Democratic Navel Gazing

middleamericaDemocrats are justifiably reassessing their message to middle America. Losing Wisconsin, Michigan and Pennsylvania is a wake-up call. Few believe that Democrats can remain a national political force operating mainly from the North-East, the West Coast and a smattering of great cities scattered across the land. I just watched an interview of two aging Democratic heavyweights, Hilary Rosen and Bill Press, and I was amused at how clueless they are. Like Hillary Clinton’s ill-fated campaign, they profess to look forward while actually thinking mostly of triumphs from the distant past.

Their assessment is that the recent campaign concentrated too much on social issues and character assassination of Trump and too little on bedrock economic issues. That is likely true, but then they proceeded to demonstrate that they are the problem not the solution. For example, Press noted that Democrats have always had the back of working class America, citing the many great programs that they have created and supported over the years. Thus, he mused, the problem must be how they get their message across. He cited as principal examples their promotion of a $15 minimum wage and their fervent support of unions.

But the uncomfortable fact is that many – perhaps most – in the working class don’t much like either of these! They see the minimum wage as just a sop for others, the poor and marginal workers. The only impact they foresee for themselves is job insecurity as businesses have to adjust operations to meet a general upward wage pressure. A rise in wages that results from increased business activity and a tightening labor market is welcome and has few adverse consequences. One that is simply mandated is quite the opposite, except for those who are its direct beneficiary. And that is not the majority of working class America.

As to unions, they currently have a very mixed reputation. Unions once did marvelous things for workers in general and we all have profited from their efforts. But that is long past. Unionization is now low and decreasing. It is strongest in the public sector, but that is a mixed blessing for union promoters as few outsiders think highly of government workers.

A key factor in the low reputation of unions is a growing recognition that many of them basically ran a scam on their members. Their leaders colluded with management, particularly in the public sector, to trade wage increases for lavish fringe benefits, like retirement packages with golden health plans. This was attractive to the short-term perspectives of management because the costs don’t show up as operating expenses. Rather they contribute to out-year costs when, presumably, many managers will be comfortably retired. For the union leaders this also is attractive as the negotiations are far easier and their outcomes, if future benefits are amortized, appear very lucrative. The problem is that these agreements imposed impossible debts that are now coming home to roost. Wages have stagnated and the promised fringe benefits are in jeopardy.

socialismWhy should those who work with their hands back a party that promotes pie-in-the-sky social schemes, transgender bathroom rights, sanctuary cities, a globalized economic policy, immigrant rights, and a long litany of causes that are remote or counterproductive to people who sweat for a living and struggle to raise a family? Joe Biden is right. Democrats need to return to their origins. It’s fine to work for the poor, the disadvantaged and the downtrodden. It shows their heart and good intentions. But their main message must be to those who have jobs and work for a weekly paycheck. Otherwise they will become the party of the marginalized, essentially a Bernie-style Socialist Party. Even a blowhard like Donald Trump can defeat that.

Watch who is selected as the new Democratic National Committee chairperson. Just as picking Debbie Wasserman Schultz signaled a grey, technocratic and backward-looking future, this will show what path they are choosing for the next political contest. If it is Rep. Keith Ellison, as is widely rumored, the party is likely toast for the foreseeable future.

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Hunger in America

Like you probably, I just received a plea for support from an organization that provides food for the needy. The occasion of course is the coming Thanksgiving Holiday. In their e-mail, they say that 1 in 6 Americans struggle with hunger while we, the relatively affluent, dine on lavish turkey feasts. That statistic brought me up short. Could it really be true that 50 million Americans lack even the minimum adequate food? If so, that is an atrocity that should shame us all. Why are we fussing over climate change or rotting infrastructure, for example, when the most basic needs of so many of our fellow citizens are unmet? Why wasn’t this the principal issue in our recent election?

