• Boomers vs. Gen X: Who’s the Wealthiest of Them All?

    This tweet has been making the rounds:

    One of my readers emailed this to me and asked if it was for real. I promised to look into it.

    The short answer is yes, it’s true. It’s based on the Fed’s Survey of Consumer Finances, which is a pretty reliable set of data, and the numbers are accurate. Boomers at age 35 held a much larger share of national wealth than Gen Xers did when they turned 35 a decade ago.

    So what’s going on? Is there really such a huge gap? I think probably not, and it has to do with the huge increase in income inequality over the past few decades. Compared to 1989, a much larger share of national wealth is tied up in the wealth of the very rich these days, and Gen X isn’t yet old enough to have a big share of that. It’s mostly boomers—either by inheritance or by simple accumulation—who control that wealth. If you look at median wealth instead, the difference between boomers and Xers would be much smaller.

    That’s my guess, anyway, but I can’t find the data to support it. It’s probably out there somewhere, though. Can anyone help us out here?

  • Yep, Impeachment Is a Yawner

    So far, the impeachment hearings appear to be a bust, public opinion-wise:

    There’s a bit of an uptick after President Trump released the transcript of his “do us a favor” call with Ukraine’s president, but that’s about it. The actual public impeachment hearings didn’t move the needle at all.

    The crosstabs pretty much tell the story here. Roughly speaking, Democrats are 90 percent in favor of impeachment, Republicans are 90 percent against impeachment, and independents are split 50-50. As usual, Democratic and Republican leaners feel the same way as Democrats and Republicans, so the only truly undecided group is the tiny number of genuine indies in the middle. That’s maybe a tenth of the electorate or so, which means that public opinion just doesn’t have very far to move. The only way to change that is for something to become public that’s too heinous for even Fox News to paper over.

    This is unfortunate in a rule-of-law sense, but perhaps not so much in an electoral sense. Barring some kind of spectacular meltdown, this means that Democrats can’t rely on some external force helping them out next November. They just have to win. No whining about the electoral college; no whining about voter suppression; no whining about the unfairness of the Senate. Just figure out a way to appeal to lots of different people and win the election.

    Pro tip: Most people are really self-centered. They’ll vote for the candidate who promises them specific things that will help them personally. Students? Free or reduced-cost college. Young women? Childcare. Working-class men? Unions and big infrastructure programs. Middle-class folks? More generous Obamacare. The elderly poor? Higher Social Security payments. Environmentalists? Big bucks for climate change R&D. You get the idea. Democrats don’t have to propose gigantic, universal programs that cost a fortune. They just need to propose targeted programs that will bring in votes from the middle-class groups they need. But don’t worry. Over time, those targeted programs will get better and better.

  • Lunchtime Photo

    This is the Sacramento Delta, home of the infamous delta smelt, about half an hour before sunset. Which picture do you like better? The one on the left sports the original lens flare, which seems to give it a slight sense of liveliness. The flare has been photoshopped out in the other image, which gives it a quieter look. I’m undecided.

    Please note that there’s no question here of which picture is the more “authentic.” Flare is an artifact of lens design, not a part of the scenery. This is purely a matter of which version you like better.

    October 10, 2019 — Above Antioch, California
  • The World Is Giving Up On Climate Change

    We’ve had our fun for the morning, so here’s something dead serious from the Financial Times to drag you back into reality

    Europe is pulling back from clean energy research. India and Brazil barely have any to begin with. The United States is flat at about $50 billion—maybe a tenth of what we should be spending. And China, after a decade of research, has decided to double down on coal and slash its clean energy R&D. Only Southeast Asia is still increasing its green energy research, perhaps because they have a more visceral fear of climate change than the rest of us. When you announce that you’re moving your capital from Jakarta to an entirely new island because Jakarta is sinking—well, that concentrates a man’s mind, doesn’t it?

    This is a disaster. Given (1) the consistent global refusal to cut back on energy usage and (2) the fact that building out current technology (mostly wind and solar) will only get us halfway to zero carbon, our only hope lies in better technology. Without that, 2°C is already in the rear-view mirror and even 3°C is all but impossible to achieve. We’re looking instead at a world that will warm by 4°C or even 5°C during the second half of the century. This is not a world you want your grandchildren to live in.

