16 November 2017

Some Thoughts on Sex Scandals, Politics, Culture and Consent

As I write this, Twitter is a twitter about sex. At least for the accounts I follow, that's unusual.

The two big stories are Roy Moore and Al Franken. The left is appalled that Moore won't drop out of the senate race and is asking Franken to resign.

There is a line of Shakespeare, "First let's kill all the lawyers," that seems to describe what so often happens in political arguments. The point should be to clearly define terms as lawyers would do but instead, on this discussion, we're killing off all efforts at clarity and lumping a lot of  behavior under the heading of "sexual misconduct."

We now know why Roy Moore dresses like Woody from Toy Story
In Roy Moore's mind, sexual misconduct does include consenting adults engaged in homosexual behavior but does not include a 32 year old man groping and touching a 14 year old girl he met at a child custody hearing.

In Donald Trump's mind, sexual misconduct does not include grabbing women's pussies or kissing them because they are so beautiful or regularly having affairs. Sexual misconduct does include whatever it is that Al Franken is doing.

In Al Franken's mind, because he's a conscientious liberal, sexual misconduct is anything guys like Moore and Trump have done AND anything he - Al Franken - may have done that would upset his constituents.

------------

Alabama Republican Senate candidate Roy Moore's repeatedly made unwanted advances on girls; in his thirties, he dated, groped and molested girls between 14 and 16 years old. And speaking of repeatedly, I've repeatedly heard people excuse the folks still wanting to vote for Moore as being no different from Bill Clinton supporters, people willing to compartmentalize a man's private life from his policy stances, essentially saying "I like his policies and what he does in his personal time is not my business."

When Trump confessed that he grabbed women by the pussy, I heard the same thing.  Defenders of Trump said, "Well, people still voted for Bill Clinton even though they knew about his misconduct."

------------

What is clear about Bill Clinton was that after marrying Hillary he had sex with other women, at least one of whom he apparently had an affair with. What is less clear is that he actually forced a woman to have sex, something Juanita Broaddrick accused Clinton of doing. Three women accused him of unwanted advances. And most clearly of all, he had a sexual relationship with Monica Lewinsky that led to his impeachment. Lewinsky doesn't describe unwanted advances, though; she refers to it as falling in love. 

What is clear about Donald Trump is that he assaulted women and had sex outside of marriage multiple times (and twice that sex matured into an affair and then marriage). What is also clear is that he readily confessed to assaulting women on tape (a confession so repulsive that it got Billy Bush, who merely chuckled at the confession, fired). What is less clear is how often he did that; about a dozen women have accused him of assault and unwanted advances, which seems to corroborate his own confession.

What is clear about Roy Moore is that when he was in his 30s he dated and propositioned high school girls. He was actually banned from the YMCA and asked not to hang out at the mall because of this behavior and his coworkers thought it strange that he would attend high school football games to pick up girls. He's been accused by multiple women of having made unwanted advances on them when they were girls - 14 to 16.

----------------

The first question is whether Roy Moore making sexual advances on a 14 year old girl who he literally met at a child custody hearing who later describes it as intimidating and confusing is the same as Bill Clinton making advances on a 22 year old woman who he literally met at work who later describes it as falling in love.

The second question is whether grabbing a woman's pussy hoping for sex is the same as making an unwanted advance in the hopes of sex.

To say yes to these questions is to say that consent is of no consequence. By law, a child younger than the age of consent cannot give consent. By common sense, anytime you grab a woman by the pussy without invitation it is done without consent. By experience, responding to the flirtations of a woman who describes the experience as falling in love is done with consent.

Consent - something the law states can only occur between adults - seems like a fairly useful way to distinguish between sexual conduct and sexual misconduct.

-----------------

Example of comedian making a bad joke or threatening advance?
And finally, there is a question as to whether making a sexual joke is the same as sexual misconduct. Going down this path alarms me. If we are going to ask every man who has done something stupid with a woman to resign, we're going to have a lot of job openings. (Going down that route could also take us back to the days when Lenny Bruce was arrested on obscenity charges; comedy is about mocking the sacred and making fun of these odd physical forms we're found in, cracking jokes about farts and the sexual impulses that make fools out of us all.)

What is clear about Al Franken is that he thought it was funny to pose for a picture groping the breasts of a woman who was wearing a bulletproof vest. I was a young man. It makes sense to me that a young man's imagination would find it hilarious to mock the guys who clumsily grope women by simulating that with a woman who would be impervious to bullets, much less hands. Such an act is just absurd enough to seem funny to a young man. There is no suggestion that this was done for anything more than a laugh. Franken himself dismisses it as unfunny now, as likely any man over 40 would.

Al Franken has welcomed a hearing on his behavior. It seems like such a hearing should be promised to start the day after the hearing on Trump's misconduct has ended.

------------------

Culture plays a role here, obviously.

There is a sensibility about affairs often attributed to the French that winks at flirtation and sex outside of marriage as something understandable. Obviously anyone voting for Bill Clinton or Donald Trump was at least reluctantly in this camp.

There is also a culture of child brides found in communities that see girls as people who would aspire to become mothers rather than people who might aspire to careers, to become equal to men outside the home. In these cultures, physical development that has largely played out by 14 is all that matters and intellectual development that might not play out until 18 to 22 is of less consequence as prelude to a relationship. States like Alabama have an age of consent at 16 and states with higher education levels like California have an age of consent of 18 given their different definitions of what it means to mature. A 14 year old preferred in some cultures because a child is easier to control. 

-------------

The goal of going after guys for sexual misconduct should have two dimensions. One, it should further the notion that women are simply people to everyone they interact with and the object of lust for only a chosen partner(s). Two, any expression of interest in a woman should leave a woman feeling safe.