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But, ever the skeptic, I did a little research into the provenance of that statistic. It is widely quoted. Such knowledgeable and renowned experts as Nobelist Paul Krugman has mentioned it. It can be found in several government publications. So it clearly isn’t just nonsense. But, on closer examination, I find that data are being misinterpreted. There is certainly a need, but this statistic is vastly overstated. Sometimes this is simply through carelessness and sometimes, as in the case of Dr. Krugman, it appears to be a deliberate attempt to misinform in order to make a point.

I don’t know what the real number is, and any widespread and curable hunger in our wealthy nation is offensive. However, fudging the figures is the wrong way to awaken America to a problem that urgently needs fixing.

So, why is this figure wrong? First, the government data actually refer to cases of occasional or periodic “food insecurity”, not actual and continuing hunger. Some seniors relying on Social Security can run short toward the end of the month. That hardly implies that they are starving, particularly since additional food sources can often be found. Second, the statistic applies to families not individuals. In other words, if any family member sometimes has inadequate food, the family as a whole is considered to have food insecurity and every member swells the statistic. But that isn’t how things work in most families. Often parents will forgo meals in order to feed their children. Not every family member inherits the family deficiency. Third, the poorest among us are eligible for food stamps. This program doesn’t in itself cure the problem but it is a significant mitigation. Yet, for obvious reasons, the statistic in question doesn’t consider such support in assessing the need. All the many millions eligible for food stamps are quite logically considered to have food insecurity. Thus they comprise a major portion of the inflated 50 million estimate of hungry Americans.

It should also be noted that some causes of inadequate nutrition are not simply due to lack of resources. Examples are drug addiction and mental disease. They are quite properly included in the statistic, but this a bit misleading because resolving this component of need isn’t amenable to simply food donations.

The bottom line is that the deliberate image of Dickensian food scarcity is overblown. There is a problem and we should address it. But wild misstatements are a disservice to this need.

No, it’s not just the economy, stupid!

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The recent Brexit vote confounds many who built their careers on understanding politics. How could so many choose an action that so obviously seems contrary to their economic interest? This has bearing on our presidential election because we have a similar choice. Clinton proposes to continue and improve on the current administration’s policies, working to control and exploit globalization to our benefit. Trump shouts “America First!” and proposes to reverse the trends of recent decades toward open borders and free trade between nations. Political elites here and abroad, the business establishment, and most mainline economists side with Clinton. Indeed, in this broad sense, so do many mainline Republicans. But Brexit sent a clear message to the contrary and treating it as an aberration is a mistake.

Our serious political leaders, Hillary Clinton and Paul Ryan, argue for policies that each believes will improve our lives and make us more prosperous. These policies differ widely but they reasonably cover the spectrum of historically plausible approaches. And neither of them will have a clue about why their sensible prescriptions are seemingly ignored. Meanwhile Donald Trump’s simplistic appeal will confound them with his success, conceivably even extending to his election.

When Hillary’s husband Bill Clinton was running for his first term in 1992, his campaign strategist James Carville coined a slogan that is widely perceived as the key to his success. “It’s the economy, stupid!” The idea is that economic interest trumps all others, and that fundamentally people vote their pocketbooks. It doesn’t imply that no other interests are relevant to an election, just that none will come close to overriding economic self-interest. I have always believed that this insight is sound and have even quoted it from time to time in my postings here. But, now I confess that I was wrong. Simply put, it is not just the economy, not by a long shot. Until the Clintons and Ryans of the world really understand this they will continue to face unpleasant surprises. And the same is true across the pond in the United Kingdom and in the remaining nations of the shaky European Union.

There has been an accelerating cultural change happening in the developed world that many find unsettling. I have lived in both England and the United States and I am old enough to have a personal perspective of this change. In both countries, young people don’t see it because this is how life has always been for them. But for the middle-aged and older, they are beginning not to recognize their countries. It is not simply nostalgia for an idealized past. Thinking people know that earlier there was a great deal wrong, and changes that right these wrongs are not unwelcome. Moreover this is mainly a white, mainstream phenomenon. People of color and first or second generation immigrants have not yet fully established themselves within the mainstream, so their attachment to it is immature and weak.

