Income inequality among Americans has been a major subject of debate for a decade, and ever more so with leftwing extremists now dominating the ranks of Democratic presidential aspirants. So, let’s get the basic facts and issues straight.
A salient claim in this area comes from the French economist Thomas Piketty in his 2014 book, Capital in the Twenty-first Century, a 700-page tome. His starting point is that the rate of return on capital investment is generally significantly greater than the growth rate of a market economy (or, r>>g). This is generally uncontested.
So, Piketty concludes that the rich, whose incomes derive greatly from their ownership of capital, will get ever greatly richer. On the other hand, the middle and lower classes, whose incomes derive mainly from their labor, will see those incomes increase only at the growth rate of the economy. Hence, they will fall ever farther behind the upper-income people.
If that were the full story, why didn’t income inequality spiral up long ago? In part, it’s because taxes burden upper classes very disproportionately and government transfer payments (mainly welfare, food stamps and health-care subsidies) are concentrated on the lower classes. Piketty’s comparisons are based on pre-tax income, not including transfer payments, as are almost all the data advanced by those obsessing about income inequality.
These folks also fail to adjust for declining household size in recent decades when they allege falsely that middle and lower family income levels have not increased. And Piketty’s analysis overlooks that the wealthy usually divide their estates among charities and various heirs and other folks when they pass it on, thus counteracting the fast growth of family incomes based on capital.
But the important point is that taxes and transfer payments have continued to grow relative to our economy. So, they now overwhelm every other factor, as shown by recent research by Phil Gramm, former economics professor and chairman of the Senate Banking Committee; and John F. Early, twice assistant commissioner at the federal Bureau of Labor Statistics.
When we consider family incomes after taxes and public and private transfer payments, the story is very different from that based on the pre-tax and -transfers data. That’s because 80 percent of all taxes are paid by the top two income quintiles (that is, the top 40 percent) and 70 percent of all transfer payments are received by the bottom two quintiles. Aggregate taxes paid and transfers received by the middle quintile are almost exactly equal.
The average bottom-quintile household earns $4,908 annually while the average top-quintile household earns $295,904, or 60 times as much. But when we consider the $45,993 additional income the lowest-quintile homes get from public and private transfer payments, less taxes they pay, their average incomes rise to $50,901. For the top quintile, the net of taxes and transfers is a reduction of $100,998, leaving them with $194,906.
So, the real ratio between the top and bottom quintiles is only 3.8 times, not 60 times.
And government and the private sector shift enough net income to the lowest quintile to raise their net income to middle-class levels at $50,901.
So, is a 3.8:1 ratio fair and reasonable?
One important fact is that income mobility is higher in America than in most other countries.
Also, 50 years of increasing transfer payments and rising and progressive taxes have had another effect. When the War on Poverty transfers began in 1967, nearly 70 percent of bottom quintile prime-working-age adults were employed. Today, that figure is only 36 percent. For all the top three quintiles, however, labor-force participation has increased.
Ultimately, though, the question depends on what fairness is, as much as it does on data. Progressives, populists and class warriors erroneously claim it means equal outcomes for everyone. They forget that in market systems income flows to people roughly in proportion to the value they deliver to others – that is, proportionately to their contribution to human wellbeing and the public interest. Not so for systems that politically allocate resources.
Finally, recent research shows that three-quarters of the high incomes made by entrepreneurs flows from their own “human capital” contributions, not from the financial capital they employ. So, yes, 3.8:1 seems quite fair.
What are the main social, political and economic problems we face today?
I think they fall into two groups, economic-political and cultural.
The economic-political issues are the continuing and still growing over-reach of government, both domestically and in international affairs. Domestically, this means excess spending, taxing and borrowing by government at all levels since about 1960 – an excess that keeps growing every decade. These fiscal problems are enabled to some extent by the federal monetary policy of printing excess dollars and thus inflating the currency.
It also includes the ever-growing excess in regulation of all kinds – health, safety, environmental and economic. Plus government expansion into ever more sectors of the economy as a direct provider of services that would better be served by private markets.
The growing regulatory and intervention excess together make up the bulk of the modern administrative state; combined with excess government spending, it depresses economic growth. Slowing economic growth means people on average are less well-off than they would be without these excesses. That is, government excess diminishes aggregate human wellbeing – and also fairness.