Given how much larger men are than women the culture should be this simple: a man could express interest in a woman through words and then simply say, "You're now in control. If you are interested I will leave it for you to initiate." We don't (yet?) live in this world, though, and in the world we do live in men have made and do make advances. I assure you that any man has expressed interest in a way that they'd be embarrassed to have broadcast. So what makes a difference between embarrassing and offensive? In my mind it is whether the unwanted advance leaves the woman feeling humiliated and unsafe or flattered and desirable, feeling like an object some guy would use to satisfy his lust or as a person some guy delights in. [Note: I'm not a woman. Women may have very different opinions about this.]

----------------

Consent seems the anchor point in these discussions. To excuse assault on any woman or advances on a child is to dismiss consent as incidental to moral judgment rather than central to it.

03 November 2017

We're Getting Older, Fewer are Working and GDP Growth is Slowing: Next Decade's Economy in 4 Simple Graphs

In October, the Bureau of Labor Statistics released a report forecasting some key numbers for the next decade. You can find it here.

Here in simple graphs is the story it tells. The punchline is that the U.S. is getting old and GDP growth is slowing.

First, population growth will slow. Babies and immigrants will be coming into the country at a slower rate.

As population growth slows, the population will get older. The percentage of the workforce 55 and older will continue to rise.


People 55 and older are less likely to work than people 25 to 55. So, as the population becomes older, labor force participation rate drops.



Finally, the BLS is projecting increases in productivity. That partly offsets a drop in population growth. Nonetheless, given a smaller portion of Americans will be working, GDP growth will be up higher than last decade (a period that included the devastating Great Recession) but lower than the decade before that (and what it was most of last century).

Demographics is destiny. Baby boomers were at their peak working years 1996 to 2006 and thanks to babies and immigrants (and the babies of immigrants) population growth was robust. Over the next decade that changes and with it will come a change in economic growth.

02 November 2017

Evaluating the Fed's First Woman Chair: How Labor and Stock Markets Performed During Janet Yellen's Tenure

The U.S. got its first Federal Reserve Chair in 1914. 100 years later the first woman was appointed to Chair the Fed. Now, after she has served the shortest tenure in 40 years, the country is once again getting a man as head of the Fed. 100 years of men. 4 years of a woman. Now, at least 4 more years of a man. That seems fair and balanced.

Trump announced the appointment of Jerome Powell to be the Fed Chair, replacing Janet Yellen after the end of her first term in February. It's worth examining how the economy did on her watch.

While the folks appointing Federal Reserve Chairman seem to have a gender bias, the economy apparently does not. Or if it does, it is a positive bias. Even though hers was the shortest tenure in 40 years and the second shortest tenure in 66 years, more wealth was created on her watch than during that of any other Fed Chair: $17.7 trillion and counting. In the nation's first 237 years, it created $78.5 trillion in wealth; in the last 3.5 years it has created an additional $17.7 trillion, an uptick of 22.5% in less than four years. (Yellen's 4 year term does not end until February of 2018.) This is, of course, at least partly due to the simple dynamics of compound interest. As Benjamin Franklin said, "Money makes money and then the money your money makes makes money too." As the nation creates more wealth it creates more wealth. Also, just this month consumer sentiment hit its highest point for the century. (Well, okay. Highest point in 17 years. But century sounds more impressive.) And the economy has created an average of about 2.6 million jobs a year, helping to drive unemployment down from 6.7% to 4.1%.  Things have been good during Yellen's tenure.

The big question facing Janet Yellen throughout her four years was when and at what rate to begin increasing interest rates. The trick is to keep inflation low while creating jobs. How did she do? Well, inflation is still low (it's bounced around 2%  - mostly on the low side - during her time) and the economy has created about 9.6 million jobs thus far into her tenure. Those numbers strike me as  flawless. And already she's begun to unwind the stimulus from the Great Recession; during her watch excess reserves at banks have dropped from $2.7 trillion to $2.1 trillion, a drop of $570 billion. (To put that in perspective, just before the Great Recession excess reserves were at $1.7 billion. Yep. Now it is over $2 trillion and  only a decade ago it was under $2 billion. She has unwound that by vast multiples of what it once was without scaring off investors or consumers. That deserves respect.)

Here is a graph that contrasts the average annual job creation and stock market performance under each of the last seven Fed Chairs.  The numbers are not final for Yellen, of course, because it will be about a half a year before the data is in on her full four year tenure.

In comparison to Yellen, the economy created more jobs per year under William Miller and the stock market did better under Miller and Paul Volker.
Miller wasn't normal, though. He was in office for only 18 months and he refused to raise interest rates to battle inflation during the late 70s oil shock. (Curiously, he was the last Fed Chair who did not have an economics degree; the most recent is Jerome Powell, Trump's new appointment.) Given he deferred addressing a bad situation, the economy did do well during his time but he left a mess to clean up; Volker was his successor and Volker's policies to bring down inflation triggered one of the ugliest recessions in the last half of the 20th century. So putting aside Miller's weird tenure, the punchline is that she did better than the boys in this century's old boys' club; no one else who served four years or more enjoyed the strong combination of labor and stock market performance that she did.

I could throw in all the usual caveats about how the economy is more than the result of fiscal policies defined by the Congress and President and more than monetary policy defined by the Federal Chair. And all of that is true. No president or Fed Chair invented personal computers or pioneered genetic engineering or venture capital. Still, monetary policy does help to determine things like inflation, interest rates and thus stock market performance and unemployment rates. The Fed's mandate is to keep unemployment and inflation low (but not too low) and it takes actions to do that. It is true that the economy is incredibly complex and luck plays a large role in what kind of numbers a Fed Chair presides over. That said, monetary policy matters and no one does more to define it than the Chair. If you are a woman or know one, you might be proud to see that the economy under Janet Yellen did as well as it did under any other Chair. While she did not get offered a second term, she should be proud of how markets - specifically labor and stock markets - performed under her watch.

