Category Archives: American Economy

Poor Lo.

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“Work is the least disappointing relationship you can have.”[1]  Unless work dumps you for some rough-hewn Latino from South of the border, down Mexico way.  Off-shoring and automation have destroyed many American jobs over the last several decades.[2]  This has left the people who used to do those jobs on the beach (and not in a Micheneresque idyllic way either).

Here’s an ugly fact: men and women have responded differently to the job-losses.  More women have been displaced by the changes than have men, but women responded by going back to school to up-grade their skills.  Then they migrated into higher-skill jobs than they had before.  This has been the traditional story of disruptive technological innovation in America.

Except that this time, men have not behaved in the traditional fashion.  Instead of up-skilling, they’ve down-skilled into fast-food servers, low-end retail jobs, and long-term unemployment.  They also have migrated out of rural areas and small towns to cities in search of opportunity.  Women seem to have been more likely to stay behind, take some classes at the local community college, and find work.  What they don’t have is a reliable man in their lives.[3]

These trends have become a social fact.  Women now account for 56 percent of undergraduate college enrollment; men account for 44 percent.  Divorce is common (51 percent) for men who don’t go to college—and for the now more educated women they married.  Not all of this is recent.[4]

It seems to be agreed that these men are abusing drugs and alcohol along the roads to and from the divorce court.  Liberal and conservative commentators alike—almost all drawn from the prissy, unworldly modern American “intelligentsia” which has the moral views of a Nineteenth Century Academy for Young Ladies–sound almost delighted.  The economic losers can be morally condemned.  The “Gilded Age” rides again.

Interpretations of these recently-discovered trends come in a bitter period of political strife.  Hence, people may suspect that they have been “weaponized.”  The “outlandishly male Donald Trump” resonated with voters amidst “a great spasm of cultural anxiety about masculine decline,” wrote one conservative.[5]  Similarly, one liberal writer opined that the administration’s new defense budget was a “Viagra budget” for Trump’s “insecure fanboys.”[6]  Andrew Sullivan[7] lifts a lonely voice to compare the agony of the disrupted small city and town/rural working class with the victims of the AIDS epidemic of the 1980s and 1990s.[8]

Off-shoring and automation are going to destroy even more jobs.  One prediction says that a third of all men under 54 could be unemployed by 2050.  (So, those born from 1996 onward; so. today’s 21 year-olds.)  Does this mean that Donald Trump’s “America First” could become the brand of the 21st Century?

[1] Betty Davis, quoted in The Week, 31 March 2017, p. 17.

[2] “Social change: The decline of men,” The Week, 31 March 2017, p. 16.

[3] Although they may well have children.  There’s a whole genre of movies in this.  I can’t say that I’ve heard of any yet.

[4] Since 1981 single women have been buying houses at a faster clip than single men.   “The bottom line,” The Week, 10 February 2017, p. 32.

[5] It doesn’t invalidate this argument to point out that over half of women voters preferred Donald Trump (and “a special place in Hell”) to Hillary Clinton.  These women may also want traditional males back.

[6] “Trump budget: Hard power, not soft,” The Week, 31 March 2017, p. 16.  I suppose you can add this term to the lexicon of liberal vitriol, along with “Deplorables.”

[7] See: https://en.wikipedia.org/wiki/Andrew_Sullivan

[8] “The invisible plague of rural America,” The Week, 31 March 2017, p. 12.

Memoirs of the Addams Administration 12.

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President Donald Trump’s administration came into office determined to break with the policies of President Barack Obama’s administration wherever possible.  Last week witnessed more instances of this commitment.

First came the proposed budget.  The big drivers of government spending are defense, Social Security, and Medicare/Medicaid.  The Obama (old) and Trump (new) budget plans both came in at around $4 trillion of spending; both anticipated a deficit of $559 billion.

