Trumponomics

Posted: 22 March 2017 in Uncategorized
Tags: , , ,

TRUMPONOMICS

Part 1 of the Real-World Economics Review on the causes and consequences of Trumponomics is now available.

Here is the direct link to my own contribution, “Class and Trumponomics” (pdf).

Part 2, with additional essays on Trumponomics, will be available next week.

And both issues will combined for a book that will be published in late April.

fredgraph

No one ever accused American conservatives of being particularly original. They started with a story about the failure of government programs and they stick with it, against all evidence.

Originally, conservatives targeted African Americans, who (so the story goes, e.g., in the Moynihan Report) were mired in a culture of poverty and increasingly dependent on government hand-outs. In order for blacks to regain America’s founding virtues (so the story continues)—especially marriage and industriousness—well-meaning but ultimately destructive government programs should be abolished so that they would once again be able to enjoy the security of marriage and dignity of work.

That exact same story has now been transferred to the white working-class. Anyone who’s read Charles Murray and J. D. Vance will recognize the “the pejorative Moynihan report on the black family in white face.”

The latest version of that story was penned by the American Enterprise Institute’s Arthur Brooks, who cites Lyndon Johnson’s War on Poverty as the original sin, which “deprived generations of Americans of their fundamental sense of dignity.” According to Brooks, “rural and exurban whites” have been left behind “every bit as much as the urban poor” because they’ve come to “depend on the state instead of creating value for themselves and others.” Real dignity, argues Brooks (echoing a long line of conservative thinkers), stems from people being “authentically, objectively necessary.” And that means working—or at least looking for work.

That’s why Brooks cites the declining labor-force participation rate in the United States beginning with the War on Poverty.

The first problem is, the participation rate has been declining since the mid-1950s, long before Johnson’s program was enacted. As readers can see in the chart at the top of the post, the labor-force participation rate for white men (the red line), which stood at 87.4 percent in 1955, had fallen to 84.2 percent by 1964 and then dropped to 76.6 percent in 2007 (on the eve of the latest crash). If we calculate the change by decades, it dropped by 3.2 percent points in the first decade and then by less then 2 percent points in each succeeding decade.

It makes as much sense to blame the declining labor-force participation rate on Chuck Berry as the War on Poverty.

But notice also that, from the mid-1950s onward, the labor-force participation rate of white women soared—beginning at 33.4 percent (in 1955), rising to 37.3 percent (in 1964), and peaking at 60.2 percent (in 2007). In the terms set forth by Brooks, that increase in dignity more than makes up for the falling rate for men. And much of the increase for women comes after the War on Poverty is enacted.

Instead of mourning the fall in men’s participation, why isn’t the increase for women deemed a great success by Brooks and other conservatives?

The only possible answer is American conservatives hold a nostalgia—an extremely selective nostalgia—for a particular moment in U.S. history. They envision a white working-class made up of men most of whom are forced to have the freedom to sell their ability to work outside the home, with wives who for the most part stay at home, care for their husbands, and raise future workers. At the same time, conservatives forget about the unions that made it possible for workers to earn a family wage—not to mention the Jim Crow laws and bracero programs that created barriers for black and Hispanic workers to compete for the jobs white working-class men were able to find.

So, no, there never was a Garden of Eden—and, thus, no original sin.

192964

Special mention

sbr031717dAPR 193028_600

OG-AL452_032020_FON_20170317184534

Clearly, 2016 was a good year for CEOs. They’re on track to set a post-recession record for capturing their portion of the surplus.

According to a new Wall Street Journal analysis, median pay for the chief executives of 104 of the biggest American companies rose 6.8 percent for fiscal 2016—to $11.5 million. At the very top was Thomas Rutledge, CEO of Charter Communications, who took home $98.5 million last year. (Here’s a link to the compensation of the other CEOs in the study.)

By way of comparison (using data from the Bureau of Labor Statistics), average wages for production and nonsupervisory workers rose 2.5 percent, to $21.86. And their annual pay rose by the same percentage, to $36,725.

If you’re keeping track, that means the ratio of average CEO to average worker pay in 2016 was 299.5!

193040_600

Special mention

TMW2017-03-22color

We’re #1!

Posted: 20 March 2017 in Uncategorized
Tags: , ,

wealth

According to calculations by Kenneth Thomas (based on data in the latest Credit Suisse Global Wealth Report), the United States has the most unequal distribution of wealth of any rich nation.

And it’s not even close!

Thomas calculates the ratio of mean to median wealth for each country (the last column in the table above) to devise a measure of wealth inequality.

As you can see, the U.S. inequality ratio is more than 50% higher than #2 Denmark and fully three times as high as the median country on the list, France.

193051_600

Special mention

193070_600 March 18, 2017