US Consumer Spending Rises At Fastest Pace in Seven Years

Personal consumption in our economy accounts for roughly 70 percent of our gross domestic product. And the consumption economy seems to be kicking back in, as “US consumer spending recorded its biggest increase in more than six years in April.”

Consumer spending went up 1 percent last month, in large part due to the “strengthening labor market, which is steadily pushing up wages.” In the words of our plutocratic overlord Nick Hanauer, “when customers have more money, businesses have more customers.” You don’t say!

This virtuous cycle of consumption and demand is known by many:

Economists generally accept the idea that Americans who make more will be prone to spend more. While consumer savings preferences don’t always add up to an exact 1-to-1 ratio between income and spending, it’s generally believed that compensation gains ultimately help stimulate consumption. Perhaps unsurprisingly given the month’s solid spending totals, disposable personal income – or Americans’ earnings after taxes – climbed 0.5 percent last month for the metric’s best showing since January.

An economy’s purpose, after all, is to provide solutions via market forces for citizens. Naturally, a citizen is going to be more active in the economy if he or she has enough money to participate in the economy. That’s why today’s news is good news. With the velocity of money in our society so beleaguered, any uptick in consumer spending is cause for celebration.

Daily Clips: May 31st, 2016

A basic income is smarter than a minimum wage: It really is remarkable how quickly basic income has ascended the policy ranks. While it has academic cover from both the right and left, the very idea of unconditionally giving money to citizens seems so much more revolutionary than the concept of a minimum wage.

The author here notes how basic income has a “libertarian flavor”:

By guaranteeing basic survival, a government provides a service as necessary as, say, policing the streets or fighting off foreign enemies. At the same time, once this service is provided, the government can get out of trying to regulate the labor market: Its goal of keeping people fed and clothed is already achieved.

In one sense, a basic income provides a negative form of liberty (in that there is no interference needed post-basic income), but in order to allow for no interference it requires a positive form of liberty (giving citizens money with no conditions). It’s a very interesting relationship, that makes the future of this policy choice extremely important to monitor.

Democrats have more work to do with Latinos than you may think: An informative piece on naturalizations and voter turnout from Vox. 

German unemployment falls to record low in May: I usually don’t cover international news in these clips, but I saw this headline and thought it was worth sharing. Did you know that the German unemployment rate is at 6.1%, its lowest level since 1990? I didn’t.

US struggles with goal of admitting 10,000 Syrians: To put that pathetic number in perspective, Australia (a country with a little over 20 million people) is admitting 12,000 Syrians.

Tweet of the day:

Daily Clips: May 27th, 2016

What is the Presidential Election Campaign Fund? I had never heard of this fund before today, but its history is intriguing.

The Presidential Election Campaign Fund was conceived 40 years ago to level the presidential playing field and to give political unknowns a fighting chance…The program boosted outsiders like Democrat Jimmy Carter and Republican Ronald Reagan, and for years, it helped limit campaign costs. But with the explosion of campaign spending, fewer and fewer candidates have embraced the program. Today, it has become irrelevant.

What should we call the “sharing” economy? In our podcast on the “sharing” economy, we outlined just how many terms were used to describe this modern economic situation. Similarly, this Atlantic piece looks at the power of naming.

‘Obviously ‘the sharing economy’ is a misnomer, which the industry no doubt likes a lot,’ said Dean Baker, an economist and the co-director of the Center for Economic and Policy Research. ‘It’s got nothing to do with sharing. They’re profit-making companies.’

David Brooks speaks for my generation…again: I have written in the past about David Brooks’ capacity for condescension towards young people and his latest article does not disappoint!

This creates a tension in the minds of some students. On the professional side they are stressed and exhausted. On the political, spiritual and moral side they are unfulfilled.

On the professional side some students are haunted by the anxiety that they are failing in some comprehensive but undefinable way. On the spiritual side they hunger for a vehement crusade that will fulfill their moral yearnings and produce social justice.