President Trump’s proposed budget moves the deck furniture around in ways that please some Republicans and enrages most Democrats.  It increases defense spending by 9 percent ($54 billion) and cuts spending in other areas (the Environmental Protection Agency, the State Department, a bunch of social and scientific programs).  National Public Radio, the Corporation for Public Broadcasting, and the National Endowment for the Arts—essentially Meals-on-Wheels for the coastal elites—would be entirely eliminated.[1]

How sensible is the shift of resources from the State Department to the Defense Department?  Most of the cuts appear to come out of the foreign aid budget.  Some of that aid goes for humanitarian causes, essentially spending American money to take some of the rough edges off human catastrophes not directly of American causing.  Some of that aid goes to governments fighting one head or another of the Islamist world-hydra: Afghanistan, Egypt, Iraq, Jordan, the Sahel countries fighting Boko Haram, and the East African states fighting al-Shabab.  One writer derided it as a “Viagra budget” for Trump’s “insecure fanboys.”[2]

From 2010 to 2016, the number of restrictions on trade (tariffs, subsidies to domestic industry) world-wide quadrupled.[3]  The Group of Twenty issued ritualistic denunciations of the rising barriers, but did nothing to reduce them.  So, following the path scouted by other nations, Treasury Secretary Steve Mnuchin told other finance ministers at the annual G-20 meeting that many existing trade agreements were unfair to the United States and he raised the prospect of renegotiating them.  The U.S. also refused to accept a joint statement opposing protectionism.[4]

In 2012, the Obama administration issued regulations on future fuel-efficiency standards for automobiles.[5]  The standards required manufacturers to almost double fuel-efficiency to reach an average of 54.5 miles/gallon by 2025.  Under the Obama administration, the Environmental Protection Agency calculated that the costs for the auto industry would be $200 billion between 2012 and 2025, while the savings on gas costs to drivers would save $1.7 trillion.  Laudable as these goals may be from a climate change perspective, two points are worth making.  First, gasoline prices have fallen since 2012, so the savings by drivers will be less without the costs to manufacturers being reduced.  Since those costs would be passed on to drivers in car prices, the Common Man might take issue with the regulations.  Second, “average” fuel economy meant that less-efficient SUVs and pick-up trucks could be off-set by more-efficient mini-cars.  In short, car-makers would have to produce vehicles that nobody wants in exchange for making cars that people do want.  Put this way, some of the business hostility to government regulations is easy to understand.

[1] “Trump’s budget: Fulfilling his promises?” The Week, 31 March 2017, p. 6.

[2] “Trump budget: Hard power, not soft,” The Week, 31 March 2017, p. 16.  I suppose you can add this term to the lexicon of liberal vitriol, along with “Deplorables.”

[3] The timing suggests that these were responses to the financial crisis and slow-down in trade.

[4] “Trade: U.S. takes a hard line at G-20 meeting,” The Week, 31 March 2017, p. 32.

[5] “Issue of the week: Putting the brakes on fuel standards,” The Week, 31 March 2017, p. 34.

Memoirs of the Addams Administration 10.

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Jonathan Chait has argued that Donald Trump and a coterie of advisers “cooperated with the undermining of American democracy by a hostile foreign power [Russia].”  James Clapper, former Director of National Intelligence and no fan of President Trump, has said that “there is no evidence” of “collusion between members of the Trump administration and the Russians.”[1]  So which is it?  Chait is a partisan Democratic journalist at a time of considerable distress for the party.  Clapper is an experienced professional who had access to all they key intelligence before he left office.  All things considered, Clapper’s seems the more credible voice.

Even so, that leaves the problem of all the false denials of contacts between some Trump followers and various Russians.  Michael Flynn has been the most egregious case of this so far, but Jeff Sessions may still end up in serious trouble over his terminological inexactitude.

The Russians undoubtedly “intervened” in the election by hacking into the computers of various Democratic figures and institutions, then releasing the fruits through Wikileaks.   The results came in the revelation of information that the Clinton campaign would have preferred to keep secret because it likely would alienate many voters in a tight race.  First, how did that “undermine democracy”?  Second, would the revelation of this information by American investigative journalists not have undermined democracy?  As for the lying, part of the explanation may be the firestorm of criticism heaped on Republicans by Democrats after the election.  Another part of the explanation may be sheer stupidity.   As Jonathan Tobin has pointed out, the Benghazi witch-hunt didn’t help Republicans.

