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Culture war games: amber waves of green

American voters don’t care about the economy
By The Economist

Polling on behalf of The Economist by YouGov shows that Republicans are four times as optimistic as Democrats about the state of the stockmarket, which Mr Trump often cheers on. Liberals complain about high housing costs and low wage growth—never mind that wages are growing more strongly now than towards the end of Mr Obama’s term.

Mr Trump’s election in 2016 was followed by a rapid switch in attitudes. From the six months before the election to the six months after, YouGov measured a 45 percentage-point increase in the share of Republican-aligned Americans who believed the economy was getting better. Democrats became sharply more pessimistic. So it’s not any longer the economy, stupid. It’s the partisanship.

The rich world is enjoying an unprecedented jobs boom
By The Economist

Thanks to the jobs boom, unemployment, once the central issue of political economy, has all but disappeared from the political landscape in many countries. It has been replaced by a series of complaints about the quality and direction of work. These are less tangible and harder to judge than employment statistics. The most important are that automation is destroying opportunities and that work, though plentiful, is low-quality and precarious. “Our jobs market is being turned into a sea of insecurity,” says Jeremy Corbyn, leader of Britain’s Labour Party.

Again, reality begs to differ. In manufacturing, machines have replaced workers over a period of decades. This seems to have contributed to a pocket of persistent joblessness among American men. But across the OECD as a whole, a jobs apocalypse carried out by machines and algorithms, much feared in Silicon Valley, is nowhere to be seen. A greater share of people with only a secondary education or less is in work now than in 2000.

It is also true that middle-skilled jobs are becoming harder to find as the structure of the economy changes, and as the service sector—including the gig economy—expands. By 2026 America will have more at-home carers than secretaries, according to official projections. Yet as labour markets hollow out, more high-skilled jobs are being created than menial ones. Meanwhile, low-end work is becoming better paid, in part because of higher minimum wages. Across the rich world, wages below two-thirds of the national median are becoming rarer, not more common.

As for precariousness, in America traditional full-time jobs made up the same proportion of employment in 2017 as they did in 2005. The gig economy accounts for only around 1% of jobs there.

The American Dream Is Alive and Well
By Samuel J. Abrams

Collectively, 82 percent of Americans said they were optimistic about their future, and there was a fairly uniform positive outlook across the nation. Factors such as region, urbanity, partisanship and housing type (such as a single‐family detached home versus an apartment) barely affected these patterns, with all groups hovering around 80 percent. Even race and ethnicity, which are regularly cited as key factors in thwarting upward mobility, corresponded to no real differences in outlook: Eighty-one percent of non‐Hispanic whites; 80 percent of blacks, Hispanics and those of mixed race; and 85 percent of those with Asian heritage said that they had achieved or were on their way to achieving the American dream.

Income did make a difference, with 72 percent of those earning under $35,000 expressing a positive outlook about the American dream, compared with 90 percent of those earning over $100,000 — but those numbers are still overwhelmingly positive. Another difference was generational. Eighty-three percent of baby boomers, 80 percent of Gen Xers and 81 percent of millennials were optimistic about the American dream. But those in Gen Z — Americans born in 1997 or later — were notably less optimistic at 73 percent.
Brothers Chase and Connor LaCoste, Amite, La. “I think the American dream is that all people should be equal, no matter if you’re black or white,” Chase said. “As an African-American young boy I just hope I can can live to be a black man. Two main things you should always have is freedom and liberty.”

In general, though, the data are clear: Individuality and family, not wealth and real estate, are what Americans seek and believe they are finding in the national “dream.”

What conclusions should we draw from this research? I think the findings suggest that Americans would be well served to focus less intently on the nastiness of our partisan politics and the material temptations of our consumer culture, and to focus more on the communities they are part of and exercising their freedom to live as they wish. After all, that is what most of us seem to think is what really matters — and it’s in reach for almost all of us.

Americans’ Confidence in Their Finances Keeps Growing
By Jim Norman

Americans’ optimism about their personal finances has climbed to levels not seen in more than 16 years, with 69% now saying they expect to be financially better off “at this time next year.”

The 69% saying they expect to be better off is only two percentage points below the all-time high of 71%, recorded in March 1998 at a time when the nation’s economic boom was producing strong economic growth combined with the lowest inflation and unemployment rates in decades.

Americans are typically less positive about how their finances have changed over the past year than about where they’re headed, and that remains the case. Fifty percent say they are better off today than they were a year ago. That 50% still represents a post-recession milestone — the first time since 2007 that at least half of the public has said they are financially better off than a year ago.

Ten years ago, as the Great Recession neared its end, the percentage saying their finances had improved from the previous year was at a record low of 23%. More than half the public, 54%, said they were worse off. Now, with unemployment below 1998 levels and the job market growing steadily, the number saying they are worse off than a year ago has dropped to 26%, the lowest level since October 2000.

Why Wages Are Finally Rising, 10 Years After the Recession
By Ben Casselman

Decades ago, economists observed that when unemployment falls, wages tend to rise, as companies are forced to offer higher pay to attract workers. Yet even as the unemployment rate fell from 10 percent in 2009 to less than 5 percent in 2016, wages rose slowly. Even now, with the unemployment rate near multidecade lows, wages are not rising as quickly as standard models suggest they should be.

Economists proposed all sorts of theories to explain the mystery: Globalization and automation meant that Americans were competing against lower-paid workers overseas and against robots at home. The rising power of the biggest corporations, paired with falling rates of unionization, made it harder for workers to negotiate for higher pay. Sluggish productivity growth meant that companies couldn’t raise pay without eating into profits.

The recent uptick in wage growth suggests a simpler explanation: Perhaps the job market wasn’t as good as the unemployment rate made it look.

The government’s official definition of unemployment is relatively narrow. It counts only people actively looking for work, which means it leaves out many students, stay-at-home parents or others who might like jobs if they were available. If employers have been tapping into that broader pool of potential labor, it could help explain why they haven’t been forced to raise wages faster.

It appears as if that is exactly what is happening. In recent months, more than 70 percent of people getting jobs had not been counted as unemployed the previous month. That is well above historical levels, and a sign that the strong labor market is drawing people off the sidelines.

Why record job growth in America hides a troubling reality
By Jana Kasperkevic

January marked the 100th consecutive month of job creation in the United States – a record breaking streak of job creation that has left employers scrambling to find workers and dragged the long-term unemployed back into the market.

Yet even now, 20m jobs later, there are some parts of the US economy that have yet to reflect the positive image projected by the continuous job growth and low unemployment rate.

“That we’ve had the unemployment rate at or below 4% since last February is obviously historically remarkable,” said Mark Hamrick, senior economic analyst at “But the composition of the workforce or employment obviously paints a much more complicated story.”

What troubles analysts like Hamrick, as well as the central bankers at the Federal Reserve, is the fact that the US economy is now dominated by high skill, high wage jobs and low skill, low wage jobs. Gone are many of the middle skill, middle wage jobs and that, said Hamrick, a trend that has led to “not only the economic divisiveness of our country but to some degree the political divisiveness”. Take manufacturing for example, where about 25% of jobs have disappeared over the last two decades thanks to globalization and automation.

It isn’t just middle wage jobs that are missing from this job market. There is also the mystery of stagnant wages. Even as jobs were added, the one thing that remained mostly the same for large part of those 100 months were the wages. In December, wages were up 3.2% from a year earlier, their largest gain since 2008 but nothing to boast about. In January growth slipped to 3.1%. According to the Economic Policy Institute (EPI), a left-leaning thinktank, wages would have to grow between 3.5% to 4% for average workers to really feel an impact.

The Best Economic News No One Wants to Talk About
By Derek Thompson

According to analysis by Nick Bunker, an economist with the jobs site Indeed, wage growth is currently strongest for workers in low-wage industries, such as clothing stores, supermarkets, amusement parks, and casinos. And earnings are growing most slowly in higher-wage industries, such as medical labs, law firms, and broadcasting and telecom companies.

Bunker’s analysis is not an outlier. A Goldman Sachs look at data from the Bureau of Labor Statistics found growth for the bottom half of earners at its highest rate of the cycle. And even among that bottom half, the biggest gains are going to workers earning the least. A New York Times analysis of data from the Federal Reserve Bank of Atlanta found that wage growth among the lowest 25 percent of earners had exceeded the growth in every other quartile.

In fact, according to Bunker’s research, wages for low-income workers may be growing at their highest rate in 20 years.

The American middle class is stable in size, but losing ground financially to upper-income families
By Rakesh Kochhar

About half (52%) of American adults lived in middle-class households in 2016. This is virtually unchanged from the 51% who were middle class in 2011. But while the size of the nation’s middle class remained relatively stable, financial gains for middle-income Americans during this period were modest compared with those of higher-income households, causing the income disparity between the groups to grow.

The recent stability in the share of adults living in middle-income households marks a shift from a decades-long downward trend. From 1971 to 2011, the share of adults in the middle class fell by 10 percentage points. But that shift was not all down the economic ladder. Indeed, the increase in the share of adults who are upper income was greater than the increase in the share who are lower income over that period, a sign of economic progress overall.

Financially, middle-class households in the U.S. were better off in 2016 than in 2010. The median income of middle-class households increased from $74,015 in 2010 to $78,442 in 2016, by 6%. Upper-income households (where 19% of American adults live) fared better than the middle class, as their median income increased from $172,152 to $187,872, a gain of 9% over this period. Lower-income households (29% of adults) experienced an income gain of 5%, about the same as the middle class. (Incomes are adjusted for household size, scaled to reflect three-person households, and expressed in 2016 dollars.)

But, recent gains notwithstanding, the median income of middle-class households in 2016 was about the same as in 2000, a reflection of the lingering effects of the Great Recession and an earlier recession in 2001. The median income of lower-income households in 2016 ($25,624) was less than in 2000 ($26,923). Only the incomes of upper-income households increased from 2000 to 2016, from $183,680 to $187,872.

The widening income gap between upper-income households and middle- and lower-income households this century is the continuation of a decades-long trend. In 1970, the first year covered by earlier Pew Research Center analyses, the median income of upper-income households was 2.2 times the income of middle-income households and 6.3 times the income of lower-income households. These income ratios increased to 2.4 and 7.3 in 2016, respectively.

Amber Waves of Green
By Jon Ronson

I’d worked out that there are six degrees of economic separation between a guy making ten bucks an hour and a Forbes billionaire, if you multiply each person’s income by five. So I decided to journey across America to meet one representative of each multiple. By connecting these income brackets to actual people, I hoped to understand how money shapes their lives—and the life of the country—at a moment when the gap between rich and poor is such a combustible issue. Everyone in this story, then, makes roughly five times more than the last person makes. There’s a dishwasher in Miami with an unbelievably stressful life, some nice middle-class Iowans with quite difficult lives, me with a perfectly fine if frequently anxiety-inducing life, a millionaire with an annoyingly happy life, a multimillionaire with a stunningly amazing life, and then, finally, at the summit, this great American eagle, Wayne, who tells me he’s “pissed off” right now.

“I live my life paying my tas and taking care of my responsibilities, and I’m a little surprised to find out that I’m an enemy of the state at this time in my life,” he says.

He has a big, booming voice like an old-school billionaire, not one of those nerdy new billionaires.

“Has anyone said that to your face?” I ask him.

“Nobody has to,” says Wayne. “Just watch what they’re doing.”

“You mean the Occupy Wall Street crowd?”

“Those guys are a bunch of jerks,” Wayne mutters, giving a dismissive wave that says, They’re just a sideshow. “Politically I’m on the enemy list. I’ve lived my whole life doing what I thought was right, and now I’m an enemy of the state.”

Dennis installs, maintains, and repairs “a wide variety of home medical equipment, oxygen equipment, wheelchairs, a smattering of everything.” Rebecca stays home with the children. She says their problems are twofold: tas and health insurance.

“He gets paid every two weeks,” says Rebecca. “For state and federal tas they take about $180. Then for health insurance they take about $375.”

“The health costs go up every year,” says Dennis. “And not just the regular 4 percent for inflation. It could be 10 percent, 17 percent…”

I ask them if they feel worse off than they did a few years ago. Rebecca says, “Yes, a little. The cost of everything, like health insurance, gas, and groceries, has been going up by leaps and bounds. Some things have even seemed to double. Versus our income not changing that much.”

The economy is booming. But are Americans’ finances healthier because of it?
By Janna Herron

Savings and debt: Even though Americans can make ends meet, the percentage spending less than their income has stayed nearly unchanged over the decade. Almost half haven’t set aside money to cover expenses for three months. And 37% say they have too much debt, the FINRA Foundation found.

All this leaves Americans feeling stressed about money despite the booming economy. Half say their personal finances make them anxious, and only 31% are very satisfied with their money situation. Just under a third earned income outside their main job.

“People are still struggling even though wages have increased and unemployment is down,” Hudson says. “The cost of goods and services have gone up, but people’s spending power hasn’t kept up.”

America Stopped Building
By Jim Clifton

On a visit to the Princeton campus recently, I asked a famous economics professor a simple question, “Are we in a recovery?”

He gave me a simple, emotionless answer, “No.”

I then asked him how many of the economists in the building would agree. He said, “Every one of them.” I asked him why the media reports indicate that we are in a recovery. His exact words, “I don’t know.”

I’m concerned there’s a mistaken understanding of U.S. economic dynamism. The New York Times, The Wall Street Journal, Financial Times, Fox, MSNBC, all the networks — the Federal Reserve, too — all say the same thing: The job market is strong and the economy is growing. We’re in a recovery.

That’s only partly true.

As optimistic Americans, we really want to believe this narrative. I want to. But it is hard to square this with the fact that half of Americans are making less than they were 35 years ago in real terms. They have not received a raise in 35 years. Making things worse, the cost of housing, healthcare and education are exploding while paycheck sizes are frozen or even declining.

Many citizens don’t buy that the economy is growing. Recently, Gallup found that 56% of Americans say the economy is slowing down — or worse.

There are good reasons they feel that way. Productivity (GDP per capita) has been trending down for decades. It’s been increasing, but at a decreasing rate. Even with the 2017-2018 GDP improvement, we are in a decades-long decline of GDP per person or “productivity” as the economists refer to it.

Are Americans benefiting from the strong economy — aside from the rich? A Fed report raises questions.
By Andrew Van Dam

When David Moore, owner of D&D Automotive in Las Cruces, N.M., heard he will soon be living through the longest economic expansion on record, he sounded indignant.

“It’s not expanding for me,” he said. “It’s getting worse.”

Moore has been a mechanic for 40 years. He said these days, customers often have to leave their cars with him until payday rolls around, or until they can scrape together the money.

“I had three jobs this week that I lost because it’s too much money,” Moore said. “They hauled the cars off. They’re not going to fix them.”

“There’s not any extra money laying around for a lot of people,” Moore said. “I get sticker shock adding up tickets sometimes,” he added later. “Everything’s gone up.”

In fact, when his son had to go to the emergency room last year, Moore himself couldn’t cover the $2,000 bill up front. He’s still sending the hospital $100 a month to pay off the bill, he said.

“Another year of economic expansion and the low national unemployment rates did little to narrow the persistent economic disparities by race, education, and geography,” the report’s authors wrote.

‘This doesn’t look like the best economy ever’: 40% of Americans say they still struggle to pay bills
By Heather Long

The stock market is at record levels, with the Dow Jones industrial average closing at a new high Wednesday ahead of the July 4 holiday, and President Trump has made the economy’s strong performance a centerpiece of his reelection campaign.

But this expansion has been weaker and its benefits distributed far more unevenly than in previous growth cycles, leaving many Americans in a vulnerable position.

This is a “two-tier recovery,” said Matthew Mish, head of credit strategy at the investment bank UBS. About 60 percent of Americans have benefited financially, he said, while 40 percent have not.

The 40 percent — which Mish calls the “lower tier” — have seen paltry or volatile wage growth, rising expenses for housing, health care and education, and increased levels of personal debt. They tend not to own homes or many stocks.

In discussions with 30 Americans unable to pay all of their bills, a clear pattern emerged: Most were able to eke by until they faced an unexpected crisis such as a job loss, cancer, car trouble or storm damage.

The extra expense caused them to get behind on their bills, and they never fully rebounded.

Economists fear such precarious financial situations put many Americans at risk if there is even a mild setback in the economy, potentially setting up the next recession to be worse than anything in recent history except the Great Recession.