What is definitely unwelcome to this aging white majority is what appears to them to be a fundamental change in the character of our country. We no longer think alike about much at all and these differences rock our country like earthquakes. In particular, patriotism has become a somewhat scurrilous concept, as though love of country meant willful ignorance of our flaws and also hatred of others. It doesn’t, or at least it doesn’t have to be. In sum, we no longer know our neighbors and we don’t seem to have shared aspirations, although politicians like to pretend that we do.

In the United States, few look back fondly on the days of racial segregation, and certainly not those who were its target. But some changes since then strike at the heart of what it once meant to be an American. A factor in this is our changing demographics. While America has always been a country of immigrants, previous groups consciously and hopefully merged their cultures with the existing one. They were certainly proud of their heritage but they became equally proud Americans, notwithstanding the flaws in our way of life that were evident and exasperating. This seems no longer true. Also, the growing economic separation of the classes exaggerates the feeling that we are, in a sense, no longer in this together. There have always been the rich and the poor, but the increasing segmentation into the “haves” and the “never-will-haves” is disturbing to many. It has been a common expectation by each generation that its children will fare better than them, but for the first time in my lifetime that is coming into question.

Those who benefit economically from it have promoted immigration beyond our emotional capacity to accept and have glorified globalism with little real concern for its disruptive effects. All of this means that many older Americans look around and find themselves to be strangers in a strange land. They are alarmed by this and are drawn to the cartoonish simplicities of a Trump. “Make America great again” is heard as “Restore the country I once knew”.

Brexit was a harbinger of coming political events. England, and indeed all of the United Kingdom, used to have a recognizable character, not always lovable or admirable, but constant and familiar. The same kinds of changes driven by immigration and globalization have  riven that country and, to a significant degree, Brexit exposes the consequences.

Those who analyze events based mainly on economics will never understand this, and thus they will continually be dumbfounded by election results that appear foolish and impractical. So, it is not just the economy, stupid! Prosperity is not equivalent to life satisfaction, all the more so when prosperity is unevenly distributed. Listen to the speeches of Clinton and Ryan. See if they are beginning to understand this or if they remain attached to their comfortable verities.

The Little Engine That Couldn’t

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The Federal Reserve once again did a head fake. Interest rates will remain at historic lows for yet another cycle. You can hear echoes of the children’s fairy tale from our little economic engine, “I think I can. I think I can. Hmm…maybe not this time.” This is getting old and the markets are coming to realize this. Keep this up and no one will listen to the Fed, even though it is speaking publicly at historic volumes.

Fed Chair Janet Yellen says that they really, really want to normalize rates, and the economic indicators support this if they ignore short-term effects as they should. But they always find some monster on the horizon that deters them. So far anyway, these monsters never bite, although statistically we know that one eventually will. The latest is Brexit plus a disappointing jobs report. Will there ever be a clear field ahead? Probably not. The nature of our world economic system is that threats are endemic. Sooner or later, the Fed must accept the risk and move firmly forward on rates, but if they wait until the coast is entirely clear, timidly dithering on the edge, disaster is likely.

Consider this. Remaining in an unsustainably low-interest environment removes the main lever that the Fed has to respond to a real problem when it inevitably strikes. Of course they can always print money, but that is a fool’s errand.

“Sooner” or “Later”?

Oklahoma is crazy Republican territory. Before we had political parties it was just crazy territory so perhaps it is unfair to blame the GOP.

Here are a few scary facts, for Sooners anyway. In 2007, Oklahoma had one earthquake of magnitude 3, the lowest level that can be generally felt. Last year there were 890. Of the 12 largest recorded earthquakes in Oklahoma history, 10 have occurred since 2011. And it has been 300 million years since this seismic zone was last active. Move over California, in December 2014, Oklahoma won the dubious honor of becoming the state with the most earthquakes.

Now here are some possibly related facts. Last year the state finally acknowledged that water injection involving in fracking might conceivably play some role in these geological occurrences. But not certainly, you understand. If you want to know more about fracking and its consequences, check this discussion. The fracking technique has been in use for decades, but it has only been since the end of the Great Recession that it really surged. Note when earthquakes also surged in Oklahoma in the chart below. At the current rate, they are well on their way to setting new records in 2016. Not incidentally, the proportion of jobs in Oklahoma related to the oil and gas industry is 20%. Oh, and by the way, the number of seismologists currently employed by the state is zero.

