25 August 2019

It's Time to Stop Pretending That Both Sides are Equal: Trump's Parade is Leading Backwards on Progress

From about 1830 to about 1900, the Democratic party was all madness and defense of the agricultural economy and the Republicans were the progressives. While Democrats were defending slavery, Republicans were figuring out capitalism. Now the Republican Party under Trump has gone full bore mad, fighting for the waning industrial economy the way Democrats once fought for the waning agricultural party. While Trump is fighting trade wars, Democrats are trying to figure out how to finance education and R-n-D for projects like global warming.

This divide between defending an old economy and trying to navigate a new one is why Democratic support is so high everywhere that the economy is strong and Republican support is so strong everywhere the economy is weak. (In the regions with the highest wages, Hillary Clinton won twice as many votes as Trump. (See below for details.)) Communities whose policies support the information economy are more prosperous than those still defending the industrial economy.

One of the many things absurd about this current battle between information and industrial economies is that rather than engage in a really great conversation about policies that better support an information or entrepreneurial economy and how to transition into the latter, we're debating something settled decades ago ... whether we should give preference to policies to support an information or an industrial economy. It is a complete waste of time to defend Trump's 1950s vision of the world and yet that is exactly what you have to do if you're a Republican. It's the political equivalent of selling rotary dial phones. There was no legitimate "both sides are equal" argument in 1870 and there is no both sides are equal argument today. 

Progress is heading in a particular direction and that's not the direction Trump is leading his parade.

The claim that the most prosperous areas voted most strongly against Trump's call to defend the industrial economy is based on facts. Among them is this fact: the 15 counties with the highest average weekly wages voted 2-to-1 for Clinton and against Trump.

The average vote for Clinton in these regions was 66% . (Details here.) 

24 August 2019

Contrasting the Districts that Supported and Opposed Trump: It Comes Down to a Divide Between Industrial vs. Information Economies

Nerd that I am, I collected some data on the 15 congressional districts where Trump won the largest percentage of votes and the 15 districts where he won the lowest percentage of votes. 30 districts out of the 535 lets us look at the contrast by looking at extremes.

The biggest difference is the ratio of folks with Bachelor's degrees or higher to the folks employed in manufacturing. (I still don't know of a simpler proxy for knowledge worker than a Bachelor's degree.)

In the least Trumpian districts, the ratio of folks with college degrees to folks working in manufacturing is 6 to 1. These are districts in the information economy. Not only are they more likely to be knowledge workers than factory workers but they create more jobs. There are 43 jobs for every 100 people living in such districts, 1.5X as many as found in the most Trumpian districts. The information economy is still growing even as the industrial economy shrinks. This not only explains the fact that districts in the information economy have more jobs but likely explains why they're 4 years younger, on average. The regions creating the most jobs are going to attract more people starting their careers.

In the most Trumpian districts, people are 3X more likely to work in manufacturing and household income is $22k lower. These are related. Generally, folks with a degree make about $22k more than folks without one.

Trump is the warrior chief for the folks in the waning industrial economy. It is just one of the ways that he is the opposite of Lincoln, the GOP's first president. In 1860, the industrial economy was cutting edge. Today it is on the wane, being eclipsed by the information economy just as the industrial economy eclipsed the agricultural economy during the time of the first Republican presidents. 

23 August 2019

Republicans - the Party That Does What It's Told

When it comes to how we're wired, liberals prioritize equality and care while conservatives focus more on loyalty, authority and purity. Once Republicans know who the authorities are, they'll reliably do what they're told.

No Republican has been more popular - not Eisenhower or Reagan, not Bush or Bush, not Nixon or Ford - than Trump. Trump defines and owns his Party in a way that no president since FDR has. This is only possible because Republicans so readily cede to authority.

Concerned Republican, "Trump had sex with a porn star while his wife was home with a new baby and then used campaign funds to hush her up. Oh, and then lied about it. We were really upset about sex and lies with Clinton, right?"
"Right. But that doesn't matter now."
"Oh, okay."

Concerned Republican, "Trump has doubled the deficit to a trillion dollars. We were really upset that the deficit grew so fast during the Great Recession under Obama, right?"
"Right. But that doesn't matter now."
"Oh, okay."

Concerned Republican, "Trump has insulted prisoners of war, discounting their sacrifice and heroism. We really love our veterans and in particular those who suffered as prisoners of war, no?"
"No. Not any more. A prisoner of war is a loser who got caught."
"Oh. Okay."

Concerned Republican, "Trump is against free trade. Aren't we against government interference in markets and for free trade?"
"Not anymore. Now we like trade wars."
"Oh. Okay."

Concerned Republican, "Trump is telling businesses that they can't do business in China or with China. Isn't government telling businesses what to do socialism?"
"Not anymore. We like this."
"Oh. Okay."

Concerned Republican, "Russia helped Trump to win. Don't we hate the Russians and isn't that foreign interference in our elections?"
"Not anymore. Democrats just hate Putin because he didn't help them to get elected."
"Oh. Okay."

