So big tech stocks — and the people who own them — are riding high because investors believe that they’ll do very well in the long run. The depressed economy hardly matters.
Unfortunately, ordinary Americans get very little of their income from capital gains, and can’t live on rosy projections about their future prospects. Telling your landlord not to worry about your current inability to pay rent, because you’ll surely have a great job five years from now, will get you nowhere — or, more accurately, will get you kicked out of your apartment and put on the street.
From the comments:
Mickey NY Aug. 20 Times Pick
It’s sad really, this free market worship. No investment in post secondary education affordability in the rust belt, no investment in infrastructure during the often bragged about this period of Wall Street record setting, no bipartisan long-term game plan for preparing and training citizens of this nation for 21st century skills. And the environment seems to go the opposite of record Wall Street numbers. Red states need to look in the mirror and ask themselves about how giving tax cuts to billionaires and building 3 miles of walls is working out.
Paul Krugman commented August 21
Prediction: almost nobody will look in the mirror. A sad reality I’ve learned over the years is that almost nobody ever admits having been wrong about anything.
A currency collapse is raising prices for everything and an overall economic collapse is making imported meat soar to about $25 a pound, driving Lebanese to the brink.
“Some people perceive bartering as a terrible thing, using it to explain how desperate we are… No, Lebanese are not poor, they are generous people who need to maintain their dignity,” “Lebanon barters” creator told Hassan Hasna.
“A Lebanese person would say: ‘Yes, the economic situation is tough, and the situation is deteriorating but it doesn’t mean I want to humiliate myself and beg. I am willing to barter a piece of clothing in exchange for bread.’ I am proud of such people. They’re doing the impossible to survive and live with dignity.”
Lebanon Barters facebook group
What it’s like to lay off nearly 300 employees—and rethink unchecked capitalism
Now New York is facing another unthinkable catastrophe — this time, along with the entire world — and the restaurant industry is threatened as never before. Last week, Danny Meyer, Colicchio’s one-time partner, shut down all 19 of his storied establishments, laying off 2,000 people — some 80% of his workforce. Thomas Keller furloughed 1,200. And Colicchio has done the same, laying off all but a few of his 300 employees.
Recognizing an existential crisis for his industry — with many other sectors of the economy sure to follow — Colicchio has turned his attention to defending independent restaurants and their 11 million employees around the country from total devastation.
Aaron Gell talking with Tom Colicchio, March 27 2020
YANG: Now, I studied economics. And according to my economics textbook, those displaced workers would get retrained, re-skilled, move for new opportunities, find higher-productivity work, the economy would grow. So everyone wins. The market, invisible hand has done its thing. So then I said, “Okay, what actually happened to these four-million manufacturing workers?” And it turns out that almost half of them left the workforce and never worked again. And then half of those that left the workforce then filed for disability, where there are now more Americans on disability than work in construction, over 20 percent of working-age adults in some parts of the country.
DUBNER: So the former manufacturing workers, a lot of them are on disability, a lot of them are also — especially if they’re younger men — they’re spending 25 to 40 hours a week playing video games.
YANG: Yeah so it did not say in my textbook, half of them will leave the workforce never to be heard from again. Half of them will file for disability and then another significant percentage will start drinking themselves to death, start committing suicide at record levels, get addicted to opiates to a point where now eight Americans die of opiates every hour. When you say, “Am I for automation and artificial intelligence and all these fantastic things?” of course I am. I mean, we might be able to do things like cure cancer or help manage climate change more effectively. But we also have to be real that it is going to displace millions of Americans.
People are not infinitely adaptable or resilient or eager to become software engineers, or whatever ridiculous solution is being proposed. And it’s already tearing our country apart by the numbers, where our life expectancy has declined for the last two years because of a surge in suicides and drug overdoses around the country. None of this was in my textbook. But if you look at it, that’s exactly what’s happening. The fantasists — and they are so lazy and it makes me so angry, because people who are otherwise educated are literally wave their hands and be like, “Industrial Revolution, 120 years ago. Been through it before,” and, man, if someone came into your office and pitched you in an investment in a company based on a fact pattern from 120 years ago, you’d freakin’ throw them out of your office so fast.
Figuring out why has become a core part of Philippon’s academic research, and he offers his answer in a fascinating new book, “The Great Reversal: How America Gave Up on Free Markets.” In one industry after another, he writes, a few companies have grown so large that they have the power to keep prices high and wages low. It’s great for those corporations — and bad for almost everyone else.
Many Americans have a choice between only two internet providers. The airline industry is dominated by four large carriers. Amazon, Apple, Facebook and Google are growing ever larger. One or two hospital systems control many local markets. Home Depot and Lowe’s have displaced local hardware stores. Regional pharmacy chains like Eckerd and Happy Harry’s have been swallowed by national giants.
David Leonhardt, https://www.nytimes.com/2019/11/10/opinion/big-business-consumer-prices.html
The Devil in Steve Bannon
The celebrated filmmaker Errol Morris has a new documentary — and candid remarks — about Donald Trump’s dyspeptic strategist.
Do you think, a couple of years from now, Bannon’s going to be this very curious footnote, this sort of one-off? Or do you think we’re going to be reckoning with what he’s peddling and what he represents for a good, long while?
I have to distinguish what I hope for versus what I really think will happen. I hope all of this is a very bad memory soon: Trump, Bannon, national populism, etc. In one respect, I do agree with Bannon. And I told him so. I grew up in the ’50s. My mother was an elementary-school teacher. My father died when I was 2, and my mother brought up my brother and myself. She took care of everybody, having practically no money, no insurance money from my father’s death.
And I often think, could she have done that today? And the answer is no. I don’t think she could have. There is greater and greater inequality, economic inequality, income and otherwise, in the United States. And I think it’s a very, very bad thing. And I think Bannon is right — that it will have terrible consequences in the long run.
* 2.2 million working people are paid the federal minimum wage of $7.25 an hour or less.
* Approximately another 23 million people are paid between $7.25 and $11 an hour.
* Nearly half (42.4 percent) of working Americans make less than $15 per hour.
The productivity of American workers has roughly doubled since 1968 (the peak of the minimum wage in inflation-adjusted dollars), but workers making the minimum wage today make 25 percent less than they did in 1968, once adjusted to today’s dollars. Even though unemployment has dropped precipitously, sitting well below 5 percent for the last three years, it has not been until recently that wage increases for workers in lower-paying occupations have occurred. And much of that growth at the low end of the distribution has come from action on the minimum wage at not the federal level, but the state and local level.
Making the Economic Case for a $15 Minimum Wage
THE CENTURY FOUNDATION
Adam Smith put his finger on the problem back in 1776. In The Wealth of Nations, he wrote: “A linen shirt, for example, is, strictly speaking, not a necessity of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt …”
At last, a sensible way to measure poverty, Tim Hartford, Financial Times
What struck him, even in the mid 1970s, was the effort that mothers, in particular, made to try to protect their children from feeling shame – to the extent that they would skip meals to buy clothes and toys for them. “Children as young as seven and eight soon learn strategies to persuade parents to buy them what they think they need,” says Walker.
What are the links between shame and poverty? Chris Arnot, The Guardian
More recently, this relational understanding of poverty has been championed by Amartya Sen who has argued that ‘the ability to go about without shame’ should be considered a basic capacity that should be incorporated into general conceptions of poverty.