• More Good News on Retirement Savings

    Here’s some interesting news from the Employee Benefit Research Institution. Not everyone is aware of this, but Americans have more retirement income in IRA accounts ($7.2 trillion) than in 401k accounts ($5.6 trillion). A few years ago EBRI started collecting information about IRA contributions, and they now have enough data to show some trends over the past few years. For starters, more people are putting money in IRAs: 14.1 percent in 2015 compared to 12.1 percent in 2010. And the amount of money they’ve been contributing has gone steadily up:

    The basic story is simple: more people are starting IRAs, and the ones who do are contributing more to them. That’s especially true of young people, who are contributing 15-20 percent more than they were just a few years ago.

    IRAs tend to be popular with middle-class and upper-middle-class workers, so this doesn’t tell us anything about the retirement prospects of the poor and working class, who rely primarily on Social Security. Still, it’s consistent with the numbers for 401k accounts, which have been used by more people; more young people; and more low-income people ever since the Pension Protection Act passed in 2006.

    We still need to make Social Security more generous for the poor and working class, but this data is consistent with the notion that the demise of old-school pensions hasn’t been a disaster. The source of retirement income has changed over the years, but the amount has stayed about the same.

  • Split Up All the Big States? Why Not Just Reform the Senate Instead?

    There’s yet another movement to split California in half, and Eric Levitz says that sounds great. In fact, every big state should split itself up in order to create fairer representation for everyone in the Senate, which has become “one of the most genuinely tyrannical institutions of our government.”

    Well, OK. But if that’s really the issue, wouldn’t it be easier to just change the apportionment of senators? That would fix the Senate too and it would require only one constitutional amendment, rather than a dozen states all petitioning to be broken up. How should we do it? Hmmm. How about every state gets between one and five senators depending on population? That makes it fairer, but not merely a duplicate of the House. Or maybe every state gets two senators, and then we add a hundred more that are apportioned by population? Or wait. Every state gets allocated senators by a formula: the cube root of population divided by 75.

    I think you get the idea: not gonna happen. Like it or not, the current system gives small states a lot of power, and they aren’t going to allow anything to diminish that power. That includes splitting up states.

    Still, at least this latest proposal splits California between coast and inland, which makes more sense than the usual moronic suggestions to split it north and south. On the other hand, New California is going to be a mighty poor state. They’ve tried to massage this by including Orange County and San Diego in their new inland state, but that’s pretty ridiculous. Both of these places may be relatively conservative, but neither one has any interest in being the piggy bank for all the farmers and pot growers in NewCa. If you assume that both would stay in Old California, here’s how things look:

    Pretty dismal. New California is about as rich as Kentucky and Alabama. They’re going to miss a whole lot of amenities that they get right now thanks to the largesse of Hollywood and Silicon Valley.

  • Here’s Yet Another Confirmation of the Donald/Stormy Hookup

    What could possibly be better than tabloid magazine reporting on a sex romp between a porn star and the future president of the United States? It’s got everything! Stormy Daniels may now deny that anything happened, but back in 2011 she apparently told In Touch magazine all about it:

    It all started at the American Century celebrity golf tournament in July 2006. “[Trump] was introduced to everybody. He kept looking at me and then we ended up riding to another hole on the same golf cart together,” Stormy recalled, adding that the business mogul later came to the gift lounge her adult-film company, Wicked Pictures, sponsored and asked for her number, which she gave him, before they posed for a photo together.

    “Then he asked me if I wanted to have dinner that night. And I was like, ‘Yeah, of course!’” she told In Touch. Stormy, dressed up to go out on the town, arrived at Trump’s hotel room, where she says she was greeted by a bodyguard named Keith, who let her inside. Stormy claims Trump was sprawled on the couch watching TV, wearing pajama pants. “We ended up having dinner in the room,” she revealed to In Touch.

    At one point, Stormy told In Touch, she excused herself to go to the bathroom. “When I came out, he was sitting on the bed and he was like, ‘Come here.’ And I was like, ‘Ugh, here we go.’ And we started kissing.” After having sex, Stormy said, “We hung out for a little while and he just kept saying, ‘I’m gonna call you, I’m gonna call you. I have to see you again. You’re amazing. We have to get you on The Apprentice.’”

    It sounds like Stormy had a great night! As for the sex itself, she described it as “textbook generic.” That’s really going to piss off Trump.

    In Touch says that Stormy’s account was corroborated at the time by “her good friend Randy Spears and supported by her ex-husband Mike Moz.” So now we’re up to three news outlets that knew about the hookup: In Touch, Slate, and Fox News. Two of them knew about the hush money, but none of them wrote about it during the campaign. How many more are there?

