Category Archives: Economy

GINI: Income Disparity

Thursday I posted my thoughts on the GINI rating and how it pertains to income here in America.  In that post, my main thrust was the fact that GINI, as reported when comparing national income disparity rankings, was comparing household incomes.  Not the incomes of individuals, but of households.

And I think that’s important.  As I demonstrated in that post, taking these two families:

  • Family A making $60,000 a year
  • Family B making $70,000 a year

Looks to be fairly equitable.  But now let’s consider that family A and family B get divorced, created 4 households out of two.  Then the breakdown looks like this:

  • Family A making $0 a year
  • Family B making $28,000 a year
  • Family C making $32,000 a year
  • Family D making $70,000 a year

THIS looks to be dramatically different.  However, the same four families in the second picture are the individual household represented in the first picture.  Remarkable, yes?

So, how do things look in real life?  Let’s take a look at the US Census Bureau’s Current Population Survey for 2010:

Descriptor Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth
Family Households 9,411 13,969 16,162 18,543 20,528
% 12 17.8 20.6 23.6 26.1
Married Couples 4,037 8,521 11,587 15,270 18,621
% 7 14.7 20 26.3 32.1
No Earners 14,805 7,037 3,327 1,496 722
% 54.1 25.7 12.1 5.5 2.6
One Earner 7,845 12,474 11,488 7,853 5,263
% 17.5 27.8 25.6 17.5 11.7
Two Earners 1,020 3,790 7,702 11,700 13,258
% 2.7 10.1 20.6 31.2 35.4
Three Earners 55 379 1,040 2,112 3,119
% 0.8 5.6 15.5 31.5 46.5
Four Earners 5 58 180 577 1,377
% 0.2 2.6 8.2 26.2 62.7
Aggregate Earners 10,240 21,940 31,595 41,125 48,338

The data is remarkable.  Let’s go through it bit by bit.

First, the “Fifths” listed at the top is earnings by quintile.  That is, the poorest 20% is the “Lowest Fifth” while the richest 20% is the “Highest Fifth”.

Now then, the data:

Households that are “families” is a massive indicator of income.As the percentage of families in each fifth increases, so does the wealth.  The same goes for married couples.  The top fifth has nearly 5x the number of married couples as the bottom fifth.  Seems that family is important in wealth creation.

Family aside, the powerful statistic that I took away was the number of earners in a household.  And what I found matches exactly with the phenomenon I described in my earlier post.

Of the households in the bottom fifth, more than HALF don’t have a single wage earner in the household.  More than half.  While the top 20% has only 2.6% of households that don’t qualify as a wage earner.

Further, if you look at the “Lowest Fifth” as a column and march down, you’ll see that fewer and fewer of those households have the described number of earners.  Starting at the top, this segment of the population has 54% of households with 0 wage earners.  While at the bottom, it has but .2% of the households with 4 wage earners.  The exact opposite is true of the “Highest Fifth”.

In short, it would seem that as a household has more wage earners, that household moves from one of the fifths to another.  And to the extent that this is true, look at the last line; aggregate earners.

The “Lowest Fifth” has 10,240 members.  The fifth that earns twice as much money as the lowest fifth has twice as many wage earners.  The fifth that makes three times as much as the lowest fifth has three times as many wage earners.  The fourth has four times as many wage earners.  And the highest has five times the number of wage earners.

This is true almost to the exact number.

The data presented above tells me that we don’t have an income disparity issue.  We have a family structure issue.  If you take a single wage earner in a household and compare that household to one with 4 wage earners, it should be no surprise which of the two households makes more money.

And lest there be any doubt.  The “Highest Fifth”?  They are some working sums -o- beetches.  Fully 62.7% of those households have FOUR wage earners.  This is not the lazy rich that the OWS and the ((% make them out to be.

A Win Win For Me

The State of Minnesota is reporting that they may soon have a record number of job openings available for state government jobs:

The executive director of the Minnesota State Retirement System, Dave Bergstrom, said Monday that 2,733 state employees have retired as of this month, up 675 from the record 2,058 who retired in 2010.