This situation — a patina of genteel progressivism atop a churning engine of amoral meritocracy — is inherently unstable and was bound to produce a counterreaction.

“A patina of genteel progressivism” – looks like someone pulled out the thesaurus for their latest column!

US economic growth revised higher in first quarter: Not a perfect measurement of our economy’s strength, but at least it provides a useful talking point for Democrats as the incumbent party. Partisanship!

It’s Time for Washington State to Get Rid of Caucuses

One of the most common phrases of the early 21st century: "John Oliver is completely right."

One of the most common phrases of the early 21st century: “John Oliver is completely right.”

 

Bernie Sanders had a big win in the Washington caucuses on March 26th. In fact, it was his biggest single delegate win of the entire primary process. He netted a 47-delegate advantage over Hillary Clinton. His next-best delegate haul was the Utah caucuses, where he won with a 21-delegate advantage. There is no official vote count in the Washington State caucuses, but the state Democratic Party estimated that 230,000 people turned out. Sanders won 72.7 percent, which translates to roughly 167,000 votes. To put that in perspective, in the caucuses Sanders won less than 10 percent of the 1,755,396 votes President Obama received in the state in the 2012 general election.

But Washington State also has a presidential primary. Republicans use the results of the primary to allocate delegates to their national convention, but Democrats don’t. John Oliver ridiculed that practice on Last Week Tonight last Sunday:

Generally, you are lucky if you live in a state that has a primary … unless you are a Democrat in Washington State, where things get a little more complicated:

[voice over] “In Washington State we have both caucuses and presidential primaries, where you actually cast a ballot in private. But Democrats have never liked the primary and have ignored it from Day One.”

It’s true. The Democrats’ presidential primary in Washington doesn’t count. They have one, and it’s this Tuesday, but all the pledged delegates were decided in their caucus months ago. So, you know that awful friend who says he doesn’t vote because he doesn’t feel like his vote counts? If he’s a Washington Democrat participating in the primary, he’s right. He’s still awful, but he’s right.

There is a long history behind this. But to summarize: Before 1988, both parties allocated their delegates using a combination of caucuses and conventions. After 1988, the state instituted a presidential primary. Republican rules have varied in the period since, allocating their delegates through different combinations of caucuses and the primary results. For the 2016 cycle, they are allocating 51 percent of their delegates through the primary and the rest through caucuses. But Democrats have steadfastly refused to use the primary results. Indeed, in some years when Democrats have controlled the state legislature or when there hasn’t been a competitive Republican race, the primary has been cancelled altogether. That happened in 2004 and 2012.

The Washington State primary is an open, all mail-in primary–the ideal in terms of voter participation. So it’s not surprising that participation in the primary was significantly higher than it was in the March caucuses. With virtually all the votes counted, almost 720,000 people voted in the Democratic primary. More than three times the people will have voted in the primary than participated in the caucuses—this despite the fact that the primary results will have no effect on the allocation of delegates, which one would expect to severely depress participation. Clinton is winning the primary by 53 percent to 47 percent for Sanders. Even with more votes to be counted, her raw vote total is already more than double the number of Sanders supporters in his landslide win in the March caucuses. But Sanders is still getting more than 73% of the pledged delegates from the state.

Sanders and his supporters have been claiming that the Democratic primary process is rigged. And they’re right: It’s rigged in his favor. Sanders has been calling for all open primaries and has even included that pitch in his stump speech. It has been reported that it is one of the reforms he will be seeking at the Democratic National Convention in July. But Clinton has actually won 11 of 15 open primaries. She has also won 11 of 16 closed primaries. Where Sanders has come out on top is in the caucuses. He has won 12 of 16 caucuses (and eight of those wins have been in closed caucuses).