There seems to be a lot of that going around.  Recently, Breitbart News claimed that a story in the New York Times had reported that federal officials had “intercepted communications and financial transactions” between Russians and members of the Trump posse.[2]  Almost immediately, President Trump walked—stormed, really—into a door by claiming that “Obama had my ‘wires tapped’ in Trump Tower just before the victory.”  This charge elicited a hostile reaction from all across the spectrum.

Under these circumstances, many observers may be having a sigh of relief that actual legislation on important issues has begun to move forward.  Republicans launched their campaign to “repeal and replace” the Affordable Care Act (ACA) with the American Health Care Act (AHCA).[3]  In some ways, the AHCA really is “Obamacare lite.”[4]

What gets lost in the criticism of the bill is that Americans pay a lot more for not-as-good health care than do people in Western Europe and Japan.   The ACA did little to address this problem.  Arguably, it is a more important problem than the issue of people without insurance.  (They always had “catastrophic care” through emergency rooms.  I know it’s cold to say that.)  Both Medicaid and a lot of employer-provided health insurance are in effect open-ended when it comes to spending.   The fundamental dispute between Republican and Democrats is the likely effect of limiting spending.  Will insurers hold down their premiums in a less-regulated market in order to gain customers, then find ways to cram-down costs?  This is the Republican wager.  Or will insurers shred insurance for the poor in order to keep targeting the easy money?  This is the Democratic wager.  Whoever “wins,” the stakes are high.

[1] Both are quoted in “Trump and Russia: What do we really know?” The Week, 17 March 2017, p. 6.  On Chait, see https://en.wikipedia.org/wiki/Jonathan_Chait

[2] “Trump accuses Obama of illegal wiretap,” The Week, 17 March 2017, p. 4.  The story in the NYT ran on 19 January 2017.  See: https://www.nytimes.com/2017/01/19/us/politics/trump-russia-associates-investigation.html?_r=0

[3] “Republicans face a revolt over health bill,” The Week, 17 March 2017, p. 5.

[4] See: https://waroftheworldblog.com/2017/03/05/memoirs-of-the-addams-administration-9/

The Economy Stupid.

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Since the 1970s, the fates of working Americans have become uncoupled.[1]  Those with a college education have prospered, while those without a college education have seen their incomes stagnate.  Then, the “Obama recovery” since the financial crisis has not been a very satisfactory recovery by historical standards.  The rate of growth has been slow.

First, it is worth asking why the recovery was so unimpressive   On the one hand, demography exerted a choke-hold.  Baby Boomers have begun to retire, while the share of women in the paid labor force seems to have plateaued.   This could be off-set by rising productivity of the labor we do have.  On the other hand, however, a long-running decline in productivity growth has continued to drag on the recovery.  There are various theories about why this has happened, but no consensus, let alone a solution.  On yet another hand, economists point to “skill-biased technological change.”  That is, employers constantly introduce new technology that replaces many low-skill employees while creating a demand for a smaller number of higher-skilled workers.   Those higher skills are acquired through some form of education (although it doesn’t have to be college).

Second, the economic problems have had social effects, and those social effects now have had political consequences.  Donald Trump won the votes of those without a college education by an eight percent margin; Hillary Clinton won the votes of those with a college degree by a nine percent margin.  Even this disguises the reality of President Trump’s electoral base.  The core of voters who actually propelled Trump to the Republican nomination was much more distinctly those without a college education.  Most Republicans—many of them with college degrees—merely voted for Trump because they were supporting the Republican candidate.

What kind of shape is the economy in as Donald Trump takes the helm?  Unemployment is down to 5 percent, what economists regard as “full-employment” given the constant churning in the economy.  Inflation is finally up around 2 percent, the target long-pursued by the Federal Reserve Bank.  The Fed appears poised to raise interest rates this month to keep inflation from accelerating beyond this target point.