“So many Americans are living paycheck to paycheck,” said Signe-Mary McKernan, vice president of the Center of Labor, Human Services and Population at the Urban Institute. “We are headed toward a political crisis, if not an economic one.”

Their vulnerability is due to a confluence of factors. First, the average American family has yet to recover fully from the crisis, the Federal Reserve found, leaving half the nation with a diminished cushion to handle surprise expenses — or the next downturn.

The bottom half has less wealth today, after adjusting for inflation, than it did in 1989, according to Fed data through March of this year.

A decade after the recession, 40% of U.S. families still struggling
By Aimee Picchi

About 39 percent of Americans ages 18 to 65 experienced at least one type of material hardship last year, statistically unchanged from the 39.3 percent who suffered hardship in 2017, the nonpartisan think tank found. The study spans the first two years of the Trump administration, as well as the first year of the tax overhaul. Yet there was little progress easing the financial challenges experienced by U.S. adults last year, the Urban Institute said.

Food insecurity and medical bills remain a sticking point for many families, with nearly 1 in 5 families saying they had experienced difficulty paying for food or medical care.

But the researchers found that even middle-class families are struggling with the bills. Almost 1 in 3 households that earn at least twice the federal poverty level — equivalent to annual income of $50,200 for a family of four — say they struggled with meeting basic needs. The bills that caused them the most trouble — medical and food costs, the study found. About 1 in 7 middle-class families said they struggled with medical bills or didn’t receive medical care because of the cost.

To be sure, low-income families — those earning less than twice the federal poverty level, or less than $50,100 for a family of four — are struggling most. About 60 percent of those surveyed said they struggled to pay their bills, with 53 percent reporting paying more than half their income on housing, considered a severe housing burden.

America’s Upper Middle Class Feeling the Pinch Too
By Alexandre Tanzi

Newly available net worth data from the Federal Reserve suggests that the “left-behind” contagion has spread to all Americans aside from the top 10 percent. While still wealthier overall than most other groups, even the upper-middle class is feeling the pinch of income stagnation. The growth rate of this group’s incomes is lagging behind that of those both lower and higher on the socioeconomic ladder.

The cost of many products and services the upper middle class buys, from autos to college educations, is outpacing overall inflation. While having access to credit, these households are increasingly tapping into costlier forms of debt.

Families Go Deep in Debt to Stay in the Middle Class
By AnnaMaria Andriotis, Ken Brown and Shane Shifflett

The American middle class is falling deeper into debt to maintain a middle-class lifestyle.

Cars, college, houses and medical care have become steadily more costly, but incomes have been largely stagnant for two decades, despite a recent uptick. Filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy.

Consumer debt, not counting mortgages, has climbed to $4 trillion—higher than it has ever been even after adjusting for inflation.

In one sense, the growing consumer debt is a vote of confidence in the future. People borrowing money today expect to have the income tomorrow to pay it back. Consumer debt tends to rise when borrowers feel secure in their jobs.

But the debt pile is also an accumulated ledger of economic risk. It should be manageable so long as unemployment remains low. If job losses begin to rise, it would become unsustainable for some share of borrowers, raising chances of an increase in missed payments and lenders writing off unpaid balances. The Fed lowered interest rates on Wednesday because it sees rising risks of a slowdown that could boost unemployment.

The median net worth of households in the middle 20% of income rose 4% in inflation-adjusted terms to $81,900 between 1989 and 2016, the latest available data. For households in the top 20%, median net worth more than doubled to $811,860. And for the top 1%, the increase was 178% to $11,206,000.

Put differently, the value of assets for all U.S. households increased from 1989 through 2016 by an inflation-adjusted $58 trillion. A third of the gain—$19 trillion—went to the wealthiest 1%, according to a Journal analysis of Fed data.

“On the surface things look pretty good, but if you dig a little deeper you see different subpopulations are not performing as well,” said Cris deRitis, deputy chief economist at Moody’s Analytics.

In case of a broad economic downturn, these people’s debt levels could weigh on the economy for an extended period, because people who carry a lot of debt into a downturn tend to rein in their spending for years afterward.

Nearly 25% of Americans are going into debt trying to pay for necessities like food
By Megan Leonhardt

A full 23% of Americans say that paying for basic necessities such as rent, utilities and food contributes the most to their credit card debt, according to a new survey of approximately 2,200 U.S. adults that CNBC Make It performed in conjunction with Morning Consult. Another 12% say medical bills are the biggest portion of their debt.

That makes sense, given that day-to-day costs continue to soar. Middle class life is now 30% more expensive than it was 20 years ago. The cost of things such as college, housing and child care has risen precipitously: Tuition at public universities doubled between 1996 and 2016 and housing prices in popular cities have quadrupled, Alissa Quart, author and executive director of the Economic Hardship Reporting Project, tells CNBC Make It.

It’s now common to be just scraping by. A majority of Americans have less than $1,000 in savings and more than 70% of U.S. adults say they’d be in a difficult situation if their paycheck was delayed by a week, according to a survey of over 30,000 adults conducted by the American Payroll Association released in September.

A fifth of Americans say they have zero savings
By Gina Heeb

That doesn’t mean Americans aren’t trying to save, according to Jonathan Morduch, an economist at New York University and a coauthor of “The Financial Diaries,” a book detailing a study of the spending habits of 235 households over a year.

“The evidence we see is that households are often saving and then spending that down,” he said. “So, when a fifth of Americans say they don’t have any savings, it means they don’t have any long-term savings.”

That could be in part because Americans are struggling to pay off loans, with about 13% in the Bankrate survey citing debt as a reason they can’t save. From car loans to tuition, Americans have increasingly struggled to make payments on the country’s $4 trillion of consumer debt.

“How much does growing debt have to do with it?” Morduch said. “The answer is a lot.”

In coming months, a lack of savings could become more serious for Americans. Economists widely expect growth to slow over the next two years, while some even expect the US to enter a recession by 2020.

“It’s clear that not everyone has benefited from the economic expansion,” said Ryan Sweet, an economist at Moody’s Analytics, said of the Bankrate savings survey. “Also, it shows we are not ready for the next recession.”

Half of Americans are just one paycheck away from financial disaster
By Jacob Passy

Missing more than one paycheck is a one-way ticket to financial hardship for nearly half of the country’s workforce.

A new study from NORC at the University of Chicago, an independent social research institution, found that 51% of working adults in the United States would need to access savings to cover necessities if they missed more than one paycheck.

Certain communities were more prone to economic hardship in the event of missing a paycheck. Roughly two-thirds of households earning less than $30,000 annually and Hispanic households would be unable to cover basic living expenses after missing more than one paycheck, the researchers found.

“Even so, notable differences remain across race, ethnicity, education groups, and locations and many individuals still struggle to repay college loans, handle small emergency expenses, and manage retirement savings,” it added.

The findings were based on a survey of more than 1,000 adults. The researchers interviewed a nationally representative panel designed to be indicative of the U.S. population.

The survey provides a sobering look at Americans’ precarious finances even as the economy is improving, jobs are more plentiful and the stock market has — despite this week’s volatility — generally continued its upward trajectory this year.

Prosperity Now, a Washington, D.C.-based think tank focused on expanding economic opportunity for low-income Americans, said 40% of U.S. households lack a basic level of savings.

These “liquid asset poor” households don’t even have enough savings to live at the poverty level for three months if their income was interrupted.

The data is even worse for people of color, with more than half of households of color (57%) being liquid asset poor, it found.

“The 2019 Prosperity Now Scorecard shows that too many families are either struggling to make ends meet, or are just one emergency away from a financial disaster,” it said.

Americans see themselves in debt forever, even as they continue to borrow
By Martha C. White

Americans also are increasingly leery about adding on to their debt loads by buying a home and taking on a mortgage. Last month’s Fannie Mae Home Purchase Sentiment Index found that the number of Americans who think it is a good time to buy a home dropped by 12 percentage points in one month.

“Consumer attitudes regarding whether it’s a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a release.

Duncan attributed this more negative outlook to rising home prices that outstripped wage growth. Mortgage rates also rose last year about half a percentage point, on average, ending the year with an annual average of 4.54 percent, versus 3.99 percent in 2017.

Despite our misgivings, though, we continue to borrow, especially on cards: According to Federal Reserve data, Americans increased revolving debt by nearly 11 percent on an annualized basis in October. In the third quarter, total debt rose to $13.5 trillion in the third quarter of 2018, including a 1.6 percent increase in mortgages, 2.2 percent growth in auto loans and 2.6 percent added onto student loans.

Exclusive: The next big inequality crisis
By Kim Hart

The big picture: The labor market will become more polarized.

  1. On one end of the spectrum: a couple dozen successful cities with diversified economies and a lot of young, highly educated workers who are likely to be more resilient to workforce transitions.
  2. On the other end: “trailing” cities and rural regions with aging workforces, lower education levels and jobs that are highly susceptible to automation-related displacement. As a result, these places may see a decade of flat or even negative net job growth.

Between these extremes is a group of thriving niche cities, such as Sunbelt cities popular with retiring baby boomers and college towns.

  1. There’s also a broader “mixed middle” that is seeing modest economic growth. These places — including stable cities like St. Louis and unique economies like Lancaster, Pa. — aren’t necessarily thriving but are doing much better than distressed areas.

Making matters worse, workforce mobility is at historic lows, meaning far fewer people are moving to new counties or states.

  1. “And when they do move, they go to places very similar to where they came from,” said McKinsey partner Susan Lund.
  2. That means people from distressed areas aren’t finding their way into more prosperous ones, deepening their sense of being left behind and likely leading to greater social and political turmoil.

Homelessness jumps 12% in L.A. County and 16% in the city, leaving officials ‘stunned’
By Benjamin Oreskes and Doug Smith

“If we don’t change the fundamentals of housing affordability, this is going to be a very long road,” Peter Lynn, executive director of the Los Angeles Homeless Services Authority said in a briefing with The Times. “If we don’t get ahead of affordability, we’re going to be very hard pressed to get ahead of homelessness.”

As head of a city-county bureaucratic agency that was formed primarily as a conduit for homelessness funds and to conduct the annual count, Lynn said he can do little more than react to those root causes.

“We’re the safety net of last resort,” Lynn said. “I can’t fix poverty. I can’t fix housing affordability. I can’t fix the criminal justice system. I can’t fix the foster system. But the poverty rate here is crushing a lot of Angelenos, and the economy that is booming so well is leaving out a large number of people.”

The Californians forced to live in cars and RVs
By Vivian Ho

San Francisco counted 1,794 people living out of their vehicles in 2019, a 45% increase from the last homeless count in 2017. Across the bay in Alameda county, home of Oakland, officials counted 2,817 individuals living out of vehicles – more than double the 1,259 they counted in 2017.

‘We all suffer’: why San Francisco techies hate the city they transformed
By Julia Carrie Wong

Tech workers are increasingly vocal about their discontent with the city they fought so hard to conquer. In May, the median market rent for a one-bedroom apartment reached an all-time high of $3,700 a month, according to the rental site Zumper. Meanwhile, the city saw a 17% increase in its homeless population between 2017 and 2019, and residents complain of visible drug usage, fear of crime and dirty streets. Even Marc Benioff, CEO of Salesforce and a San Francisco native who has long urged comity between the techies and the city, has taken to calling his hometown a “train wreck”.

Is the Bay Area pushing people to the breaking point?
By Louis Hansen

About two-thirds of blue collar workers said they were likely to leave the region, far more than white collar professionals (43 percent) and service workers (44 percent). And more than half of the Latino residents and 7 in 10 black residents polled said they planned to move in the next few years.

Louise Compton, a mental health professional living in Clayton, said she and her husband expect to move after they retire. “I really like the area, of course. It’s really beautiful,” said Compton, 63. “Financially, it wouldn’t make a lot of sense to stay here.”

David Metz, president of FM3 Research, which conducted the poll, said locals felt a similar angst about Bay Area life during the dot-com era in the early 2000s, but this new poll suggests those fears are stronger today.

Wage growth is falling behind the rapid escalation of housing prices, and the middle class is slipping farther behind high-earners in the Bay Area. “That gap is yawning,” Metz said.

How San Francisco broke America’s heart
By Karen Heller

In a time of scarce consensus, everyone agrees that something has rotted in San Francisco.

Conservatives have long loathed it as the axis of liberal politics and political correctness, but now progressives are carping, too. They mourn it for what has been lost, a city that long welcomed everyone and has been altered by an earthquake of wealth. It is a place that people disparage constantly, especially residents.

Real estate is the nation’s costliest. Listings read like typos, a median $1.6 million for a single-family home and $3,700 monthly rent for a one-bedroom apartment.

In the shadow of such wealth, San Francisco grapples with a very visible homeless crisis of 7,500 residents, some shooting up in the parks and defecating on the sidewalks, which a 2018 United Nations report deemed “a violation of multiple human rights.” Last year, new Mayor London Breed assigned a five-person crew, dubbed the “poop patrol,” to clean streets and alleys of human feces.

The Bay Area is home to more billionaires per capita than anywhere on Earth, one out of every 11,600 residents, according to Vox. The entire region, as far as two hours away, has been affected by spiraling real estate prices. Venture capitalist John Doerr has claimed that the area’s economic growth is “the greatest legal accumulation of wealth in history.”

Hyper-gentrification is not specific to San Francisco. Shoe repairs, dry cleaners, gay bars and independent cafes are disappearing elsewhere. With all this wealth, even with the derided tech tax breaks, comes a gusher of revenue for the city and California, the world’s fifth-largest economy. While Benioff, among others, has derided fellow tech billionaires for lagging in philanthropy, there’s hope that more money will lead to an increase in giving. And the city remains a great generator of innovation that has changed our daily lives.

“Many things were broken. Taxi medallions were expensive, and you couldn’t find one. So Uber and Lyft were started because of the broken taxi situation. The hotels were broken. They were too expensive and not enough of them, so Airbnb was founded to fix the broken hotel situation,” says developer Eric Tao, who is building a hotel, among other projects.

“What I love is still here. That Gold Rush mentality that you can come here and do whatever you want,” says Tao, a resident of 30 years. “But this is what happens when unbridled capitalism collides with progressive ideals.”

Red and Blue Voters Live in Different Economies
By Thomas B. Edsall

The average of Democratic district’s gross domestic product grew from $35.7 billion in 2008 to $48.5 billion in 2018, an inflation-adjusted average increase of 35.9 percent. In Republican districts, G.D.P. fell from an average of $33.3 billion to $32.6 billion over the same decade, a 2.1 percent decline.

The same partisan split — gains for Democratic, losses for Republicans — took place in median household incomes. In Democratic districts, household income rose from an average of $54,000 to $61,000, a 13 percent increase. In Republican districts, household income fell from $55,000 to $53,000, a 3.6 percent decline.

Similar trends are reflected in education and productivity patterns.

The share of adults with college degrees grew from 28.4 to 35.6 percent in Democratic districts; from 26.6 to 27.8 percent in Republican districts. In Democratic districts, productivity per worker grew from $118,000 to $139,000; in Republican districts from $109,000 to $110,000.

The most important finding in the Muro-Whiton analysis is that even though Democrats in 2018 held fewer seats, 235, than they did in a decade earlier, 256, the share of the nation’s total gross national product created in Democratic districts grew from 60.6 to 63.6 percent.

“This increase is absolutely striking,” Muro wrote in an email. Democrats are winning in the “very powerful, dense, and prosperous economic areas that increasingly dominate the American economy.” In other words, Muro said, “Democrats control the places that are most central to American economic power and prosperity.”

I asked Ronald Inglehart, a political scientist at the University of Michigan who has written extensively about the rise of authoritarian right-wing movements worldwide, to comment on the Muro-Whiton paper.

Inglehart made the case that a “combination of economic insecurity and cultural insecurity has contributed to the Trump vote.”

He went on:

For most of the twentieth century, working class voters in developed countries mainly supported left-oriented parties, while middle class and upper class voters supported right-oriented economically-conservative parties.

In the post-World War II period, however, Inglehart noted, “generations emerged with a postmaterialist outlook, bringing declining emphasis on economic redistribution and growing emphasis on noneconomic issues.” It was “this, plus large immigration flows from low-income countries with different cultures and religions,” Inglehart wrote, that “stimulated a reaction in which much of the working class moved to the right, in defense of traditional values.”