This news should cause much happiness and relief for the State, right?  As more and more people feel comfortable leaving the work force, younger folks can move up and be replaced at THEIR level by new job market entrants.  This is the nature of things.  Further, it may spell a growing confidence that we have seen the worst when it comes to our economic doldrums.

However, the State doesn’t see it that way:

However, State Demographer Tom Gillaspy said the wave of retirements does pose some problems for state government, which is faced with replacing senior employees with unique skills in subjects like school finance, tax collections and building roads in Minnesota’s hard climate.

Now, to be sure, from the perspective of Minnesota State executives, this IS a problem.  Finding quality staff to replace senior staff is definitely an issue.  Both in the government sector and in the  private sector.  However, from MY perspective, the fact that we have people less good at school finances and tax collections is a most wonderful condition.

The harder the State finds it to take and spend my money, the happier I am.

By the way, how, in this jobless recovery, is THIS possible:

The retirements could also bring into focus the state’s difficulty hiring top quality replacements, given that pay and promotions in state government now lag the private sector and academia, Gillaspy said.

Buffet Is A Smart Man

I was looking through articles and news about Warren Buffet, his compensation and his taxes.  He makes a remarkable amount of money.  And I have great admiration for the man.  His simple down to earth nature, his favorite activity is to have a bowl of popcorn and watch the Corn Huskers play football.  I like his common sense approach to business, I think he once mentioned that if he had purchased the Red Sox, he wouldn’t try and manage how Ted Williams approached hitting.

No, tax policy aside, I have great regard for the man.  And even in the tax debate, he showed a glimpse of his genius:

Becky: OK, there were a couple of emails that came in that people that said if you think the government should be able to tax more money, why don’t you just give your money away to the government instead of charity.

Buffett: Well, that’s a choice and it’s an option that… If I had to give it to a single individual, or make some young Buffett a multi-billionaire, or give it to the government, I’d absolutely give it to the government. I think that on balance the Gates Foundation, my daughter’s foundation, my two sons’ foundations, will do a better job with lower administrative costs and better selection of beneficiaries than the government.

Indeed.  I have little doubt that Buffet’s three children would do a better job with that money.

My only question is this:

Why does Buffet reserve the right to keep and spend his money as he sees fit but denies that same right to all other people?

This Is Obama’s Economy

Let’s see if Obama can let the Republicans craft policy in the same way that Bill Clinton let the Republicans in his day:

(Reuters) – The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.

The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.

A second downgrade — either from Moody’s or Fitch — would follow Standard & Poor’s downgrade in August on concerns about the government’s budget deficit and rising debt burden. A second loss of the country’s top credit rating would be an additional blow to the sluggish U.S. economy, Merrill said.

“The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan” to cut the deficit, Merrill’s North American economist, Ethan Harris, wrote in the report.

Everyone knows that the Republican Congress has passed job creating bill after job creating bill only to have Harry Reid kill it in the Senate.  Obama’s job bill was defeated by Democrats and then Senate Democrats supported the Republican version.  And this was after Obama’s first shot at a jobs bill was defeated 99-zip.

This is Obama’s economy.

Wherein We See OWS Grow Up And Become Conservatives

There’s an old joke:

While speaking with a friend’s daughter, I asked what she wanted to be when she grew up.

Marcia proudly announced, “I want to be President!”

This caused her parents, both of whom are liberal Democrats, to beam with pride.

I then inquired, “If you become President, what is the first thing you would do?”

Marcia replied, “I would give houses to all homeless people.”

“That is a worthy goal,” I said, “but you don’t have to wait until you’re President to do that.  You know our dog, Poco?  Well, he likes to poop in our backyard and I have to clean that up.  I’ll pay you $5 a week if you’ll do that for me.  Then I’ll then take you to see a homeless man up there by the grocery store so you can give him the money to help him buy a home.”

Marcia looked at me and asked, “Why don’t you ask him to clean up the poop himself?”

I smiled and said, “Welcome to the Republican Party.”

I laughed out loud, really, when I came across the real life version of this:

PORTLAND, Ore. (AP) — When “Occupy Wall Street” protesters took over two parks in Portland’s soggy downtown, they pitched 300 tents and offered free food, medical care and shelter to anyone. They weren’t just building, like so many of their brethren across the nation, a community to protest what they see as corporate greed.