Thus, from the 1960s to the Great Recession, we had real per-person growth in incomes of about 2 to 2.5 percent per year. During that time, the growing government excess was offset by favorable trends in population growth, labor force participation, debt both public and private, foreign trade and international economic growth. These trends are somewhat organic, but also greatly influenced by public policy.
In this century, all those favorable trends have reversed or slowed, and growth in government spending, regulation, etc. has continued. So, for the last decade, our per-person income growth has been less than half of what we all grew up with.
Per person real growth at 2 to 2.5 percent per year means that incomes, wealth and overall wellbeing double each generation. That’s a recipe for real progress – new medical cures, better diets, living standards of all kinds – and for general human happiness.
Growth at less than half those rates is a recipe for unhappiness, economic stagnation, political polarization and social upheaval such as we’ve seen in recent years. It will continue for as long as we have slow growth. And with continued government excess and the other problems driven by public policy, these problems may last for a long time.
A particular aspect will exacerbate these problems in the future. Generous payouts for social security, Medicare, and pension and benefits systems constitute a transfer of income from young people to older folks. These Ponzi schemes are, like all such schemes, unsustainable. They will breakdown or blow up in the future, damaging many people, families and businesses, and producing more social and political upheaval.
What’s the government excess in foreign affairs?
With the collapse of the Soviet evil empire – which, thank goodness, we helped precipitate – our foreign and intelligence Deep State looked for new adventures to keep its numbers employed and growing. The Deep State is the illegitimate child of the modern administrative state.
Certainly, Islamic-fascism is a major problem, but it doesn’t justify our continuous involvement in war in the Mideast and elsewhere, as favored by the Deep State.
It’s also promoting more strategic responses to our next major international problem, the ever-aggressive Chinese state. However, despite Chinese theft of intellectual property and similar aggressions, a trade war and tariffs are not the answer. They diminish overall human wellbeing here and in China.
Participation trophies, trigger warnings, safe spaces, etc. get more attention than they deserve. But they are the tip of the spear, reflecting a softening of society, a cult celebrating victim status, corrosive identity politics, and a deep sense of entitlement. These, coupled with government over-reach in social and political matters, are leading to an inversion of fundamental historic values and rights such as freedom of speech and religion, due process and the presumption of innocence, and Second Amendment self-defense.
What to do?
First, live a good life as a spouse, parent, friend, neighbor and citizen. Second, stay politically active to leave all our children and heirs a better legacy and life. For their sake, don’t give up.
United States Attorney General Bill Barr recently spoke at Notre Dame University. Last week I quoted from the first half of that speech. Today, from the second half. I add no commentary because he says it all so well:
“The call comes for more and more social programs to deal with the wreckage. While we think we are solving problems, we are underwriting them.
“Interestingly, this idea of the State as the alleviator of bad consequences has given rise to a new moral system that goes hand-in-hand with the secularization of society. It can be called the system of “macro-morality.” It is in some ways an inversion of Christian morality.
“Christianity teaches a micro-morality. We transform the world by focusing on our own personal morality and transformation.
“The new secular religion teaches macro-morality. One’s morality is not gauged by their private conduct, but rather on their commitment to political causes and collective action to address social problems.
“This system allows us to not worry so much about the strictures on our private lives, while we find salvation on the picket-line. We can signal our finely-tuned moral sensibilities by demonstrating for this cause or that.
“Something happened recently that crystalized the difference between these moral systems. I was attending Mass at a parish I did not usually go to in Washington, D.C. At the end of the Mass, the Chairman of the Social Justice Committee got up to give his report to the parish. He pointed to the growing homeless problem in D.C. and explained that more mobile soup kitchens were needed to feed them.
“This being a Catholic church, I expected him to call for volunteers to go out and provide this need. Instead, he recounted all the visits that the Committee had made to the D.C. government to lobby for higher taxes and more spending to fund mobile soup kitchen.
“A third phenomenon … is the way law is being used as a battering ram to break down traditional moral values and to establish moral relativism as a new orthodoxy.
“First, either through legislation but more frequently through judicial interpretation, secularists have been continually seeking to eliminate laws that reflect traditional moral norms.
“More recently, we have seen the law used aggressively to force religious people and entities to subscribe to practices and policies that are antithetical to their faith.