Most critical, in Inglehart’s view, is that treating economic and social issues separately creates a false dichotomy:

The interaction between insecurity caused by rapid cultural change and economic insecurity drives the xenophobic reaction that brought Trump to power and is fueling similar reactions in other high-income countries. And the rise of the knowledge society is driving this polarization even farther.

In a June 2009 study published in the Journal of Experimental Social Psychology, “Threat causes liberals to think like conservatives,” Paul Nail, a professor of psychology at the University of Central Arkansas, and four colleagues found that

Liberals became more conservative following experimentally induced threats. In fact, the threats consistently caused liberals to become as conservative as conservatives chronically were.

Progressive Boomers Are Making It Impossible For Cities To Fix The Housing Crisis
By Michael Hobbes

More than 200 American cities now have median home values above $1 million. The construction of new dwellings has lagged behind the number of new households eight years in a row. Both congestion and climate change are prompting many cities to explore expanding their public transportation networks.

And yet, despite the urgency of the need and the expert consensus on solutions, individual efforts to increase density, improve transit or alleviate homelessness can spend years bogged down by local opposition. In March, neighborhood activists in Los Angeles threatened to sue the city over the installation of a 0.8-mile bike lane. Residents of Seattle’s wealthiest neighborhood demanded reserved seats on city buses and exemptions from road tolls in exchange for permitting a light-rail station. A crowd of more than 1,000 people booed a homeless man who got up to speak in support of a new shelter in Salt Lake City.

While the extent and effect of homeowner advocacy are difficult to measure, tensions over density and growth in urban areas have been rising for years. Nearly every major city in America has seen skyrocketing housing costs push renters out into the exurbs while enriching longer-term residents who bought real estate before the boom.

Meanwhile, job growth in urban centers has worsened traffic, filled up parking spots and launched debates over cycling and scooters. Galloping inequality and a fraying safety net have made homelessness and poverty more visible.

“We have mountains of data showing that cities need more housing and better transit and shelters for homeless people,” said Matthew Lewis, the director of communications for California YIMBY, a pro-housing nonprofit. And yet cities often give in to neighborhood groups opposing this much-needed infrastructure. The proposed homeless shelter booed by Salt Lake City residents in 2017 was canceled the next day. Schwartz’s lawsuit has succeeded in delaying the bus lane on 14th Street. The tantrum-throwing Seattleites eventually won the repeal of the tax they were shouting about.

“It’s frustrating,” Lewis said. “The people with the most privilege pack the meetings, shout over everybody else and get their way.”

These organized opposition groups could also, in the longer term, form a conservative coalition in cities and pull them to the right. This is already happening in cities with high rates of homelessness, where nominally progressive residents have formed interest groups that echo conservative talking points on personal responsibility and cracking down on drug users.

How Some of America’s Richest Towns Fight Affordable Housing
By Jacqueline Rabe Thomas

“The drug addicts are going to be here, believe me,” William Woermer, of Branford, testified in November 2017 about a proposal to demolish a 50-unit, run-down low-income housing project for seniors and replace it with 67 units for poor families. “Retirees, disabled, old people—I have no objection to renovate the whole place and make it nice for them. But don’t get too much of that riffraff in. There will be a lot of riffraff. Then we go onto, with a project like this, you need security guards in the area.” Woermer did not respond to an interview request.

In Greenwich, a public hearing in August 2017 about plans for an apartment complex next to the town’s commuter train station quickly devolved into residents complaining that low-income residents wouldn’t be able to afford to shop locally. “Nobody goes to our restaurants [if you’re] living in affordable housing,” Adam Tooter, a resident who had recently bought a $1.5 million home, said during the August hearing. Tooter did not respond to messages.

Gayle DePoli, another local resident, said: “Those people won’t be able to afford to live in Old Greenwich. They won’t be able to afford to shop in King’s [gourmet grocery store]. They won’t be able to afford to eat in any restaurant but Dunkin’ Donuts and maybe grab a slice at Arcadia Pizza. They won’t even be able to afford getting a scoop of ice cream at Darlene’s.”

During a recent interview, DePoli said she is opposed to the development because the area is already too congested and it is unfair to have poor people living in such high-cost areas.

“It’s not about not in my neighborhood. It’s: enough in my area. It’s overbuilt with condos,” said DePoli, an independent contractor for media companies in Manhattan. “Your heart’s got to bleed a little bit for people that need low-income housing, and then you are going to put them in the middle of something they can’t afford. They can afford the rent, but what else? They aren’t going to the restaurants down there. Everything they can afford [is a car or bus ride] away. It’s pretty sad.”

In March, the commissioners approved a scaled-back version of this proposed development that will have about half as many affordable apartments. The apartment will be located two miles from Greenwich Point, a beach restricted to residents only until the Connecticut Supreme Court in 2001 unanimously ordered the town to open it to everyone.

During a zoning commission meeting in rural Oxford in 2014 for a proposed affordable housing project, the town’s first selectman expressed concern there would not be enough parking for visitors on holidays, specifically pointing to one that originated in Mexico.

“I’m sure they could have their little parking spaces, but somebody throws a party, or it’s Cinco de Mayo or something else and pretty soon you can’t park there. Well, you also can’t bring an ambulance there and you can’t bring a fire engine there,” said First Selectman George Temple during a public hearing on the project, adding: “I’m not for putting slumlords into Oxford. You know, that’s perhaps an overstatement, and I am sure it is, but I am concerned about these units.”

Malloy has little patience for such concerns.

“Is safety genuinely 100 percent the fear or is there something else at play and the reason why these projects aren’t moving forward,” he said. “Let’s drill down for a second. Every one of those towns has housing on a street that doesn’t have a sidewalk. The difference being that those are single-family homes which are not affordable.”

All of this pushback is code for not allowing in poor people, says Hollister, the land-use attorney.

“Does anybody say we need to keep blacks and Hispanics out of Westport? No, but they talk about property values, safety and preserving open space—all the things that a town can do to prevent development that would bring up a more economically and racially diverse housing population,” Hollister said. “They don’t use the overt racial terms, but it’s absolutely clear to everybody in the room that’s what they’re talking about.”

Why wealth gap has grown despite record-long economic growth
By Christopher Rugaber

Fewer middle-class Americans own homes. Fewer are invested in the stock market. And home prices have risen far more in wealthier metro areas on the coasts than in more modestly priced cities and rural areas. The result is that affluent homeowners now sit on vast sums of home equity and capital gains, while tens of millions of ordinary households have been left mainly on the sidelines.

“The recovery has been very disappointing from the standpoint of inequality,” said Gabriel Zucman, an economist at the University of California, Berkeley, and a leading expert on income and wealth distribution.

Household wealth — the value of homes, stock portfolios and bank accounts, minus mortgage and credit card debt and other loans — jumped 80% in the past decade. More than one-third of that gain — $16.2 trillion in riches— went to the wealthiest 1%, figures from the Federal Reserve show. Just 25% of it went to middle-to-upper-middle class households. The bottom half of the population gained less than 2%.

Nearly 8 million Americans lost homes in the recession and its aftermath, and the sharp price gains since then have put ownership out of reach for many would-be buyers. For America’s middle class, the homeownership rate fell to about 60% in 2016 from roughly 70% in 2004, before the housing bubble, according to separate Fed data.

And the sharpest increases occurred in richer cities, like San Francisco, where prices have more than doubled in the past decade, or Phoenix, where they’ve surged 80%. By contrast, in lower-cost Charlotte, home prices have risen by only about a third. In Cleveland, by less than one-fifth.

Overall, in fact, middle-income households on average now have less home equity than they did before the recession, Fed data show .

Financial Crisis Yields a Generation of Renters
By Christina Rexrode

More adults in their 20s and 30s are living with their parents, according to census data, which could make them unwilling or unable to move cities for better jobs. The possibility of rent increases could make them less willing to spend, which some economists believe has already contributed to the economy’s slow postcrisis growth. Some young adults said their inability to buy a home had made them rethink having children, which could exacerbate the challenges created by America’s aging population.

“Lower homeownership for young adults means lower economic growth,” said Sam Khater, chief economist of mortgage-finance giant Freddie Mac. “That’s it in a nutshell.”

Homeownership rates for young people are near their lowest levels in more than three decades of record-keeping. About 40% of young adults, ages 25 to 34, were homeowners in 2018, according to federal data analyzed by Freddie Mac. That is down from about 48% in 2001, when Gen X-ers were young adults. Some economists calculate the decline is actually even steeper.

The crux of the problem: Home prices have outpaced wage gains. From roughly the end of 2000 to the end of 2017, median home prices rose 21% after adjusting for inflation, while median household income rose 2%, according to federal and industry data analyzed by Freddie Mac.

Some of the drop in homeownership is a matter of preference. The financial crisis made today’s young adults averse to debt and risk, lenders say. That means they might be willing to spend on daily luxuries but not to tie up the bulk of their money in a mortgage.

Millennials aren’t making up for lost home equity in other investments. The median net worth for young families plunged by nearly a third from 2001 to 2016 after adjusting for inflation, according to the Federal Reserve.

Even if millennials soon start buying homes en masse, as some banks and mortgage lenders predict, there are consequences to buying late. A recent report by the Urban Institute examined homeowners who turned 60 or 61 between 2003 and 2015. Those who bought their first home between ages 25 and 34 had median housing wealth of about $149,000. Those who waited until ages 35 to 44 had half that.

The effects of not buying, or buying late, should become more clear as millennials enter new stages of life. The median family net worth of homeowners is more than $230,000, according to the Fed, compared with $5,000 for renters.

Without home equity, people are less able to weather job losses or unexpected medical expenses, and less able to start small businesses. Baby boomers could find that when they want to downsize, there are fewer buyers because younger adults never built up equity in a first home. And decades from now, millennials might have to keep working well into retirement age.

This bunk bed is $1,200 a month, privacy not included
By Anna Bahney

Housing costs have become so expensive in some cities that people are renting bunk beds in a communal home for $1,200 a month. Not a bedroom. A bed.

PodShare is trying to help make up for the shortage of affordable housing in cities like San Francisco and Los Angeles by renting dormitory-style lodging and providing tenants a co-living experience.

A PodShare membership allows you to snag any of the 220 beds — or pods — at six locations across Los Angeles and one in San Francisco. There’s no deposit and no commitment. You get a bed, a locker, access to wifi and the chance to meet fellow “pod-estrians.” Each pod includes a shelf and a personal television. Food staples, like cereal and ramen, and toiletries like toothpaste and toilet paper, are also included.

“You have to be willing to share,” she says. “I think if you are not willing to share a small space with a stranger, PodShare is not for you.”

And there are some ground rules: Lights out at 10 pm, and no guests allowed.

“You can’t invite any friends over,” she says. “Sorry. Just make new ones here.”

US private equity moves into trailer parks
By Rana Foroohar

In America, trailer parks are a fragmented, “mom and pop” business, making them ripe targets for consolidation. They are also a shorthand for “poor” — most people who live in them are part of households earning less than $50,000 a year. Some 22m individuals live in trailer parks; roughly 1 in 15 Americans. Most own their trailers, which depreciate just like cars, but rent the land underneath them, since traditional mortgages on such properties aren’t available.

For investors, trailer parks are cash cows. They offer relatively strong and steady returns of 4 per cent or more — around double the average US real estate investment trust return, according to research data cited in a recent report on the topic by the Private Equity Stakeholder Project and two other non-profit consumer advocacy groups.

What’s more, they are a growth business. Shipments of new trailers have been rising steadily since 2009, thanks in part to the fact that an increasing number of people can’t afford stationary homes in many urban areas.

Part of that is down to monetary policy that has made housing the one area of the US economy that has seen any real inflation. Another part is a housing “recovery” that has been driven largely by cash-rich and institutional investors. Invitation Homes, which Blackstone founded and floated, has become the largest single family home landlord in the US, a development its chairman and chief executive Stephen Schwarzman says has been “good” for America.

The Future of the City Is Childless
By Derek Thompson

The richest 25 metro areas now account for more than half of the U.S. economy, according to an Axios analysis of government data. Rich cities particularly specialize in the new tech economy: Just five counties account for about half of the nation’s internet and web-portal jobs. Toiling to build this metropolitan wealth are young college graduates, many of them childless or without school-age children; that is, workers who are sufficiently unattached to family life that they can pour their lives into their careers.

It’s incoherent for Americans to talk about equality of opportunity in an economy where high-paying work is concentrated in places, such as San Francisco and Manhattan, where the median home value is at least six times the national average. Widespread economic growth will become ever more difficult in an age of winner-take-all cities.

But the economic consequences of the childless city go deeper. For example, the high cost of urban living may be discouraging some couples from having as many children as they’d prefer. That would mean American cities aren’t just expelling school-age children; they’re actively discouraging them from being born in the first place. In 2018, the U.S. fertility rate fell to its all-time low. Without sustained immigration, the U.S. could shrink for the first time since World World I. Underpopulation would be a profound economic problem—it’s associated with less dynamism and less productivity—and a fiscal catastrophe. The erosion of the working population would threaten one great reward of liberal societies, which is a tax-funded welfare and eldercare state to protect individuals from illness, age, and bad luck.

This threat sounds hypothetical, but low fertility rates are already roiling Western politics. In a 2017 essay, I explained how low fertility in the U.S. and Europe might be feeding into right-wing populism. The theory went like this: Low natural population growth encourages liberal countries to accept more immigrants. As growth stalls, native-born low- and middle-class workers become frightened of the incipience of foreign workers. To protect themselves, the white petit bourgeoisie turns to retrograde strongmen who promise to wall out foreigners.

Finally, childless cities exacerbate the rural-urban conundrum that has come to define American politics. With its rich blue cities and red rural plains, the U.S. has an economy biased toward high-density areas but an electoral system biased toward low-density areas. The discrepancy has the trappings of a constitutional crisis. The richest cities have become magnets for redundant masses of young rich liberals, making them electorally impotent. Hillary Clinton won Brooklyn by 461,000 votes, about seven times the margin by which she lost Pennsylvania, Michigan, and Wisconsin combined. Meanwhile, rural voters draw indignant power from their perceived economic weakness. Trump won with majority support in areas that produce just one-third of GDP by showering hate and vitriol on cities that attract immigration and capital.

America’s Hot New Job Is Being a Rich Person’s Servant
By Derek Thompson

In an age of persistently high inequality, work in high-cost metros catering to the whims of the wealthy—grooming them, stretching them, feeding them, driving them—has become one of the fastest-growing industries.

The MIT economist David Autor calls it “wealth work.”

Low-skill, low-pay, and disproportionately done by women, these jobs congregate near dense urban labor markets, multiplying in neighborhoods with soaring disposable income. Between 2010 and 2017, the number of manicurists and pedicurists doubled, while the number of fitness trainers and skincare specialists grew at least twice as fast as the overall labor force.

While there are reasons to be optimistic about this trend, there is also something queasy about the emergence of a new underclass of urban servants.

Let’s start with the bright side: As manufacturing has declined, service jobs have been a crucial source of work for those without a college degree. Immigrants fill many of these positions. According to Mark Muro, a senior fellow at the Brookings Institution, an estimated 20 percent of wealth work is done by people who are not citizens, compared with less than 10 percent of all U.S. labor. Foreign-born workers often move to large metros to find jobs before relocating to cheaper towns and suburbs to build a more permanent home. In this way, one can see wealth work as a bridge for foreign-born workers and less skilled Americans to get a foothold in the labor force.

But Muro cautioned in an interview that “we should also look to the tolerability of these jobs and the precariousness of these lives.”

Wealth work falls into two basic categories. First, full-time retail and service jobs at places like nail salons and spas. “You’re talking about people with $30,000 incomes that are often employed in high-wealth metro areas, or resort economies,” Muro said. Because they often cannot afford to live near their place of work, they endure long commutes from lower-cost neighborhoods. These arrangements aren’t merely time-consuming; they can also be exploitative. For example, New York City nail salons are notorious for flouting minimum-wage laws and other labor regulations, and massage parlors across Florida have served as fronts for human trafficking.

A second category is the “Uber for X” economy—that nebulous network of people contracted through online marketplaces for driving, delivery, and other on-demand services. Optimistically, these jobs offer autonomy for workers and convenience for consumers, many of whom aren’t wealthy. But the business models that keep these firms aloft rely on the strategic avoidance of laws like the Fair Labor Standards Act, which regulates minimum wage and overtime pay. These laborers often do the work of employees with the legal protections of contractors—which is to say, hardly any.