We should consider appointing another woman someday. And maybe next time we won't wait a century.

Freud, Jung, Hidden Impulses, the Collective Unconscious, Hitler, Putin, Conspicuous Consumption and - Finally - Community

Freud's Couch Was Sort of a Bed
About a century ago two competing models for modern media emerged in the U.S. and Germany. Using what they were learning about psychology, the Nazis created state propaganda to sway the masses to serve the interests of the state and advertisers in the U.S. used those same insights to serve the interests of the corporation. (A fascinating documentary, the Century of the Self, makes this argument and can be found here.)

William James published what some argue was the first textbook on psychology - the Principles of Psychology - in 1890 and Freud published The Interpretation of Dreams in 1900 and Civilization and its Discontents in 1930. If you visit the apartment in Vienna where Freud pioneered psychotherapy you don't just see that the Freudian couch was actually a bed. (Freud thought that a bed was a safe and  cozy place from which to free associate but perhaps the preponderance of sexual references would have given way to a preponderance of food references had he instead used a kitchen table.) What you get from the museum that once was his office is this very exciting sense of the mind as a new frontier. Rather than blame spirits or madness for weird thoughts and behavior, these early psychologists were taking a scientific approach to the mind, hoping to better understand the impulses that seemed to lay below the seemingly thin veneer of our civility. Jung's concept of the collective unconscious might be suspect but it gets to the reality that something binds us that is almost mystical and that these impulses could be tapped to sway large groups to do strange things - like drive to the mall on a sunny day or shout angry slogans at political rallies.

These insights were exploited with new and transformative technology of that time. The radio was the first technology to allow people across an entire nation to hear about the wonders of the Third Reich or nylons and electric razors and it was quickly followed by TV.

Obviously it made an enormous difference whether a community used these powerful new media technology to promote the interests of the state or the corporation. Someone once said that the book most likely to change minds in the Soviet Union would be the Sears Catalog. Magazines, newspapers, radio and TV shaped minds - and thus communities - as only churches and sacred texts had before. And it was no coincidence that the state and corporation undermined the dominance of the church last century.

This century's transformative media is the internet and the social media it has enabled. The shift in advertising revenue from newspapers to the internet has shattered old business models and forced a scramble to discover new audiences and sources of revenue for reporting and commentary.

And curiously, the choice about whether this model will be funded by the state or the corporation, by advertising for political interest and shared values or great values on products you'll love, is still in question. This week's senate hearings with the social media giants Facebook, Twitter, and Google gets to the question of how social media has been used to manipulate voters and thus American policy rather than merely focus on getting us to buy more goods.

It's worth noting that this is social media.

About the same time as the emergence of the radio and television, a third really powerful technology emerged: the telephone. This was intimate and personal and allowed two people to communicate and in the process strengthen relationships. I think it's telling that so much of the internet is experienced on a phone. Even though actual talking on the phone is not even in the top ten activities people do with their phones, what they're doing is closer to what was done on the phone last century than what was done with TV and radio. They're creating and feeling part of a community.

Community is a third goal, different from the goals of consumption and propaganda. I think one thing we're seeing in the success of Twitter and Facebook is the strong impulse to belong. You can dismiss this as tribalism but I think it speaks to communities of the mind and shared values, to what it means to be human and feel the part of something larger. It's worth noting that the strength and vulnerability of these brands is that they are platforms. Zuckerberg doesn't make editorial decisions about what posts your Aunt Leola or cousin Curt should make on Facebook. They do. Your friends are rarely selling goods or trying to win votes for the political party they are starting. (Although I admit I would be interested in seeing the posts of someone who was starting a new party; that sounds like an interesting person.) They are simply connecting, sharing what they are proud of, what impresses them, what they are worried about and what made them laugh. The third way beyond media as a tool for conspicuous consumption or political propaganda is media a tool for creating communities of the mind, of shared interests and simple friendships. It's not novel that people would do that; it is novel that people could do that across distances, with a tool more inclusive than the phone or the kitchen table.

01 November 2017

Bot Puppets

In the 2016 election, bots were busily posting and reposting weird memes to people who confused cynicism with sophistication, people who found credible claims like, "the Pope endorses Trump!" and "Clinton has used the Clinton Foundation to make Millions!" Millions of bots on Facebook and Twitter were busily forwarding fake news to gullible users who still didn't understand that a brand new site labeled "TrumpWillMakeAGreatPresident.com" or "MelaniaWillBeAMoreBeautifulFirstLadyThanBill.com"  is less likely to be offering objective news than the New York Times. Given they had already believed that the New York Times and other "mainstream media" sites were not to be believed, they actually found this put up overnight sites more credible than the mainstream media that still practiced journalism according to standards that predated the internet.

These bots were particularly busy swaying what the social media algorithms had identified as "soft Clinton" supporters. While they couldn't hope to win many black voters in Philadelphia over to Trump, they could feed rumors to voters likely to vote Clinton and thus convince them there wasn't enough difference between Clinton and Trump to justify voting. Just getting Clinton voters to stay home was enough to tip the election in the three states that gave Trump the national victory while only giving him the edge of 80,000 votes in Pennsylvania, Wisconsin, and Michigan. It was as if someone had concluded that a car salesman and a car thief were no different but it worked.

