also said:
“When you deal with fear, it is very difficult to classify,” he tells Here & Now‘s Jeremy Hobson. “But you can look at the consequences of it, and the consequence is basically a suppressed level of innovation and therefore of capital investment and a disinclination to take risks.”
I agree with this, but not just as it relates to “ a suppressed level of innovation…” but instead as it relates to the 2005 World Bank report on what produces wealth in a developed economy like ours. It comes down to trust. Trust in your judicial system and trust in your education system. I discuss this in the following 3 posts: 2007, 2009, 2011
This election at it’s core is about trust. Destroy that, and we have no democracy, we have no economy. It’s that simple. That McConnell et al has decided he will not abide by the rules agreed to in conducting the business of the Senate means we have no currently functioning democracy. That is how fragile democracy in the US is. Our democracy comes down to two people, the leaders of each party in the Senate agreeing to the rules. When one decides not to, there is nothing that can be done other than vote.
This past weekend, I was in North Adams, Ma. We did some exploring of the area and came across a company started in 1837 that still exists today in Buckland. It no longer produces there, as it has moved to Westfield, Ma. It’s only move in 178 years. However, it has not survived the trend of Capital Investment companies. Though, their being purchased does not appear to be a bad thing based on their website.
This picture I took is why I am posting.
The letter struck me as to what we are and have been discussing for decades now: globalization, off shoring, tariffs, industrial policy, etc. In particular, it is this sentence from the letter:
It affords me special pleasure to see American manufacturers succeed in making those things which are generally articles of import.
At its peak in 1905, Arnold print works employed more than 3,000 workers and was one of the world’s leading producers of printed textiles. Arnold produced 580,000 yards or 330 miles of cloth per week. Arnold had offices in New York City and Paris. In addition to printing the textiles, Arnold Print Works expanded and built their own cloth-weaving facilities in order to produce “grey cloth”, which was the crude, unfinished textile from which printed color cloth was made.
Update: There is this one other line regarding Arnold Print Works which reminded me of another prior post.
In 1942 Arnold Print Works was forced to close its doors and leave North Adams due to the low prices of cloth produced in the South and abroad,…
My prior post is (11/28/08) regarding a past Democratic Senator, Ernest F. “Fritz” Hollings. He hated unions. He hated “free trade” (off shoring of jobs). But he failed to see that his work of promoting the South as a cheap labor nonunion region was exactly the same thing he was hating regarding the off shoring of jobs.
This facility was followed by Sprague Electric. I recognize the name due to my guitars. As to it’s demise, there is this:
Also by the 1980s, many electronic assembly plants were overseas, and there was more inclination to buy local or from areas closer to assembly. This was an area Sprague Electric could not compete.
What Arnold Print Works and Sprague Electric have in common is that these were companies that were founded on the idea of making a product. Arnold Print Works applied current technology. Sprague was actually a creator. Not a “job creator”. Just a plain old creative power.
Since the presidential election there have been claims made that the Democratic Party is not interested in change. People have noted how the pre-election rhetoric of both Bill Clinton and Barack Obama did not match their post election actions. (I’ve pointed out specific examples in the past).
I just heard the following article on Democracy Now and I think it is important for people to hear just what has been happening when it comes to the hoped for “Blue Wave” of FDR New Deal, Second Bill of Rights movement of our governing body.
NERMEENSHAIKH: We turn now to a new exposé by The Intercept that confirms how powerful Democratic officials have worked to crush competitive progressive candidates in primaries around the country, choosing instead to back moderate, business-friendly candidates. This comes after President Obama used his farewell address to encourage Americans upset about the outcome of the 2016 election to take action by running for office themselves.
From Lee Fang, author of the article regarding the subject:
That’s right. Steny Hoyer is the number two Democrat in the House. He also has ambitions to be the next speaker of the house. And Steny Hoyer, elected from Maryland, really skyrocketed through the Democratic leadership ranks. He was elected in 1981, but he has played a part in the DCCC for his entire congressional career. He has been a big party fundraiser. He is the point person in the Democratic caucus to outreach to K Street to raise big bucks from lobbyists and from corporate PACs. He has played a very pivotal role in going around the country and selecting establishment candidates and helping them fundraise, and hopefully, in his perspective, making sure they win the general election and support his agenda once elected.
I am posting this NPR Fresh Air radio article here because it talks about a part of our society that has not been talked about much. When it comes to discussion of taxation, social programs, how our economy works, the basic premise of free market misses an awful lot.
From the page:
For many poor families in America, eviction is a real and ongoing threat. Sociologist Matthew Desmond estimates that 2.3 million evictions were filed in the U.S. in 2016 — a rate of four every minute.
“Eviction isn’t just a condition of poverty; it’s a cause of poverty,” Desmond says. “Eviction is a direct cause of homelessness, but it also is a cause of residential instability, school instability [and] community instability.”
Desmond won a Pulitzer Prize in 2017 for his book, Evicted: Poverty and Profit in the American City. His latest project is The Eviction Lab, a team of researchers and students at Princeton University dedicated to amassing the nation’s first-ever database of eviction. To date, the Lab had collected 83 million records from 48 states and the District of Columbia.
“We’re in the middle of a housing crisis, and that means more and more people are giving more and more of their income to rent and utilities,” Desmond says. “Our hope is that we can take this problem that’s been in the dark and bring it into the light.”
One stat that stood out: The average age of the homeless is 9 years old. That is how many homeless are children.