“The problem is not that religion is being forced on others. The problem is that irreligion and secular values are being forced on people of faith.
“[M]ilitant secularists today do not have a live and let live spirit – they are not content to leave religious people alone to practice their faith. Instead, they seem to take a delight in compelling people to violate their conscience.
“For example, the last Administration sought to force religious employers, including Catholic religious orders, to violate their sincerely held religious views by funding contraceptive and abortifacient coverage in their health plans.
“This refusal to accommodate the free exercise of religion is relatively recent. Just 25 years ago, there was broad consensus in our society that our laws should accommodate religious belief.
“Ground zero for these attacks on religion are the schools.
“The first front relates to the content of public school curriculum. Many states are adopting curriculum that is incompatible with traditional religious principles according to which parents are attempting to raise their children. They often do so without any opt out for religious families … [or] even warn[ing] parents about the lessons they plan to teach on controversial subjects relating to sexual behavior and relationships.
“A second axis of attack in the realm of education are state policies designed to starve religious schools of generally-available funds and encouraging students to choose secular options. [Cites Montana action based on anti-Catholic Blaine provision in its constitution.]
“A third kind of assault on religious freedom in education have been recent efforts to use state laws to force religious schools to adhere to secular orthodoxy. [Cites suit to force Catholic schools to employ teachers in same-sex marriages.]
“[A]s long as I am Attorney General, the Department of Justice will … fight for the most cherished of our liberties: the freedom to live according to our faith.”
United States Attorney General Bill Barr recently addressed some important issues at the University of Notre Dame. Excerpts follow (edited for space).
From the Founding Era onward, there was strong consensus about the centrality of religious liberty in the United States.
The imperative of protecting religious freedom was not just a nod in the direction of piety. It reflects the Framers’ belief that religion was indispensable to sustaining our free system of government.
They crafted a magnificent charter of freedom – the United States Constitution – which provides for limited government, while leaving “the People” broadly at liberty to pursue our lives both as individuals and through free associations.
This quantum leap in liberty has been the mainspring of unprecedented human progress, not only for Americans, but for people around the world.
In the 20th century, our form of free society has faced a severe test.
Men are subject to powerful passions and appetites, and, if unrestrained, are capable of ruthlessly riding roughshod over their neighbors and the community at large.
No society can exist without some means for restraining individual rapacity.
But, if you rely on the coercive power of government to impose restraints, this will inevitably lead to a government that is too controlling, and you will end up with no liberty, just tyranny.
So, the Founders decided to take a gamble. They called it a great experiment.
They would leave “the People” broad liberty, limit the coercive power of government, and place their trust in self-discipline and the virtue of the American people.
[I]n the Framers’ view, free government was only suitable and sustainable for a religious people.
Modern secularists dismiss this idea of morality as other-worldly superstition imposed by a kill-joy clergy. In fact, Judeo-Christian moral standards are the ultimate utilitarian rules for human conduct.
They reflect the rules that are best for man, not in the by and by, but in the here and now.
I think we all recognize that over the past 50 years religion has been under increasing attack.
On the other hand, we see the growing ascendency of secularism and the doctrine of moral relativism.
By any honest assessment, the consequences of this moral upheaval have been grim.
Virtually every measure of social pathology continues to gain ground.
Along with the wreckage of the family, we are seeing record levels of depression and mental illness, dispirited young people, soaring suicide rates, increasing numbers of angry and alienated young males, an increase in sense less violence, and a deadly drug epidemic.
[T]he campaign to destroy the traditional moral order has brought with it immense suffering, wreckage, and misery. And yet, the forces of secularism, ignoring these tragic results, press on with even greater militancy.
First is the force, fervor, and comprehensiveness of the assault on religion we are experiencing today. This is not decay: it is organized destruction. Secularists, and their allies among the “progressives,” have marshaled all the force of mass communications, popular culture, the entertainment industry, and academia in an unremitting assault on religion and traditional values.
These instruments are used not only to affirmatively promote secular orthodoxy, but also to drown out and silence opposing voices, and to attack viciously and hold up to ridicule any dissenters.
One of the ironies … is that the secular project has itself become a religion, pursued with religious fervor. It is taking on the trappings of a religion, including inquisitions and excommunication.