  • Cryptocurrency Rout Now in Full Swing

    Sad news today. Yesterday’s cryptocurrency rout is continuing. Bitcoin toyed with $10,000 yesterday, but then recovered slightly, only to plunge right on through this morning. It’s at $9,916 as I write this, but I’m sure that will change by the time you read it. I wonder what all those miners are going to do with their racks and racks of specialized servers that are good for nothing other than performing useless proof of work calculations?

  • California’s Bullet Train Gets Yet Another Price Hike

    California High-Speed Rail Authority

    Buckle your seat belts for yet another big surprise. This one is for Californians:

    The estimated cost of building 119 miles of bullet train track in the Central Valley has jumped to $10.6 billion, an increase of $2.8 billion from the current budget….The new estimate was presented Tuesday by Roy Hill, who leads the main consulting firm on the project, WSP (formerly Parson Brinckerhoff). Hill said the cost increases were mainly driven by problems including higher costs for land acquisition, issues in relocated utility systems, the need for safety barriers where the bullet trains would operate near freight lines and demands by stakeholders for mitigation of myriad issues.

    “The worst case scenario has happened,” Hill said bluntly.

    Uh huh. The “worst case” scenario. Except that pretty much everyone who’s ever looked at this project figured this would happen. My guess is that this is nothing close to worst case.

    I also wouldn’t assume that this is the last cost increase we’ll see on the bullet train. Still, it’s a 36 percent hike, which is plenty. And keep in mind that the Central Valley segment is by far the easiest segment to build. The current cost estimate for all of Phase 1 is about $65 billion, and this will go up by $23 billion if we see a 36 percent increase across the board. We’ll be at $100 billion before you know it.

  • It Looks Like Everyone Knew About Trump and Stormy Daniels

    Lisa O'Connor/ZUMA

    Prepare yourself to be shocked. You might want to be sitting down for the latest news about Donald Trump’s alleged affair with porn star Stephanie Clifford, aka Stormy Daniels:

    The allegation of a relationship was no secret to Fox News….One of the network’s reporters, Diana Falzone, had filed a story in October 2016 about an alleged sexual relationship between Clifford and Trump, people familiar with the matter said. Falzone had an on-the-record statement from Clifford’s manager at the time, Gina Rodriguez, confirming that her client had engaged in a sexual relationship with Trump, three of these people said, and Falzone had even seen emails about a settlement.

    But the story never saw the light of the day, to the frustration of Falzone, two of the people said. “She had the story and Fox killed it,” one of the people familiar with the matter told CNN.

    In what’s becoming a familiar mantra, Fox responded that they tried and tried to nail down the details of the affair but “were unable to verify all of the facts and publish a story.” I’ll bet. I wonder how many other outlets knew about this? So far only Slate and Fox News have fessed up. I wonder if there were more, and they were all just waiting for someone else to go first?

    POSTSCRIPT: The affair itself is not that big a deal. However, the agreement to pay Daniels $130,000 to stay quiet is a very big deal. Trump’s lawyer has admitted the payment was made, but refuses to say anything more about it. How is this happening? How can the president of the United States get away with what looks like hush money paid to a mistress in the middle of an election? How is it that this isn’t front-page news until Trump tells us what it was all about and shows us the agreement?

    What am I missing here?

  • White Racial Resentment Hasn’t Become More Politically Powerful Recently

    “White racial resentment has been gaining political power for decades,” says the Washington Post. But I have some problems with this. For starters, the two authors¹ present a chart which, they say, “shows that racial resentment hasn’t fluctuated much over time.” I’ve redrawn it to make clear just how misleading this is:

    In fact, using their particular metric of racial resentment, we saw a large and surprising fall in racial resentment in 2016—precisely the time when we all assumed that a rise in racial resentment was powering Donald Trump to the presidency. That’s interesting enough that it deserves some analysis. But one way or another, if you take this metric seriously you need to explain why racial resentment suddenly dropped so abruptly after years of staying flat.

    Having ignored that, the authors go on to say that even if racial resentment has stayed about the same, it’s become more powerful as a political force:

    As you can see, every political variable we measured has become more closely correlated with racial resentment over time. For instance, racially resentful whites had a variety of attitudes toward health insurance in 1988. But by 2016, highly racially resentful whites strongly opposed public health insurance while those with little racial resentment strongly supported it. And for every variable except voting for the Republican Party candidate, the correlations between racial resentment and all these political variables have tripled over time.

    Here’s the chart:

    This doesn’t show that everything has become more correlated with racial resentment. It shows that everything has become more correlated, period. We used to have liberal Republicans and conservative Democrats, and now we don’t. The parties have polarized, and members of the parties increasingly agree with each other about everything. You could redraw this chart to show increasing correlation with health care, government services, abortion, gun rights, party ID, or practically anything else.

