How to Cripple an Economy, Part 1: Inequality

Does inequality matter in the big economic picture?

I’m not going to discuss here why economic inequality is worsening.   That it’s getting worse is an unarguable fact. What drives the worsening is not yet perfectly clear—is it mainly the inevitable outcome of market forces, or is it a side-effect of “rent-seeking” by rich folks and rich corporations?  (I will treat rent-seeking issue in another post.)

Does increasing economic  inequality harm the economy as a whole? Does it suppress growth in total wealth? (Agreed that definition of “wealth” is slippery.  IMO the Gross Domestic Product does not exactly measure wealth, since it includes the production of a lot of Stuff no one really needs, some of it downright absurd, such as the more than two billion annually spent on Halloween costumes for pets. But the movement of the GDP is the best guide we have to economic growth, or the lack of it.)

I’m not addressing the somewhat different issue of fairness here.  It is obvious that huge inequalities are  unfair to those on the lower rungs. Enough people are talking about that, that I don’t need to chime in.

Aside from fairness, does the canard that the “Rising Tide Lifts All (or most)Boats” hold, when economic inequality is a main driver of the tide?

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How to Cripple an Economy, Part 2: Taxes

A Bad Joke in Search of a Punch Line

This post was prompted by an anecdote concerning a meeting top Trump  economic adviser Gary Cohn had with a number of high-flying corporate executives. He asked for a show of hands of those who would use benefits from the corporate tax cut to reinvest in their business, or some other business, in the U.S.  A few hands went up. Most did not.  The administration’s heavy hitter asked (I believe these were his literal words), “Why aren’t there more hands up?”

The answer from execs who failed to raise their hands was, they already had plenty of money, there just weren’t many opportunities to invest in.  And that’s because . . . (is this the punch line?) consumers weren’t spending!

Oops! Went a tiny voice in Gary Cohn’s shrinking brain.

Of course, what holds for corporations also goes for rich individuals who can only spend so much money until they are sated.  After a certain threshold, they buy things not for use, but for bragging rights.  Not avarice, but ego ego ego.  My yacht is bigger than your yacht, and everyone knows that Size Matters.

I first heard this anecdote on NPR but unfortunately cannot find the segment where their sharp correspondent identified it (sheesh! – forgot her name too—sorry, sharp reporter!).

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How to Cripple an Economy, Part 3: Wealth Gap Multipliers

[One note here at the outset:  the wealth gap multipliers are not really “hidden pieces” as my headline below implies, but they are pieces that most people don’t think about when they speak of income disparities and tax policy. But they are pieces you can’t separate from the whole picture of economic disparities, and are arguably just as important a topic of discussion as income taxes.  Bernie Sanders speaks about it, but unfortunately his bombast tends to cause independent voters—the ones who increasingly make the differences in elections—to tune out.]

Hidden Pieces of the Tax and Wealth Puzzle: Wealth and Wealth Gap Multipliers

Regardless of specific amounts, even at comparable incomes (say, within one order of magnitude, $75,000 to $150,000), those with wealth behind them are many times more secure than those with little wealth.  (Note that I plucked these numbers out of national averages; of course incomes and expenses are far greater in many major cities and upscale suburbs.  Incomes are far lower among the poor and much of the lower middle class, of whom to speak of their nonexistent “wealth” is a bitter irony.)

To state the obvious: the wealthy have something to fall back on in hard times and personal emergencies.

Moreover, their wealth expands through wealth multipliers.

I have not looked at exact disparities in wealth in the U.S. for 20 years, since it was bad then and has obviously been getting worse.  The Great Recession of 2007-2009 amplified the wealth disparity, and it  hasn’t improved since then. (For a good idea of where it’s all going, read Plutocrats by Chrystia Freeland. )

Multiplier Number One, Race: note that the hardest hit are people of color, where the wealth gap is worse than for whites, and widening: see CNN analysis at Racial wealth gap in 2016

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The Ultimate Externalized Cost

They conned the public, and will never pay for it

I know this is obvious, but not to take it off our radar screens for a second: climate chickens coming home to roost, and who’s going to take care of them? Not the fossil fuel companies.

The U.S. Congress is presently debating, how much should the government provide for disaster relief and recovery due to hurricanes—around Houston, in Florida, in the Virgin Islands, and most disastrously, Puerto Rico.  The Congress is reluctant, because a precedent for paying now points the way to astronomical payments to come. They know that named hurricanes are just the tip of the climatic disaster iceberg (sorry for the incongruous metaphor) .

Anyone who has, with an open and analytical mind, paid attention to   Anthropogenic Global Warming (AGW) and Climate Change, has connected the dots between profligate burning of fossil fuels and catastrophic weather events.

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Franken Scandal Revisited

Pro-Franken pushback

It’s no surprise that I’ve gotten some pushback on my Franken Should Resign post (mostly via messages sent to my private email).  Three people took me to task for being unnecessarily harsh. In case you missed it, here’s my previous borderline-harsh post:

Franken: Should He or Shouldn’t He? The Bigger Issue

I get what they’re saying, although I’m not in complete agreement.  Let me make as crystal clear as I can, I am not denouncing Al Franken the person.  As I said, I like him, I admire him, and I’m very grateful for his service in the Senate.  He made a few mistakes, but the mistakes didn’t cross more than a centimeter into the dark zone of exploitation of women. Whereas Roy Moore has gone so far into the dark zone he has become invisible to anyone seeking decency.. He has shown no contrition; on the contrary, he has attacked and gotten surrogates to humiliate his accusers, of whom there’s little doubt that they are telling the truth.  You can’t get a lot less Christian than that.  (That Donald Trump has failed to denounce him speaks still more volumes about the fundamental indecency of our so-called national leader.)