Gig economy platforms causing “unpaid labour” among workers in developing world
By Oxford Internet Institute

“The increasing global nature of the digital economy also brings into question the idea that additional barriers to migration will benefit workers in the UK, US and other developed nations” says Wood. “Freelancers in the developing world can now offer their labour at cheaper prices through gig economy platforms and compete directly with domestically-based workers via the internet, from anywhere in the world. It is the commodification of labour rather than migration which needs to be challenged.”

Professor Mark Graham, Professor of Internet Geography at the OII, added: “Workers from both rich and poor countries are now competing in the same border-spanning labour market. This is a situation that is creating downward pressure on wages and working conditions for workers in higher-wage countries.”

The AI gig economy is coming for you
By Karen Hao

MIT Technology Review: How do you define ghost work?

Mary Gray: It’s any work that could be—at least in part—sourced, scheduled, managed, shipped, and built through an application programming interface, the internet, and maybe a sprinkle of artificial intelligence. It arguably becomes ghost work when the proposition is that there are no humans involved in that loop, that it’s just a matter of software working its magic.

So the definition really hinges on how the end product or service is marketed.

Yeah. The work, or the output, itself is not inherently bad or good. It is specifically the work conditions that make it bad or good. Providing a service like those we describe in the book, captioning a translation or cleaning training data for training algorithms—that work is often written off as mundane drudgery. Think of content moderation right now and how it’s sensationalized as something horrific and terrible to do. From the perspective of the workers, it’s a job. And it’s a job that actually takes quite a bit of creativity and insight and judgment. The problem is that the work conditions don’t recognize how important the person is to that process. It diminishes their work and really creates work conditions that are unsustainable.

Companies have a long history of exploiting the labor of less privileged communities. You bring up the example of the fashion industry in your book. Is there something particularly distinct about ghost work that creates even more cause for concern?

In some ways, ghost work is indeed a continuation of the mistreatment of many working people. To me, the dramatic shift is we’ve never quite had industries so completely sell contract labor as automation—not just to make it difficult for a consumer to see the supply chain as we can in textiles, in food, and in agriculture, but also to say that there’s really not a person working here at all. I get chills just thinking: if that is taken to every sector that effectively sells information services, that’s a lot of people and their participation in the economy erased. That also makes it so difficult for workers to organize and to claw back power.

The gig is up: America’s booming economy is built on hollow promises
By Robert Reich

According to polls, about a quarter of American workers worry they won’t be earning enough in the future. That’s up from 15% a decade ago. Such fears are fueling working-class grievances in America, and presumably elsewhere around world where steady jobs are vanishing.

Gig work is also erasing 85 years of hard-won labor protections.

At the rate gig work is growing, future generations won’t have a minimum wage, unemployment insurance, worker’s compensation for injuries, employer-provided social security, overtime, family and medical leave, disability insurance, or the right to form unions and collectively bargain.

Why is this happening? Because it’s so profitable for corporations to use gig workers instead of full-time employees.

Gig workers are about 30% cheaper because companies pay them only when they need them, and don’t have to spend on the above-mentioned labor protections.

Increasingly, businesses need only a small pool of “talent” anchored in the enterprise – innovators and strategists responsible for the firm’s competitive strength.

Other workers are becoming fungible, sought only for reliability and low cost. So, in effect, economic risks are shifting to them.

It’s a great deal for companies like Uber and Google. They set workers’ rates, terms, and working conditions, while at the same time treating them like arms-length contractors.

But for many workers it amounts to wage theft.

If America still had a Department of Labor, it would be setting national standards to stop this.

Yet Trump’s Anti-Labor Department is heading in opposite direction. It recently proposed a rule making it easier for big corporations to outsource work to temp and staffing firms, and escape liability if those contracting firms violate the law, such as not paying workers for jobs completed.

The Gig Economy’s Unhappy Middle Class
By James Stanier

There have been numerous times in history in which workers were flocking to jobs with poor conditions. One notable period was the Industrial Revolution. Wages were low, and work was monotonous and unregulated. Poor conditions for workers led to backlash, protests, and attempts at unionization. However, the surplus of available work during the Industrial Revolution was continually filled by mass immigration to the U.K., ensuring that factory owners never had a staff shortage. This lessened the effect of labor unions since the effect of strikes and walkouts were minimal. Does that sound familiar? Perhaps we find ourselves in another transformational period for our economy and the nature of work.

Conditions during the Industrial Revolution gave birth to labor laws that underpin traditional employment today. The series of Factory Acts passed in the 1800s in the U.K. limited the minimum age of workers, the maximum hours per day they were legally allowed to work, and weekend working hours. Similar reform occurred in the United States, ultimately resulting in the Fair Labor Standards Act being passed in 1938, ensuring that workers had the right to a minimum wage, as well as overtime pay when working more than 40 hours a week.

In an article by Lee Fang for the Intercept, he argues that the race for Lyft, Uber, and their siblings to initial public offerings (IPOs) is partly driven by investors and founders looking to cash out at the highest possible valuation before labor laws catch up with them and potentially break the model that has given them their multibillion-dollar valuations. If Lyft really does lose $1.50 per ride, how much would it lose if it had to provide securities and benefits for its workers in line with those in permanent employment? In fact, when Uber filed for its IPO last week, its S-1 filing stated that “our business would be adversely affected if drivers were classified as employees instead of independent contractors.”

State by State, Gig Companies Maneuver to Shape Labor Rules
By Noam Scheiber

Uber, Lyft and Handy argue that their workers should be considered contractors because the workers decide when, where and how long they work. The companies say they are experimenting with ideas, like benefits, to improve workers’ economic security.

But skeptics argue that the companies exert control through ratings that elicit certain behavior, like treating passengers courteously, and by barring drivers who cancel too many rides. Uber and Lyft also determine pay rates for drivers, something independent contractors typically decide.

‘I’m really struggling’ — Facing pay cuts, some Uber and Lyft drivers prepare to strike
By Johana Bhuiyan

Sinakhone Keodara drives for Lyft using a vehicle he rented from the company. Keodara became homeless in September after pouring money into building his own app and took up driving for Lyft to get himself on his feet. He has resorted to paying $25 a night to stay at a local Korean spa that allows overnight guests. But his earnings on Lyft aren’t always enough to cover that fee in addition to the $240 weekly payment for the car and the cost of gas. On those nights, his car doubles as his home.

“I’m not the only one,” Keodara said.

“I’m really struggling,” he said. “But I feel like it’s time for us to humanize our struggle. Let people know what’s really going on with us as we’re driving for Lyft and Uber trying to survive and this is what is happening to us.”

Though Uber and Lyft have both made efforts to appease current drivers and recruit new ones, protests and strikes have so far done little to move wages. With both companies planning initial public offerings, the firms have even more reason to focus on cutting costs.

Another obstacle for the demonstrators is organizing an inherently disorganized workforce. Because Uber and Lyft drivers only interact with the company through apps, there’s no one place where they can spread the word and no picket line where they can rally for their cause. Some drivers and many passengers might not even realize a strike is underway on March 25.

Call Uber and Lyft drivers what they are: employees
By David Weil

Through algorithmic systems, Uber and Lyft produce a highly valued brand experience for consumers and investors based on their ability to control and direct drivers who are central to the service they provide. And that means under the three-part test established by the California Supreme Court and proposed in AB 5, currently being debated in Sacramento, those workers are employees, not contractors.

Uber and Lyft insist that they cannot survive if they no longer can treat their drivers as independent contractors. Such a change would mean that they would have to factor in the real costs of drivers into their business model. They would have to figure out how to comply with workplace laws like the minimum wage, provide certain baseline protections like unemployment insurance and workers compensation, and collect and pay state and federal payroll taxes. In other words, they would have to do what millions of other businesses do every day.

We all value companies that innovate, build and grow. But there’s no reason that new businesses can’t be built on a system of rights and protections — like fair wages, rules against discrimination and safeguards against work-related injury — that we also value as a society.

Silicon Valley’s grand experiment in jobs means employees are the guinea pigs
By Katherine Boyle

Meanwhile, it’s somewhat unclear how many people the gig economy really serves. Government agencies can’t even agree on “who” a gig worker is: The Bureau of Labor Statistics recently declared a slight decline over 12 years in gig economy workers to 10 percent of the workforce, while the Federal Reserve says contractors compose closer to 30 percent, the difference being whether gig work is primary or supplemental income, which again, isn’t easy to measure. Even Alan Krueger and Lawrence Katz, the two economists who published a widely cited study in 2016 on the gig economy, recently walked back their conclusions that the gig economy was growing rapidly.

Growing or not, it’s clear though that politicians are not keen to fund the social costs of these new business models; more likely, they will force tech companies to unravel the problems themselves. In December, New York officials enacted a guaranteed minimum wage for ride-hailing drivers of $17.22 per hour. Neither the UBERians nor the UBIans applauded. That may be because it’s increasingly clear what most people want: a traditional relationship with their employer. Silicon Valley would be wise to heed the signs — as well as the literal signage — now popping up on streets. Last year, when striking workers picketed outside many Marriott hotels in San Francisco, they held up signs that said, “One job should be enough.”

David Autor, the academic voice of the American worker
By The Economist

Some tasks that are trivially easy for machines (like multiplying 15-digit numbers) are very difficult for humans. Others that humans handle effortlessly, like manoeuvering around furniture while tidying an office, are incredibly difficult for machines. The “task approach” to labour markets that emerged from this work has become a critical tool in analysing the ways in which all sorts of disruptive events affect workers.

The connection he drew between the extent to which tasks were routine or not, and the ease with which they could be automated away, proved important as policymakers began to grow worried about a “hollowing out” of the workforce. The production and office work done by respectably paid, “middle-skill” employees was disappearing; data entry and repetitive production tasks could be given to computers or cheap foreign labourers in a way that neither low-skill janitorial tasks, say, nor well-compensated professional work could be.

What’s more, by the early 2010s, it became clear that the tools Mr Autor had developed could be used to assess the effects of another big source of disruption: expanded trade with China. Along with Mr Hanson and Mr Dorn, he pointed out in a paper published in 2013 that routine sorts of work might also be susceptible to competition from abroad, either through offshoring or trade with low-wage countries. Western firms might not wish to send abroad complex jobs like design, but production work looks much the same whether it is done in Chicago or Shenzhen.

Where the economic affects of automation tend to be spread broadly across the whole of an economy, however, displacement of routine work by trade tends to have a more focused geographic impact. In subsequent work, the authors showed how it was these concentrated costs of trade with China which made the China shock so powerful. Communities hit hard by the shock could not recover easily. Trade left long-run economic, social and political scars.

The researchers knew their work would be explosive. They were themselves surprised by the results, and checked and rechecked their findings in preparation for the storm of criticism they expected to face. The profession was indeed sceptical at first. Mr Autor chuckles that economists’ initial reaction was to insist the work was wrong, then to shift to allowing that it was right but meaningless, before eventually grappling with the work’s implications.

Tech Is Splitting the U.S. Work Force in Two
By Eduardo Porter

Automation is splitting the American labor force into two worlds. There is a small island of highly educated professionals making good wages at corporations like Intel or Boeing, which reap hundreds of thousands of dollars in profit per employee. That island sits in the middle of a sea of less educated workers who are stuck at businesses like hotels, restaurants and nursing homes that generate much smaller profits per employee and stay viable primarily by keeping wages low.

Even economists are reassessing their belief that technological progress lifts all boats, and are beginning to worry about the new configuration of work.

Recent research has concluded that robots are reducing the demand for workers and weighing down wages, which have been rising more slowly than the productivity of workers. Some economists have concluded that the use of robots explains the decline in the share of national income going into workers’ paychecks over the last three decades.

Because it pushes workers to the less productive parts of the economy, automation also helps explain one of the economy’s thorniest paradoxes: Despite the spread of information technology, robots and artificial intelligence breakthroughs, overall productivity growth remains sluggish.

“The view that we should not worry about any of these things and follow technology to wherever it will go is insane,” said Daron Acemoglu, an economist at the Massachusetts Institute of Technology.

In a new study, David Autor of the Massachusetts Institute of Technology and Anna Salomons of Utrecht University found that over the last 40 years, jobs have fallen in every single industry that introduced technologies to enhance productivity.

The only reason employment didn’t fall across the entire economy is that other industries, with less productivity growth, picked up the slack. “The challenge is not the quantity of jobs,” they wrote. “The challenge is the quality of jobs available to low- and medium-skill workers.”

The growing awareness of robots’ impact on the working class raises anew a very old question: Could automation go too far? Mr. Acemoglu and Pascual Restrepo of Boston University argue that businesses are not even reaping large rewards for the money they are spending to replace their workers with machines.

But the cost of automation to workers and society could be substantial. “It may well be that,” Mr. Summers said, “some categories of labor will not be able to earn a subsistence income.” And this could exacerbate social ills, from workers dropping out of jobs and getting hooked on painkillers, to mass incarceration and families falling apart.

Automation perpetuates the red-blue divide
By Mark Muro, Jacob Whiton and Robert Maxim

To be sure, as Jed Kolko has noted, it’s nearly impossible to fully disentangle automation from other economic and demographic factors, because “demographic characteristics and economic conditions are themselves related.” But even so, it is clear that to the extent that places experiencing high automation threats are experiencing greater economic stress, that stress is a factor in their voting behavior.

Which suggests two takeaways. One is that automation, and the worker anxieties associated with it, appears to be a subtle, real, and far-reaching factor in voting behavior that may be triggering even more anxiety in red America than blue America, with more stress to come. Such trends underscore the importance of problem-solving to help mitigate the transitions ahead and suggest that it would behoove the presidential candidates to begin describing their responses.

The second takeaway is that while the two Americas are experiencing somewhat different trends, automation is impacting both realms, with large pools of lower-skilled production, transportation, service, and clerical workers at risk across red-blue lines. That means there may be room and reason for cross-party cooperation on efforts to facilitate smoother transitions and reducing hardships for displaced workers and communities affected by automation.

The Second Machine Age Hits the Tipping Point
By Morgan Stanley Research

The world’s economy is in the early stages of a Second Machine Age—sometimes called a “Fourth Industrial Revolution”—an explosion of new digital technology poised to transform manufacturing and industry as dramatically as the steam engine or telegraph.

“The current pace of technological change is breathtaking,” says Ben Uglow, Morgan Stanley’s head of research for the Capital Goods Industry. “This is not a vague concept that may happen one day in a hypothetical world. It is very much here and now, as real dollars are being committed, with tangible benefits in efficiency and productivity.”

In their newest report, Investing in the Second Machine Age—Picking the Winners, Uglow and his research colleagues take an in-depth look at the six most relevant technologies—artificial intelligence software, autonomous vehicles, Internet of Things (IoT) hardware, industrial software, robotics and semiconductors—and identify companies best positioned to capitalize on this theme.

Together, the market for these data-era technologies is poised for compound annual growth of 17%, growing from $738 billion in 2018 to $2.2 trillion by 2025. Within these technologies, the teams estimated the highest growth could come from AI software (42%), autonomous vehicles (40%), and IoT hardware (21%).

Consider a few applications that have been put in place in just the past year: One major tech company used its machine-learning algorithm to increase wind energy output by 20%; an iron-ore mining operation cut costs and boosted productivity with autonomous trucks; an automaker began production in a fully digitalized factory that, among other advances, uses some 2,000 connected robots to install parts.

“Within the next decade, it is probable that the majority of industrial facilities will deploy some form of artificial intelligence,” says Uglow. “Manufacturing is set to become highly customized, with a ‘lot size of one’ being the norm. Consumers will specify exactly what they want on virtually any product—cars, shoes, sports equipment, dental implants, and even body parts.”

The rate of adoption is now escalating. “Penetration of 20% tends to be the level at which growth accelerates, investors take notice, and stock outperformance becomes meaningful, followed by more muted growth and impact after 50% penetration, when a technology enters maturity phase,” says Huberty.

In fact, strong parallels exist between data-era industrial technologies and mobile internet stocks in 2010, following an initial phase of adoption. Between 2010 and the cycle’s peak in November, 2017, mobile internet winners cumulatively returned 350% vs. 80% for the benchmark S&P 500.