My elderly mother was having trouble with her computer during the election. After a lot of finagling I got her back online and signed into her Facebook account. This was either late October or early November.  I was aghast at the sheer volume of "news" articles posted to her Facebook feed. Obviously bogus news sites that looked credible to her were decrying Michelle Obama's lack of fashion sense and lauding Melania, showing Trump's promise to restore America or Hillary in an angry face. I honestly scrolled through about 50 of these posts while seeing only a couple of personal posts from her friends or family. And each post seemed to be from yet another fabricated site. It was absurd.

I don't know how many people will ever admit they were swayed by bots. It's not flattering to be duped by computer code. (Although I imagine that by 2017 we all have been at least once.)

My term for the folks who were swayed by bots? Either to believe that Trump somehow cared for them or that Hillary was just as bad? Bot puppets.

If you are a regular reader of this blog I expect you to incorporate the term into your daily vocabulary. Here is how you use it.

"Oh don't be just a bot puppet Justin. You've got to be smarter than three lines of code. Your argument doesn't even make sense."

"Did you just forward that argument from a bot? What are you, a bot puppet now? Just doing whatever the computers tell you? Think for yourself Justin."

"Well, Shelley is such a bot puppet that she doesn't know the difference between nytimes.com and notyourtime.com. Seriously, that woman will forward anything from anywhere as long as it blames Bill Clinton for whatever she's upset about today."

The goal is to make it shameful to rely on memes to do your thinking, to make bot puppet have all the stigma of racist.

Wait. That might not be enough to sway some of Trump's base that it's a bad thing to be a bot puppet.

The Most Overlooked Reason for Growing Polarization in Congress

An interesting study here depicts how little overlap there is in voting in Congress compared to what it was decades ago.

As you can see, Republicans and Democrats are more clearly voting along party lines.

Why?

One overlooked reason is likely the reliance on national media and the easy access of anything a politician has said. Once upon a time a politician could say things that let him establish a brand but then go negotiate and vote in ways that might suggest he was insincere about his campaign promises. To win in many districts you have to be clearly conservative or liberal. Then, once the vote comes, you have to vote consistent with those promises or you will be taken down in the primary. And your constituents will know about it because you can't hide your record or speeches in this age of Google and online data.

It is possible that we aren't getting compromise that helps a government to function because politicians aren't allowed leeway to negotiate. Instead, they're expected to be "true" to their principles and promises which means they're unable to compromise and reach agreement. The result? Even when one party owns both houses of congress and the white house it struggles to pass any significant legislation.

George Carlin's Driving Test Applied to Income and Politics

"Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?" - George Carlin

What he might have said about household income.

"Have you ever noticed that anybody making less than you is lazy and anyone making more than you is lucky?"

After an interesting exchange with a stranger about household income it occurred to me that this person judged people making more or less than her. She seemed really resentful of people who made more AND less than her. The ones making less were at home slacking off and pumping out babies. 

It was curious that she felt that people making less than her could have easily applied themselves - just by working hard - and increased their income but she apparently didn't think that if only she would work harder that she, too, could double her income.

Here is the thing about income distribution: 20% of your population will always be in the bottom 20% and 20% will always be in the top 20%.

This stranger said she made about $40,000. That means that she makes more than 40% of American households. Households that make under $20,000 are in the bottom 20% and households that make over $100,000 are in the top 20%. When you are talking to a random American there is a 50% chance that their household makes less than $50,000. You should be no more shocked or judgmental about discovering the person you talking with makes less than $50,000 than you are that a coin you flipped was tails. 

Or you could make it all mean something about a person's work ethic and morality.


2016 Distribution of Household Income

The aha I got from the exchange with this woman making about $40,000 is that we do have a tendency to believe that if only the people making $20,000 were to work as hard as we have, they too would make $40,000. And if only the people making $80,000 had fewer lucky breaks, they would be making no more than we are. In this worldview, incomes of the people making less than us would rise if only they worked harder and incomes of the people making more than us are so high only because they are lucky. 

History suggests that hard work doesn't change incomes as much as progress.

In 1900, people worked harder than us. The average work week was 60 hours, not the 37.5 it is today. Yet people in 1900 made an average salary of about $9,000 ($450, actually, but adjusted for inflation of things like groceries and housing), less than one-sixth of what they do today. Not only did they make less but their money could buy less. No one in 1900 was buying an airplane or movie ticket.

At any given point in history there is a distribution of income and half of the households will find themselves in the bottom half of that distribution. Maybe at some point in the future the people in the bottom 10 to 30% will be perfectly comfortable and able to afford housing and food and healthcare but that time isn't now. We can act like those people are in those bottom percentiles because they work only half as hard as people in the 40th or 50th percentiles and are meeting their just reward. Or we can acknowledge that incomes vary and some simply aren't enough. 

30 October 2017

Two Urgent Questions The Media Isn't Asking About Trump's Collusion

Some facts:
  • Today Trump's campaign manager was indicted and a campaign adviser to Trump plead guilty to lying to the FBI about a contact with ties to the Kremlin.
  • The Kremlin definitely meddled in the 2016 election, working to help Trump beat Clinton. 
  • Russians invested heavily in Trump's business after his bankruptcies.
  • The Trump campaign changed Republican policy to eliminate support for the Ukraine in their battle against Russia over Crimea and other territory.
  • Trump has attacked and criticized fellow Republicans, former allies, even his own staff but has never spoken negatively against Putin.
  • Trump's son and son-in-law and key officials met with Russians to discuss compromising information on Hillary Clinton shortly before Clinton emails were released by the Russians during the campaign.

Speculation:
It is plausible that Trump colluded with the Russians to steal the 2016 election.

It is not too soon to ask two really big questions, questions that will have to be addressed if speculation about Trump stealing the presidency prove true.