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This is yet another of a long line of misbegotten policies of wantonly disregarding scientific data when the consequences might conflict with business goals or threaten jobs. Are we really sure that sucking tubes of lit tobacco causes cancer? I know several people who lived to ripe old ages while smoking two packs a day. And isn’t the evidence of global warming pretty flimsy. After all, in many parts of the country, today’s weather is actually colder than yesterday’s was. And it could just be coincidence that the increase in atmospheric greenhouse gases has occurred in conjunction with an increase in human industrial activity. As I’ve often noted, the plural of anecdote is not data, but there seems to be no upper limit to our human capacity for self-deception.

594c6bd7a010544790f24a740bc7a51bThe Oklahoma state bird is the Scissor-tailed Flycatcher, and a beautiful little creature it is. But I suggest that a more appropriate choice would be Struthio camelus, the common ostrich. To be fair, the state government does seem to be belatedly paying attention to this looming threat, but past history suggests that this might be largely window-dressing.

There is a perfectly logical reason that Oklahomans are called Sooners. The name derives from the “sooner clause” of the Indian Appropriations Act of 1889. This stated that anyone occupying the territory that became Oklahoma before its opening for settlement could be denied the right to claim land. In the event, this rule was widely ignored by eager settlers. Perhaps now a better name might be Laters.

Politics Through The Looking Glass

bonkersI have been recording my thoughts about this political season for a while now, and I have had an epiphany. I must be mad as a hatter. Most voters seem to take these shenanigans seriously and believe that one of the leading candidates could actually run our country. So, what other explanation is there for why I swing between hysterical laughter and a feeling of doom. Trump, Sanders, Cruz … come on, really? I suppose Hillary might manage a creditable job if she can avoid Leavenworth Federal Prison.

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Sanders has just released his plan for funding his socialist paradise. You can read it here. If you are dead center of the income spectrum (pun intended), then your taxes go up an average of $4,700 a year. Capital gains taxes will triple. But it’s all in a good cause, isn’t it? Bernie used to claim that it would be at worst a wash for those he cares about because of the accrued benefits. And screw those he doesn’t!

Republicans fall back on discredited supply side economics to claim that rising incomes and hence rising taxes will pay for what little government they deem necessary. Closing down government seems a reasonable form of discipline to many of them.

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In an odd way, Trump and his supporters have it right. The entire political class are a bunch of idiots when it comes to economics. Maybe we really do need someone who has met a payroll to straighten things out. Too bad the only one on offer seems to be a combination of Mussolini and Groucho Marx.

Climate Change Is Not The Problem

This is going to be a longer posting than normal, so please bear with me. This topic is important and it cannot be covered briefly.

Climate change is inevitably going to wreak havoc here and abroad, and the impact will be far worse than is necessary because few are willing to face the danger. Stupidity will be its own reward. The Obama administration has been valiantly trying to stem this rising tide – pun intended — most notably with his just-announced more stringent carbon emission standards. However this is more intended to goad international efforts than to mitigate climate change directly. I can’t help visualizing Obama as King Canute commanding the waves to cease. We simply can’t prevent this looming threat, although we could significantly minimize its damage through prudent preparations beginning right now.

But long before this catastrophe strikes something far more ominous is on the horizon, especially here in the United States. Our entire economy predicated upon lives of work is being threatened by technology. People are just as dismissive of this threat as they are with climate change. What they don’t understand must surely be either untrue or overstated. The world couldn’t change so dramatically from what we have known all our lives and since the founding of Western civilization, could it?

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Well, consider this. The best estimates from those who really understand the technology is that 40-50% of all current jobs in the United States will no longer exist in as little as 20 years. Robots and associated technologies are here now and are progressing an order of magnitude faster than the technologists themselves predicted only five years ago. You, or more likely your children, will live in a far different world. Meanwhile our legislators and our education system are blundering forward heedlessly. This picture shows a current factory floor. Can you find Waldo, the sole human operator needed?