They also created an ideal place for the homeless. Some were already living in the parks, while others were drawn from elsewhere to the encampment’s open doors.

I think this gets a little fuzzy.  I say that because I think there are dangers when personal obligations mingle with State obligations.  See, this is where the Left is able to effectively hammer the Right.  See, it is ABSOLUTELY our personal responsibility to perform charitable work for those of us less well off.  However, that same responsibility does not exist for the government.

Anyway, this nicely frames this nugget:

Homeless transplants from the city’s Skid Row have set up their tents within the larger tent city. No violence has been reported, but protest organizers are attempting to discourage people who are only at the encampment for the amenities.

I smiled and said, “Welcome to the 53%!”

Why Incentives Matter

One of the most powerful lessons I’ve taken away from all the reading, studying, arguing and debating I’ve done over the past 4 years of my “political awareness” has been that of incentives.  And how much they matter.  And until you can admit that people are driven by incentives, in general mind you, you will never be able to understand how laws and regulations shape our world.

Consider:

(AP) ONEONTA, Ala. – Potato farmer Keith Smith saw most of his immigrant workers leave after Alabama’s tough immigration law took effect, so he hired Americans. It hasn’t worked out: Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by midafternoon. Some quit after a single day.

Now listen, Alabama has an unemployment rate of 9.8%.

Nearly 1 in 10 Alabamians are out of work.  More I’m sure, if you count the folks who’ve given up.  And the numbers are worse if you add up those folks who are underemployed.  Yet farmers can’t keep help.

Too be sure, the value proposition is a tough one:

 It’s hot, the hours are long, the pay isn’t enough and it’s just plain hard.

At his farm, field workers get $2 for every 25-pound box of tomatoes they fill.

A crew of 25 Americans recently picked 200 boxes — giving them each $24 for the day.

That’s $3 an hour.  Hardly worth downsides of the job.

Finally, and here is the kicker, the government makes it too easy to say “no” to jobs:

It may make sense for some to sit on the couch. Unemployment benefits provide up to $265 a week while a minimum wage job, at $7.25 an hour for 40 hours, brings in $290.

Who in their right mind would choose to work back-breaking jobs in order to make an effective $25 a week?

No one.

There are jobs out there all right, just that we make it too easy to say no to ’em.

Tale of Two Senate Jobs Bills

There’s been a lot of talk about the lack of a jobs bill to come out of Washington.  In the campaign of 2010, the mantra of “jobs, jobs, jobs” was heard from The Coast of Carolina to the coast of California.  Of course, we know how that election worked out.

Horribly for the Democrats.

Since then, any legislation by the Republican House that doesn’t deal directly with “jobs, jobs, jobs” has been derided by the Left as some sort of betrayal to the people.

Wanna pass a bill that talks about abortion?  Wanna discuss legislation that speaks to immigration?  All impossible under the chorus of mockery from the Left claiming that the Republicans haven’t passed a single jobs bill.

The Speaker of the House disagrees that his chamber has been silent:

 House Republicans have worked throughout the year to implement the Pledge to America, our governing agenda focused on removing government barriers to private-sector job creation, and later this year built on the Pledge by putting forth an expanded jobs agenda, our Plan for America’s Job Creators.  Our new majority has passed more than a dozen pro-growth measures to address the jobs crisis. Aside from repeal of the 1099 reporting requirement in the health care law, however, none of the jobs measures passed by the House to date have been taken up by the Democrat-controlled Senate.  

None have been taken up in the Senate.  More than a dozen bills.  None taken up in the Senate.

Zero.

Very hard to blame the Republicans for the Democrats refusal even to consider such bills.  Much ado has been made about the Republicans use of the filibuster, but let’s not forget that the Democrats control the Senate.  And as such, only bring up legislation that they want to consider; a built in filibuster.

However, even with all of that aside, last night was illustrative:

Thursday night, there were a couple Democratic defections on Obama’s jobs measure. And despite a veto threat from the White House, 10 Democrats voted for a GOP alternative.’