If Trump is found guilty of colluding to hijack a presidential election,

Who should then assume the presidency? 
1. Vice President Pence? 
The problem with this is that Pence is only VP because of Trump's victory. If Trump's victory is invalid, so is Pence's claim to replace him.

2. Hillary Clinton?
The obvious argument here is the Olympic's argument: if the gold medal winner has cheated then the official winner is now the silver medal winner. There are so many obvious problems and complications with this that one hardly knows where to start. Suffice to say that it is unprecedented. Suffice to say that a candidate colluding with a foreign power to steal the presidency is also unprecedented.

3. Barack Obama?
The allure of this is that it would return the presidency to the last fairly elected person, and return the presidency to someone obviously experienced in the job and able to quickly take over. Obama could hold office while a new election was called and Americans chose a new president. This is unprecedented within the US but not within countries where elections have obviously been tampered with. (And obviously raises dozens of important questions about how to create a presidential election outside the normal election cycle, or even whether such an election should be arranged or if the replacement for Trump should be allowed to serve the term through 2020.)

4. Paul Ryan?
This makes sense because order of succession gives the speaker the White House in the event that the president and vice president are unable to serve. It also has the obvious problems that Pence has in that it would award the presidency to the party whose head stole the presidency.

5. Joe Biden?
Far fetched but would answer the rebuttal to Obama taking the office after serving 2 terms.

Should all of Trump's executive orders and judicial and cabinet appointments be automatically rescinded?

For instance, would Supreme Court Gorsuch lose his seat? Would any legislation signed by Trump automatically be deemed invalid?

The American people are unprepared for any of these answers. The polarization that we already see in media coverage and arguments could actually escalate into violence if Pence or Obama (or any of the others mentioned above) replace Trump and yet such options are really the only options we have. This can hardly be stressed enough: any option will be unacceptable to many - perhaps most - Americans.

A responsible media would begin processing what is next right now. If it works out that Trump did not collude and is not going to be impeached or resign, then fine. The media exploring these questions would have only explored some fascinating options in a fascinating year. If it works out that Trump did collude and thus cannot hold the office he stole, there will be no such thing as too much time for Americans to work through what has to happen next.

26 October 2017

Two Simple Policy Goals

Maybe I'm simple minded but I don't think that policy has to be terribly complex.  

A great test of your economic policy is how easily someone can start a new business that has a legitimate chance of creating wealth and jobs.

A great test of your social policy is how easily a single mom can raise a child who has a legitimate chance to be happy and productive.


Doing well on those tests is not trivial. If you are successful at popularizing entrepreneurship you have a great education system, easy access to capital markets that are well regulated and reward people who invest well and punish people who abuse investors or borrowers, and stable, predictable laws around property and wealth. Your culture embraces disruption and protects losers enough that your community has little resistance to new companies, technologies and industries and welcomes change. You have things like universal healthcare so that would-be entrepreneurs face less risk when they take on the risk of a new business. Your culture sees social invention and product invention the same way: you keep improving what you have and looking for new ways to reach old goals more effectively, whether that goal is to store fresh food for longer like a fridge now does (and like some other technology may do in the future) or create meaning and community like a church now does (and like some new social invention may do in the future). 

If you are successful at making it easy for every parent to raise a child, this again has many policy implications. People have easy access to birth control and abortion so that they can easily control when they become a parent. Maternity and paternity leave is generous without penalizing companies that employ young people who are more likely to be starting careers and families. Childcare is affordable. Jobs can be customized. (The Netherlands has brought birthrates back up by offering more flexible job options: many parents (mostly mothers) work part-time.) You have a vigorous defense of the environment, minimizing the probability that children will be exposed to threats that might not show up for decades.

Rather than penalize entrepreneurs who would create jobs and wealth by making them jump through hoops,or ignoring the fact that their educational needs are just as real as those who would pursue a vocation or white-collar job, the community should make it easier for them in a host of ways, from mentoring programs to bureaucratic aides to help them through necessary legal, financial and regulatory hoops. Rather than penalize young mothers who would raise up the next generation of workers and citizens, the community should make it easier for them in a host of ways, from mentoring programs to childcare along with logistical and emotional support to help them through the various challenges of parenting.

If your mothers are raising the children they aspire to raise, you'll have an emotionally whole and productive citizenry. If your entrepreneurs are creating the businesses they aspire to, you'll have steadily rising wealth and income and strong job markets that enable the community to finance personal things like fine meals and communal things like beautiful parks and good roads. If you focus on making life easier for single mothers and entrepreneurs you will automatically make it easier for two-parent families and no children families. If you focus on making it easier for entrepreneurs, you will automatically make it easier for employees and investors.


The policy implications of these two goals - the various programs and initiatives that would help further us towards these goals - could be continually enhanced by - among other things - running focus groups with real and aspiring entrepreneurs and real or aspiring single moms. Asking them what would make them more successful, what obstacles and frustrations the have, what their needs are and sorts of resources they need would help to inform policies that could make a difference. Tracking the efficacy of these policy initiatives to determine what makes the most difference for the least time and money could be used as further feedback about which policies to continue and which to let die. With these two goals, a community could continuously experiment to see how best to achieve them. It's hard to imagine how such policy experiments wouldn't make the community better for everyone.

A Much Bigger Story Than Benghazi or Niger

Focusing on individual events can distract us from the systems that make those events more probable.

In the 1980s, the Japanese were taking market share from American and European car makers. One study at the time found that German car makers were reaching the same level of quality as the Japanese but needed three times as many employees to do it. Some German car makers were employing as many people at the end of the line to fix cars as some Japanese car makers were to work the line. When Japanese workers encountered an error they had authority to shut down the whole line and initiate an investigation into why the error had occurred. Rather than just fix the error at the place, they might change the upstream flow of work to lower the probability that someone would make that error again. Japanese workers were regularly fixing the system while Germans were regularly fixing cars.