Concerned Republican, "Every time Trump tweets the stock market falls. Don't we care about the stock market?"
"Not anymore. We think trade wars are more important than prosperity."
"Oh. Okay."

Concerned Republican, "Trump claimed that he was the chosen one and that he is the second coming of God. Should we be worried that he's going crazy?"
"No. He actually is the chosen one. God loves him best."
"Oh. Okay."

Concerned Republican, "Should we be drinking this kool-aid? It looks like it made those other people really sick."
"Everyone feels worse right before they feel better. Just close your eyes and swallow it quickly."
"Oh. Okay."

There was a reason Putin wanted Trump to win. Democrats will reject a Democrat because he posed for a picture pretending to touch a sleeping woman or because she was paid for a speech by bankers. You can't get Democrats to reliably vote AGAINST a madman. Republicans? You just have to tell them to vote for and what to support this year and they'll happily do it. It's a pretty easy group to herd. If you tell them they're supposed to, they'll even reliably vote FOR a madman.

09 August 2019

How Hosting or Squelching Science Determines Where Progress Goes Next

In 1642, Galileo died and Newton was born. That's still a poignant symbol of the hand off from Italy to Britain for progress.

In 1500, Italy's per capita GDP was about 50% higher than Britain's. By 1820, Britain's per capita GDP was about 50% higher than Italy's.

Galileo was arguing that the earth rotated around the sun. The church had the authority of Joshua 10:13, a verse that made it clear that it was in fact the sun that orbited the earth. They put Galileo under house arrest and made it clear that developing theories based on observation was not to be tolerated as long as Italy had the church's authority.

Science traveled north. The Protestants of Northern Europe accommodated Galileo's theories and became host to the scientific method that the Italians had helped revive from Greek and Roman time. Newton went further than Galileo, developing a set of laws to explain what Galileo observed. Newton's science and math became a foundation for the Enlightenment and that, in turn, became a foundation for the Industrial Revolution and Democracy. Italy protected its past and the UK created a new future.

Today, we have a similar inflection point in the transition from fossil fuels to alternative energy. China now leads in the production of wind turbines and solar panels. Meanwhile, we Americans have elected a president intent on protecting coal - an industry that dates back to the time of Newton. Trump - like so many of his supporters - denies climate change in the same way that the Catholic Church denied we orbit around the sun. And science, less interested in the vested interests of coal industry profits or old testament prophets than reality, is shifting away from the greatest home to science since, well, Italy during the Renaissance or the UK during the Enlightenment.

Economic growth and prosperity follows science. It has for centuries. If we continue to deny the reality of climate change and what that means for a shift in strategies and the source of prosperity, we will play the role of Italy in the 1600s. It's not a good role. Shakespeare - born the same year as Galileo - set half his tragedies there.

07 August 2019

We're All Becoming more Individual - or the curious challenge progress poses to politics

It's not just that we're getting more specialized in our work. We're also getting more specialized in our consumption. My lunch is different from yours. The last book I read has nearly a 0% chance of being the same book you last read. The article linked below is a tad wonky but the punchline is that there is a rise in "niche consumption."

This is so fascinating to me because it means that economically we have never been more diverse. I can't do your job and I never see you at my favorite lunch spot. To some degree. our lives are lived in separate economic universes whether we're on the production or consumption side of the economy.

Meanwhile, we have to come together as a community when it comes to the government we choose and the policies we implement. You don't have to live with the consequences of what I choose in the market - which is becoming increasingly fragmented and diverse - but you do have to live with the consequences of what I choose at the ballot box - which still has to hit 51% and by definition cannot be that fragmented. At no time in history have we had to bring so much diversity into one common cause, creating community even with less and less is in common.

In this way, progress poses a curious challenge to politics. Progress makes us all more distinct individuals. Politics is often built on what we have in common. As we make more progress, what is common between us becomes less obvious.

From the summary:

This paper empirically documents a rise in what we call "niche" consumption. Households are increasingly concentrating their spending. This pattern, however, does not appear to be driven by the emergence of superstar products. Rather, households are increasingly buying different goods from one another. The increase in segmentation seen in many other walks of modern life also applies to consumption: our grocery baskets look less and less similar. As a result, aggregate spending has become less concentrated.
From the intro:
We show that over the last 15 years, the typical household has increasingly concentrated its spending on a few preferred products. However, this is not driven by “superstar” products capturing larger market shares. Instead, households increasingly focus spending on different products from each other. As a result, aggregate spending concentration has in fact decreased over this same period. We use a novel heterogeneous agent model to conclude that increasing product variety is a key driver of these divergent trends. When more products are available, households can select a subset better matched to their particular tastes, and this generates welfare gains not reflected in government statistics. Our model features heterogeneous markups because producers of popular products care more about maximizing profits from existing customers, while producers of less popular niche products care more about expanding their customer base. Surprisingly, however, our model can match the observed trends in household and aggregate concentration without any resulting change in aggregate market power.