Tag Archives: economics

Perception Is Reality

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A hypothesis. The 2020 Presidential election isn’t going to be decided on policy differences. As always, both candidates will make lots of promises, some partly fleshed out, others not. It isn’t even going to be decided on “kitchen table economics”, or tax proposals, or other manifestos for further weakening or strengthening our frayed social safety net.

It’s going to be decided on emotions, how the candidates make people feel about themselves, even more than how they feel about the country.

Remember Bruni’s description of how Trump makes his followers feel like victims:

“He has turned himself into a symbol of Americans’ victimization, telling frustrated voters who crave easy answers that they’re being pushed around by foreigners and duped by the condescending custodians of a dysfunctional system.”

The Demo candidate should rebut Trump victimization head on, repeatedly saying, “We are not victims. Your neighbors and you control your destiny. Together we can strengthen labor unions, create jobs that pay a livable wage, preserve our natural environment, and take care of the most vulnerable among us. Immigrants and foreigners are not our foes, our only foe is unfounded fear of the other.”

Trump also plays brilliantly on his followers sense that they’re being pushed around by the mainstream media, “coastal elites”, and anti-religious liberals whose common thread is a sense of superiority.

That’s why television segments like this (start at 2:33) are a serious problem for anyone who wants to defeat Trump in November. Like Hillary Clinton’s infamous “deplorable” slur, the single worst thing anyone who wants to defeat Trump can do is laugh at people susceptible to his victimization bullshit because it plays right into their belief that liberals are arrogant; that Democrats, whether they know it or not, whether they accept responsibility for it or not, can be counted on to convey a sense of superiority.

The larger context of this clip, Pompeo’s unconscionable treatment of a female reporter doesn’t matter. The fact that geography is not Trump’s strong suit doesn’t matter. The only thing that matters is how their laughing makes those susceptible to his victimization push feel because perception is reality.

For Democrats to win, they can’t let their animus for the Trump Administration spill over into disrespect for the dignity of moderates, independents, and “still undecideds” in Michigan, Wisconsin, Pennsylvania, Florida, Ohio, and elsewhere.

Too Smart For Own Good

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Near the very end of Claire Cain Miller’s New York Times story, “When Wives Earn More than Husbands, Neither Partner Likes to Admit It”, there’s a powerful illustration of why academic writing often sucks.

Consider two of the last few sentences. First Cain Miller’s clear, specific, easily comprehensible one:

“. . . . Women who outearned their husbands were more likely to seek jobs beneath their potential, they found, and to do significantly more housework and child care than their husbands — perhaps to make their husbands feel less threatened.”

Immediately followed by Marianne Bertrand’s, a University of Chicago Business professor, attempting to communicate the exact same idea:

“‘When the gender norm is violated, there is some compensating behavior to try to undo some of the utility loss experienced by the husband.”

That contrast is the problem of academic writing in a nutshell.

Bertrand’s use of more sophisticated vocabulary, “gender norm is violated”, “compensating behavior”, and “utility loss” muddies more than it illuminate’s Cain Miller’s previous point. It would be nice if doctoral economics programs, no make that doctoral programs of all sorts, required a class in journalism.

Academics would be well advised to follow Chimamanda Ngozi Adichie’s advice to her writing students.

“She tells them to avoid inflated language—’never purchase when you can buy.'”

Amen to that.

Review Week—One Consumer Product Review a Day

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Everyone is saying my consumer products reviews are brilliant, but infrequent, and you dear readers, deserve better. Thus, beginning in an hour, I’m going to review one consumer product a day for seven days. Plan your week accordingly.

This overview is intended to make Review Week even more life-changing than it otherwise would be. Before we get going, scrape together $1,042.64, the cost of all seven products combined. The cool-factor (and prices probably) of these products is about to sky-rocket and you don’t want to be left on the outside looking in.