To what extent can President Trump deliver on his commitments to the voters who gave him the nomination?  The same forces that have dragged on the economy for a while now are likely to hamper some of his plans, while some of his plans will likely further drag on the economy.

For one thing, tax cuts combined with a big infrastructure plan will expand the deficit and increase inflationary pressures.  The Fed will raise interest rates in response, dragging back on the economic growth that the president wants to encourage.   The anti-immigrant stance will only worsen the labor supply bottleneck is in the years ahead.  Thus, there is some reason to expect that the Trump administration will disappoint its core constituency.

Democrats might want to hesitate before shifting from protesting in the streets to dancing in the streets.  First, no one doubts that America needs a massive overhaul of its infrastructure.  How to pay for it and how to burst through the resistance of opponents[2] are problems for any successor to the Trump administration.  Second, in a labor-short economy, a big chunk of workers (those without college degrees) are being left behind.  Somebody needs to think of a constructive solution, rather than just viewing them with contempt.

[1] Gregory Mankiw, “Advice for Trump: Ask an Economist,” NYT, 12 March 2017.

[2] For example, both the Keystone XL and Dakota Access pipelines are infrastructure projects.

My Weekly Reader 3 March 2017.

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In the last third of the 19th Century, America sprinted through massive industrialization.  Sweeping development ended in “consolidation.”[1]  Big business sought to control the dangers to immense investments they had made.  By organizing production and markets they sought to avoid destructive competition and reduce waste.  “Trusts” and holding-companies, vertical and horizontal integration became hall-marks of industry.  Under the sponsorship of J. P. Morgan, this consolidation movement spread to financial services and capital markets.  Bankers and stock-brokers became central figures in the private management of the American economy.

“Old money” seems out of place in a “New Land” built by such hustlers.  Still, it has been an American reality since the time of Edith Wharton.  Prep schools, Ivy League universities, clubs, churches, and marriage bound families with a lineage into one important element of the American elites.  By the early 20th Century, banks and the stock-exchange opened an appealing career avenue to the young men of this group.  Like many others of his group, Richard W. Whitney (1888-1974) turned down it.[2]

From 1919 on, Whitney and Company brokered most of the bonds for the great Morgan bank.[3]  This burnished the already-impressive respectability that came with an education at Groton and Harvard, followed by marriage into a family with excellent ties to the Republican party.  Respectability isn’t the same thing as admiration.  Other men in the market didn’t think much of Whitney’s abilities.  The client base of his firm failed to grow.  However, bonds aren’t flashy (or mercurial) in the way that stocks may be, so they appeared to be a perfect match with Dick Whitney.  Appearances can be deceiving.  Whitney lived beyond his means.  Rather than retrench, he borrowed from an ever-widening pool of banks, family, friends, and acquaintances.  The personal loans often were unsecured by collateral, other than his respectability, family ties, and friendships.

When the Stock Market crashed in October 1929, Whitney became highly esteemed for his ineffectual steadiness in the face of disaster.[4]  Soon, his colleagues on the Stock Exchange elected him president, then re-elected him four times.

For a time, his respectability allowed him to go on borrowing.  Eventually, even the president of the Stock Exchange couldn’t get an unsecured loan.  So, in 1936, he misappropriated resources placed in his trust, then did it again and again.  In March 1938, the roof fell in.  Convicted of embezzlement, Whitney did three years in prison.

One question raised by this little immorality tale is how idiots—honest and dishonest—come to have big chunks of money.[5]  Richard Whitney didn’t strike people as sharp.  Anyone from the world of the monied must have been able to set a price on his life-style, then match it with what they knew of his income.  Yet they went on lending him money or trusted him to manage the resources of other people.  Why?

When Whitney lost everything and went to prison, friends gave his now-homeless wife a house to live in.  Later, Whitney’s more successful older brother paid all of his huge personal debts.  The bonds of family and friendship and respectability hold fast, even in the face of logic.

[1] See Naomi Lamoreaux, The Great Merger Movement in American Business, 1895-1904 (1988).