But today – in the face of all the increasing pathologies – instead of addressing the underlying cause, we have the State in the role of alleviator of bad consequences. We call on the State to mitigate the social costs of personal misconduct and irresponsibility.
So, the reaction to growing illegitimacy is not sexual responsibility, but abortion.
The reaction to drug addiction is safe injection sites.
The solution to the breakdown of the family is for the State to set itself up as the ersatz husband for single mothers and the ersatz father to their children.
The call comes for more and more social programs to deal with the wreckage. While we think we are solving problems, we are underwriting them.
More next week.
Monday, April 4, 2016, the greatest sportscaster ever began his 67th and final season.
Don’t take the word of two life-long Dodger fans that 88-yearold Vin Scully, the Voice of Da Bums since 1950, is the best. His awards and recognitions are way too numerous to list, so here are the greatest highlights. The American Sportscasters Association named him Sportscaster of the Century in 2000 and first on its all-time Top- 50 list later. Numerous halls of fame, a star on Hollywood’s Walk of Fame, etc.
The reasons for that extend from his encyclopedic knowledge of the game and technical broadcasting skills to his modesty, casual friendly manner, and personal warmth, all conveyed in a lyrically descriptive style via a dulcet voice. His vivid yet simple description of a game has thrilled fans for years.
It all starts with his signature introduction: “It’s time for Dodger baseball! Hi, everybody, and a very pleasant good day/evening to you, wherever you may be.”
When the Dodgers moved to Los Angeles in 1958, fans began bringing their transistor radios to the ballgame because he added so much to what they saw. Part of his charm is his mastery of baseball history and anecdote, which makes fans feel a special connection to him and the game.
He learned early on to be objective and understated, not a home-team shill and loud. And he always kept in mind that sportscasting is about the players and the game, not about him.
He’s witnessed more spectacular sports history moments than anyone. He was there (but not calling the action) for baseball’s most famous moment ever, Bobby Thomson’s pennant-winning “shot heard ‘round the world” homerun in 1951 for the Giants that broke Dodger hearts forever.
Four years later, he called the seventh game of the Dodgers’ first World Series championship ever, which Scully recalls as his favorite moment. On the last out, he said simply, “Ladies and gentlemen, the Brooklyn Dodgers are the champions of the world.” Then he turned the mic to the cheering crowd for an extended time in what became another signature move.
He explains that as an eighty year-old boy, he used to lay his head on a pillow under the large radio counsel in his parents’ home and let the sounds of the crowd and the game wash over him as ate crackers and drank milk. That memory comes back at every good baseball moment, and that’s what he shares with fans.
Other highlights? Kirk Gibson’s 1988 World Series walk off homer that’s widely viewed as the second most memorable moment in baseball history. Hank Aaron’s 715th homer in 1974 that broke Babe Ruth’s most famous career record. Barry Bonds’ 71st, 72nd and 73rd home-runs in 2001 to capture the single-season record.
Did we mention that he called “The Catch” on TV in 1982, when the San Francisco 49ers’ Joe Montana and Dwight Clark beat the Dallas Cowboys and started a dynasty? Yes, he’s great at television, too, plus football, golf and tennis broadcasting.
He’s called five baseball perfect games – no one else has two – beginning with Don Larsen’s in the 1956 Series, the first perfect game in 34 years. And 18 no-hitters, including four by Sandy Koufax, culminating with his perfecto in 1965. Two more perfect games in 1988 and 1991. Then, in 1999 he played himself in arguably the best sports (and date) film ever, For Love of the Game. As the hero takes the mound for the ninth inning, seeking to finish his perfect game, Scully says: “Billy Chapel is 40 years old, arm weary and aching. And you know, Steve, you get the feeling that Billy Chapel isn’t pitching against left-handers, he isn’t pitching against pinch-hitters, he isn’t pitching against the Yankees. He’s pitching against time. He’s pitching against the future, against age, and even when you think about his career, against ending. And tonight I think he might be able to use that aching old arm one more time to push the sun back up in the sky and give us one more day of summer.”
Vin Scully used that dulcet voice to push the sun back up in the sky for one more summer for all of us.
In college 50 years ago, I took Introduction to Political Science from Stephan A. Douglas. Not the short, fat Little Giant who debated Abe Lincoln. But a very good tall and angular professor at Illinois.