Most product reviewers write in a way that suggests our quality of life hinges on their uber-detailed, super serious deconstruction of the product at hand. I will take a different tack. Since we are not our consumer purchases, my aim is to lighten up the genre with ample doses of sarcasm. So the not-so-hidden-agenda is to poke fun at the mindless materialism perpetuated by reviewers.

According to economists, we often buy consumer goods to “signal” things about ourselves to others, look I’m well-to-do, look I’m on top of the trends, look I’m smart, look I’m an environmentalist, etc.

The following reviews are informed by my fondness for the ancient Stoics who believed status, wealth, and hedonism are impediments to tranquility or “inner joy”. But even Stoic sympathizers like myself have to buy things on occasion.

The reviews are also informed by books like True Wealth by Juliet Shor. Shor argues we should be more materialistic, by which she means more thorough and thoughtful in our purchasing of products, so as not to waste money and contribute even more to our ever expanding landfills. Shor, and other progressive social scientists, argue that we should signal, if anything, environmentally conscious, pro-social values through our consumer purchases.

As one of the 7.6 billion people on the planet, my goal is to find products that “just work”, offer good value, and last a long time. I concede, that may come across as boring, but I’m also susceptible to beautiful materials and design, as my current love interest, the new Audi A7, illustrates. In the interest of keeping the week’s price total down, I decided not to purchase and review that. Yet.

See you shortly.

 

Males Last Bastion—Economics

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Last week, after reading Tyler Cowen’s predictions of which men might win the Nobel Prize in economic science, I wondered why do males so dominate economics when females are steadily pulling away from males in educational attainment? Why do female economists find the upper echelon’s of the field so elusive? More specifically, where is the female half of Nobel Prize winners in economic science?

Increasingly, economics is applied math. I do not believe men are better than women at math. For me, if there’s some kind of proof of that contention, it simply begs more questions, particularly, why are men (allegedly) better than women at math. I suspect there are differences between men’s and women’s brains, but I don’t believe for a second that the part of men’s brains that do math is somehow superior to that part of women’s.

I suspect the All Star economist gender discrepancy lies in the male dominated cultures that typify elite economics graduate schools. For now, male privilege perpetuates itself in the top doctoral programs.

Here’s Cowen’s interesting summary of the winner’s work.

 

On Anti-Intellectualism

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Jordan Weissmann of Slate shares a mind numbing story that calls into question the President’s intelligence. Titled “A Small But Soul-Crushing Illustration of Donald Trump’s Economic Illiteracy,” he concludes:

“At some point, it appears Donald Trump heard somebody say that the United States cannot grow as fast as China or Malaysia because we have a ‘large’ economy. No doubt, what they meant is that the U.S. is a highly developed, rich nation and therefore can’t expand as quickly as developing countries that can still reap large gains from taking basic steps to improve their living standards. But Trump did not understand it that way. He apparently thought that when whoever he was listening to said “large,” they were talking about population. Therefore, in his mind, if China grows at nearly 7 percent per year with its 1.4 billion people, the U.S. should be able to do it too. This is the man who millions of voters are relying on to bring back jobs.”

Many anti-Trumpers will interpret this middle school-like error as disqualifying. A President has to have a modicum of economic literacy, doesn’t she? But there are lots of others whose school experience was so negative that they are suspicious of anyone or anything academic in nature. They trust people who work with their hands way more than they do people, like journalists, who work with words.

It’s easy to write off these people’s anti-intellectualism as simple-minded, but there’s more to it. Listen to their stories and inevitably they’ll talk about classmates’, teachers’, or employers’ negative preconceived notions of them. Their strongest memories of school are of a pervasive arrogance that often takes root early as a result of homogenous ability grouping or “tracking”. In the way they design curriculum and evaluate student work, educators routinely define “intelligence” far too narrowly, agreeing that those especially good at reading and writing have it, and those whose “smarts” take less academic forms, do not.

Formally educated professionals aren’t intentionally arrogant, but often, they convey a sense of superiority in subtle and nuanced ways. Not being in touch with one’s arrogance doesn’t negate its impact.