    UPDATE: James Wimberley points out that I failed to mention that the 2019 number in the chart is only for the first half of the year. There was nothing nefarious about this, just a bit of laziness, I suppose. My point (and the FT’s) was that on an annualized basis we’re still looking at a decline in clean energy investment. I’ve added a dotted bar to the chart to make this clear.

    As for JW’s other criticism, well, I disagree with his optimism about as strongly as I possibly can. My cover story in the upcoming issue of MoJo will spell out my case in more detail.

  • Is Uber Really Unprofitable? It’s Complicated.

    Former California controller Steve Westly writes in the LA Times today that he doesn’t favor making gig workers either pure contractors or pure employees. He favors a middle ground called “dependent workers” that’s used in Canada and Spain.

    There might be something to this—I’m agnostic about it for now—but I want to point to one specific part of his argument:

    It’s important to remember that Uber and many other gig economy companies are not profitable. Uber is currently losing over $1 billion a quarter and is likely to have an extremely difficult time raising future rounds of capital. This is especially true if it is forced to pay higher wages and benefits — and profitability is no longer in sight. If Uber or any of these companies goes out of business, everyone loses. A negotiated compromise could obtain higher wages for workers without putting companies on the hook for full benefits for all.

    This is technically true. However, it’s worth pointing out something that few people seem to know:

    Uber’s profitability target rests heavily on the success of its ride-hailing service, which brings in three-quarters of the company’s revenue and is its only profitable business unit before interest, taxes, depreciation and amortization.

    In fact, Uber has reported profitability in its ride-hailing business for the past two years:

    Now, it’s true that this is funny-money non-GAAP profitability, so don’t take the exact figures too seriously. Still the profit numbers aren’t generally way different even when they’re reported on a conventional GAAP basis, which suggests that in ride hailing, which is what most people think of as “Uber’s business,” it is profitable. That is, the ride-hailing business would be profitable if Uber simply ran a ride-hailing business.

    So why is the company as a whole so massively unprofitable? Because Uber has chosen to plow its profits (and more) into new areas that require enormous spending on both R&D charged to the corporation as well as other corporate expenses. There’s nothing inherently wrong with this—Amazon has done spectacularly well plowing profits into new businesses—but it’s a separate issue for investors, who have to decide what they think about the future of these risky bets. Conversely, if you want to know if the ride-hailing business can afford to pay its workers more, you should look solely at the ride-hailing business. And according to Uber, at least, their ride-hailing biz will earn nearly $2 billion this year. That’s the right metric for evaluating their ability to pay their drivers more.

  • Rick Perry and “The Chosen One”

    Tia Dufour/White House via ZUMA

    My Twitter feed has been full of mockery this morning aimed at Rick Perry for calling Donald Trump “the chosen one.” I finally got curious enough to find out what Perry actually said:

    “Barack Obama didn’t get to be the president of the United States without being ordained by God. Neither did Donald Trump,” he said in a Fox News interview that aired Sunday, adding that God has used “individuals who aren’t perfect all through history.”

    ….The former Texas governor said he told Trump that some people “said you were the chosen one.”

    “And I said, ‘You were.'”

    “‘You didn’t get here without God’s blessing,'” he said he told Trump….Perry said he also cautioned Trump, “‘Don’t get confused here, sir. This is not a reflection that you’re perfect, but that God’s using you. And he uses all of us that way.‘”

    So Perry is saying that Trump was “chosen” in the sense that God chooses all of us for our tasks on Earth. God is using Trump, and Trump needs to understand what that means.

    One might hope that Perry could have been a little more direct about Trump’s imperfections, but this is just the way evangelicals talk. Perry is only repeating pretty conventional evangelical theology, not suggesting that Trump is the second coming of Christ or something.

  • Presidential Scandal Isn’t a Very Big Deal Anymore

    Yuri Gripas/CNP via ZUMA

    OK, back to Ukrainegate. Over the weekend we learned:

    I doubt that these revelations will move the needle much on public opinion. As I alluded to yesterday, the public doesn’t seem to doubt that Trump did what he’s accused of doing. What they doubt is that this is much different from the kinds of things that presidents do all the time. Democrats have—so far—done a bad job of explaining that although presidential pressure is common in foreign policy, it’s not common for that pressure to be used for personal gain. In fact, it’s not clear if the public even gets that digging up dirt on a political rival counts as personal gain. It all just seems like politics, and it’s not as if anyone was handing over bags of cash to Trump’s campaign.