Which brings me, curiously enough, to stories about our military. Right now, media and politicians are focused on the story of how four soldiers were killed in Niger. This is very similar to the focus on the four dead in Benghazi in 2012 and this focus on individuals misses a more important story about policy, the system that makes these tragic events more or less probable.

First of all, let’s assume for a moment that anyone killed in service to our country deserves honor and their families deserve acknowledgement and gratitude. Let’s further assume that whether or not they died in an incident that got an enormous amount of coverage, their families are equally shattered by this loss. Whether they were the only one killed that year in service to their country or one of 2,000, the trauma and grief their families suffer is real and they deserve our support.

Stalin was quoted as saying, “One death is a tragedy and a million is a statistic.” Perhaps it is because we can’t comprehend 2,000 deaths as easily as we do 2, we are made numb by the bigger number and saddened by the smaller. The media is currently gripped by the story of Myeshia Johnson, the pregnant widow of La David Johnson who received a phone call in which Trump’s offer of comfort included the phrase, “He knew what he was signing up for …” Yet a much bigger story is playing out here that is obscured by the odd way the media fixates on a Benghazi or Niger but ignores the bigger story about how many widows and widowers are experiencing what Myeshia Johnson is.

If you appreciate the tragedy of Chris Stevens death (he was the ambassador killed in Benghazi) and the grief of Myeshia Johnson, you have to be humbled by the thought of losing more than a thousand soldiers a year. Between 1980 and 2010, an average of 1,575 American military were killed each year. Each year. During that time the lowest it ever dropped to was 796 (that was in 1999) and it rose as high as 2,465 (in 1983). In only six years during that 31-year stretch did the number killed drop below 1,000. (1996 to 2001.)

Each death involved a real person and deserved its own story but our policy made the number killed each year remarkably consistent. Policy was the bigger story than any one of those deaths because it was policy that made the number of those deaths so remarkably consistent for so long.

And then the most remarkable thing happened. The number killed steadily fell. In 2010 the number killed was 1,485. Then, in 2011 467 died. In 2012 it was 314, 2013 was 132, 2014 was 60, 2015 was 28 and then in 2016 it was 30.  30 is 2% of what it averaged from 1980 to 2010.

It’s not true that each of these numbers are mere statistics. We aren’t equipped to comprehend 1,575 grieving families and all their friends. We can scarcely comprehend one. But the limits of our empathy shouldn’t excuse the obvious: a year in which 2,465 of our military are killed is 82 times worse than a year in which 30 are killed.

Obama deserves criticism for reneging on his threat to intervene in Syria. His decision not to send in American troops may have resulted in more civilian deaths in the last few years. But Obama also deserves respect for his decision. For one thing, he couldn’t see the next move. Who takes power once Assad is out and how does that lower the number of casualties and refugees? (Not only did our invasion of Iraq result in somewhere between 100,000 and a million Iraqi deaths, it created millions of refugees. Attacking a country doesn’t guarantee a fall in casualties.) It is not clear whether his decision to keep troops out of Syria resulted in more Syrian deaths.



It is clear that during Obama’s last six years our American troops were safer. Only a fraction of the number who would have died with previous policies died during his last six years in office. This deserves more attention than it has received. Had our service people died at the same rate in Obama’s last six years as they had in the 31 years prior, 8,418 more of them would have been killed. 8,418 grieving families and their friends. 9 times more grief and tragedy than actually occurred. This is not just a statistic. It is not just a story. It is 8,418 life stories that get to be told in radically different ways. And it is not just their stories. It is the stories of their children who get to grow up with both parents. Or the story of the children who were born because a mother or father lived well past the date they would have if they had been deployed under the policies of a president more eager to put boots on the ground.

Progress doesn’t come from fixing each tragic event after it happens. Progress comes from making changes to the system, or in this case to the policies that determine how our troops are deployed.

Foreign policy that spares the lives of 8,418 soldiers may not seem as gripping as tragedies that take the lives of four but they matter more. If we’re going to be factual about it, they matter 2,000 times more. That, it seems to me, deserves at least as much attention as a tragedy in Benghazi or Niger.

--------------
Data sources on military casualties are harder to find now. Sites that formerly posted data now yield up an error. Here are the places I went for data months ago and just this week. It would seem the Trump administration or someone in DoD wants to make these numbers less transparent.

https://www.dmdc.osd.mil/dcas/pages/report_by_year_manner.xhtml

https://www.defense.gov/News/News-Releases/Customrelcat/12003/?Page=3

https://fas.org/sgp/crs/natsec/RL32492.pdf

https://www.defense.gov/casualty.pdf

21 October 2017

Who is Poor? Who Should Help? - Poll to test perceptions on what is fair for income redistribution

Per my survey (which likely differs from what you would glean from the general population), people think that households with income of about $40,000 to $50,000 or more should pay additional tax to help households with income of only $30,000 to $40,000 or less. That seems worthy of unpacking.

The survey is here but asked only two questions:
1.

Who should help the poor? Only people whose income puts them in the following categories should be taxed extra to help the poor.

2.

Who do you consider poor? Only people whose income would put them in the following categories should receive income help from richer citizens.


I got 22 responses to the survey. Two (9%) self-identified as conservatives, two (9%) as libertarian, three (14%) as moderates and 15 (68%) as liberals.

Now some data. (Household income calculated from here.) Here is the minimum amount your household would have to make to land in the top [1%, 10%, 20%, etc.] $140,000, for example, means that you are in the top 10% of American households (or, of course, making more than 90% of American households.)