The main thing I remember from his class is his explanation about a compelling revolution in political science and economics that began a decade earlier. Traditionally, he said, political scientists sought to explain how institutions, practices and people in political and economic processes worked to promote the public interest and the common good. It was Pollyanna-ish: All for the better.
Then some iconoclasts said that’s not how things work at all. Most folks in the political and economic spheres aren’t trying to promote the public interest. To the extent they can, they use institutions and practices to promote their own special interests. This insight, which today seems obvious, changed political science and helped foster a branch of economics known as public choice theory – which has produced a number of Nobel Prizes in economics.
Against the background of the Viet Nam war and the turmoil in American politics in the 1960s, it was a bracing idea, and it quickly became a formative part of my intellectual make-up. It has served me well in politics and public service.
Now come our corporate leaders with a perfect example of how political and economic behavior masquerades as public-spirited when it’s really completely self-serving. The Business Roundtable, an association of chief executive officers of America’s largest companies, issued a new “Statement of the Purpose of a Corporation,” signed by 181 CEOs.
“While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” reads the key sentence. It names those stakeholders: customers, employees, diversity and inclusion, suppliers, the communities where they work, the environment and sustainability. Oh, yes, also “effective engagement with” company stockholders.
Since 1997, their periodic “Principles of Corporate Governance” statements have endorsed the notion of shareholder primacy: that corporations exist primarily to serve stockholders. In the New York Times Magazine on September 13, 1970, economist Milton Friedman, one of the intellectual giants of the 20th Century, said business executives who pursue a goal other than making money for their equity investors are wrong.
They are, he said, “unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.” They become “unelected government officials” who essentially tax employees and customers. They violate their legal and ethical fiduciary duties.
But the new diktat declares all “stakeholders” equal – leaving corporate moguls, our enlightened visionary betters, to decide how to balance their interests via corporate actions.
The concept of corporate stakeholders arose soon after the public choice revolution. Originally, it was descriptive: It described the groups that were affected by actions of corporations. But once the term was invented, it morphed into a normative concept suggesting the stakeholders have some kinds of claims on the actions of companies and their decision-makers that legitimately compete with the fiduciary duties owed to those who put their capital at risk by investing in the firm.
Now the CEOs have thrown in the towel and joined these predatory special-interest claimants. Why?
It’s something I’ve observed the last 40 years in regulation, politics and business. Essentially, executives are – surprise! – pursuing their own self-serving interests. They want to be lionized everywhere as great leaders, compassionate souls, visionary intellectuals. They want to use the resources their stockholders have entrusted to them to buy off everyone – unions, politicians, predatory special interests such as environmentalists, and the lamestream press.
Maximizing long-term discounted stockholder value within ethical norms crimps those aspirations.
This rot is clearest with regulated utilities, where executives can cut implicit (sometimes explicit) deals with regulators: We’ll do almost any foolish thing you want us to, as long as we can pass on the costs to ratepayers.
The problem started a century ago when large corporations were no longer managed by their primary owners, but instead by hired professional managers with their own self-serving agendas. Ironically, consumers, employees and the real public interest in economic growth and fairness suffer with stockholders in this scheme. Friedman was more right than he knew.
In last week’s column, I showed things really are much better now than in the past and said this week I’d provide some reasons for hope in the future.
Let’s start with: Our air and water are much cleaner now than 50 years ago. But we’ve not really observed the fundamental principal of regulation: We should implement such laws and regulations only if they are socially cost-effective and fair. That is, if the social benefits exceed the costs and minimize cross-subsidies. Fortunately, the Trump administration has stopped the rush to mindlessly promulgate ever more regulations and started to reconsider a few excessive ones now on the books. Maybe we can get policy right and all be better off.
Many children are indeed growing up in poor circumstances and face challenging futures. But that’s always been true, and some of them turn out surprisingly well anyway. Many other children are raised in very good circumstances, and some of them also do very well. Our daughter gives me much hope for the future. I hope your kids do so for you, too.
And some people are finally beginning to speak up about the need for two-parent families and the damage divorce and single parenting often do to children. We can’t reduce these problems until we openly acknowledge them.
Almost all significant dire things Al Gore predicted in his 2006 book An Inconvenient Truth have failed to materialize, especially the 20-foot rise in sea level. Good thing for him, too, because he bought an $8-million mansion on the coast. Probably even he didn’t believe that dreck.