    One reason for this is the endless scandalmongering of the past couple of decades. Barack Obama ran perhaps the cleanest, most honest presidency in recent memory, but that’s not what you believe if you watch Fox News—or even the evening news. Instead, what you’ve heard about nonstop is Bill Ayers, Fast & Furious, Solyndra, Shirley Sherrod, the IRS, Benghazi, emails, DACA, and more. You probably believe that Obama was a lawless, scandal-ridden president. Trump’s actions seem picayune in comparison.

    Ditto for Bill Clinton, of course, and I won’t bother with the laundry list of alleged scandals since we’re all familiar with it. The bottom line is that Republicans—and Democrats too, though to a smaller degree—have convinced much of the country that presidential scandal is so common as to be merely a normal part of the political background noise. Given that, it’s hardly surprising that a bit of conniving with an obscure foreign country hardly seems like an impeachable offense. After all, we didn’t impeach Obama, did we?

  • A Middle-Class Agenda for Democrats

    I’m trying to temporarily avoid the torrent of impeachment/corruption-related news that threatened to drown us over the weekend, so here’s something else to start the week. It’s apropos of nothing in particular, and has nothing to do with any specific Democratic candidate for president. It’s just something to think about.

    As progressives, we have a natural tendency to focus our policies on the poorest and weakest among us. This is, needless to say, admirable, but it’s also politically dangerous if it’s taken too far and leads the middle classes to believe they’ve been abandoned.

    This is where we find ourselves today. We spend about a trillion dollars a year on social welfare programs for the poor, an expansion of 300 percent since 1980. In inflation-adjusted terms, this represents an increase from $3,000 per poor person to $12,000 per poor person. This chart from the Congressional Budget Office shows what this means:

    Thanks to the demise of unions and the nature of our economy, the affluent have done very well. Thanks to the big increase in social welfare programs, the poor have done well too in relative terms. It’s the working and middle classes that have done the worst—and it’s not close. What’s more, the rate at which they’ve lost ground to the top and bottom has accelerated since 2000.

    Is it any wonder they feel left behind even if they make more in absolute terms than the poor? The best example of this is the bitter observation from many of them that they wish they were poorer so they’d qualify for Medicaid instead of having to pay for an Obamacare policy with big deductibles and out-of-pocket maxes in the thousands of dollars.

    So what if we decided to focus our attention tightly on the working and middle classes? What would a Democratic agenda look like? Something like this:

    • Instead of Medicare for All, double the subsidies for Obamacare and reduce the maximum allowable deductible and OOP expenses at the silver level. The new subsidy levels should be set so that families with incomes all the way up to the high double-figures would have to pay no more than about 5 percent of their income for premiums. This would cover virtually the entire middle class and would be affordable by nothing more complicated than repealing the Republican tax cut for the rich.
    • Propose a serious and aggressive pro-union plan. This would cost nothing, and it would primarily benefit the working class and the lower middle class. Figure out how to sell this in terms that make sense to ordinary workers, and if you don’t know how then ask Sherrod Brown.
    • Put forward a massive and detailed plan to build green infrastructure—solar, wind, grid upgrades, etc. This would address climate change and provide hundreds of thousands of middle-class construction jobs for every state in the country. Finance it with taxes on the rich.
    • Stay honest about hot-button social issues, but do your best not to talk about them a lot. In most cases it’s a lose-lose proposition.

    You get the idea. These are things with limited costs that can be sold to the middle class as real, concrete benefits. At least, they can be if you know how to talk to ordinary people. And since, like it or not, middle-class workers tend to worry about spending and deficits, it’s appealing that these things can be financed in fairly ordinary ways, not via stupendous new taxes that barely sound plausible even to low-information voters.

    And for those of you who are super sophisticated and want to point out that it hardly matters what anyone proposes since none of it will pass through a Republican-controlled Senate anyway—well, you’re wrong. It does matter. Ordinary voters don’t think about filibusters and Senate majorities and other niceties of the American constitutional order. They just want to know whose side you’re on. A presidential campaign is a chance to tell them.