[2] Malcolm MacKay, Impeccable Connections: The Rise and Fall of Richard Whitney (2017).  Reviewed by Malcolm Carter, “Blue Blood, Red Ink,” WSJ, 28 April 2017, p. A11.

[3] Both his uncle and brother had made partner at Morgan.

[4] That’s not the worst quality a person can possess.

[5] For another, later, tale, see: https://waroftheworldblog.com/2015/01/19/by-the-waters-of-babylon/

My Weekly Reader 1 March 2017.

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In recent years, I have noticed–and lost track of–how many times a head-line in the New York Times describes something as “risky.”[1]  The word is meant to deprecate, rather than to laud the thing being described.  Clearly, both the editors and the typical Times reader are risk averse.  OK, so what?  So this.

Tyler Cowen, The Complacent Class: The Self-Defeating Quest for the American Dream (2017), argues that risk-taking and an openness to change “made America the world’s most productive an innovative economy.”  Now, however, the American economy appears much less innovative and aspirational.[2]  Start-ups as a share of American companies have fallen from 12-13 percent in the 1980s to 7-8 percent today; over the last eight years productivity growth has increased at about half the average rate for the period since 1945.  The former may be taken as a rough measure of entrepreneurialism; the latter may be taken as a rough measure of technological innovation.  Then there is the widespread prescription of mood-leveling anti-depressants.  Perhaps these blunt enthusiasm and engagement (as well as the impulse to drive your car into a telephone pole)?  Even Americans’ recreational drugs-of-choice disappoint.  We’ve gone from dropping acid and snorting coke to drifting away on an opioid cloud.

Cowen believes that Americans have shifted from “building a new and freer world” to “rearranging the pieces in the world we already have.”  To steal a metaphor from demography, Americans are becoming increasingly “endogamous” (marrying people inside the familiar social group) and decreasingly “exogamous” (marrying people outside the familiar social group).  That is, people are increasingly “matching” with others who share their own identity, whether it is politics, or residential location, or interior design.[3]  One way or another, risk-aversion and a fear of change have seized hold of the hearts of a broad swathe of Americans.

While Cowen offers some cautious suggestions about the future, the book may incite a closer examination of the past.  If Cowen is correct, then how did this risk-aversion come about?  In a sense, “morning in America” or no, the last forty years have been trying times.[4]  The oil shocks of the Seventies announced a long era of the disruption of the settled economy of the post-war period.  A whole set of important social relationships and institutional arrangements rested upon the prosperity yielded by that settled economy.

A whole string of unforeseen disasters revealed errors in human judgement.  Take a few recent examples.  The invasion of Iraq in 2003 seemed like a good idea to some people and a bad idea to other people, but no one anticipated that the Pentagon would mess-up the subsequent occupation.  In the first decade of the 21st Century, a housing bubble existed and banks were badly compromised, but only a few people perceived the danger and government regulators were not among them.  The “Deepwater Horizon” blow-out left some people agape at the realization that no one in the oil industry had ever asked what would happen if the blow-out preventer failed, as technology does with surprising frequency.[5]

Seen in this light, it is possible to understand why many people have come to adopt a stance of “first do no harm.”  However, it may be that such a stance does a different kind of harm.

[1] For a sampling, see: https://www.google.com/search?q=New+York+times+%22risky%22&ie=utf-8&oe=utf-8

[2] Matthew Rees, “Lazy Does It,” WSJ, 1 March 2017, p. A15.

[3] For another take on this issue, see: https://waroftheworldblog.com/2017/02/08/pret-a-penser/

[4] “Make America Great Again” is a frank acknowledgement of a feeling shared by many Americans.

[5] For example, Samsung phones catching fire or Takata air-bags deploying when there weren’t supposed to.

Memoirs of the Addams Administration 8.

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From the New Deal through the Seventies, the “closed shop” provided a major source of union membership.[1] Union membership has declined from 20.1 percent of workers in 1983 to 10.7 percent in 2016.  Now, a majority (28/50) of states are “right to work” states where compulsory membership in unions is outlawed.[2]  President Trump has further undermined union sympathy by calling for heavy spending on long-overdue infrastructure projects, by promising to revise trade agreements, and by adopting a stance of “America First.”  All these are things that Democrats or Republicans might have done, but did not do, in years gone by.