We talk about education’s importance all the time without acknowledging the underlying antipathy many have for formally educated know-it-alls who would never conflate the meaning of a “large economy”. One particular friend of mine, who is unconventionally smart and happened to vote for the reading-averse President, would conclude one thing from Weissmann’s story, he’s an arrogant prick.

Is that because my friend is just another irrational right wing nutter or are formally educated people like me to blame? At least in part.

A Mean and Nasty Job Description—the New Economic Reality

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Sundays are glorious rest days. The week’s physical activity deposits are in the bank. It’s just me, myself, and my iPad in bed. Surfing aimlessly, wasting time because I can.

Craigslist. Seattle. Olympia. Jobs. Managing Editor. I could do that. Where’s it written I have to die an egghead professor? Check it out:

Managing Editor (Olympia)

Leading health related website is currently searching for a Managing Editor to join our company.The Managing Editor is responsible for quality control, editorial consideration, and publication of all written content published to our website, ensuring content accords to website mission and vision.

The Managing Editor’s duties are as follows:
-Manage all aspects of written content editing and publication.
-Make editorial consideration to website content, ensuring all content accords to website mission and vision
-Work in conjunction with Content Marketing Coordinator on various content related projects
-Develop ideas for user generated, pop-culture, and traditional content
-Manage and coordinate with writers on various projects
-Work with programming team and managing editor to design improvements to design of content pages
-Manage other related duties as assignedThe successful candidate will have some combination of experience in communications, content management, literature, journalism, and creative writing. We are looking for someone who is self-motivated, prioritizes effectively, communicates well via written and verbal mediums, thinks strategically, yet can focus intently on day-to-day details, feels confident in ability to learn the ins and outs of various content management systems, and works well in a collaborative, team environment.Required Qualifications:
Bachelors or Master’s degree in communications or social science related fields preferred
-Interest in mental health and psychology
-1 – 2 years of relevant experience.
-Strong background in computers and ability to learn new technology quickly
-Able to handle a variety of projects simultaneously and prioritize effectively
-Communicate effectively via email and in collaborative meeting environmentsThis is a full-time, 40-hour per week position. Pay starts at $15 per hour, with opportunity for increased wages. Interested applicants please reply to the anonymous email and please be sure to include your cover letter and resume as word docs.

I’m not sure what’s more frightening, the fact that they require a Bachelors or Masters, experience, and pay $15 an hour with no medical benefits, or the possibility they may get qualified candidates applying for the job.

Do the math. $2,400 a month before taxes, so at most $2k take home. Without medical benefits especially, that is not a “livable wage”. What’s the cheapest, catastrophic private medical insurance cost a month? How much to insure and maintain a beater car? Rent an apartment? Travel on an occasional weekend? Save for large, unplanned future expenses? Walk or bike to work, share an apartment, live really simply, basically keep living like a college student indefinitely, then it’s probably doable.

This is a mean and nasty job description that speaks volumes about the new economic reality.

College administrators, the people running for President in 2012, and the sitting president won’t tell you the truth—that a college diploma does not guarantee a job that pays a livable wage. Not even close. That is the new economic reality.

In the U.S., in the 20th century, most adults expected their children to live a more comfortable and secure life than themselves. In the first decade of the 21st, anxiety has replaced hope and most parents are deeply worried about whether their children will achieve economic independence even if they complete internships, graduate college, and outcompete others for the title Managing Editor of a “leading health-related website”.

Count me among them.

Two Roads Diverge

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The first in a week-long, three-part series.

I’m doing some reorienting. Prioritizing my non-work identities and relationships. Mid-life crisis? Don’t think so, but time will tell. Check back in a year or two from now. Lao Tzu said, “The journey of a thousand miles begins with a single step.” I’m taking the first steps of a journey whose outcome is unknown.

So what follows, like my identity more generally, is a work in progress. I don’t expect anyone to agree with everything. Or anything.