The Democrats brought up a jobs bill in the Senate.

It was defeated 50-50.

Then the Republicans brought up a jobs bill.  Every single Republican voted for it.  AND 10 Democrats joined ’em.

It was defeated, 57-43, due to Democrat obstruction.

I find it fascinating that the Republicans garnered more bi-partisan support for a jobs bill in a Democrat Senate than the Democrat President was able to muster.

A tale of two jobs bills indeed.

Hope And Change

Obama’s star is fading.  I never had any doubt that he would be an ineffective President; he simply didn’t have a single ounce of experience that would lead a reasonable person to think otherwise.  He is, in essence, a lifetime member of the #OWS crowd.  Not an executive.

However, as the campaign wore on and I saw that he was going to be elected, I began to doubt America’s ability to discern competence, or at least lack of it, in our Presidents. We went from electing capable leaders to voting for American Idol.

But, good news.  America is waking up:

PRINCETON, NJ — President Barack Obama’s 11th quarter in office was the worst of his administration, based on his quarterly average job approval ratings. His 41% approval average is down six percentage points from his 10th quarter in office, and is nearly four points below his previous low of 45% during his seventh quarter.

These results are based on Gallup Daily tracking from July 20-Oct. 19, 2011. During this time, Obama’s approval rating ranged narrowly between 38% and 43% for all but a few days of the quarter. The 38% approval ratings, registered on several occasions, are the lowest of his presidency to date.

This is fantastic news on two levels.  On the first, it reflects an awaking of Americans and does some little bit to restore my faith.  On the second, it means that the Republican Primary is really the Superbowl.  That condition where the one team is widely regarded as being too weak to defeat whoever the other team is.

Further, Obama is slipping in comparison to the last President to “inherit the worst economy since the great depression”.  Mr. Reagan:

At this point in his term, Reagan was well on his way to recovering from his horrible numbers.  There is no such movement on Obama’s part.  In fact, he continues to slide.  I fully expect worse numbers as the months go by.

Reflections On OWS

I recently stumbled on a very very well written essay on Occupy Wall Street.  I found the style and content compelling and interesting.  Further, it is the first piece that Ive found that attempts, in a serious manner, the whole point of this thing.  I certain disagree in many ways, but I found myself in agreement in several others.

Here is the text [in blue] in full with my comments inline:

I’ve spent a fair bit of time downtown at OWS now, including a couple of hours today (and last Friday) with a few of my colleagues from the Columbia philosophy department talking about civil disobedience. I’ve noticed a few interesting trends and, in talking to people, have also gotten a feel for some of the ways in which this movement is both different and (perhaps because of that) not well understood yet. What follows are a some reflections on the movement, how it differs from previous instances of civil disobedience, and why it might succeed where other progressive activism in the last few decades has failed. A lot of this is speculative and/or based on my own observation and experience. Comments are encouraged, and I’ll probably say more about this in the future.

1. Goals and Methods

There’s been quite a bit of discussion of the fact that the occupiers here lack a consistent organizational scheme, a consistent message, and a consistent set of demands. I think that the NYT op/ed on “political disobedience” (attached) comes closest to appreciating the fundamental issues here, but there’s still some more to say. It’s worth emphasizing, I think, that the disorganized nature of the movement is a (to borrow a term from the computer scientists) a feature rather than a bug. That is, the lack of a codified list of demands or hierarchical organization scheme is something to be celebrated as a strength of the movement, not a problem to be solved. This fact isn’t widely appreciated, though, for a variety of reasons, so let me say a little bit about why this is the case.

I am interested to hear why the lack of a cohesive message is a feature.  I do see it as a bug.

This is not to confuse society as a whole.  I find it wonderfully liberating to know that our society is so free that all forms of ideas and thoughts are valid enough to gather people of like mind.  However, when dealing with institutions, it is important to be concise and clear in the way and manner of your grievances and remedies thereto.