Even though government excess and other basic trends have slowed economic growth, it seems to have settled at two percent annually in real terms, instead of slowing ever more. Economic growth is necessary to increase human wellbeing. Maybe we can turn our policies and other problems around and get back to long-term growth above three percent so each generation is about twice as well off on average as its parents.
A handful of high-tech companies have huge size and virtual monopolies in communications platforms. But just as IBM and others once ruled their sectors, only to be taken down by disruptive firms including the current leaders, so also will they eventually succumb to new technologies and business models, curing some of their current bad behavior.
A prominent futurist predicts artificial intelligence will blossom in the future, the way micro-electronics and the internet did before. And its benefits will exceed its risks. I think he’s right.
The rot of the Deep State is bringing it down fitfully and slowly. People are gaining consciousness of it and the problems it causes. All this likely will set off a round of reform that will benefit the public interest and ordinary folk.
Rumors of the death of the private auto are greatly exaggerated.
New technology has fostered a boom in creative arts and will continue to do so. You can make a video and post it to the world with your phone. Yes, most are forgettable, but not every play in Shakespeare’s time was a masterpiece, either. New tech gives us much new art and science.
Baseball is as much fun as ever to watch, especially the brilliant fielding plays. And the Dodgers are still the best team. Now, if only the Orioles could get back to their glory days …
If current film-makers won’t produce good movies (plot, character development, hope, inspiration, etc.) we can now watch classics on TCM, which we couldn’t decades ago. Thanks, Ted Turner.
There’s some hope biotech will help us live better, longer lives – and reduce the cost of medical care. No guarantees here, because health care and insurance costs continue to rise, but we can hope.
Technology and economic progress continue to improve our diets – quality, variety, nutrition, etc. Now we need to find ways to manage our intakes to fight obesity and promote overall wellness. A task for people, not governments.
We’ve been through crazy times like the present before and recovered. The Great Depression, the Sixties and various wars. We can do so again.
Thank you, President Trump, for considering the human lives lost before counter-attacking the evil empire of Iran.
Many folks have had enough of the anger, condescension, dishonesty, hate, bitterness, aggression, etc. that are so plentiful these days. So, despite my inclination to answer so much of it (and it needs to be answered), I write today about some reasons to be grateful for the world we inhabit — and hopeful about the future.
Our family recently traveled back to the Midwest for the biennial coast-to-coast extended family reunion on my mother’s side. The fact that many folks can travel economically such long distances for brief stays is something to appreciate, because it wasn’t possible in the past and still isn’t in most parts of the world today.
Mom’s the oldest surviving member of the family, while our daughter Karyn’s the youngest of her generation of cousins. So Karyn has had a great opportunity to learn first-hand some real and important history others get only in passing in school.
Her grandmother, until she turned eight, was a barefoot, dust-bowl, depression era Kansas farm girl. My grandparents (Mom’s parents) did well as young farmers in the Kansas farm boom of the 1920s, but as the water table sank, their well went dry and they lost the farm.
Having been diligent and productive farmers and paid their loan to the end, the bank asked them to take over a farm that still had water but had been abandoned by folks who went to California. When the well at the second farm also went dry, the bank asked them to try once more.
When the third farm went dry too, as the water table continued downward, they gave up farming and moved into Wichita. From my grandfather’s funeral many years later, the salient thing I remember is he continued to deliver eggs to neighbors even when they couldn’t pay.
Mom vividly remembers that the only time she ever saw her parents cry was after they moved into town and the pastor came to tell them he had found Grandpa a job. They cried at the family table because they knew their seven (soon to be ten) children would not go hungry. Those were really hard times.
Karyn also has such a story on her mother’s side from the same period. Kathy’s dad’s family owned a restaurant (25-cent full meals!) and then a general store in Lily, South Dakota, population 33. As things went downhill for everyone, they had to accept barter from folks at the store because no one had cash.
Ultimately, they couldn’t make the last payment on the family car and lost it, while the store closed. They packed everything they could into their suitcases, including the family silverware, and boarded a train for the west coast. Eventually they landed in California, where Dad and his father worked in the Marin shipyards in World War II (and Dad caught asbestos fibers in his lung that killed him half a century later).