U.S. citizens are at a fork in the woods. A fork formed by a decline in manufacturing, technology-based automation, slower economic growth, and heightened economic scarcity.

More details here, although you don’t need Tyler Cowen or me to tell you about what you’re experiencing day-to-day.

We talk at length about the trees in the woods—fast rising gas prices, exorbitant health insurance premiums and college costs, and declining home values —but hardly at all about what lifestyles are most sustainable and meaningful.

The fork has prompted a radical shift in thinking. In the U.S., throughout the 20th century, parents thought, “I expect my children to live a better, more comfortable life than me.” Today the default is “I worry and wonder whether my children will be able to live as well and comfortably as me.”

Two roads diverged in a wood and I—I worried and wondered.

Economic security seems outside of our control. The economy is in constant flux and no job is secure. We can’t get politicians to think beyond their re-election and balance our state or national budgets. We can’t get them to stop fighting distant wars. We can’t slow China’s and India’s growth. We can’t reduce our dependence on oil. We can’t get consumers to stop shopping at Wal-Mart and other big boxes. We can’t stop companies from outsourcing jobs. And there’s seemingly no way to improve parenting, fix schools, or reduce inequality.

The fork is doubly tough for adults responsible for young people. They worry, what does their future hold? “I’m worried for myself and I’m worried for you.”

If we stop or even slow down, we may be overcome with fear for the future and overwhelmed with anxiety; therefore, we fill our days with work, shopping, entertainment, new apps, Facebook.

I wouldn’t be able to write this sentence if I weren’t extremely privileged, but I wonder if these tough economic times are an opportunity to slow down and think through more carefully how we want to live, to find ways to live more sustainable, meaningful lives. Or maybe, since lifestyle choices are intensely personal, I should say, how I want to live, to find ways for me to live a more sustainable, meaningful life.

Before fleshing out those concepts, consider the perspectives of the political left and right who have distinct opinions about the causes and consequences of the fork. Competing voices in the woods if you will. And yes, I’m conscious I’m overgeneralizing. Sometimes when you’re painting, you just grab the broad brush.

The right interprets economic history and life more generally through the lens of American exceptionalism. They’re more anxious about accelerating ethnic diversity than they are global economic restructuring. They refuse to acknowledge our relative decline and are nostalgic for the second half of the 20th century when the U.S.’s economic, military, and political advantages were much more obvious. They’re in serious denial, but if you tell them that they’ll label you anti-American, because in their worldview, American exceptionalism is self-evident.

Stagnant wages and high unemployment aren’t a result of technology-based automation, economic globalization, or our consumer choices. They’re temporary anomalies. Small bumps in the road. If the Kenyan-born, Muslim president (okay, that was uncalled for) would just embrace American exceptionalism, reduce the government to a fourth of its current size and lower taxes by half, we’d quickly reclaim our rightful role as the world’s unquestioned economic superpower. Then we could pick up living large again.

Wednesday—Part 2 of 3—The left, the President, and my evolving thoughts on the fork.

2011 Resolution

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Resist manic materialism.

I have no one really to blame because I chose to watch MSNBC while preparing for the 2011 cycling season one morning last week.  It was the morning after 20 inches of snow fell throughout the Northeastern U.S. Business analysts worried “How will the conditions affect retailers since post Christmas shoppers will stay home?”

Does everything always have to be interpreted through the lens of economics?

I should have switched to the Zen Cable Network, a mythical creation of mine where a slow, beautiful, non-narrated slideshow with acoustic guitar accompaniment was looping. Slow moving shots of young people up and down the seaboard sledding and having snowball fights while parents sipped coffee and talked against the backdrop of translucent, oddly beautiful cities.

Manic materialism is the increasingly common practice of defining as many life activities and events as possible in economic terms. How does this—a winter snow storm, schooling, an art form, food, healthcare—make people more or less wealthy? It’s the result of our collective idolatry, and as a result, it’s our unofficial national religion. No activity is immune from its influence. Every life activity and event is reduced to whether it generates wealth.