The most important point to highlight (and, I think, the one that is most widely appreciated) is that the lack of a codified set of shared principles and demands keeps the circle of inclusion as wide as possible. This is part of what separates OWS from other recent movements to which it might bear some surface resemblance (think, for instance, of the anti-Iraq War demonstrations of 2003-2005, or the ongoing environmental protests), and might explain why OWS is gaining more wide-spread traction while those movements ever did, despite the fact that it is only months old. It’s essential that this trend continue for two reasons.

This is most certainly true.  The massive appeal to the OWS movement is the vast openness and inclusion of all petitioners.  The method of decision making and even the structure [or lack thereof] is very powerful in gaining and retaining “members”.

First, it’s important that we recognize that the unusual nature of the problem here (more on this below) means that we might need to make common-cause with some people that we might otherwise avoid politically. It’s vitally important that this movement be presented not as a political movement, but rather as a social one: we’re not trying to get people to vote a certain way, endorse a certain ideology, or sign up for a certain party. Rather, we’re trying to build a coalition of people who recognize the presence of a certain problem in the way our political and economic systems are structured. It’s perfectly possible that individuals within this movement might disagree about how to solve that problem (again, more on this in a moment), but it’s essential that the core around which the movement is build remains a recognition of a problem that most people no matter their political persuasion can agree is a problem.

OWS will struggle in this attempt.  Already I see the lines and divisions of “Party” take form.  You see the Democrats co-opting the movement and the Republicans shunning it and distancing it.  It will be difficult for the OWS movement not to be portrayed as the answer to the Tea Party.

However, with that said, I am SURE that many on both sides of America’s political aisle would agree that we have a problem in how government interacts with Wall Street and business in general.

Moreover, it’s important that this problem continue to be presented as one that’s affecting lots of individual Americans today. Everything I said in the last paragraph might equally well apply to a movement aimed at addressing climate change but (alas) no such movement has materialized. That fact is telling. It’s significant, I think, that the dangers of global climate change are still largely someone else’s dangers: the problems are going to show up in ten years, or on the other side of the world. It’s hard to rally significant numbers of people around an issue when we can’t point to concrete, immediate, tangible problems. The current economic issues, on the other hand, are as concrete as your plummeting house value, your neighbor’s lost job, and your child’s six-figure student debt. These are issues that normal people can relate to, and that are accessible to their ordinary, every-day experience; you don’t have to understand a significant amount of science to see that your inability to find work is a problem; similarly, it isn’t possible for the powers-that-be to spread the kind of disinformative smoke-screen we’ve seen with climate change–there’s just no way to suggest that there’s genuine controversy about whether or not your poverty is a problem.

This is right on  point.  Whatever the cause, and no matter how much we disagree on the cure, the fact that many MANY Americans are hurting, and hurting right now, is a very valid and insightful point.  We can [and do] debate tax theory all day long.  But to the average American, such conversations are beyond their mathematics ability [sadly] and certainly outside their “care zone”.  But this, THIS pain is real and present.

Keeping things somewhat vague keeps this wide appeal possible. If the movement is to succeed, it’s going to have to break into the mainstream. The goal is not–can not–be to radicalize the average person on the street. The average person on the street does not want to be radicalized. He wants to feed his family; she wants to crawl out from under crushing debt. I saw a group of people downtown today chanting about “creating the Malcolm X nation by any means necessary.” Whether you think that’s a laudable goal or not, it is absolutely essential that it not be seen as the primary goal of the movement. We don’t want the Malcolm X nation. We don’t want an end to capitalism. We don’t want to destroy the State. We want a system that gives an individual willing to work a realistic chance at a good life. That’s a moderate goal akin to the one espoused by the workers’ rights movements of the 20th century (“8 hours for work, 8 hours for rest, 8 hours for what we will”), and it’s one that normal, non-radical people can both understand and support. It’s easy for them to see why it’s in their interest, and it’s easy for them to see the extent to which we don’t have that kind of system now. If we can include the radicals, then all the better: they’ve got the kind of commitment and energy that it might take to keep this movement running during the cold winter ahead while public support slowly gains momentum. Again, though, it’s important that no particular kind of radicalism comes to dominate: if we can continue to build a movement that appeals both to radical anarcho-capitalist libertarians and radical Marxists, then we’re sure to end up with a movement that appeals to Average Jane the Office Worker.