As Walmart turns to robots, it’s the human workers who feel like machines
By Drew Harwell

Over the past 50 years, Walmart has recast the fabric of American life, jostling mom-and-pop shops, reshaping small towns and transforming how millions work and shop.

But the superstore titan’s latest gamble is an entirely new kind of disruption — the biggest real-world experiment yet for how workers, customers and robots will interact.

The nation’s largest private employer has unleashed an army of robots into more than 1,500 of its jumbo stores, with thousands of automated shelf-scanners, box-unloaders, artificial-intelligence cameras and other machines doing the jobs once left to human employees.

The robots also don’t complain, ask for raises, or require vacations and bathroom breaks. During a company earnings call in August, Walmart president and chief executive Doug McMillon said the machines were an important part of how the company, which has annual revenue of $500 billion, could trim waste and “operate with discipline.”

Michael Webb, an economist at Stanford University who researches labor markets and AI, said it is no coincidence that the machines are first arriving en masse in big-box stores.

Those companies depend on volume — jumbo stores, lots of sales — so the burden of investing in robots can more quickly balance out. Higher-priced stores, he said, are also less likely to shift to robots. “The human service is this thing you’ve got to pay extra for now,” he said.

The struggling iconic American industry you’re not thinking of
By Catherine Rampell

Retail is larger than any of the sectors Trump usually dotes on, the ones he bestows with bailouts and subsidies and affectionate tweets. “Retail salesperson” is the single biggest occupation in the country. Total industry employment eclipses that of manufacturing by some 3 million jobs, according to the Bureau of Labor Statistics.

In fact, more people work in department stores alone than in the entire coal mining industry — by a factor of 20.

Lately, retail has been suffering. From January through mid-June, U.S. companies announced plans to close some 7,000 brick-and-mortar stores, more closures than in all of 2018, according to Coresight Research. This despite the fact that the economy has posted strong growth and consumers have more money in their pockets thanks to the recent tax cuts.

Many dark or soon-to-darken storefronts are household names, such as Payless ShoeSource, Gap, J.C. Penney, Family Dollar. They have struggled to compete as customers spend more of their money online (and on other purchases, such as restaurant meals).

Malls were also vastly overbuilt, growing more than twice as fast as the U.S. population from 1970 to 2015. So even without Amazon and other e-commerce, a correction was probably coming eventually, if not necessarily the retail-pocalypse we see today. (Amazon’s founder, Jeff Bezos, owns The Post.)

There are lots of parallels with Trump’s pet industries. Retail, for instance, is dominated by demographics at the heart of Trump’s political base: financially insecure non-college-educated whites displaced by technological change. As in manufacturing, those retail employees lucky enough to have work often log long shifts, on their feet, with little control over their hours.

Yet, for some reason, the decline of retail — and the 160,000 industry jobs eliminated since January 2017 — hasn’t inspired nearly the same level of sympathy as have similar challenges in other industries.

As Seattle’s new hotels roll out automation to serve guests, workers worry
By Melissa Hellmann

Despite the contract requirement that Marriott negotiate with the union before implementing new technology, Huang said that his coworkers are still concerned. “The company, whatever they do, they don’t really care about the worker and the union,” Huang said. “I don’t really trust the company.”

At the Westin Seattle, the digital check-in process is the most recent technological advancement that has hotel workers fretting. Currently, guests are assigned a room by hotel staff, but visitors could soon check in with a mobile app that would allow them to bypass the front desk and go straight to their rooms.

UNITE HERE Local 8 representatives will soon enter the bargaining phase on the digital check-in process, Van Rossum said.

Although the Westin Seattle is not experimenting with room-service machines, Van Rossum predicts that it’s only a matter of time before automated devices become more commonplace.

“This whole generation of room-service robots is likely to be an incentive for hotels not to pay an hourly employee, but to employ a robot,” Van Rossum said. “A hotel can rent a robot for much less than the cost of paying an employee health care and wages.”

Will a robot really take your job?
By The Economist

The finding—that 47% of American jobs are at high risk of automation by the mid-2030s—comes from a paper published in 2013 by two Oxford academics, Carl Benedikt Frey and Michael Osborne. It has since been cited in more than 4,000 other academic articles. Meet Mr Frey, a Swedish economic historian, in person, however, and he seems no prophet of doom. Indeed, Mr 47% turns out not to be gloomy at all. “Lots of people actually think I believe that half of all jobs are going to be automated in a decade or two,” he says, leaving half the population unemployed. That is, Mr Frey stresses, “definitely not what the paper says”.

Building on his original paper, he revisits the history of industrialisation and asks what lessons it provides today.

One is that new technologies take time to produce productivity and wage gains. It was several decades before industrialisation led to significantly higher wages for British workers in the early 1800s, a delay known as Engels’s pause, after the theorist of communism who observed it. Another lesson is that, even though it eventually increases the overall size of the economic pie, automation is also likely to boost inequality in the short run, by pushing some people into lower-paid jobs. Mr Frey is concerned that automation will leave many people worse off in the short term, leading to unrest and opposition, which could in turn slow the pace of automation and productivity growth. Everyone would then be worse off in the long run. This is the titular “technology trap”. Whereas many people assume he worries about a world with too many robots, Mr Frey is in reality more concerned about a future with too few.

To avoid the trap, Mr Frey argues, today’s policymakers should take advantage of the fact that this time around it is possible to see how things might play out, and manage the transition accordingly. In particular that means making greater use of wage insurance, to compensate workers who have to move to jobs with a lower salary; reforming education systems to boost early-childhood education and support retraining and lifelong learning; extending income tax credit to improve incentives to work and reduce inequality; removing regulations that hinder job-switching; providing “mobility vouchers” to subsidise relocation as the distribution of jobs changes; and changing zoning rules to allow more people to live in the cities where jobs are being created.

At Work, Expertise Is Falling Out of Favor
By Jerry Useem

Ten years from now, the Deloitte consultant Erica Volini projects, 70 to 90 percent of workers will be in so-called hybrid jobs or superjobs—that is, positions combining tasks once performed by people in two or more traditional roles. Visit SkyWest Airlines’ careers site, and you’ll see that the company is looking for “cross utilized agents” capable of ticketing, marshaling and servicing aircraft, and handling luggage. At the online shoe company Zappos, which famously did away with job titles a few years back, employees are encouraged to take on multiple roles by joining “circles” that tackle different responsibilities. If you ask Laszlo Bock, Google’s former culture chief and now the head of the HR start-up Humu, what he looks for in a new hire, he’ll tell you “mental agility.” “What companies are looking for,” says Mary Jo King, the president of the National Résumé Writers’ Association, “is someone who can be all, do all, and pivot on a dime to solve any problem.”

The phenomenon is sped by automation, which usurps routine tasks, leaving employees to handle the nonroutine and unanticipated—and the continued advance of which throws the skills employers value into flux. It would be supremely ironic if the advance of the knowledge economy had the effect of devaluing knowledge. But that’s what I heard, recurrently, while reporting this story. “The half-life of skills is getting shorter,” I was told by IBM’s Joanna Daly, who oversaw an apprenticeship program that trained tech employees for new jobs within the company in as few as six months. By 2020, a 2016 World Economic Forum report predicted, “more than one-third of the desired core skill sets of most occupations” will not have been seen as crucial to the job when the report was published.

Sports, musicianship, teaching—these are fields where the rules don’t change much over time. In tennis, it pays to put in the hours mastering your serve, because you know you’ll always be serving to a box 21 feet long and 13.5 feet wide, over a net strung 3.5 feet high. In medicine and law, the rules might change—but specialization will probably remain key. A spinal surgery will not be performed by a brilliant dermatologist. A criminal-defense team will not be headed by a tax attorney. And in tech, the demand for specialized skills will continue to reward expertise handsomely.

But in many fields, the path to success isn’t so clear. The rules keep changing, which means that highly focused practice has a much lower return. Zachary Hambrick and his co-authors showed as much in a 2014 meta-analysis. In uncertain environments, Hambrick told me, “specialization is no longer the coin of the realm.”

So where does this leave us?

Even as I reported this story, I found myself the target of career suggestions. “You need to be a video guy, an audio guy!” the Silicon Valley talent adviser John Sullivan told me, alluding to the demise of print media. I found it fascinating and slightly odd that Sullivan would so readily imagine that I would abandon writing—my life’s pursuit since high school—for a new line of work. More than that, though, I found the prospect of starting over just plain exhausting. Building a professional identity takes a lot of resources—money, time, energy. After it’s built, we expect to reap gains from our investment, and—let’s be honest—even do a bit of coasting. Are we equipped to continually return to apprentice mode? Will this burn us out? And will the collective work that results be as good as what came before?

Xed Out: Why Generation X Is Leaving Boston’s Workforce
By Kris Frieswick

Gen X is increasingly the “sandwich generation,” responsible for taking care of both our parents and our children. We need health insurance. We own homes. Financially, we don’t have much runway to launch a business. For this group of Gen Xers, the Prince Charles effect has another outcome: “presenteeism,” in which we show up, go through the motions, and wait for…we know not what. Presenteeism and disengaged employees are a death sentence for companies, and, according to one Gallup poll, actively disengaged employees cost the U.S. between $450 billion and $550 billion in lost productivity each year.

Rising Profits, Rising Injuries: The Safety Crisis at Koch Industries’ Georgia-Pacific
By Christopher Leonard

When Travis McKinney joined the Georgia-Pacific warehouse more than a decade ago, about 135 people worked there. Now there are about 60 employees, he said. And Koch has notified workers that the company plans to eliminate 20 more jobs this year as it tries to automate more of the warehouse. Overall, the company cut the number of unionized workers in half, and it reduced the total workforce by 36% to roughly 35,000. The workers who are still there are doing more work, during longer hours, with fewer days off than ever before, McKinney said.

“They really preach the gospel that we want everyone to be safe, but in the end, it’s all about productivity,” McKinney said.

Rather than slow down the factories or increase the workforce, internal company memos show that executives focused on changing employees’ “hearts and minds” and getting them to more tightly embrace the teachings of MBM.

At a Georgia-Pacific warehouse complex in Portland, Oregon, Koch boosted productivity by using a software program called the Labor Management System, which precisely directed the movements of forklift drivers during their shifts. When drivers like McKinney reported to work, they logged onto the system and were told which bay to drive to and which pallet to pick up. The LMS directed their movement for the rest of this shift. It also recorded how quickly they delivered each load, comparing their performance against internal benchmarks.

Koch used the data to push employees to work harder. For years, Koch ranked each driver into three tiers: “green” for the top performers, “yellow” for the middle and “red” for the laggards. The results were publicly posted. If a driver ranked in the red zone for too long, he or she could be fired. Drivers sped up to keep their rankings high, according to multiple employees interviewed over several years. They were also expected to adhere to Koch’s detailed safety policy.

The LMS system and Koch’s 10,000% compliance doctrine were contradictory forces that guided McKinney’s work. He hurried to keep pace with the LMS, and he tried to remember every workplace safety rule along the way.

“People aren’t wanting to slow down. They want to stay productive,” McKinney said. “When you work someone like that, they’re going to be tired and make mistakes.”

9 out of 10 Americans would take a pay cut for more meaningful work
By Stephen Johnson

“…employees who find work meaningful experience significantly greater job satisfaction, which is known to correlate with increased productivity,” they wrote. “Based on established job satisfaction-to-productivity ratios, we estimate that highly meaningful work will generate an additional $9,078 per worker, per year.”

The report also showed that employees who work meaningful jobs also seem to work harder and stay with organizations longer:

  1. Employees with “highly meaningful” jobs were 69% less likely to plan on quitting their jobs within the next 6 months, and also had longer job tenures.
  2. Employees with very meaningful work spend one additional hour per week working, and take two fewer days of paid leave per year.

The authors suggested that employers can cultivate more meaning by strengthening social networks in the workplace, making every worker a knowledge worker, and connecting workers who find their jobs meaningful to other employees.

“Meaningful work only has upsides,” the authors wrote. “Employees work harder and quit less, and they gravitate to supportive work cultures that help them grow. The value of meaning to both individual employees, and to organizations, stands waiting, ready to be captured by organizations prepared to act.”

Why the future of well-being isn’t about money
By Justin Dupuis

“Feasible changes in GDP are very unlikely to play an important role in changes in life self-evaluations within 30 years,” says coauthor Eric Galbraith, of the Institute of Environmental Science and Technology at the Universitat Autònoma de Barcelona (UAB) in Spain.

“Our results show that the greatest benefits to be potentially made over the next decades, as well as the most dangerous pitfalls to be avoided, lie in the domain of social fabric,” the researchers conclude.

The Economist Who Would Fix the American Dream
By Gareth Cook

For all he’s learned about where opportunity resides in America, Chetty knows surprisingly little about what makes one place better than another. He and Hendren have gathered a range of social-science data sets and looked for correlations to the atlas. The high-opportunity places, they’ve found, tend to share five qualities: good schools, greater levels of social cohesion, many two-parent families, low levels of income inequality, and little residential segregation, by either class or race. The list is suggestive, but hard to interpret.

For example, the strongest correlation is the number of intact families. The explanation seems obvious: A second parent usually means higher family income as well as more stability, a broader social network, additional emotional support, and many other intangibles. Yet children’s upward mobility was strongly correlated with two-parent families only in the neighborhood, not necessarily in their home. There are so many things the data might be trying to say. Maybe fathers in a neighborhood serve as mentors and role models? Or maybe there is no causal connection at all. Perhaps, for example, places with strong church communities help kids while also fostering strong marriages. The same kinds of questions flow from every correlation; each one may mean many things. What is cause, what is effect, and what are we missing? Chetty’s microscope has revealed a new world, but not what animates it—or how to change it.

Chetty has found that opportunity does not correlate with many traditional economic measures, such as employment or wage growth. In the search for opportunity’s cause, he is instead focusing on an idea borrowed from sociology: social capital. The term refers broadly to the set of connections that ease a person’s way through the world, providing support and inspiration and opening doors.

Economics has long played the role of sociology’s annoying older brother—conventionally accomplished and wholeheartedly confident, unaware of what he doesn’t know, while still commanding everyone’s attention. Chetty, though, is part of a younger generation of scholars who have embraced a style of quantitative social science that crosses old disciplinary lines. There are strong hints in his research that social capital and mobility are intimately connected; even a crude measure of social capital, such as the number of bowling alleys in a neighborhood, seems to track with opportunity. His data also suggest that who you know growing up can have lasting effects. A paper on patents he co-authored found that young women were more likely to become inventors if they’d moved as children to places where many female inventors lived. (The number of male inventors had little effect.) Even which fields inventors worked in was heavily influenced by what was being invented around them as children. Those who grew up in the Bay Area had some of the highest rates of patenting in computers and related fields, while those who spent their childhood in Minneapolis, home of many medical-device manufacturers, tended to invent drugs and medical devices. … Chetty is currently working with data from Facebook and other social-media platforms to quantify the links between opportunity and our social networks.

Sociologists embrace many ways of understanding the world. They shadow people and move into communities, wondering what they might find out. They collect data and do quantitative analysis and read economics papers, but their work is also informed by psychology and cultural studies. “When you are released from the harsh demands of experiment, you are allowed to make new discoveries and think more freely about what is going on,” says David Grusky, a Stanford sociology professor who collaborates with Chetty. I asked Princeton’s Edin what she thought would end up being the one thing that best explains the peaks and valleys of American opportunity. She said her best guess is “some kind of social glue”—the ties that bind people, fostered by well-functioning institutions, whether they are mosques or neighborhood soccer leagues.

Where civic life crumbled, Donald Trump arose
By Andy Smarick

It’s no secret that civil society — the local, voluntary associations that knit together America’s communities — has been in retreat for decades. Numerous authors, including Robert Nisbet, Peter Berger, Richard John Neuhaus and Robert Putnam, have charted this decline. Now Timothy P. Carney’s excellent new book, “Alienated America,” shows what the disintegration of social connectedness has done to today’s most vulnerable individuals and communities. Carney also sheds light on contemporary politics by detailing how social isolation helped give rise to Donald Trump.

Carney, a conservative journalist and commentator, argues that Trump’s core supporters, especially those who backed him in the early primaries, have much to teach us about the role of community in politics. His analysis shows that Trump’s backing came disproportionately from places where the institutions of civic life had eroded badly. The disappearance of constructive, stabilizing connections in these locales has untethered individuals, making them susceptible to Trump’s apocalyptic “the American Dream is dead” refrain and demagogic “I alone can fix it” promise. By contrast, Carney observes, other reliably conservative areas — rich with civic life — were immune to Trump’s message.