There are an estimated 11 million illegal immigrants in the United States.[3]  The vast majority are Mexicans who fled their failing-state homeland for the opportunity to work in the United States.  They perform many tasks—and perform them well–that other Americans do not desire to perform.  To put it mildly.  That reality argues for allowing the illegals to remain as legal workers, if not as candidates for citizenship.  On the other hand, the obvious presence of the illegals drives a lot of Americans wild.  OK, the illegals cluster in the places—farm fields in Georgia or Arizona, hardware store parking lots, landscaping businesses, the kitchens of restaurants, faculty office buildings—or at the times—early in the morning or late at night–where high-income, highly educated people would not notice them.  Some native-born Americans feel that their culture is being swamped by a foreign culture.  Some of them think that the laws are being flouted by Republican businessmen avid for cheap labor and by Democratic politicians—who insist upon a “path to citizenship” for the “undocumented”–avid for potential voters.  Both of the latter headings play into a feeling that the system is rigged by the “elites” for their own benefit.  Senator Bernie Sanders caught part of that feeling.  That feeling is part of what brought Donald Trump to the White House.

The Republicans have embraced “repeal and replace” for the Affordable Care Act.  Replace with what?  That’s where things are getting tricky.  Republicans who dare to think about the nuts and bolts favor market-based solutions.  They believe that “consumers” who approach medical care as a “commodity” will be bargain-hunters.[4]  That, in turn, will hold health care costs in check.  How to make people into cost-conscious consumers?  At the moment, an expanded system of Health Savings Accounts (HSAs) is being much caressed.  The HSAs allow people to divert pre-tax income to an individual fund that can be used to pay for things like deductibles and co-pays.  Usually, such HSAs run with a high-deductible health insurance policy.  About 30 percent of employers now offer high deductible + HSA insurance to their workers.  Republicans propose to raise the current caps on annual contributions ($3,400 individual/$6,750 family) to at least the maximums set by the insurance policy for out-of-pocket and deductible costs.

Given Americans’ reluctance to save for predictable calamities like old age, it’s a little much to expect them to save for unpredictable calamities like medical problems.[5]  One solution might be to make such contributions mandatory, or at least require an Opt-Out decision.   Thus, even Republicans are being driven by realities toward a form of the nanny-state.

[1] See: https://waroftheworldblog.com/2015/03/02/american-union-stay-away-from-me-uh/

[2] “Issue of the week: Labor’s diminishing clout,” The Week, 3 March 2017, p. 38.  In “right to work” states, employees are not required to pay union dues or belong to a union to get a job.

[3] “Deportations: Immigration crackdown begins,” The Week, 3 March 2017, p. 16.

[4] “Health insurance: Can HSAs replace Obamacare?” The Week, 3 March 2017, p. 36.

[5] Half of Americans have no retirement account.

Memoirs of the Addams Administration 6.

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Any way you look at it, President Donald Trump has had a bad couple of weeks.  Democrats glory in every one of his spectacular mis-steps, while mainstream Republicans insist that he has to be just like them to survive.[1]

After President Donald Trump dropped the Director of National Intelligence (DNI) from the National Security Council, America’s intelligence agencies leaked information that compromised the National Security Adviser (NSA), Lt. General (ret.) Michael Flynn.[2]  Apparently, the leaks included actual transcripts of the conversations between Flynn and Soviet–sorry, Russian–ambassador Sergey Kishlyak.[3]  Flynn resigned as NSA.  On the other hand, Steven Mnuchin was confirmed as Secretary of the Treasury.[4]  The Trump administration now has in place the secretaries of Treasury, State, Defense, and Education

Trump is already at the head of the enemies list of a diverse group.  The New York Times, which had criticized the EffaBeeEye for releasing news of a new investigation of Hillary Clinton’s e-mail messages shortly before the election, reported that the national police force had launched an investigation of connections between the Trump campaign and Russian organs of the state.  Senator John McCain (R-Arizona), who has been attacked by Trump on many occasions, said that “It’s a dysfunctional White House.”  Fred Kaplan (D-Slate.com) said that the scandal “could conceivably oust Donald Trump from power” if further revelations show that he is “secretly beholden to a foreign power.”