And here we see the beginning of a cohesive “goal”.  It starts out by claiming what it can’t be:

  1. Malcolm X Nation
  2. Anti-capitalism
  3. Anti-state
And then it moves to what it should be:
  1. A system that gives an individual willing to world a realistic chance at a good life.

A disclaimer here.  THAT is a noble goal.  It is absolutely consistent with the American Dream that we be able to make for ourselves the kind of life that we wanna live.  And I think that it is uniquely American that we wanna EARN that life.  Not have it given to us.  However, where I think the movement will wither [not fail] is that for most Americans, most people willing to work, that dream is already a reality.

2. So What’s the Problem?

So what exactly is the problem that everyone seems to agree is here? When I first started going down to OWS, there was a very unfocused sense of rage all around; people were angry at having lost their jobs, lost their homes, and lost their credit. People were angry about the government’s complete inability to fix things. People were angry about the fact that the rich were getting richer while the middle class shrank into debt. There’s still a lot of anger, but it’s also starting to focus. In the last two weeks in particular, I’ve noticed one idea beginning to take hold among a lot of the demonstrators: Wall Street has succeeded in privatizing profits and socializing risk. This, more than anything, is the heart of the constellation of specific individual complaints people all over the nation are making. The problem is just that what we’ve got right now is effectively the worst of both worlds of capitalism and socialism: large corporations ran a risky financial scheme that made them tremendous amounts of money for a while, then fell apart, harming many individuals in the process. Rather than face the consequences of this failure, though, they were bailed out at the expense of the tax payers. The debate as to whether or not the bailouts were necessary is, at this point, irrelevant: the way we built the political and economic system resulted in that happening, which tremendous numbers of people now recognize was a bad thing. Perhaps it would have been better to just let the banks fail; perhaps this was making the best of a bad situation. I don’t know. What it has served to do, though, is highlight some really deep problems in the way things are currently structured.

This is very well said.  All of us are upset that banks were bailed out.
*** Unsolicited advice to increase the broad appeal.  Include car companies in the rage. ***

We’ve privatized profit and socialized risk: the corporations at the top of the economic pyramid have absolutely no incentive to either play by the rules or operate responsibly–they can turn extensive profits on risky schemes, knowing that even if those schemes fail they’ll be propped up by the American government. This way of framing the problem is both accurate and brilliant, and it cuts across all the economic and political divides: radical Marxists and Ron Paul libertarians can both agree that this way of doing things is theoretically unsound, and the average man on the street can recognize that it’s practically unsound as well: the status quo is not working. Radical capitalists and radical socialists will disagree about why we’ve run into this problem, but they will agree both that there is a problem and about what the nature of the problem is: the relationship between business and government is broken, and it’s operating to the detriment of virtually everyone who is a part of the system. That’s a powerful consensus, and affords us an opportunity that we can’t afford to squander.

This is a summary, or perhaps a restatement of the above.  As such, it is remarkably succinct in it’s accuracy.

It’s also important that the OWS movement has–so far–operated outside the traditional political establishment. The economic aspect of the problem cuts across the capitalist/socialist divide, and a recognition that the problem is just as much a problem with the government as it is a problem with business cuts across the liberal/conservative divide as well. The fact that the issue is one about the relationship between government and business means that–given a continuation of the status quo–the problem will not be solved by private industry, but nor will it be solved by traditional electoral politics. The solution, in other words, is not to vote Democrat, vote Republican, or even vote OWS. This is part of what sets OWS apart from the Tea Party movement, which might be seen as a kind of early manifestation of these same concerns before they took hold in the mainstream. The Tea Party framed itself as a political party–their solution involved (among other things) putting their own candidates up for office at both local and national levels. The message behind OWS is that this kind of solution is no longer available. The problems have become too deep–too endemic to the status quo of the system–to admit of an easy electoral solution.

Here, again, I differ, though not subtly.  I feel the economic aspect of the problem is currently being viewed through the lenses of that capitalist/socialist divide.  Those of us that find ourselves to be more fiscal conservatives feel that it is the socialist aspect of the government that caused the collapse; the goal of the government to provide housing to low income citizens.  I suspect that those who find themselves to be more fiscal liberals feel that corporate greed led to the collapse.