Washington isn’t the only state that conducted both a primary and caucus during this cycle. Nebraska did, too, with the same split result. Sanders won the March 5th Nebraska caucuses (and the most delegates) while Clinton won the subsequent non-binding primary on May 10th, which had much higher turnout—even though, as in Washington, the results didn’t matter. Clinton won the Nebraska primary with 41,819 votes (53%) to 36,691 votes (47%) for Sanders. But delegates were allocated pursuant to the caucuses, which Sanders won with 19,120 votes (57%) to 14,340 votes (43%) for Clinton. Sanders won the caucuses, and netted a five delegate advantage, with less than half of Clinton’s primary vote.

The Washington State and Nebraska results are about as close to controlled experiments as you get in the political process. And as those results attest, caucuses discourage voter turnout. In fact, they shrink participation numbers more effectively than all the Republican voter suppression tactics combined.You have to show up on a particular day, at a particular time, at a particular place and stand around for hours with no secret ballot while strangers harangue you—all without regard to work or family obligations (or just a life apart from politics). You have to be pretty committed to a highly inflexible process, with life circumstances that can accommodate it, to participate. It is, in short, highly undemocratic.

Sanders is right to call for reforms to the presidential primary process–ideally, in the aftermath of the presidential contest when emotions have cooled and opinions aren’t biased by the outcome of the most recent contest. And if or when Democrats get around to doing that, let’s start by getting rid of the caucuses.

 

Paul Ryan Releases Bizarre Anti-Trump Ad That Never Mentions Trump By Name

 

"I'm not saying I'll vote for Trump, but I'm not NOT saying I'll vote for Trump. Of course, I'm also not saying I won't vote for Trump, but I'm not saying I won't WON'T vote for Trump, either."

“I’m not saying I’ll vote for Trump, but I’m not NOT saying I’ll vote for Trump. Of course, I’m also not saying I won’t vote for Trump, but I’m not saying I won’t WON’T vote for Trump, either.”

Yesterday, Speaker of the House Paul Ryan’s office published a very strange video. Titled “The Choice,” the video features Ryan speaking very vaguely about something that he thinks is a real problem today. He doesn’t really name the problem he’s discussing, but it’s pretty obvious that he’s talking about Donald Trump. Here’s the video:

And here’s the transcript:

I have not seen the kind of bitterness in our discourse, our politics, like we have today, and I gotta say I think it’s both sides — I’d love to say it’s just Democrats, but it’s not, it’s both. And it doesn’t have to be this way. America can do better. This anxiety has got to be channeled, and dealt with with solutions instead of just amplified and accelerated and exacerbating it.

How do you fix that? I think leaders fix this. We haven’t had that kind of leadership lately. Leaders need to say, “Here’s my principle, here’s my solution and let’s try and do it in a way that is inclusive, that’s optimistic, that aspirational and that’s focusing on solutions.” And so that’s the choice you’ll have, far more than personality. Republicans lose personality contests anyway. We always do. But we win ideas contests. We owe you that choice.

So a little Ryan-to-English translation is necessary: by “it’s both sides” who participate in bitterness, Ryan is really just calling out Donald Trump. When he says that we “haven’t had that kind of leadership lately,” he’s likely calling out both President Obama and Donald Trump. This is exceptionally weird, right? I can’t recall another time when a prominent elected official has put out a commercial trashing the presumptive presidential nominee of his own party.

Also interesting? Ryan’s idea of what leaders do. Nobody, really, can argue with his claim that leaders should be optimistic, aspirational, and in favor of solutions. This is about as controversial as calling kittens cute. But calling for an “inclusive” leader is a hell of a stretch, coming as it does from a man who is arguably the most public face of a party that is pushing anti-trans bathroom laws, suing for the right to discriminate against gay couples, and working around the clock to ensure that as few people as possible can enjoy the right to vote. Ryan’s budgets are the most exclusionary documents ever embraced by a mainstream political party in modern times. (Here’s a study guide for Speaker Ryan: If your plan rewards the very wealthy at the expense of many more poor people, you’re practicing exclusionary politics, not inclusive politics.)