All the same, if you leave aside the whole are-we-sliding-toward-a bureaucratic/military-coup issue, the pressing issue of the moment is what course President Trump will adopt on the dollar.[5]  A strong dollar allows American consumer to buy lots of stuff on the cheap.  A strong dollar also makes American products more expensive on foreign markets.     Trump’s “America First:” bumper-sticker doesn’t provide any guidance on the correct policy to follow here.  Consumer America loves a strong dollar; Producer America hates a strong dollar.  “Which will you have?”[6]  It isn’t clear which America is “Consumer America” and which is “Producer America.”  The revolt by tech workers against the “Not-A-Muslim-Ban” suggests that much of the economy of the future is against Trump, while much of the economy of the past is for him.  Of course, the mechanization of manufacturing that has destroyed so many jobs means that manufacturing still needs export opportunities.

The mainstream Democrats found themselves confronted by their own “Tea Party,” in the guise of the “Resistance” movement.[7]  Odds are that this is an authentic revolt by the Democratic equivalents of the Republican idiots of 2009.  Maybe its get-out-the-vote ardor will just help Democrats regain some seats in 2018.  However, the enthusiasm and support for the “Resistance” shown by mainstream Democrats will come back to haunt them if zealots gain the upper hand in party policy-setting.  The question is whether the white working-class voters who abandoned Hillary Clinton in November 2016 can be won back by an emphasis on racism, LGBT issues, and abortion.  (Well, that one answers itself.)

[1] “Trump: Can he regain control of his presidency?” The Week, 24 February 2017, p. 6.

[2] “Flynn resigns amid growing Russia scandal,” The Week, 24 February 2017, p. 4.

[3] JMO, but if this happened in a Third World country, the New York Times would be all over the story of a looming coup.

[4] “Washington: Mnuchin takes top Treasury job,” The Week, 24 February 2017, p. 32.

[5] “Issue of the week: President Trump’s dollar dilemma,” The Week, 24 February 2017, p. 34.

[6] See: https://www.youtube.com/watch?v=UtTBykcnjX4

[7] “’The Resistance’: A liberal Tea Party?’ The Week, 24 February 2017, p. 17.

Poisonville.

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A couple of recent books have high-lighted the big changes that swept over one part of America.[1]  Charles Murray and Brian Alexander[2] have both tried to understand the situation of the folks “I left behind me” when I went East to grad school.  Murray adopted the macro-perspective, while Alexander preferred to flesh-out the story by looking at the home town he had abandoned and to which he later returned.[3]

Once upon a time Lancaster, Ohio, incarnated the prosperous, moderate, conformist America of the golden years that followed the Second World War.  No one in the Boston-Washington corridor would have thought of places like Lancaster as an American Athens.  However, some basic cultural values of the Classical Greeks also then prevailed in Middle America: moderation and self-restraint.  The wealthiest Lancastrians did not live in gated communities; most children went to the public schools; women of all social classes joined in the community initiatives.[4]

Then things went wrong.  Over the last thirty-odd years, Anchor Hocking, a glass-maker and the chief employer in town, got passed around by Wall Street investment firms and the bankruptcy courts.  Along the way Lancaster went from being a town of 29,000, of whom 5,000 worked for Anchor Hocking, to being a town of 39,000, of whom 1,000 worked for that same company.  Production down-shifted from high-skill to lower-skilled products; and workers’ commitment to quality down-shifted with it.  In the process, the company’s pension fund dried up and its’ obligations were passed to the federal insurance program; wages were held down; and the generous fringe-benefits once offered by the company were cut to the bone.  Demoralization spread among the workers.  One worker says his co-workers snort Percocet and Oxy on the job.