While American conservatism generally favors free-market economics and limited government, it is also animated by its devotion to a constellation of local organizations such as community-based charities, parent-teacher groups and fraternal organizations that sit between individuals and the giant entities of public life. Conservatives believe that these diverse associations help protect our many faiths and cultures, possess the wisdom of prior generations, and protect us from the overbearing influence of the federal government. When these groups thrive, Carney argues, they contribute mightily to our nation’s character and success.

Carney, the commentary editor at the Washington Examiner and a visiting fellow at the American Enterprise Institute (where I was previously employed), maintains an even tone as he sorts through the forces at work within America’s communities. He is charitable with both those out of work and those undermining, intentionally or not, the civil-society institutions he prizes. He recognizes the faults of capitalism, big business and the gig economy as well as those of big government. He also concedes the potential risks of local, voluntary organizations, including their insularity. “The factors that create cohesiveness can sometimes lead to a hostility and prejudice toward the others, especially if the others are sufficiently different,” he writes.

Capitalism and democracy: what if we have it backwards?
By Sheri Berman

Knowledge-based firms are highly clustered in urban areas, where similar firms and highly-educated workers are located, and have highly segregated workplaces that allow for little mixing between middle and working classes. Low-skilled workers have meanwhile become increasingly concentrated in low-productivity service-sector occupations. Thus advanced capitalism produces a new middle class, whose life experiences and interests differ greatly from those of the old middle and working classes. And because the new middle classes are highly concentrated in particular urban areas, new class conflicts have led to new geographical ones (big cities versus peripheries). The political consequences of this are profound.

Their embeddedness in cosmopolitan cities, extensive education, diverse social contacts and so on make the new middle class more socially progressive than the old middle and lower classes. Again, channelling Marx, Iversen and Soskice insist that ‘social progressives and populists are rooted in different parts of the economy’; it is incorrect, therefore, ‘to detach their values from underlying economic reality’. Iversen and Soskice thus reject the dominant tendency in analyses of US politics—increasingly prevalent in analyses of Europe as well—to focus on social attitudes or a ‘cultural backlash’ when trying to explain contemporary voting patterns or political trends, since such analyses miss the deeper structural causes of contemporary problems.

But if their position in the knowledge economy makes the members of the new middle class socially progressive, it can also make them less economically progressive, since neither their interests nor life experiences overlap greatly with those of the old middle and lower classes. Herein lies the primary reason why the rising inequality accompanying the transformation of capitalism has not been effectively countered by increased redistribution: the old middle class is hostile to the poor and the rising middle class is uninterested in the plight of the declining middle class—it is the workings of the democratic system rather than the political power of capital that is to blame.

Key here is social mobility. Mobility ties the interests of members of different classes together—those at the lower end can expect that they or their children will move up and those at the higher end can’t be sure that they or the children won’t move down. In a high-mobility world the ‘interest gap’ between classes diminishes and messages that ‘we are all in the same boat’ or of ‘class cooperation’ make more sense. In contrast, when social mobility is low, the old middle and lower classes become susceptible to populists who ‘attack symbols of the new economy, an economy they and they children feel’ they have been permanently left out of.

Populism thrives, in other words, where democracy does not provide opportunities for all. Iversen and Soskice present very interesting data on the difference between populist attitudes and populist voting and show that ‘where barriers to good education and upskilling are low populist values are much less prevalent’. (They also argue that there is a very strong tendency for the low-skilled to vote populist, even after controlling for values.) And broadening opportunity means first and foremost expanding access to and improving the quality of education, since education determines whether ‘losers’ and their children have the opportunity to become ‘winners’ through the acquisition of new skills.

5 Seriously Stunning Facts About Higher Education in America
By Rob Henderson

1. 4 out of 10 college students fail to complete their degrees. According to research from the National Student Clearinghouse Research Center, only 58 percent of students manage to complete their degree programs within 6 years. Bill Gates has called this figure “tragic.” He has written, “Based on the latest college completion trends, only about half of all those students will leave college with a diploma. The rest—most of them low-income, first-generation, and minority students—will not finish a degree. They’ll drop out.” Sadly, community college figures are even more dismal. A recent study in California found that 70 percent of community college students fail out.

An astounding number of American college students are going hungry or homeless
By Hillary Hoffower

An astounding number of American college students are going hungry or homeless, reported James McWilliams for Pacific Standard, citing a new study by the non-profit Hope Center for College, Community, and Justice. It conducted surveys with 167,000-plus students across 101 community colleges and 68 four-year colleges and universities.

Roughly 50% of two-year college students and 44% of four-year college students in the survey worried their food would run out before they could afford to buy more. Of each group, 30% didn’t eat when they were hungry because they couldn’t afford it.

Housing was also an issue among respondents — 18% of two-year college students and 14% of four-year college students said they were homeless. Some respondents reported staying with a relative or friend, or couch surfing, while others said they lived outdoors, at a shelter, or in a camper.

The rise of universities’ diversity bureaucrats
By The Economist

Universities say that a boom in regulations under Barack Obama’s administration increased the need to hire more bureaucrats of every kind. But one study found that for every dollar spent to comply with government rules, voluntary spending on bureaucracy totalled $2 at public universities and $3 at private ones. Robert Martin of Centre College in Kentucky, a co-author of the study, says the real reason for the growth in spending is that administrators want to hire subordinates, thereby boosting their own authority and often pay, rather than faculty, over whom they have less power. Bureaucrats outnumber faculty 2:1 at public universities and 2.5:1 at private colleges, double the ratio in the 1970s. Diversity is the top justification for these hires, says Richard Vedder of the Centre for College Affordability and Productivity, a think-tank. Of more than 1,000 bureaucrats at Ohio University in Athens, 400 are superfluous, he reckons. If let go, tuition fees could be cut by a fifth.

Stop Feeding College Bureaucratic Bloat
By Philip Hamburger

Administrators serve many valuable functions. They can help students and save time for faculty. But their growth in numbers has coincided with some disturbing trends. Governance of academic institutions traditionally rested with the faculty, especially full-time tenured faculty. But the relative decline of faculty has shifted the balance of power toward administrators, who increasingly control academic policy.

It’s no accident that as they have hired more administrators, these institutions have veered toward indoctrination and censorious intrusions into speech, opinion and personal life. These heavy-handed policies are often incompatible with traditional educational ideals, such as academic freedom, freedom of speech, open-mindedness and dispassionate judgment. To be sure, many faculty support such policies, but the most consistent pressure for them typically comes from the administrative bureaucracy. Congress should recognize that its funding helped create this threat to education.

When authorizing student loans, Congress should take into account the ratio of administrators to full-time tenured faculty. The amount of a student loan, and the interest rate payable on it, should come on a gently sliding scale dependent on the ratio of administrators to full-time tenured faculty at the institution that will benefit from the loan. At one end of this sliding scale, students attending a school with few administrators could get the largest loans at the lowest possible interest rate, and at the other end students attending an institution where administrators are relatively numerous could get only the smallest possible loans at the highest possible rate.

Who owes the most student debt?
By Adam Looney

A straight-forward comparison between the administrative data to the SCF suggests that the true distribution of debt shows a larger share owed by lower-income individuals but also a higher share owed by the highest-income taxpayers. Specifically, the SCF reports that 9 percent of total student loan debt is owed by the bottom 20 percent and 27 percent by the top 20 percent.

Across the three sources and methods, student loan borrowers in the top 40 percent of SCF households owe 53 percent of all student debt; borrowers in the highest 40 percent of the earnings distribution owe 58 percent of student debt, and borrowers in the top 40 percent of the distribution of tax payers owe 59 percent.

Dimon: U.S. student loan debt is ‘now starting to affect the economy’
By Aarthi Swaminathan

J.P. Morgan Chase (JPM) CEO Jamie Dimon is concerned that the $1.5 trillion student loan debt pile is “starting to affect” the economy, urging greater urgency to resolve the crisis.

“Irrational student lending, soaring college costs and the burden of student loans have become a significant issue,” Dimon wrote in his widely-read annual letter. “The impact of student debt is now affecting mortgage credit and household formation… Recent research shows that the burdens of student debt are now starting to affect the economy.”

Dimon highlighted a study by Fed economists from January that found that a $1,000 increase in student debt reduces homeownership rates by 1.8%.

Outstanding student loan balances have surged in real terms between 2005 and 2014, with the average student loan debt per capita for borrowers aged between 24 and 32 has doubling from $5,000 to $10,000.

“The student debt crisis is more than a higher education policy issue,” former CFPB student loan ombudsman Seth Frotman told in front of a House committee earlier this month. “It is a significant — perhaps the most significant — consumer finance issue threatening our nation at this time.”

CEOs tell Trump they are hiring more Americans without college degrees
By David Shepardson

Chief executives of major companies said at a White House forum on Wednesday that they are hiring more Americans without college degrees as they search to find increasingly scarce applicants for open jobs.

The White House hosted CEOs of major corporations who joined a Trump administration advisory board on workforce issues, including from Apple Inc, IBM Corp, Lockheed Martin Corp, Siemens USA and Home Depot Inc, who are part of a 25-member board co-chaired by President Donald Trump’s daughter and adviser Ivanka Trump and Commerce Secretary Wilbur Ross.

“We have a chance to employ so many more people – and not always with a college degree, a less than a four-year degree will get a very good paying job in the new economy,” said IBM Chief Executive Ginni Rometty.

Apple CEO Tim Cook said nearly 50 percent of the people the company hired in the United States last year did not have a four-year degree.

“We never thought that the college degree was the thing that you had to have to do well,” Cook said, adding that “our founder was a college dropout,” an apparent reference to Steve Jobs.

Cook said he believed “strongly” that computer coding proficiency should be a requirement before U.S. students graduate from high school.

Lockheed Martin CEO Marillyn Hewson said of 14,000 people hired last year by Lockheed, half did not have a four-year degree and 6,500 were in manufacturing. The company has boosted workforce training, she said.

The Surreal End of an American College
By Alia Wong

In 2011, just a few years after the economy had tanked, the writer Clayton Christensen, a Harvard professor of business administration known for his advocacy of “disruptive innovation,” declared in his then-new book that the rise of online education would destroy half of the country’s colleges and universities by about 2030. After a slight uptick, the total did start to decline: At the peak, in 2013–2014, the U.S. was home to 3,122 four-year colleges, according to Education Department data; four years later, the number had dropped by 7 percent, to 2,902.

To be sure, the majority of those shuttered schools were for-profit colleges, a model whose underwhelming outcomes and questionable student-recruitment tactics garnered public scrutiny and government regulation. But recently, as people like Barbara Brittingham of the New England Commission of Higher Education note, certain regions have witnessed this trend encroach on nonprofit colleges in noticeable ways. In some places, such as Vermont, it’s felt as if small, private institutions are toppling one after the other. Southern Vermont College, Green Mountain College, and the College of St. Joseph all announced closure plans within a few months of one another earlier this year.

At the same time, the country’s colleges and universities have experienced a pronounced increase in the number of freshmen applications received over the past 15 or so years, a trend reflected in the U.S. undergraduate population’s dramatic growth, from 16.7 million in 1996 to 20 million in 2016, according to a recent Pew Research Center report. The reason for this makes sense: Personal success in the modern economy, research suggests, is more incumbent than ever on whether one has a college degree (if only because of employers’ growing tendency to treat such a degree as essential).

Yet selective colleges and universities—those that accept fewer than half of prospective students—have enjoyed a disproportionate share of that growth, receiving close to two out of every five applications despite accounting for fewer than a fifth of the country’s higher-education institutions. What’s more, the number of applications doesn’t correlate with the number of students. (The number of applications per high schooler has soared in part thanks to the Common App, which makes applying to additional schools much easier.) In fact, a gradual downturn in U.S. birth rates has led to a decrease in the country’s current high-school population (which remains four-year colleges’ primary source of students). A recent report by the National Student Clearinghouse research center underscores just how dramatically this is playing out. In spring 2019, overall postsecondary enrollment decreased by 1.7 percent, or nearly 300,000 students, from the previous spring.

This has all but the very top tier of colleges and universities—whose prestige effectively serves as a self-perpetuating revenue engine—on edge. But it’s especially nerve-racking for institutions in parts of the country where the aging is more pronounced, which, according to analyses by the Carleton College economist Nathan Grawe, are concentrated east of the Mississippi River—especially New England. Grawe predicted that the number of high-school graduates in Massachusetts, for example, could drop by as much as 15 percent from 2012 to 2032. This is perhaps most devastating for the colleges in these regions faced with the double whammy of demographic change and proximity to brand-name institutions that eclipse them with their practically unlimited resources and academic accomplishments. The kinds of colleges most at risk in this confluence of bad news? Small, less selective liberal-arts institutions that tend to draw primarily from their local populations.

The Revenge of the Poverty-Stricken College Professors Is Underway in Florida. And It’s Big.
By Hamilton Nolan

The long term trend in higher education has been one of a shrinking number of full-time positions and an ever-growing number of adjunct positions. It is not hard to see why. University budgets are balanced on the backs of adjunct professors. In an adjunct, a school gets the same class taught for about half the salary of a full-time professor, and none of the benefits. The school also retains a god-like control over the schedules of adjuncts, who are literally laid off after every single semester, and then rehired as necessary for the following semester. In the decade since the financial crisis, state governments have slashed higher education funding, and Florida is no exception. That has had two primary consequences on campus: students have taken on ever-higher levels of debt to pay for school, and the college teaching profession has been gutted, as expensive full-time positions are steadily eliminated in favor of cheaper adjunct positions. Many longtime adjuncts talk of jealously waiting for years for a full-time professor to die or retire, only to see the full-time position eliminated when they finally do.

Teaching and preaching, two callings of the heart, have left Angela Edwards-Luckett mired in poverty. She has Obamacare, and still must sometimes choose between paying her premium and being able to afford her medication. During summer and winter breaks, when teaching income stops, she must sometimes go to food banks in order to feed her family. She cannot afford a car, so she takes three buses to commute to her teaching job in Tarpon Springs. This commute is two-and-a-half hours each way. In order to teach for three hours, she must spend five hours on the bus. Health conditions mean that she must get on and off the bus with a cane. Once, a student saw her on there wearing her college ID, and told her she must not be a very good professor if she was forced to ride the bus.

“I had to admit this to myself about five months ago: I’m part of the working poor,” says Edwards-Luckett, who is confident the union will prevail. Tears well up in her eyes as she speaks. “I’m educating future leaders, and I’m part of the working poor. Is that not an irony?”

At its core, the plausibility of having a dignified career in higher education has eroded for the same reason that everyone from skilled manufacturing workers to cab drivers to writers have woken up and found that their slice of the American dream has been canceled: if money is everything, and everything is a business, then full-time jobs must be taken off the books as fast as possible. Absent any countervailing impulse to assign value to these jobs above and beyond their raw labor cost, this trend will only continue. At Santa Fe College, and at colleges throughout the country, “they are governed by people who look at higher education as business management heads would look at any operation,” Kate Murray says. “Of course they hire more adjuncts. They get it for cheaper. That’s the smart thing to do if you look at it according to a business model. In my humble opinion, there’s a lot more to it than pooping out employees for local industries.”

Author discusses new book on the ‘educated underclass’
By Scott Jaschik

Q: Many higher education leaders see postsecondary education as the key to social mobility. You suggest otherwise. Why?

A: The equation of postsecondary education with upward mobility has been out of date for a half century already. It was based on the rapid expansion of the economy following World War II, when for the first time massive numbers of students from working-class backgrounds were admitted into the collegiate system. Since the 1990s, however, a very different, and much more complicated, situation has prevailed. While college enrollments increased by more than 40 percent between then and now, a third of those graduates wound up in jobs that do not require a college education. For recent graduates of four-year institutions, the figure is over 40 percent. If a college degree is still a means of social uplift, it is because a substantial portion of graduates compete in the employment markets against nongraduates. Meantime, everyone without a four-year degree faces intensified competition for the decently paying jobs that still remain.

Q: How does the hierarchy of higher education prestige reinforce class structure?