So in the end, Ryan is attacking Trump for being further along the same spectrum that Ryan himself is on. Maybe Ryan is reacting so forcefully to Trump’s rise because in Trump he sees something of his own politics reflected back at him? Maybe by being so aggressively exclusionary in (for example) his policies against immigrants, Trump is forcing the mainstream Republican Party into an uncomfortable state of self-awareness? Two years ago, it would have been inconceivable to imagine Paul Ryan defending inclusiveness as a core Republican value; maybe two years from now Ryan will realize that getting into a fight with Trump was not unlike picking a fight with the guy in the bathroom mirror.

Daily Clips: May 26th, 2016

Marijuana smuggling is declining in the the era of legal weed: Good news for marijuana advocates, who often combat with the idea that interstate smuggling has increased since Washington and Colorado legalized the devil’s lettuce.

Econ 101ism, overtime pay edition: The Noahpinion blog has put out an excellent piece on overtime and how critics of the rule have responded. He writes:

In the Econ 101 model of labor supply and demand, there’s no distinction between the extensive and the intensive margin – hiring the same number of employees for fewer hours each is exactly the same as hiring fewer employees for the same number of hours each. But with overtime rules, those two are obviously not the same. For a given base wage, under overtime rules, hiring 100 workers for 40 hours each is cheaper than hiring 40 workers for 100 hours each, even though the total number of labor hours is the same. That breaks the 101 model.

Immigration isn’t that bad for native workers: Some may find this headline (and article) surprising, but this conclusion follows from a lot of research. Indeed: These and other surveys and meta-analyses all reach one overwhelming conclusion: “Immigration has at most only a small harmful effect on the native-born.”

Tweet of the day:

 

Daily Clips: May 25th, 2016

Paternity leave and family responsibility: Good, long read from the Atlantic. 

Their 6-year-old was killed with a neighbor’s gun. A court just decided how much his life was worth. 

Workers get a little more of the income pie: 

Good news! Labor’s share of national income, which has been declining since the early 1990s, and which took a big hit in the 2008 recession, has been rising for two years.

Dead cat bounce?

Dead cat bounce?

Asian-Americans increasingly identify as Democrats: 

Asian-Americans are the fastest-growing immigrant group in the country, but they’re rarely polled and remain somewhat of a political enigma.

Just Another Day in Trickle-Down America

Two hotspots of the trickle-down economy, from 270towin.com.

Two hotspots of the trickle-down economy, from 270towin.com.

Part of the reason why we’re finally recognizing trickle-down economics as a scam is that we have so many examples of its failures. The clearest and most obvious failure, of course, is Kansas, which is maybe the purest laboratory of trickle-down economics ever devised by politicians. Governor Sam Brownback and his conservative legislature pushed through tax cut after tax cut, driving more and more money to Kansas’s top one percent. They cut regulations for corporations, and they did as much trickle-down triage as possible. As we all know by now, the trickle down motto is that if you give enough money to the wealthiest Americans, that money will then trickle down (often in the form of jobs) for everyone else. How’s it working out?

The Chicago Tribune‘s Eric Zorn did a little check-in on Kansas last week. Seems that Governor Brownback is the least popular governor in America right now—yes, even lower-rated than Michigan Governor Rick Snyder, who is largely viewed as responsible for Flint’s over-leaded water supply. Zorn continues:

The Congressional Joint Economic Committee reported earlier this year that Kansas had just 9,400 new private-sector jobs in 2015 (out of 2.6 million nationwide). U.S. Department of Commerce data show that, prior to Brownback’s tax cuts, Kansas ranked 12th in the nation in personal income growth; after the tax cuts it fell to 41st.

A handful of school districts in the state had to close early last year for lack of funds, and the state Supreme Court has had to issue orders requiring Kansas to cough up enough money to pay for K-12 education.

In March, Brownback cut $17 million in funding, 3 percent, from the state’s six public universities in response to revenue shortfalls. In April, he announced that he was going to have to delay a $93 million contribution to the state pension fund, prompting Moody’s Investors Services to downgrade Kansas’ outlook from stable to negative.