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The past is prologue. In 1964, the nation’s most valuable company, AT&T, was worth $267 billion in today’s dollars and employed 758,611 people. Today’s telecommunications giant, Google, is worth $370 billion but has only about 55,000 employees—less than a tenth the size of AT&T’s workforce in its heyday. Today, that kind of change will take place immeasurably faster.

Don’t believe it? Well it has happened before. The industrial revolution beginning in the mid-18th century replaced human work with machines and processes in massive proportions. It was probably the most important economic event in recorded human history. In that case, however, two mitigating factors reduced the suffering and turmoil. First, many new jobs were created and displaced workers could fairly easily adapt their skills to them. But most importantly, this was a slow-moving revolution that lasted about six human generations.This new industrial revolution of robots, artificial intelligence and inexpensive electronics is moving far faster because it is springing from a much more advanced technology base.

A man puts dishes on robots for delivery at a restaurant in Hefei, Anhui province, December 26, 2014.  The restaurant, with a space of 1300 square metres and a total of 30 robots to cook meals, deliver dishes and welcome costumers, was reported to be the biggest robot restaurant in China. REUTERS/STRINGER (CHINA - Tags: SOCIETY BUSINESS FOOD SCIENCE TECHNOLOGY) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA

Jobs are at risk across virtually all sectors of the economy: agricultural workers, warehouse and distribution workers, retail clerks, tellers, cashiers, stock clerks, hotel staff, porters, waitresses, barmen, fast food workers, welders, machinists, cabbies, subway operators, assembly line workers, bakers, butchers, clerical staff, psychologists, legal assistants, golf caddies, optometrists, insurance salesmen, investment counselors, pharmacists, tax preparers, and on and on.

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The most-common occupations in the United States are retail salesperson, cashier, food and beverage server, and office clerk. Together, these four jobs employ 15.4 million people—nearly 10 percent of the labor force, or more workers than there are in Texas and Massachusetts combined. All are at risk.

robot_teachers_3Telerobotics will leverage some professionals so that many fewer will be needed in the legal, medical, accounting and teaching fields. Meanwhile artificial intelligence will replace most computer programmers, researchers, diagnosticians, help desk operators and librarians. The impact will be felt not just across the employment spectrum but up and down the social strata. This is an entirely new aspect, quite unlike the earlier industrial revolution. Oddly, one area likely to be relatively untouched is the scorned performing arts, and people are going to have scads of free time to appreciate them.

The examples I have depicted are necessarily from current technology. No one can confidently predict how this will evolve, other than to say that its impact will be enormous. This won’t happen instantly and there will be moves to restrain it by latter-day Luddites and by those being ground under the wheel of progress. But it is inevitable, and soon.

Robots don’t require health insurance, 401K plans, vacations, parking spaces, motivation and encouragement, pay raises, tips, etc. They don’t get tired and they aren’t distracted by family responsibilities. You can replace a poor-performing robot with the stroke of a pen. In many cases they don’t even need lighting. From a management perspective, what’s not to love? But if you are in the management class, don’t get too complacent. Many managerial jobs are on the line too, in first-level supervision, human resources, accounting, personnel management and corporate planning.

Of course, as before, many new jobs will be created and the robots will need service and support attendants. But few displaced workers will fit these high-tech roles. Eventually, the economy and education system will catch up with this employment revolution, but that will take generations. And never again will we need such a large portion of our population to maintain and improve our way of life. The coming crisis of tens of millions with not the slightest hope of gainful employment will create a tsunami of unrest.

So, put climate change on your back burner. There’s nothing practical we can do to prevent it anyway. At best we might mitigate its impacts, but don’t bet on our legislators to be that farseeing. Many probably believe the millennium will arrive momentarily, so why bother? Nothing else could explain their conscious refusal to believe the science. I wish I could be around decades hence when I could say, “There it is, you imbeciles! Look out of your window. I told you so.”