I have seen to many objections to capitalism for this not to be the general case.

The vast majority of people are suffering economically, despite the fact that we have an unprecedented amount of resources at our disposal. The kind of system we’ve been trying to run might have been effective once upon a time, but it has proven to be ineffective today. Just recognizing this is a vital first step toward fixing things. Likewise, though, we need to recognize that the way in which things have failed is going to mean that more of the same simply is not going to work. Along with socialized risk, we’ve managed to get ourselves into a situation where the people with the power to restructure the system are precisely those who have the least incentive to do so: much of our government is bought and paid for–not in the sense that bribery is going on, but in the sense that the economy of influence that governs Washington has produced a political gridlock. The interplay of market forces and governmental regulation has sent us into a kind of vicious instability that just voting Democrat or Republican (or Tea Party) in the next election is not going to fix. The problems run too deep for that, and the current political boundary conditions are such that any elected official attempting to effect real, lasting, significant change will be prevented from doing so–not directly, but just in virtue of structural features of the political system. It’s a kind of collective action problem: there’s no clear path to change from within because the things that need to be changed are precisely those which regulate the mechanisms of change. OWS is attempting to effect change from the outside: not by electing the right people, but by changing the general climate under which politics gets done. The first step is the kind of coalition-building I’ve been talking about here.

I think the first is misplaced in this paragraph.  With that said, I would like to posit that the vast majority of people are not suffering.  Unemployment is high, admittedly, but most of America is gainfully employed.  And while the average salary is down, that is due to the tails being impacted, not the body of wage earners.

I think the main gist of this section is that normal party politics are not going to “fix the system”.  In the sense that the problem exists in the “now” so to any solution that also DOESN’T exist in the same manner will seen to be ineffective.  I’ll reserve comment until we read “So What Do We Do?”

3. So What Do We Do?

I don’t know. I lack the relevant knowledge and skills to plausibly suggest solutions to a problem as complex as this one. I’ve suggested that it’s a feature (rather than a bug) of the movement that it’s able to build a coalition of people who disagree about so many things. This also means, though, that the people who have built this movement are going to disagree about what the next step is. The important thing, though, is that most of them will agree that the problem is soluble: one of the greatest potential victories of OWS is in getting people to see that the current status quo is neither an inevitability nor a human-independent feature of nature. We built this system, and we can fix it if we put our minds to it. It’s likely that whatever fix we come up with will be at least somewhat painful; change is always painful, and we’ve gotten ourselves to a place where there are no easy outs. We need major revisions, and that’s likely to hurt.

And this is my greatest critique of the OWS movement.  There are two ways to attack a perceived problem:

    1. Take the position that you are part of the solution.  This requires adult conversations with clear and distinct solution.
    2. Riot and demand the system changes.

If we assume that the movement does not want to abdicate responsibility to the status quo, that implies they are intent on completing this change on their own.   That is, OWS is not only a part of, but a DRIVING part of, the change agent.  As such, a viable solution is required or, quite simply, they will never be taken serious by anyone that is in a position of influence.

Another interesting difference between OWS and the Tea Party, I think, is that many of the OWS mainstream is (like me) quick to admit that they don’t have a concrete set of suggestions about what exactly to do to fix the problems we’re facing. The mainstream media has tried to play this as an example of OWS’ ignorance, the protesters’ stupidity, or an indicator that the movement doesn’t have serious goals. Nothing could be further from the truth, though. OWS’ recognition that our problems are difficult, the system is complex, and that there are no easy answers is a mark of their seriousness and their genuine commitment to real change. OWS is a populist movement in important respects that I’ve discussed, but it also differs from previous populist movements in that it doesn’t presume to suggest that the answers are easy or obvious. Intelligent people can agree that we’re facing unprecedented problems, agree about the nature of those problems, and disagree about how to solve them. There are experts on all sides here, and none of them think that the best way to proceed isobvious. If it were obvious, there would be no need for any of this. It’s vital to recognize this point.