Compare these results to high-wage areas like Seattle, where trickle-downers like to warn that paying dishwashers $15 an hour will devastate the economy, and tell me which economy looks worse to you. Why aren’t jobs flowing to low-wage states like Kansas? Maybe because true wealth comes from the middle class, and not from the top down? Could it be that areas where everyone has money to spend in the local economy are economically stronger, and therefore more desirable, than areas where the poorest citizens can’t afford anything?

Of course, some trickle down regions are doing better than others. There are lots of reasons for that. In some cases, the trickle-down politicians aren’t able to institute all of the ruinous policies that Brownback was able to pass in Kansas. And in other cases, the economy might be buoyed unexpectedly by a natural resource.

To study that last example, consider North Dakota. In 2012, Mitt Romney repeatedly used North Dakota as an example of what his energy policy would look like if he was elected president. Here’s an LA Times account of a Romney visit to the state in March of 2012:

[Romney] argued that Obama has tried to stifle the development of oil and gas resources in the U.S. and said the president was wrong to try to strengthen federal oversight of fracking — a technique where fluids are blasted into the ground to help extract oil and gas.

While North Dakota’s rich natural resources have created a thriving economy compared to many other states — its 3.3% unemployment rate is the lowest in the nation — Romney said the Obama administration has thwarted the efforts of other states to tap into their natural resources.

By demanding laxer regulations, Romney was playing the trickle-downer’s second-favorite game (after demanding lower taxes.) This is another way that politicians can move money from the poorest Americans (who often have to live with the terrible damage caused by the unfettered industries) to the wealthiest. In 2012, North Dakota was undeniably doing well by hacking their regulatory safety net to pieces, so Romney praised the state at every opportunity. But how’s North Dakota doing now?

According to Ernest Schuyder at Reuters, not so hot:

That [bright] future [promised by the fracking economy] has evaporated. Those who haven’t packed up and left the Bakken [oil fields] are facing a new reality of smaller budgets, fewer residents and the physical detritus of a building boom that left behind hundreds of empty apartments.

Williston’s Walmart has cut hourly pay 15 percent. The Salvation Army, facing slipping donations, reduced gasoline and food assistance by a third. Statewide, oil tax revenue is down nearly 70 percent from this time last year…The slowdown has also inflicted pain on community budgets. Williston’s debt and other liabilities nearly quadrupled from 2008 to 2014, to $158 million, as the city sought to keep pace with growth.

Yet the city’s sales tax receipts fell 47 percent in March from a year earlier, according to the state treasurer.

Moody’s Corp, the credit rating agency, downgraded Williston’s general obligation bonds in March to junk status, citing the city’s reliance on those sales taxes to repay debt.

Putting all your eggs in one basket can be very risky, and I think we’re seeing that bear out in Williston and North Dakota now,” said Hetty Chang, a Moody’s analyst.

When you rely on a single industry to prop up your economy, you are deferring a disaster for another day. If North Dakota had taken advantage of the fracking boom to build up the middle class, to institute a higher minimum wage and other policies to ensure that more people had money to start small businesses and consume goods and services from other local businesses, the bust would likely not have been as bad as it was. When you have more economic drivers than one—when you have thousands of people creating a virtuous cycle of innovation and demand—your economy is more diverse and therefore stronger. Now North Dakota has to start all over again, and if they don’t include the middle class in their upward growth, they’ll continue to suffer from the same brutal boom and bust cycle that has always tormented the state.

Nobody is taking any joy from the destruction of the economies of North Dakota and Kansas. The fact is, the entire United States is a single ecosystem with many different climates, and the collapse of these two states affect us all. When we all do better, we all do better. It would be in our best interests, both as a local economy and as a larger American economy to ensure that every economy is stronger. The best way to do that is to stamp out trickle-down economies wherever they are, and to foster more inclusive economies in their place. The experiment is over. Their side is wrong.