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Franken: Should He or Shouldn’t He? The Bigger Issue

Should Al Franken resign? It’s Complicated.

At this very moment, 6:15 pm EST on November 17, Al Franken has neither resigned his seat in the Senate, nor declared positively that he’s not going to.

Of course, understandably, there have been calls for Franken’s political head.  The complainant has the goods. Even Roy Moore–a sexual predator far worse than Al Franken–  doesn’t have an  actual photo of him taking advantage of a woman.

I’ve been a fan of Al Franken from well before he was elected to the U.S. Senate.  As Senator, he has been a strong and effective voice for liberal politics.. I admire the man and like him, and am thankful for his service.

BUT:  there’s more at stake in the Al Franken scandal than an offense to a woman at a some comic moment that he must have thought at the time (being a man) was a harmless bit of fun. What’s at stake is the moral stature of the Democratic Party. Which is why I think Franken should resign. 

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Public Interest Algorithms and the Jungle of Earth Two

Public Interest Algorithms: An idea whose time has come, and  will quickly be shelved by free-market ideology

Former FCC Chairman Tom Wheeler has proposed a technical measure to defend against the trend of social media to divide us: Public Interest Algorithms.  See this in the Brookings Institution website: Wheeler on Public Interest Algorithms

Tom Wheeler is a very smart guy, so why has he poisoned his concept by branding it as a public interest initiative?  In an era when free-market ideologues hold sway over the intransigent core of Republicans in Congress, and Silicon Valley is jam-packed with libertarians, anything that smacks of public interest is derided as an instrument of the Nanny State.  If you can’t legislate restaurants to stop providing super-sized soft drinks to their customers (a clear public health hazard), how are you going to keep at bay the Sultans of Social Media who will fight tooth and nail against public interest algorithms tampering with their business models?

A current Senate hearing on Russian meddling with U.S. elections via social media finds Facebook and Twitter PR spinners making conciliatory noises while at the same time holding fast to their narrative of social media as the best outlets for the freest flow of information ever conceived of by the human race.  The problem with this narrative is the unbounded nature of the “flow.”  It’s not like a stream that gathers the contributions of multiple tributaries and flows in a direction (toward the truth or at least a wide consensus). It’s not even like a river that has overleapt its banks in a flood, since a flood, too, still has a recognizable shape and direction.  It is a deluge pounding down anywhere and everywhere, a Hurricane Harvey hovering over continents. The “public interest” is a drowning victim.

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Uncertainty Part Two: When Comes the Big Shock?

Another scary crapshoot: Coronal Mass Ejection

The dice are loaded against Earth from the activity of that warm and friendly object that bestows most of the energy we use, our Sun. The worst effect of the Sun will be its roasting to death all life on earth a billion or so years hence. But that warming is nothing to worry about for the next few million years (this warming has virtually nothing to do with climate change on a scale of centuries, such as 2,000-10,000 A.D).

Short-term, the biggest wallop the Sun has in store for us is a Coronal Mass Ejection.

Just do a web search on Coronal Mass Ejection and you’ll get, along with a fascinating description and analysis, an eyeful of bad news about what CME’s could do to Earth–and what they have already done, the most dramatic recent manifestation being the 1859 “Carrington Event” (named after the astronomer who witnessed the flare accompanying the CME). In 1859, telegraph wires were jolted to a degree that knocked wireless operators off their chairs, ignited fires, and took down the entire telegraph network.

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Uncertainty Part One: Climate and Loaded Dice

Here’s a little different slant on the old subjects of climate change and coronal mass ejections.
Climate: the Known Unknowns

Will the Earth be hotter in 2050 than today?  What does the science say?

The simplest answer is, probably.  A more complicated answer is, we don’t know.

We do know it is almost certain, that absent a 50% drop in carbon emissions within the next ten years, and a still steeper drop afterwards, Earth’s temperature will continue to rise dangerously fast on account of the enormous quantities of carbon dioxide we have already pumped into the atmosphere. But a 50% drop in ten years would be ruinous to the global economy and is, if not technically impossible, then politically so—even more the case now that the leaders of the world’s second worst carbon polluter have turned their backs on mitigation, and even adaptation. Furthermore, even a 50% drop leaves 50% still going, with the promise of (net) zero emissions still decades away.

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More Bad News for White Athletes and Would-Be-Athletes

Too much exercise takes a toll on male cardiac arteries (whites only)!!

We all know that white men (still) can’t jump,*  but now we find that a new study reveals, “White men who exercise at high levels are 86% more likely than people who exercise at low levels to experience a buildup of plaque in the heart arteries by middle age. . . .”

See: uh-oh

Yes!  Another occasion for white males to feel like a victimized minority. . .

This research hits home with me especially because last year I discovered I had cardiac disease that required the installation of two stents in my Left Anterior Descending artery, the so-called “widow maker.” Now I find that a white male age 71 who runs and cycles maybe too much is increasing his risk of heart disease.

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