I certainly am a member of that group that holds OWS accountable for a lack of concrete sets of suggestions.  While I would not claim they are stupid or unserious, I do represent that they are naive.  Naive in the manner which is the natural order of things, not meant to be used as an insult.  Before we “know” we are naive.  Such is the nature of the OWS.

Change requires discipline and rigor.  In demands inordinate amounts of time and skill.  It requires vision.  And specific, measurable attainable goals.  Without these characteristics, not just casually but in obvious abundance, the OWS movement simply devolve into another populist movement.

Perhaps the best solution is the kind of solution the anarcho-capitalists might propose: a complete separation of government and business that lets market forces return us to a stable equilibrium. I have very little doubt that whether this solution is optimal or not, it would leave us better off than we are now. I don’t know if we could do better than that. Maybe we can’t; I’m not dogmatically committed to the idea that capitalism is evil. I also think that those suggesting radical capitalists solutions, though, ought to admit that it’s at least possible that we might be able to come up with an even better solution. It’s essential that all sides not let dogmatism blind them to the incredible chance we have here to explore alternative possibilities. We have resources at our disposal now of a kind that have never been available in the history of the world: this includes computational resources (e.g. computers that let us do things with models that would have seemed laughably impossible 30 years ago), theoretical resources (e.g. a burgeoning understanding of complexity and non-linearity in social systems), and concrete, labor-type resources that have come with a globalized economy.

I think it’s important to recognize the desire to work across ideologies here.  I have never met the author, but I get the feeling that the solutions of the anarcho-capitalists does not fit in his natural state or world views.  The willingness to cooperate is admirable.

We all recognize that the current system is broken. Before we jump to any quick conclusions about how to best fix it, though, let’s take a minute to open the problem up for consideration in the light of these new resources. People are smart and creative, and they’ve got some great new tools. Perhaps we can do better than anything that anyone has suggested so far, and perhaps not: the important thing is that we not squander this chance to try. We all should be open to the possibility that our favored solutions might not be the best ones, and we shouldn’t let dogma get in the way of actually trying to figure out what is in fact best. We’re on the cusp of a very rare moment when people of major ideological differences all agree on something. Let’s see what we can do with that.

Well said.  Well said indeed!

Housing Market: Hitting Bottom?

Ever since the Federal government decided that it needed to subsidize home ownership, we’ve been heading for the bubble.crash.  And it hit.  Big.

Now we’re waiting for the bottom so that we can begin to climb our way back to positive ground.

I have seen two pieces of good news:

  1. My neighborhood Realtor has sold 2 properties on the street in the last couple of weeks.  Sellers are internalizing the new prices and buyers are responding by, well, by buying.
  2. This story about a first time home buy in Minneapolis:

Jessica Harrison thought she knew what to expect when she decided to look for a house: a buyer’s market.

And why not? Prices are down sharply since 2009. And with so many foreclosed properties for sale, Harrison was certain she would find a good deal fast.

Instead, the Minneapolis teacher waded through countless homes during what became a two-year search. Most needed too much work. When she found a move-in ready house, she lost out to bids she couldn’t match. Harrison tried to buy a home through a short sale, too, but the deal fell through after six months.

She finally reached a deal on a tidy house in south Minneapolis and expects to close at the end of this month. “There were multiple properties available, but I wanted to get a house that I could move into,” Harrison said. “A lot of the houses needed a lot of work, and I didn’t have the money or resources to do that.”

Home buyers can no longer assume that it’s easy to buy a cheap house in a good location. New local listings are down 17 percent in the Twin Cities over the past year, as would-be sellers are holding on to their homes until the market improves. “[Buyers] have to be patient until the right home comes along,” said Ryan Haagenson, a sales agent with Re/Max Results in Minneapolis. “And ready to pull the trigger when it does.”

Make no mistake: There are still more sellers than buyers. But the decline in listings and the quality of the options are slowing the search for those on the hunt. U.S. home listings in September fell to a four-year low, according to Realtor.com.

For whatever reason, when the supply of homes goes down, the price goes up.

We’re certainly not out of the woods yet, we still have Obama and the Democrats stalling foreclosures and incenting people to buy homes.  But we’re closer than we were last week.