One person (5%) thought that no one should be taxed to help the poor. One of my respondents (5%) thought household income should be higher than $383,000 before paying a special tax to help the poor. Most respondents (7, or 32%) thought that any household making more than $40,000 should pay additional tax for the poor. Cumulatively, 14 respondents (64%) thought that any household making more than $50,000 should pay additional to help the poor.

Curiously, the one respondent who thought no one should be taxed to help the poor nonetheless thought that the poor should be helped. The question, then, is who qualifies as poor and in need of help? Five (23%) of my respondents thought only households making less than $12,000 needed help. (It's worth noting here that in America's 50 biggest cities, a median, one-bedroom apartment costs $15,000 a year. Without any help, $12,000 a year would be tough.) Most respondents (12 or 54%) thought that households making less than $30,000 to $40,000 deserved help.

One of the great things about a democracy is that it has to reconcile so many different views. 12 (55%) of my respondents thought that people making about $40,000 to $50,000 should be taxed to help the poor. 8 (36%) of my respondents thought that those same households were poor and should be helped. It would be tough to tax someone from one pocket and then help them by putting money back in their other pocket.

My opinion, for what it is worth? The top third should help the bottom third. The third in the middle? They get no help and they don't have to help anyone. That essentially means that any households making more than $75,000 are taxed to help the poor and any household making less than $33,000 would get help. If you make between $33,000 to $75,000 - as do a third of American households - you neither pay for the poor nor get help for being poor. Also, I wouldn't argue vigorously with someone arguing that the cutoffs should be at 25% and 75% (which would mean only households making less than $26,000 would get help and only households making more than $90,000 would help them.) (And this would be progressive tax. Income over $75,000 might be taxed at 1% and income over, say, $400,000 might be taxed at 5%. Also, I'm not saying that people wouldn't have other taxes to pay to help finance schools, roads, courts, etc. Those taxes I would apply to at least the top two-thirds of Americans and - again - progressively.)

Here are the results from the poll. Thank you for helping me to get a sense of what people think of as fair.




20 October 2017

Podcast - Social Invention, Progress & Trump

Here is my very first podcast:

Social Invention, Progress & Trump, one in a series of Fourth Economy podcasts.

"History consists of a series of accumulated imaginative inventions."
- Voltaire



The simple argument is that it is a struggle to understand politics and policy today without understanding social invention. A wave of social invention is simultaneously creating new opportunities and threatening old identities. Among the major points made in the podcast:
  1. Social inventions like banks and nation-states are as important to progress as technological or product inventions like steam engines and computers.
  2. 100 years ago the rate of product invention accelerated. Now, the rate of social invention (e.g., the EU, NAFTA, Uber-like employment, same-sex marriages) is accelerating.
  3. Progress in the West has come from treating social inventions like tools rather than as either sacred or disposable.
  4. The three major social inventions and reinventions that resulted in freedom of religion, democracy, and the American Dream (essentially the democratization of financial markets) inform us as to what strategies and measures result in successful social invention.


14 October 2017

What Your Fellow Americans Are Making - And What That Suggests About Minimum Wage Law

13 October, our Social Security Administration released data on last year's wage earners.

An income of $95,000 put you in the top 10%, made you 1 out of 10.
An income of $250,000 put you in the top 1%, 1 out of 100. 
$500,000 put you in the top 0.1%, or 1 out of 1,000.
$50,000,000 - fifty million - put you in the top 0.001%. It made you one in a million. 143 people reported incomes of over $50 million and those 143 people had average incomes of $100 million.

Here's another remarkable stat. Merely having an income put you in the top 50%. When I write, "top 10%," above, I'm writing about the top 10% of wage earners. Social security has data on 163 million wage earners. There are about 325 million Americans, so only about half of Americans reported incomes. Some were too young. (My wife's second grade class is full of slackers who haven't earned a dime in their life.) Some were too old. Some are too rich to work or make their living from investments rather than wages, property or stock owners. Some are too handicapped. Some are working jobs without wages, jobs like caring for their kids or parents. Some depend on family or friends for food and housing, some are in school, some recovering from injury, some permanently disabled, etc.

Now let's get into the normal people, the wage earners who don't make six figure salaries but still work. The 90%.

If you make $15,000, you make more than 30% of all wage earners. $15,000 a year works out to $1,250 a month. Median rent for a one-bedroom apartment in the country's most expensive 22 cities is higher than $1,250 a month. Assuming that you have to eat, buy clothes, get transportation, etc., what nearly a third of Americans make is not enough. 

If you made $30,557.71 last year, you made more than half of all wage earners. You have as many people who would trade wages with you as you would trade wages with. In some sense, you are the representative American, someone fellow Americans are as likely to pity as envy.

$30,000 a year works out to $15 an hour. Half of wage earners make less than this. Half.

Seattle is a wonderful city. It's both home to two of the richest men in the world and to many liberals who folks in the Midwest would consider more liberal than Scandinavians. They've recently passed a $15 an hour minimum wage. 

I have a problem with that.

I don't have a problem with places like San Francisco and Seattle - places where median wages are $90,000 to $100,000+ a year - saying to employers, "If you want to hire our people you have to pay more than you would elsewhere." That makes perfect sense to me. 

What doesn't make perfect sense to me? Choosing to make that minimum wage $15 an hour - an amount MORE than what half the people in this country make. 

Average wages in Belarus and Armenia are about one-tenth the average wage in the US. You can't just pass legislation requiring all businesses to pay Armenian employees the same as American employees. It's a noble and proper aspiration to lift wages but the way you get there is complicated. Better education. Easier access to foreign markets where they can sell their goods and services. More capital investment that makes their people more productive. 