Incomes have remained flat for many Americans over the last two decades, but housing costs have soared. So between 1995 and today, median asking rents have increased by 70 percent…So when we picture the typical low income American today, we shouldn’t think of them living in public housing or getting any kind [of] housing assistance for the government, we should think of folks who are paying 60, 70, 80 percent of their income and living unassisted in the private rental market. That’s our typical case today.
What is understood after listening is again, as a nation we are penny wise and pound foolish. Somehow, some way we have to get this nation to understand it is less expensive to take care of people than it is to let them live in disparate poverty.
Stabilizing a home has all sorts of positive benefits for a family. The kid gets to finish school. The neighborhood doesn’t lose a crucial neighbor. The family gets to root down and get to understand the value of a home and avoid homelessness. And for all of us, I think [we] have to recognize that we’re paying the cost of eviction because whatever our issue is, whatever keeps us up at night, the lack of affordable housing sits at the root of that issue. …
I have this pile of income data sorted out from Saez’s work (the GDP is BEA). My thoughts regarding our economy is that income inequality (or equality) matters. It matters so much, that it is the all defining focus of government in a democracy. Every policy made should be judged against this goal of ever greater equality as we use the tool called “economy” for the betterment of our lives.
For most (even the tippy-top earners), the biggest share of income is not earned from money, but from labor, whether physical or cognitive. Because of this, there must be effort as reflected in our policy toward regulation and initiatives that continually work to equalize the share of income. I am confident, that just as Cactus showed there is a low and high to top marginal rates correlating with GDP growth rates, the same is true for share of income. That’s my thoughts.
I sorted out the share of income in dollars and percentages in the past and have posted them. This time I look at per capita income and compare them to GDP.
Starting at the low point for both groups in 1933, we see $6142/person (16.46% of the total personal income) for the top 1% and $315/person for the rest. The following chart shows the years of income and GDP doubling along with the top’s percentage share. I took the starting income and kept doubling it to find the year closest. A + or – means the actual income is before or after the year (between 2 years).
For the top, the number of years to double are: 9,19, 12, 7, 5, 11, 9
For the bottom 99 the number of years to double are: 8, 7, 17, 9, 7, 15,
For GDP the number of years to double are: 8, 5, 11, 11, 8, 7, 12, 13
The bold number is the last doubling before 1976.
If we look at 2005 incomes, it is clear the trend for years to income doubling was increasing for the 99%. For this group, 9 years past the last doubling, there has only been a 34.5% increase where as the top has doubled. It appears that the best income percentage for both the top and the rest is around 10 to 12%. Based on my prior posting, I will say with confidence that once the 1%’ers increase their share to 16% of the income we are screwed. That is because, it was as the 1%’ers passed through the 16% mark as their share declined (the income low point in 1933) that the post 1929 economy started its turn upward. On the other end of this time span, it was 1996 that the 1%’ers passed through the 16% point as their share increased. 1996is the year that the 99%ers income fell below the personal consumption line and has stayed there since. Can you say deficit spending? Another funny thing about the 30’s, the second recession, the top 1% hit 19.26% of the income in 1936. The WW2 turn around? The top 1%’ers share finally went below 16% in 1941 and never turned back.
However, here is the meat. Using 1976 as the center point of the range because it is the low point of the share of income for the top 1%, there are 5 times that GDP doubled for an average of 8.6 years per doubling. This during the time that income share was becoming more equal. As income became less equal over the next 32 years, there are only 3 doublings of GDP or once every 10.6 years. Also, the time between doubling is increasing to more than during the prior 43 years.
Now, for the class war aspect. In the first 43 years, the top 1% saw their income double only 3 times (1 every 14.3 yrs) compared to the bottom 99% seeing theirs double 4 times (1 every 10.75 yrs). During the next 32 years, the top 1% has experienced 4 doublings, one every 8 years compared to the 99% experiencing this only twice, one every 11 years.
Here is the graph that illustrates the relationship of shifting income share and GDP growth. Following Spencer’s past suggestion, the graph is a logarithmic scale.
Basically, increasing of income was more equal and the economy grew more as the top was losing share. The post 1976 economic policy we have been following has quite frankly been killing our economy. Yeah, it sure benefited the top 1%, they got their’s. But, it could not last because, you can not have one group taking more out of the economic growth faster than it can grow. That, boy’s and girls is the lesson of the first 43 year compared to the last 32 years. For the first 43 years, GDP doubling was always ahead of the income. For the next 32 years, GDP growth was always behind the income which was do to the top 1%’s share. Their’s is the only income that increased faster than the economy. In chart form it looks like this:
First 43 years doubling: GDP 8.6 yrs, 99%’ers 10.75 yrs, 1%’ers 14.3 yrs.
Next 32 years doubling: GDP 10.6 yrs, 99%’ers 11 yrs, 1%’ers 8 yrs.
You know what else this is? It is the difference between reducing debt or increasing debt: Saving or spending tomorrow’s money. Unified budget (illegal) or general budget.
So, what should economic policy in a democracy strive to do? Promote more equality in the nation’s income which everyone helps to produce thus giving everybody a more equitable rise in their standard of living or promote the top 1%’s growth and the hell with all the rest? The rest being 99% of the population, the overall economic growth, the deficit, quality of life (retirement, health care, free time, better life for future generations) and just plain happier people who don’t find a need to fight with everyone else on the planet.
Such policy if implemented will also act as the stop gap for this current downward trend better than anything proposed so far because it will be returning to the true purpose of an economy in a democracy like ours. Or, we can keep talking in quintiles hiding the truth and pretending that it’s just a housing bubble, and people spending to much, and a credit freeze and bad regulation and oil and lack of stimulus spending and it is not really like 1929 and…