As I told Karyn when we watched Ken Burns’ documentary, The Dust Bowl, that was something of a family history for her. But both families worked hard and prospered after the war. Kathy and I have been more fortunate than most, and so today Karyn will be able to go to college wherever she can get in.
Not everyone has been so fortunate, but a very large percentage of the population lives much better today than their forebears.
For example, in the last century, the portion of the average family budget that goes for food has declined from 25 percent to less than 10 percent. And over half of today’s food dollar is spent eating out, with much greater selection than at home and no dish-washing. A couple of years ago Karyn ordered Australian lobster at an Elko restaurant in February – something completely unheard of when I was her age. (Yeah, I really said that.)
Clothes, furniture, tools and all kinds of material things are plentiful and inexpensive today. So, much of our spending now goes to services only the very wealthy could afford in previous decades.
Yes, economic growth has slowed, and we may not see such rapid progress going forward. But next time I’ll give some reasons to be hopeful and optimistic for the future.
“Job growth was about 227,000 in June but 46 percent of the people surveyed say they are not better off. Democrats claim the 50 percent growth of the stock market does not help the common people because most do not invest in stocks, except those with 401(k) plans. But the stock market indicates companies are willing to invest, which leads to job growth. Please explain.”
Good points from a thoughtful reader.
June job growth of 227,000 was good, and recent upward revisions of prior-month figures likewise. However, longer-term job growth hasn’t been very robust, even though unemployment is at record lows.
Some people who were dropped from the job market during the Great Recession and tepid recovery that followed it simply haven’t returned. But some are beginning to. Some are seniors who entered retirement early and aren’t being welcomed back by hiring managers. And some are millennials who retired to their parents’ basements or similar quarters.
Dems err when they claim securities market price gains don’t help common folk. Beyond 401(k) plans and personal portfolios, the much larger impact is that the vast majority of those people depend on retirement plans that are invested in the markets. Given the poor management of most plans, members need markets to soar, for otherwise their golden years may not be so rosy.
And stock market rises don’t necessarily indicate strong investment by firms, so long-term job growth has been weak, as noted above; however, in the last decade, things have changed significantly from the pre-recession decades: thus, the “new normal.” And I think those long-term changes explain our national ennui and sourness.
The key fact is that, even after a decade of recovery and stock market growth, our economy is growing significantly slower than in previous decades. So, people’s incomes and wellbeing are rising much slower than they did during most adults’ lives, when annual per-person real growth of 2.0-2.5 percent meant that standards of living doubled every generation. Now, the generational growth is only about 40 percent, instead of doubling.
Although people don’t much consciously think or talk about that, it greatly conditions their sense of wellbeing and their outlook. For example, living space in the average home has doubled over about 40 years, and home amenities have also greatly improved. So, people are less burdened by preparing and cleaning up after meals with microwave ovens and dish washers. And they enjoy more TV options on much bigger and higher quality screens. Life seems better, and it is.
Although they don’t think about per-capita real growth having been cut in half, they do get a sense the last decade that things aren’t getting better the way they had come to expect from life-long experience. The fact they don’t know the exact reason for that is itself discomforting.
In my controller’s annual reports the last four years, I explained some key reasons for the new-normal slow growth. Government excess – spending, taxes, and debt rising continuously relative to the economy, plus continuously proliferating regulations of all kinds – all slowed growth ever more. Labor force participation grew before the turn of the century, helping growth, but has slowed since.
Debt of all kinds grew unsustainably before the recession, accelerating growth, but has stalled since then. And increasing trade and international investment, plus strong world economic growth, all helped us before the recession, but those trends too have reversed since then.
These are the important drivers people don’t see, but they definitely feel their effects of slow growth of productivity, jobs and incomes.
As noted above, people generally don’t think consciously about then versus now, although such considerations may play a subconscious role in their outlooks. Instead, regardless of how much their lives have improved, they always focus on us versus them: They are acutely aware of how well off they are compared to other folks.
And when they feel things aren’t going well for them, they look for scape goats and others to blame. When they don’t understand the economic complexities and long-term issues, they look for single-factor causes and immediate trends.
Swathed in an elegant suit of red, white and blue and enveloped by a huge crowd of the same beautiful hues, President Donald J. Trump announced his re-election campaign Tuesday night.