A: Education is one of the primary means through which society is structured. Not everyone goes to college, and of those who do, not everyone receives a bachelor’s degree. This alone splits the population into three identifiable groups, whereby occupations and earnings correlate with the level of education. But also, of the two-thirds who attend some amount of postsecondary education, a minority attend four-year residential colleges. Among the latter, sharp divisions divide the schools in terms of rankings, all of which has profound implications for a student’s future. The data on these sorts of things is pretty dismal. Some of the most prestigious schools, for instance, admit more applicants from the top 1 percent of the income scale than from the entire bottom 60 percent, while 70 percent of the students at the “most competitive” schools hail from the top 25 percent. Privilege and talent are reinforcing characteristics.

Massive Admissions Scandal
By Scott Jaschik

A 2009 series in the Chicago Tribune called “Clout Goes to College” exposed how the University of Illinois essentially has a separate tier for consideration of the politically connected, letting in some people with questionable academic credentials.

A 2015 survey by Kaplan Test Prep of admissions officers found that 25 percent of them “felt pressured to accept an applicant who didn’t meet your school’s admissions requirements because of who that applicant was connected to.”

The Story Behind Jared Kushner’s Curious Acceptance Into Harvard
By Daniel Golden

My book exposed a grubby secret of American higher education: that the rich buy their under-achieving children’s way into elite universities with massive, tax-deductible donations. It reported that New Jersey real estate developer Charles Kushner had pledged $2.5 million to Harvard University in 1998, not long before his son Jared was admitted to the prestigious Ivy League school. At the time, Harvard accepted about one of every nine applicants. (Nowadays, it only takes one out of twenty.)

I also quoted administrators at Jared’s high school, who described him as a less than stellar student and expressed dismay at Harvard’s decision.

“There was no way anybody in the administrative office of the school thought he would on the merits get into Harvard,” a former official at The Frisch School in Paramus, New Jersey, told me. “His GPA did not warrant it, his SAT scores did not warrant it. We thought for sure, there was no way this was going to happen. Then, lo and behold, Jared was accepted. It was a little bit disappointing because there were at the time other kids we thought should really get in on the merits, and they did not.”

Harvard Dismisses Fencing Coach Over Conflict of Interest Violation
By Shera S. Avi-Yonah and Delano R. Franklin

Harvard has dismissed head fencing coach Peter Brand after an independent inquiry into the 2016 sale of his home found he violated Harvard’s conflict of interest policy, Athletics Director Robert L. Scalise wrote in an email to athletics staff Tuesday.

“Harvard Athletics is committed to upholding the integrity of our athletics program, and it is our expectation that every coach and staff member adhere unambiguously to our policies,” Scalise wrote in a statement Tuesday.

Dean of the Faculty of Arts and Sciences Claudine Gay announced the investigation in April, after the Boston Globe reported that Brand sold his Needham, Mass. home to Jie Zhao — the father of two current and former Harvard fencers — for well over its assessed market value.

One of Zhao’s two sons — a rising junior at the College — was admitted to Harvard shortly following his father’s purchase of Brand’s home. Zhao’s other son graduated from the College in 2018.

Admissions scandal highlights divide over class in America
By Michelle R. Smith and Deepti Hajela

In court papers, the ringleader explained the realities of getting into top colleges in America in stark terms: There’s the front door, which involves getting in legitimately through academic achievements. There’s the back door, which involves donating huge sums of money to a university to influence admissions decisions.

His scheme — much easier and cheaper — was through the side door.

The back door was common knowledge, and bad enough. The description of a side door — a corrupt advantage on top of the advantages already accorded the rich — has set off outrage, especially for hard-working kids trying to get in on merit.

Lalo Alcaraz’s son is a Los Angeles high school senior who is waiting to hear back from over a dozen schools that he’s applied to, including some in the top tier.

“It really infuriates me right now. These people jumped ahead in line of my kid, I mean, literally my kid, this year,” said the author and cartoonist.

For Alcaraz, there’s also outrage at seeing wealthy, white families try to cheat the system, especially when many minorities have experienced being questioned over whether they got their spots because of their race.

“They had all the advantages but they had to cheat,” he said.

They Had It Coming
By Caitlin Flanagan

Anyone can understand a parent’s disappointment if he had thought for 17 years that his child would go to Yale one day, only to learn that it’s not in the cards. But what accounted for the intensity of emotion these parents expressed, their sense of a profound loss, of rage at being robbed of what they believed was rightfully theirs? They were experiencing the same response to a changing America that ultimately brought Donald Trump to office: white displacement and a revised social contract. The collapse of manufacturing jobs has been to poor whites what the elite college-admissions crunch has been to wealthy ones: a smaller and smaller slice of pie for people who were used to having the fattest piece of all.

The future of inequality
By James Kirkup

Today, if you talk to scientists, doctors and even insurers, you can glimpse a near future where the extension of current trends in public health, wealth and medical technology combine to widen existing gaps in life expectancy, to the point where the rich live significantly longer, healthier lives than everyone else. Last month, official statistics showed that the rich are living longer, while life expectancy for the poorest is falling.

Wealth inequality may well be the defining issue of today’s politics and economics. Health inequality may be tomorrow’s challenge.

Poor and middle-class Americans are much less likely to survive into their 70s than the wealthy, federal report says
By Christopher Ingraham and Jeff Stein

Poorer Americans are much less likely to survive into their 70s and 80s than rich Americans, a stark life-expectancy divide compounded by the nation’s growing disparities in wealth, according to a federal report.

Over three-quarters of the richest 50-somethings in 1991 were still alive in 2014, the report found. But among the poorest 20 percent of that cohort, the survival rate was less than 50 percent, according to the analysis by the Government Accountability Office, a nonpartisan congressional research agency.

The report finds that while average life expectancy increased over that period, it “has not increased uniformly across all income groups, and people who have lower incomes tend to have shorter lives than those with higher incomes.”

“Over time, the top fifth of the income distribution is really becoming a lot wealthier — and so much of the health and wealth gains in America are going toward the top,” said Harold Pollack, a health-care expert at the University of Chicago who was not involved in the creation of the report. “In these fundamental areas — life expectancy, health — there are these growing disparities that are really a failure of social policy.”

Rising health insurance deductibles fuel middle-class anger and resentment
By Noam N. Levey

Many wealthy Americans — already reaping most of the benefits of the last decade’s economic growth — have weathered the dramatic increase in deductibles in recent years in part by putting away money in tax-free Health Savings Accounts.

Very poor Americans, millions of whom gained coverage through the 2010 Affordable Care Act, can see a doctor or go to the hospital at virtually no cost, thanks to Medicaid, the half-century-old government safety-net program.

Squeezed in the middle are legions of working Americans who face stagnant wages, insurance premiums that take more and more of their paychecks and soaring deductibles that leave them with medical bills they can’t afford.

“The system increasingly doesn’t work for this group in the middle,” said Drew Altman, longtime head of the Kaiser Family Foundation, or KFF, a California nonprofit that researches the U.S. health system.

“These people may have health insurance … but they can’t pay the bills.”

As deductibles and premiums have surged, a growing number of low-income workers who have job-based health benefits are enrolling their children in Medicaid and the related Children’s Health Insurance Program, research shows.

But many workers cannot get the same cost-free government coverage for themselves.

Stevens, the Home Depot worker, said he doesn’t begrudge those who need government assistance, recalling that when he was a child, his family was poor enough to qualify for Medicaid. But he said he missed the security that coverage offered.

“There was no fear,” he said. “You didn’t have to be afraid to go to the doctor.”

Overall, four in 10 American workers said they had trouble affording healthcare in the last year, despite having job-based health coverage, The Times/KFF survey found.

The share of Americans with health insurance just dropped for the first time since the Great Recession
By Andrew Keshner

The rising rate of uninsured people is worrying, but not surprising, said Rachel Garfield, vice president of the Kaiser Family Foundation and co-director of its Program on Medicaid and the Uninsured.

One possible reason for the increase is that people are making too much money in new jobs to be eligible for Medicaid, but aren’t getting health insurance through their employer, Garfield said.

Legislation to stop patients getting massive ER bills is on life support
By Heather Knight

Jeffrey Lance, a 35-year-old graphic artist at video game developer Zynga who lives in Bernal Heights, said the bill’s short-term death was “disappointing, but not surprising.”

What was surprising was the $54,908.35 that Lance owed S.F. General for an emergency appendectomy in September despite having insurance. After he told his story to The Chronicle, the hospital informed him he’d no longer be on the hook for the money.

But the scary experience made him realize how broken the country’s healthcare system is.

“You go to the hospital, you go to the insurance company and they just sort of bat you around and tell you to go talk to the other guy,” he said. “You don’t know how bad your insurance is until something happens.”

Drug prices in 2019 are surging, with hikes at 5 times inflation
By Aimee Picchi

So far in 2019, more than 3,400 drugs have boosted their prices, a 17% increase compared with the roughly 2,900 drug price increases at the same time in 2018, according to a new analysis by Rx Savings Solutions, a consultant to health plans and employers.

The average price hike for those 3,400 drugs stands at 10.5%, or about 5 times the rate of inflation, the study found. About 41 drugs have boosted their prices by more than 100%, including one version of the antidepressant fluoxetine — also known as Prozac — whose cost has surged 879%, Rx Savings Solutions said.

The price increases come at a time when lawmakers and consumers are increasingly concerned about the escalating cost of medications, which are far outpacing wage growth and the cost of living. Four of 5 Americans believe the cost of prescription drugs is unreasonable, according to a study earlier this year from the Kaiser Family Foundation. About one-third of patients say they’re skipping prescription medicine because of the cost, the survey found.

Drug prices are rising because of a combination of pressure from shareholders to deliver higher profits and what Rea calls an “inelastic market.”

“It’s a good that people need, in many cases in order to stay alive,” he says. “You have a lot of flexibility to drive prices higher and higher.”

That’s an issue with insulin, which Type 1 diabetics require to stay alive. Even though the medication was discovered nearly a century ago, its price has more than doubled over 5 years, causing financial hardship for many diabetics and prompting some to ration the medication to cut costs. In some cases, those decisions have proved fatal.

Skyrocketing cost of insulin pushes Americans to buy drug in Canada
By Sarah Varney

Sarah Varney:

In Washington this year, lawmakers have grilled executives from the three main producers, Eli Lilly, Novo Nordisk, and Sanofi, and investigated price-fixing. But, so far, no bills have passed.

In May, Colorado became the first state to cap monthly insulin co-payments at $100. And, in Minnesota, people like Nicole Smith-Holt have pushed for legislation to provide free or low-cost emergency insulin.

Her son Alec, a type 1 diabetic, died because he couldn’t afford the drug. We met Smith-Holt on the second anniversary of Alec’s death. Her family has made a memorial in their backyard. When Alec turned 26, he was no longer allowed on his mother’s insurance plan, and the restaurant he worked at didn’t offer any.

Nicole Smith-Holt:

The lowest plan that we found was $450 a month with a $7,600 deductible. That’s really not affordable.

Sarah Varney:

Instead, he decided to pay for his insulin over the counter at list price. But the pharmacist told him a month’s supply would be $1,300. With only $1,000 in his bank account, he left empty-handed.

When did you first get word that something had gone terribly wrong?

Nicole Smith-Holt:

Five days later, I received a phone call from actually my mother, who received a phone call from his girlfriend. He wasn’t answering his door and he wasn’t answering his phone. She could hear the phone ringing in the apartment.

And she just happened — you know, checked one of his windows that happened to be unlocked, and she was able to climb in through his bedroom window, and she found him on his floor, cold and unresponsive.

Sarah Varney:

Alec’s official cause of death was diabetic ketoacidosis, or DKA, when, without insulin, acid dangerously builds up in the bloodstream. DKA can occur when diabetics ration their insulin. A study found one in four do so because of cost.

Sarah Varney:

Until prices come down in the U.S., people with type 1 diabetes and activists like Smith-Holt are making these trips to Canada to stock up on insulin and call attention to the dramatic price difference.

Unlike in the U.S., the Canadian government and many other countries negotiate insulin prices with manufacturers. So they traveled through Wisconsin, Illinois, Indiana, and Michigan, adding riders and cars to the caravan. Their reasons for joining were all personal.

Sarah Varney:

The group spent about $2,000 for insulin. The same haul would cost almost $24,000 in the U.S.

To mark the end of the trip, they head to a spot revered by diabetes activists. It was here in London, Ontario, at this house that Dr. Frederick Banting first had the idea that led to the discovery of insulin. That was nearly 100 years ago.

Dr. Banting sold the patent for $1 to the University of Toronto. Pharmaceutical companies started manufacturing the drug that remained cheap well into the 20th century.

Why prescription drugs cost so much more in America
By Hannah Kuchler

When the pharma executives testified before Congress earlier this year, they were also asked what kept them up at night. Many said it was the concern that the market would no longer allow them to make risky bets that could result in medicines that save lives. Kenneth Frazier, CEO of Merck, said: “What keeps me up . . . is the concern that we will not have a viable, predictable market that will allow people to continue to put the very large amounts of money up at risk for a very long period of time, in an attempt to find solutions to some of the hardest problems like Alzheimer’s.”

Discovering new drugs is getting harder, added Jennifer Taubert, executive vice-president at Janssen Pharmaceuticals, the drugmaking division of J&J. “The easy diseases have largely been solved. It gets harder and harder as we go after new treatments for ever more challenging diseases.”

Yet the biggest single funder of innovation in the US remains the government. In 2017, the US National Institutes of Health spent more than $32bn on research, compared with an estimated $71bn from all the members of PhRMA, the major pharmaceutical industry lobbying association.

One recent controversy concerned the high price of Truvada, an HIV-prevention drug, which many claim was developed largely as a result of taxpayer-funded investment. (The company, Gilead, denies this.) The case has led to questions about how the government can ensure that its research is used to create affordable medicines.

Andrew Witty, the former chief executive of GlaxoSmithKline, said last year that the “$1bn-plus” cost of developing a single drug was “one of the great myths of the industry” because it is an average of the money spent on drugs, including those that ultimately fail.

Ken Kaitin, director of Tufts Center for the Study of Drug Development, says that pharma companies do not factor in what they spent developing a drug when they come to price it. “In the vast majority of cases, the price of the drug is a reflection of value, the competitive landscape and the willingness of payers: what the market will bear,” he says.

Missing from the US landscape are authorities such as the National Institute for Health and Care Excellence (Nice) in the UK or the Patented Medicine Prices Review Board in Canada, which negotiate prices and consider value for money. By contrast, once the US Food and Drug Administration has approved a drug as safe and effective, insurers are faced with a simple decision: to pay up or not. They fear that if they do not, their business will be damaged by patients leaving their plans.

Where else is the money from high drug prices going? Major pharma companies make about twice as much in profit each quarter as they spend on R&D. And most spend significantly more on sales and marketing — particularly in the US, where TV advertising is allowed.

The industry is also spending more money on M&A and share buybacks. Increasingly, big pharma is outsourcing innovation to smaller biotechs, then buying the companies before they have a product on the market and using their own commercial machines to sell the drugs widely.

When they are not buying companies, they are often buying back shares. Unlike dividends, buybacks boost earnings per share, helping executives meet targets and bag bonuses. From 2006 to 2015, 18 major pharma companies spent $261bn on buying back shares, 57 per cent of what they spent on R&D, according to William Lazonick, a professor of economics at the University of Massachusetts Lowell.

He says the drug companies and their lobbyists “are talking out of both sides of their mouth”. “Either the purpose of a drug company and the people managing it is to take the profits and reinvest them . . . to do drug development. That I have no problem with,” he says. “Or it is to distribute money to shareholders, which is in fact what they are doing.”

Elderly couple found dead in apparent murder-suicide, left notes about high medical bills
By Caitlin O’Kane

“Several notes were left citing severe ongoing medical problems with the wife and expressing concerns that the couple did not have sufficient resources to pay for medical care,” the sheriffs department’s post reads.

GoFundMe CEO: ‘Gigantic Gaps’ In Health System Showing Up In Crowdfunding
By Rachel Bluth

Q: What have you learned that you didn’t know before?

I guess what I realized [when I came] to this job is that I had no notion of how severe the problem is. You read about the debate about single-payer health care and all the issues, the partisan politics. What I really learned is the health care system in the United States is really broken. Way too many people fall through the cracks.

The government is supposed to be there and sometimes they are. The health care companies are supposed to be there and sometimes they are. But for literally millions of people they’re not. The only thing you can really do is rely on the kindness of friends and family and community. That’s where GoFundMe comes in.