Brian Alexander—like everyone else, so far as I can tell—sees the modern economy as the snake in this Garden of Eden.  His rogues’ gallery includes foreign competition, Milton Friedman, the powerful bargaining of big box stores, and companies that put profits for stock-holders ahead of wages for workers.

What seems to be missing is any awareness of the rebounding of foreign economies after the Second World War, which created formidable competitors for American industry; the great labor offensive of the 1970s that led companies to shift production to “right to work” states or over-seas; the huge impact of automation on many industrial processes, which destroyed millions of jobs; the nostalgia for small shops that imposed a quaintness tax on consumers, which many sought to evade by going to Walmart; or the inadaptability of many older workers, which left them languishing in backwaters.

These changes have come in for a lot of attention because of the supposed political consequences.  That is, “Rust Belt” one-time Democrats put Donald Trump into the White House.  Now Democrats and mainstream Republicans are thrashing around trying to figure out what went wrong.  Neglect of/contempt for blue collar workers is an easy explanation.  Certainly, it has been my one.  Is it the right one?

[1] Maybe, just maybe, other people in my social group missed out on them as well?  IDK.

[2] Charles Murray, Coming Apart: The State of White America, 1960-2010 (2012); Brian Alexander, Glass House: The 1% Economy and the Shattering of the All-American Town (2016).  See Roger Lowenstein, “Why They Voted For Trump,.” WSJ, 18-19 February 2017.

[3] Alexander is not the first to explore these issues in this fashion.  See also https://waroftheworldblog.com/2015/03/22/our-kids/

[4] Many of the early thrillers by John D. MacDonald offer glimpses of this world.  See, for example, Area of Suspicion (1954).

Memoirs of the Addams Administration 4.

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In his second week in office, President Trump issued an executive order requiring that any new regulation must be accompanied by the removal of two existing regulations.[1]  Given the cumbersome mechanism for removing existing rules and regulations, this should put a stop to new rules and regulations for a year.[2]  (He allowed an exception for national security-related issues.)  A cost-benefit analysis of this issue is murky.  The Office of Management and Budget suggests that regulations drain-off $110 billion a year from the economy.  On the other hand, the same regulations may save the economy an estimated $872 billion a year.  The “benefits” of regulation actually are non-monetary and can be difficult to calculate in a conventional manner.[3]  In short, neither the “costs,” nor the “benefits” of regulation can be calculated.

President Trump nominated Neil Gorsuch to fill the Supreme Court vacancy created when Antonin Scalia augured-in.  Judge Gorsuch is a highly-regarded jurist, as was Judge Merrick Garland, who was denied even a hearing in a shameless piece of Republican obstructionism.[4]  He’s also 49 years-old and could sit on the Court for decades, short-circuiting every Democratic initiative launched by the turn of semi-annual or quadrennial elections.  Democrats demonstrated dismay.  “This is a stolen seat,” declared Senator Jeff Merkley (D-Oregon); the “Republicans stole this seat from Obama” declared the Charlotte Observer (D-North Carolina); while the Atlantic (D-Massachusetts) denounced it as a “deal with the devil.”

Still, the Republicans controlled the Senate when President Obama nominated Judge Garland.  They weren’t going to approve a pro-Democratic Justice when the election tides had been running against the Democrats for three out of four successive elections.  Hearing followed by rejection isn’t any different than rejection through no hearings.  The assumption in the White House appears to have been that whichever party held the White House got to choose which ever justice it wanted for the Supreme Court.  If that’s true, then what about Robert Bork?[5]

[1] “Washington: Trump orders regulatory rollback,” The Week, 10 February 2017, p. 32.

[2] See Emmarie Huetteman, “How Republicans Will Try to Rescind Obama Regulations,” NYT, 31 January 2017.

[3] Perhaps not everything can be reduced to a balance sheet.  Still, do we want a flight into mysticism and “personal feelings” on behalf of people whose standard of living depends upon other people generating wealth?

[4] “Battle lines drawn over Supreme Court pick,” The Week, 10 February 2017, p. 5.

[5] See: https://en.wikipedia.org/wiki/Robert_Bork