After reviewing the failures and treachery of his opposition and the Fake News, he counted at length the accomplishments of the American people and his administration. He ushered in the summer of our politics, economy and culture and outlined the challenges we face and how we will Keep America Great.
Of course, the lamestream media couldn’t focus on anything but Trump’s deserved criticism of them and the reptiles of Washington’s political swamp.
“Jabbing at the press and poking the eye of the political establishment he ran against in 2016, President Donald Trump officially kicked off his reelection campaign Tuesday night with a grievance-filled Florida rally that focused more on settling scores than laying out his agenda for a second term,” said AP in its story immediately after the speech.
And that’s completely a lie.
The truth is he focused mainly on how we’ve made America great again and what we’ll do in his second term to keep America great.
He started by saying our movement is made up of hard-working patriots. Next, he pointed out our country is thriving, prospering, booming and soaring to new heights. He added, “Our future has never looked brighter or sharper.”
We’ve reclaimed our government from a permanent political class that has enriched itself at the expense of the American people. We’ve transferred power back to you, the people of the USA. We’ve restored the future America deserves.
Yes, he observed his opponents are driven by hatred and rage. The truth of that was encapsulated in Hillary Clinton’s calling half of America “deplorables and irredeemables.” (Editor's note: For those that don't want to watch the link, here is Clinton's full quote: "We are living in a volatile political climate. You know, just to be grossly generalist, but you could put half of Trump's supporters into what I call the basket of deplorables. (laughter, applause) Right? The racist, sexist, homophobic, xenophobic, Islamophobic - you name it. And, unfortunately there are people like that. And he has lifted them up. He has given voice to their websites that used to only have 11,000 people - now have 11 million. He tweets and retweets their offensive hateful mean spirited rhetoric. Now, some of those folks - they are irredeemable, but thankfully - they are not America. But the other basket - and I know this because I look at this crowd and I see friends from all over America here - I see friends from Florida and Georgia and South Carolina and Texas, as well as, you know - New York and California - but that other basket of people are people who feel that the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures, and they're just desperate for change. It doesn't really even matter where it comes from. They don't buy everything he (Trump) says, but he seem to hold out some hope that their lives will be different. They won't wake up and see their jobs disappear, lose a kid to heroine, feel like they're in a dead-end. Those are people we have to understand and empathize with as well.")
He noted the progress he and the senate have made in restoring a competent non-political judiciary that promotes the rule of law, not politics from the bench. Despite the vicious attacks against a great jurist, Brett Kavanaugh.
He discussed at various points the progress we’re making on the human tragedy of massive illegal immigration and initiatives he will be proposing. He announced a July 4th celebration of America in Washington.
In officially announcing his reelection campaign, he promised, “I will never, ever let you down.” He promised his heart, mind and soul. He observed the essence of his administration has been keeping his promises and not being co-opted by the special interests. And he generously shared credit with many folks for the progress we’re making.
He emphasized the progress on unemployment: lowest figures ever for African Americans, Hispanic Americans and Asian Americans. Lowest rates in 74 years for women. And wages are rising, especially for low-income workers.
These results are due to cutting and reforming the onerous and unnecessary regulations that have long accumulated due to special interests and statist liberals and progressive ideologues. Also to his historic tax cuts. Further, he celebrated America’s energy independence, noting our air and water are cleaner than in many decades and better than most places in the world.
He pointed to crime policy reform, progress against opioids (thank you, Melania), right-to-try initiatives, and health care for military veterans.
He promised we’ll have fair trade and related relations with China, or none at all. He highlighted the progress we’ve made with Mexico and Canada. He discussed how we stand up to evil empires including Russia and Iran, where the Obama administration kowtowed to them. He touted our relationship with the good nation of Israel. And we support the people of Cuba and Venezuela against socialist oppression and poverty.
Yes, he noted that Democrats are driven by hatred and rage. They want to keep us splintered and divided as they become ever more radical and unhinged.
He proclaimed, “America will never be a socialist country. As Republicans, we believe in freedom, not socialism.” President Trump defended free speech, religious liberty and the right to bear arms.
He opposes taxpayer funded abortions and said, “Republicans believe that every life is a sacred gift from God.”
Finally, he promised we’ll provide opportunity for our children and make America wealthy, strong, safe and great again. But the lamestream press won’t acknowledge this summer of our politics.