    You might think this is nitpicking. It’s not. Here’s what the authors conclude from this:

    These results suggest that white voters use their attitudes toward race to guide political decisions three times as much today as they did just 30 years ago….One apparent reason has been that political elites — politicians, party leaders, the political media and so on — have increasingly indulged in what scholars call “racial priming.” Those are the subtle and not-so-subtle messages that encourage citizens to base their opinions at least in part on racial considerations.

    Unless I’m missing something, this is just wrong. All voters—not just whites—have sorted themselves into their natural political parties over the past 30 years. This is what guides political decisions, not any single aspect of those parties. You could just as accurately say that attitudes toward abortion guide the political decisions of whites, and it would be just as wrong.

    There’s also no evidence I’m aware of that party leaders have indulged in “racial priming” more over the past three decades. I’d guess less, in fact, though I’d want to see some evidence. In any case, the one politician who clearly did indulge in more racial priming is Donald Trump, and that coincided with a drop in white racial resentment and a drop in the Republican share of the white vote.

    This strikes me as a real abuse of statistics. It’s possible that racial resentment has become more politically potent for whites over the past three decades, but nothing here demonstrates that. All it shows is that as liberals and conservatives have sorted themselves into Democrats and Republicans, everyone’s attitudes toward everything have become more highly correlated. At the same time, white racial resentment in general has declined. Analyzing what this means might produce an interesting result, but this isn’t it.

    ¹Adam Enders, an assistant professor of political science at the University of Louisville, and Jamil Scott, a PhD candidate in political science at Michigan State University.

  • Immigration Negotiations Have Gone Off the Deep End

    Anik Rahman/NurPhoto via ZUMA

    Let’s talk immigration for a bit. It’s gone completely cuckoo. I realize that this is all due to politics of various stripes, but let’s stop for a minute and look just at the policy.

    It all started when President Trump killed DACA, the mini-DREAM executive order that allows individuals who were brought to the country at a young age to apply for work permits and protection from deportation. Trump revoked it because it was an Obama policy and he’s dedicated to destroying all things Obama, but he took care to delay the end of DACA for six months so that Congress would have time to reinstate it via legislation, something he said he favored.

    That sounds simple enough. Democrats are more eager to restore DACA than Republicans, which means they needed to offer something in return. How about funding for Trump’s wall? Even among Republicans, a recent poll shows that 53 percent support DACA and 62 percent support a deal that includes both DACA and the wall. Then Democrats went further: they offered the wall plus preventing chain migration among the DREAMers by making their parents ineligible for citizenship plus an end to the visa lottery. But apparently that’s still not enough.

    Which is crazy. This was never meant to be a deal for comprehensive immigration reform. It’s a narrow agreement to keep DACA in place, something that both Trump and many Republicans say they want to do anyway. The deal Democrats offered would be hugely popular among Republicans; it would give Trump a start on his wall; and it would prevent a government shutdown, which would probably be blamed on Republicans no matter how many manic tweets Trump sends out.

    In other words, everyone has a strong incentive to ignore the hardliners and do this. Republicans like it. Democrats like it. It avoids a shutdown. Are the immigration hardliners really so powerful that they can kill off a deal that has practically everything going for it? Is Trump really so unnerved by a bit of mockery that the dealmaker-in-chief is going to let this deal sink? The whole thing is crazy.

  • Lunchtime Photo

    Different weather provides different opportunities for picture taking. I’ve been wanting to try some fog pictures for a while, but I’ve had no luck. First I went to Ireland. Gotta be fog there. No fog. So I went to London. No fog. In London! I came home as winter was settling in, but there was no fog. Just the light marine layer that we always have in the morning.

    Then, last week, I woke up and looked out the window. Fog! Nice, thick fog. So I grabbed my camera and went out to the lake. The result is the pair of coots below.

    I love coots. They’re like little bowling balls on stilts, and they look like they can barely stay upright when they waddle around looking for food. I just want to pick them up by their round little bellies and squeeze them. But I never have and probably never will.

  • The Stock Market Is on a Tear

    Let’s just finish up with all the charts I have today, OK? Then I’ll go to lunch, and maybe I’ll come back with some ideas for less analytical posts.

    The stock market has gone crackers this month. Here’s the growth rate of the S&P 500 for the past year, with the first two weeks of January extrapolated to a monthly rate:

    Hmmm. And here’s the Shiller PE ratio, which uses 10-year inflation-adjusted earnings:

    It’s currently at about 34, which is lower than it was at the height of the dotcom bubble, but higher than Black Tuesday of 1929, the height of the 1960s bull market, Black Monday of 1989, and the height of the housing bubble. Is it too high? I guess that’s for each one of us to decide.