And make no mistake about it, wealth is defined one way—materially. How much money do you have, how big is your house, how nice is it on the inside, how luxurious is your car, where do you vacation?

Schooling provides a poignant example. Why are U.S. opinion and business leaders over involved in reform efforts today? For one reason—our international economic competitiveness is slipping. As a result, our relative wealth is declining. That’s why math and science content is routinely privileged at the expense of humanities and social studies education. The business leaders at the education reform table are in essence asking, “How in the hell is an affinity for literature or history going to translate into more money for more people?”

Maybe I errored in using the phrase “our collective idolatry” a few paragraphs ago. Maybe all of us are exceptions, a fringe minority that believes we’re more social, emotional, dare I even say spiritual beings, than economic ones.

In prioritizing close interpersonal relationships, maintaining work-life balance, and consciously living below our means, we provide a viable alternative to manic materialism and threaten the status quo.

What else can and should we do in 2011 to provide a social-emotional-spiritual alternative to manic materialism?

Housing Prices

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The conversation turned to real estate on a recent Saturday run when I shared my opinion that many sellers in our community were slow to grasp the correction as evidenced by their overpriced houses languishing on the market for six months to a few years.

You would have thought I suggested we extend our 10 miler another 16.2 just for the fun of it. The right wing nutters immediately jumped on me for assuming I knew more about free markets and home values than the actual homeowners themselves. And more importantly, who did I think I was, homeowners have the right to price their houses however they want.

Of course they do just like they have the right to be irrational and waste money more generally. Check out this chart:

credit—Jodi Ashline Newsletter

In the end, the average “priced right” and “priced reduced” home sell for the same price, but the “price reduced” home is on the market an extra 162 days. If “price reduced” homeowner has $100k in equity, and that equity was invested for 162 days @ 5%, they passed on earning $2,219. That’s the cost of exercising your constitutional right to overprice your home.

Around here at least, it appears that the larger and more expensive the home the greater the tendency to overprice it. That’s counterintuitive if one assumes, on average, the most well-to-do homeowners are the most business savvy, but I digress. We can also assume a much smaller pool of prospective buyers (I know it only takes one) and therefore the “average days on market” I suspect is far greater than 197, but for consistency sake we’ll stick with that.

Let’s consider a waterfront home that is four times the average at $1,317,392. Ultimately, after 197 days, overpriced sellers have to reduce their price $251,008 ($62,752 x 4). Let’s compensate for the too short “average days on market” by assuming that our waterfront sellers own their home outright. If “expensive price reduced” homeowner has $1,066,384 (the final sale price) in equity and had invested that for the too short 162 days @ 5%, they passed on earning $23,665.

To which the nutters might say, “That’s waterfront sellers right.” Which again, of course is right, just irrational.

Since I’m on math fire, and the nutters are down for the count again, one related thought. One oft repeated housing axiom is that housing corrections don’t matter if you’re buying and selling into the same down market. That’s only true in one of three possible scenarios—buying and selling similar priced homes. It doesn’t hold for buying a more or less expensive home than sold.

For example, consider the case of buying a more expensive home. Imagine you could sell your existing home for $300k or $100k less than its peak 2007 valuation. You buy a home for $1m or $250k less than its peak 2007 valuation. Had you made that move in 2007, it would have cost $1,250,000-$400,000 or $850,000. Today, the equation is $1m-$300,000 or $700,000 for a savings of $150k.

The opposite is also true. As a result of the correction, it’s more expensive to move down. Imagine you could sell your existing home for $600k or $200k less than its peak 2007 valuation. You buy a home for $300k or $100k less than its peak 2007 valuation. Had you made the move in 2007, you would have pocketed $400k, $800k sale price-$400k purchase price. Making that move today you would only pocket $300k, $600k sale price-$300k purchase price.

So assuming one has the resources, it makes more sense to move up in down markets and down in up markets.

School’s out nutters. Do they give out Economics Nobels for this stuff?