Minimum wage seems to work as a prod to businesses or industries that aren't keeping up. It can force the folks in the bottom of 10% or 25% of labor productivity to either go out of business, go overseas or to up their game and make their employees more profitable even at a higher wage. What it can't do is force wages up for half the workforce. You need more complicated policies than that.

Policies that make it easier to live when you make only $15,000 a year or less - something that 30% of the workforce is doing - are good, humane and necessary. Minimum wage laws that ignore what the market says about the value of half your workforce seem, by contrast, bad, silly and doomed to backfire. 

12 October 2017

What is Likely to Trigger the Next Stock Market Downturn

Watch for legislation that cuts capital gains tax. Once that happens, people with equities will be able to sell with lower tax penalty. If you have a 401(k) that lets you sell without paying taxes, you might want to sell off, say, 20% of the more volatile stocks before the legislation is signed because shortly after it is likely that the market will begin its correction.

Unemployment Rate: What is Next After the Longest Drop in History?

We have data on monthly unemployment rates in the US from January 1948 - shortly after World War 2 - through September of 2017. During that time it has never been lower than 2.5% (which it was in May and June of 1953 at the peak of the post war recovery) and never been higher than 10.8% (which it was in November and December of 1982 in the depth of the Volcker-induced recession during Reagan's first term).

Half the time it is below 5.7% and half the time it is above 5.7%.

Unemployment rates of 3.8% or lower put you in the top 10%; rates of 7.9% or higher put you in the bottom 10%. 80% of the time, unemployment rates have bounced between 3.9% to 7.8%; that range defines normal. Outside of that range things are great or awful.

At the depth of the Great Recession - in October of 2009 - unemployment hit 10%. That's among the worst 1% of all months. (Well, in the worst 1.2%.) Since then it has steadily come down during the longest uninterrupted streak of job creation on record. Last month - the end of the streak - unemployment hit 4.2%, a value in the best 17%. We're in the top 20% but not yet top 10%, really good but still not great.

One simple answer as to whether unemployment will drop further is to say that it's only been lower than its current rate of 4.2% 15% of the time. Again, unemployment rates bounce between 4% to 8% most of the time; it doesn't seem to last long outside of that range. That alone suggests that the unemployment rate will soon stabilize or even rise.

Another interesting thing to note is that this is an exceptionally long recovery. Unemployment peaked 8 years ago this month - in October of 2009. A steady drop in unemployment has never lasted longer. The next longest improvement, the drop from the 10.8% high in December of 1982 to its low of 5% in March of 1989, took just over 6 years before beginning to rise again. Unemployment rates steadily drop for a time and then steadily rise, and steady improvements usually last just a few years, not 8 yerars.

At the start of a recovery people are well aware of all the reasons things can go badly. After all, they are just coming out of a period in which things did, indeed, go badly. Remember how early in the recovery people were anxious about Greece, China's stock market, deficit spending, the mortgage market, Greece, etc. People were looking for reasons that things could go wrong. Now? Now they're looking for reasons that the recovery could continue and less aware of reasons it might not; this makes economies more vulnerable.

There are reasons the unemployment rate could drop further and reasons it won't. 

Among the reasons it could drop further is that our labor force is growing more slowly than it did a decade ago. From 1955 to 2005, US labor force (folks aged about 25 to 65) grew 1.7 percent a year. Since then it has grown about 0.5%. As companies seek to hire, they'll have fewer options; all else being equal, this would translate into lower unemployment.

Another reason it could drop further is because of a drop in immigration. Again, this lowers the number of available workers and could mean that employers will draw from the unemployed rather than the newly available. If immigration rates drop enough, the labor force might even stop growing.

Curiously, the reasons that the unemployment rate could start to rise again include a drop in immigration. Immigrants don't just find work here. They buy houses, clothes, meals and all the things that drive demand for goods and services that, in turn, drives demand for employees here. If Trump's policies are successful at slowing down the flow of immigrants, he'll actually succeed at destroying jobs.

Trade, of course, could still provide jobs for American workers. Assuming, of course that Trump does not ignite trade wars. Simply put, he wants trade wars with our biggest trading partners - threatening to blow up Nafta and trade deals with China - and if he gets his way we'll see a drop in trade with our three biggest trading partners. That will destroy American jobs.

The third reason that the unemployment rate could rise is because Trump is planning to cut spending and taxes. Tax cuts will disproportionately go to the rich. If you give a poor guy a $1,000 in tax cuts, he's likely to spend $900 of it. When you're making only $30,000 a year, you could use that extra $1,000. If, by contrast, you give a rich guy $1,000 in tax cuts, he's likely to save $900 of it. When you're already making $500,000 a year, an extra $1,000 isn't going to change your vacation plans. Government spending ripples throughout the economy in ways simple (the employees of the State Department buy coffee at that little coffee shop across the street) and complex (the Medicare recipient pays a medical bill which enables the hospital to make a down payment on a new imaging technology and the young doctor to make a down payment on a new car). If you cut $1,000 in government spending and then give a $1,000 tax cut to someone rich, you'll reduce spending, reducing demand for the goods and services that drives demand for employees.

What is the punchline? It depends on whether Trump ends trade deals. In either case, unemployment rates are likely to start rising again within 3 to 9 months. If he ends trade deals, they'll begin to rise sharply.

If Trump fails to end trade deals:
Unemployment will fall to no lower than 3.8% within the next six months, after which time it'll start to rise again. Given drops in the growth of the labor force, job creation could turn negative at least one or two more months within the next year even as the unemployment rate remains relatively stable.

If Trump succeeds in ending trade deals like Nafta:
Unemployment will - at best - hit 4% near term but may have already bottomed out at the current 4.2%. We'll have a recession and the unemployment rate will rise to 6% to 8% within a year or two.