I was not ready for that at all when I started at the company. When you live and breathe it every day and you see the need that exists, when you realize there are many people with rare diseases but they aren’t diseases a drug company can make money from, they’re just left with nothing.

Q: But what does this say about the system?

The system is terrible. It needs to be rethought and retooled. Politicians are failing us. Health care companies are failing us. Those are realities. I don’t want to mince words here. We are facing a huge potential tragedy. We provide relief for a lot of people. But there are people who are not getting relief from us or from the institutions that are supposed to be there. We shouldn’t be the solution to a complex set of systemic problems. They should be solved by the government working properly, and by health care companies working with their constituents. We firmly believe that access to comprehensive health care is a right and things have to be fixed at the local, state and federal levels of government to make this a reality.

Thailand Has a Developing Economy and a Big First World Problem
By Margo Towie, Jason Clenfield and Hannah Dormido

For years, economists and government planners assumed that overpopulation was the world’s main demographic worry, not population loss. But that idea may be wrong.

In the last 50 years, birth rates have dropped in every country on the planet. The change is happening as people move to cities, where women have more access to education and contraception. Fewer babies is good for many families and also the environment, but there are economic consequences, too: fewer consumers, workers and tax payers, and fewer people to care for the elderly.

Since 2000, Thailand has urbanized faster than any other big country besides China, which is the main reason fertility rates are falling now. But the push to have smaller families started back in the 1970s, when an anti-poverty program swept the country led by an activist named Mechai Viravaidya, who became known as “Mr. Condom.”

Over two decades, Thailand’s fertility rate plunged from 6.6 to 2.2.

Now, at 1.5, It’s among the world’s lowest—lower than China’s 1.7 and well below the 2.1 needed to keep population steady. The UN estimates Thailand’s baby bust will cause the country of roughly 70 million to lose more than a third of its people by century’s end.

“I don’t want to have a lot of kids if I can’t guarantee I’ll be able to give them a good life,” said Nandini Sehgal, a 28-year-old account manager at a Bangkok ad agency.

Thailand doesn’t have too much time to fix its problems, says Stanford University demographer Shripad Tuljapurkar. It must find ways to boost labor productivity, otherwise the shrinking pool of workers won’t be able to support the country’s retirees, whose numbers will balloon in the mid-2030s.

America’s $103 billion home health-care system is in crisis as worker shortage worsens
By Bob Woods

We keep hearing the foreboding statistics: 10,000 baby boomers in the United States turn 65 every day; our aging population is expected to double in the next 20 years and swell to 88 million by 2050; 75 percent of Americans over 65 live with multiple chronic health conditions, ranging from diabetes to dementia.

It is no secret, either, that the nation’s already-strained health-care system is trying to keep sick and longer-living seniors out of hospitals, assisted-living facilities and nursing homes and instead in their own homes, which is where they want to live out their golden years. But that has shifted the caregiving burden onto family members, who are increasingly stressed and often supplemented by personal-care aides (also referred to as certified nurse assistants, personal-care assistants or home health aides) employed by thousands of home-care agencies across the country. Nurses and other skilled practitioners manage in-home medical needs, such as administering medications and wound care, while the personal-care aides cook, shop, clean, bathe, dress and generally offer companionship.

As all of these realities coalesce, we’re starting to hear warnings about the fact that while the demand for all types of home health-care workers skyrockets, the supply cannot keep pace. This presents a looming national dilemma for the workforce and entities that hire, train and try to retain them, as well as the public and private sources that pay them. Consider, too, that while the Trump administration pursues its stringent anti-immigration agenda, one-quarter of these workers are immigrants — and the possibility that draining that labor pool could further intensify the shortage problem.

America’s Defining Divide Isn’t Left vs. Right. It’s Old vs. Young.
By Michael Hobbes

Older voters have strikingly different wealth and income profiles than younger voters. Four out of five older families own homes, compared to just one in four younger families. Most own stocks and a large plurality are business owners. Nearly 1 in 9 older households are millionaires and, according to a 2015 study, are the only age group in America whose net worth has increased since 1989.

Politically speaking, this means older households have a profoundly different narrative of the U.S. economy than every other cohort. Gen Xers and millennials, who have seen their incomes stagnate and their living costs explode, are gravitating toward candidates who prioritize issues like student debt and income inequality. Older voters, by contrast, will be more likely to vote for candidates who promise to boost the stock market, lower taxes and push up property values.

The widening gap between the economic realities of older and younger voters could become an even more prominent feature of American politics. According to a 2018 study, the poorest Americans die an estimated 12.7 years earlier than the wealthiest Americans. This means that, over time, as the rich retire and the poor pass away, the government will be spending an increasing percentage of its Social Security and Medicare resources on its wealthiest population.

In the midst of increasing strain on government programs, America will have to make hard choices about taxation and distribution. According to Campbell, this will create a paradox between what the country needs and what its dominant voter group will accept.

Older Americans, she said, will need better and cheaper government services. Their stances on policy and their dominance of the electorate, however, will increase pressure to raise taxes on everyone but themselves ― i.e. the young and the poor.

“If you ask seniors if we should preserve Social Security and Medicare for their grandchildren, they say yes,” Campbell said. “But their presence in the electorate might prevent that.”

AP-NORC Poll: Many feeling vulnerable despite economic gains
By Josh Boak and Emily Swanson

Many older Americans have managed to build financial security through home ownership and traditional pensions, which most employers have now phased out. About three-quarters of those ages 60 and over report feeling good about their financial situations.

By contrast, four in 10 Americans under 30 describe their financial situation as poor. Half say they doubt their ability to handle an unplanned bill — twice the proportion of people ages 60 and older.

“Millennials are on a much lower path of wealth-building than their older predecessors,” said Reid Cramer, director of the millennials initiative at the New America Foundation, a Washington-based think tank.

The generational wealth gap that emerges from the survey coincides with findings last year by researchers at the St. Louis Federal Reserve. Those researchers studied six groups of families born between 1930s and the 1980s. The youngest group, they concluded, was essentially a “lost generation” for accumulating wealth.

The median family led by someone born in the 1980s had only two-thirds the wealth that earlier generations did at the same stage in life. The same study found that the median inflation-adjusted income for people younger than 40 had declined 10% since the Great Recession. By contrast, incomes for those older than 62 had jumped 24%.

Younger workers are not only earning less. They are also clustering in large cities, where many major employers have increasingly placed their jobs. This often means moving to neighborhoods with higher housing costs.

American millennials are saddled with more than $1 trillion in debt — and the bulk of that is student loans
By Callum Burroughs

Student loans have become a contentious sector of the market, seeing a record $166 billion in delinquencies in the fourth quarter of 2018, according to the Federal Reserve Bank of New York. Figures suggest that about 40% of outstanding debts will default by 2023, a staggeringly high number, considering that mortgage defaults at the height of the financial crisis reached only 11.5%.

Mortgage debt makes up the vast majority of overall consumer debt, but it’s not growing nearly as fast as student-loan debt. Since 2009, mortgage debt increased 3.2% while student loan debt grew 102%, according to Bloomberg. Missing student-loan payments could complicate the prospects of getting a mortgage in the future given the expected harm caused to a person’s credit profile.

For millennials, now come the robots
By Steve LeVine

Millennials face one of the toughest economic landscapes of any generation since World War II: they are working for relatively low pay and, for college graduates, they’re saddled with an average of some $30,000 in student debt.

But now, they are about to confront yet another challenge — robots. Millennials will be the first generation to absorb the full impact of the new age of automation, which, if history is a teacher, will wipe out jobs faster than the economy can create new ones.

What’s happening: Millennials came of age during the Great Recession. Since then, three-quarters of all new U.S. jobs have paid less than a middle-class income, according to Labor Department data.

  1. These minimum- or lower-wage jobs are the ones that millennials — ages 23-38, born between 1981 and 1996, and the largest generation in the country — are often taking.
  2. Unlike prior generations, there may not be much of a ladder up from there. Part of that is economics — tech and globalization have hollowed out middle-skill, middle-wage jobs. And part of it is the continued aftermath of the financial crash.

The average millennial has an average net worth of $8,000. That’s far less than previous generations.
By Abha Bhattarai

Millennials are doing far worse financially than generations before them, with student loans, rising rents and higher health care costs pushing the average net worth below $8,000, a new study shows.

The net worth of Americans aged 18 to 35 has dropped 34 percent since 1996, according to research released Thursday by Deloitte, the accounting and professional services giant. This demographic is paying more for education and such basics as food and transportation while incomes have largely flatlined.

“The vast majority of consumers are under tremendous financial pressure,” said Kasey M. Lobaugh, Deloitte’s chief retail innovation officer and lead author of the study. “That is particularly true for low-income Americans and millennials.”

The growing gap between the nation’s wealthiest residents and everybody else, he said, is affecting the way consumers spend.

Education expenses have climbed 65 percent in the past decade. Food costs have jumped 26 percent, health care is up 21 percent, housing jumped 16 percent and transportation rose 11 percent. And there are now expenses that most consumers didn’t have to account for 20 years ago, including smartphones and data plans.

Today’s 20- and 30-somethings spend about 17 percent of their incomes on education, health care and rent, compared with 12 percent a decade ago, the study found. Discretionary spending, which includes dining out, alcohol and furniture, has remained largely flat, at about 11 percent of total income.

“Only 20 percent of consumers were meaningfully better off in 2017 than they were in 2007, with precious little income left to spend on discretionary retail,” the study found.

The findings, researchers say, “debunk many conventional wisdoms about the new-age consumer.” Millennials, they contend, are putting off home-buying and marriage not because they want to but because rising costs are making it difficult for them to afford down payments and weddings.

American millennials have an average net worth of $8,000 — and it’s part of a bigger financial problem the generation is facing
By Hillary Hoffower

Various debt and soaring living costs ultimately make it more difficult for American millennials to adequately save. More than half of millennials don’t have a retirement account, and more than half of them also have less than $5,000 in their savings accounts, according to an INSIDER and Morning Consult survey.

Coupled with the ongoing fallout of the Great Recession, these financial problems are creating an affordability crisis for American Millennials.

Millennials are 41% below boomers in a key wealth measure
By Sibile Marcellus

The Peterson report notes that the shift from pensions to retirement savings accounts – from a system in which employers contributed to workers’ retirements to one in which the individual has the responsibility – is also weighing on younger generations.

“That puts more burden on them, planning how much to save, how to allocate it, when to take the money out, how much money to take out,” Gale says. “There’s much more responsibility placed on an individual in a defined-contribution plan like a 401(k) than there would be if there’s just a defined-benefit plan.”

The fact that millennials are delaying major life milestones such as buying a house, getting married, and starting a family could spell trouble for their retirement plans.

“Delays in all those life cycle events would cause them to delay the onset of retirement saving,” says Gale. The millennial generation will almost certainly live longer than their predecessors.

“From the perspective of trying to save enough for retirement, living longer makes it harder. So they have an increased risk of outliving their assets,” he says.

Millennials really are special, data show
By Andrew Van Dam

Millennials are the most educated generation on record. A college degree is a prerequisite for an increasing share of jobs, a possible side effect of the bifurcation of the economy into high-skill and low-skill work.

For the record, the education divide was wider than any other split we considered. That includes high income vs. low income, urban vs. rural and white vs. minority.

In 2004, when the first wave of millennials graduated college, Americans owed about $260 billion in student loans, according to the Federal Reserve Bank of New York. In 2018, when the youngest millennials were graduating, the figure had multiplied almost by a factor of six, to $1.46 trillion.

A recent Federal Reserve report confirmed that debt has held young Americans back.

About “20 percent of the decline in homeownership among young adults can be attributed to their increased student loan debts since 2005,” Fed economists Alvaro Mezza, Daniel Ringo and Kamila Sommer found. “This represents over 400,000 young individuals who would have owned a home in 2014 had it not been for the rise in debt,” they wrote.

As a generation, millennials who entered the labor market around the Great Recession or during the years of slow growth that followed, have experienced less economic growth in their first decade of work than any other generation we looked at. (We considered work to begin at age 18, but results would be similar if we took college into account.)

A bleak view of the future
By Bartleby

… a new survey from Deloitte, the accountancy firm, suggests that millennials, defined as those born between January 1983 and December 1994, are feeling particularly gloomy. The survey interviewed 13,416 people across 42 countries (with between 200 and 500 people in each nation, ranging from Argentina to Turkey).

The survey found that climate change was their biggest worry, with 29% concerned about the issue, followed by income equality at 21% (respondents were asked to pick three issues from a list of 20). That said, separate research by MIT found that American millennials travel more miles in cars than baby boomers and are just as keen on car ownership; concern about climate change does not automatically translate into lifestyle changes.

Millennials seem to have turned very pessimistic about the global economy, with only 26% expecting the situation to improve in the next 12 months; that compares with 45% last year. Just over half expect their personal finances to deteriorate. Only 22% expect the social and political climate in their countries to improve, down from 33% in 2018.

When it comes to business, the proportion of millennials who feel that the sector has a positive impact on society has dropped to 55%, from 61% in 2018. Almost two-thirds of those polled think that business have no ambition beyond wanting to make money. In contrast, millennials think businesses should place a higher priority on generating jobs and producing high-quality goods and services.

Many millennials are unhappy with their jobs. The survey says 49% plan to quit within the next two years, up from 38% in 2017. (Of course, younger workers are naturally more footloose than their elders.) Dissatisfaction with pay is the biggest factor, followed by a lack of opportunities to advance.

What about the gig economy, which many assume will provide a lot of work for this generation (although it currently provides just 1% of paid employment in America)? Here their views are mixed. While 48% think that “gig workers have a better work/life balance than those in full-time jobs”, 49% think “the employment rights of gig worker are not respected or protected” and 60% think they are only used to reduce costs.

Finally, there is mixed evidence that “woke capitalism” may work, if only in the negative. More than a quarter of millennials said they had backed away from an organisation because of its political position, or that of its leader; only around a sixth said they had been positively attracted by a company’s position. Sending an illiberal message may drive workers and consumers away.

The Coming Generation War
By Niall Ferguson and Eyck Freymann

Democrats have been working for decades to get more young Americans to vote. They have partnered with organizations such as Rock the Vote to make voting cool. They have invested heavily in social-media microtargeting and experimented with mobile apps that use peer pressure to drive up turnout. Yet they have never gotten youth-turnout rates high enough to swing a close presidential election in their favor. Since 1980, the percentage of eligible voters in their 20s who actually vote in presidential elections has held steady between 40 and 50 percent. For Americans aged 45 and up, voting rates have been far higher: between 65 and 75 percent.

History offers Democrats some reason for hope. The closer an American is to middle age, the more likely he or she is to vote. On the other hand, turnout rates are declining across the board, and it is the 30-to-44-year-old age bracket that has seen the steepest decline over the past four decades. Unless Democrats can show younger voters that their votes translate into policy change, they could find themselves trying to mobilize a generation that is permanently apathetic and politically disengaged.

Gen Z, Millennials and Gen X outvoted older generations in 2018 midterms
By Anthony Cilluffo and Richard Fry

Midterm voter turnout reached a modern high in 2018, and Generation Z, Millennials and Generation X accounted for a narrow majority of those voters, according to a Pew Research Center analysis of newly available Census Bureau data.

The three younger generations – those ages 18 to 53 in 2018 – reported casting 62.2 million votes, compared with 60.1 million cast by Baby Boomers and older generations. It’s not the first time the younger generations outvoted their elders: The same pattern occurred in the 2016 presidential election.

Higher turnout accounted for a significant portion of the increase. Millennials and Gen X together cast 21.9 million more votes in 2018 than in 2014. (The number of eligible voter Millennials and Gen Xers grew by 2.5 million over those four years, due to the number of naturalizations exceeding mortality.) And 4.5 million votes were cast by Gen Z voters, all of whom turned 18 since 2014.

By comparison, the number of votes cast by Boomer and older generations increased 3.6 million. Even this modest increase is noteworthy, since the number of eligible voters among these generations fell by 8.8 million between the elections, largely due to higher mortality among these generations.

Americans’ Stress, Worry and Anger Intensified in 2018
By Julie Ray

Younger Americans between the ages of 15 and 49 are among the most stressed, worried and angry in the U.S. Roughly two in three of those younger than 50 said they experienced stress a lot, about half said they felt worried a lot and at least one in four or more felt anger a lot.

Income also plays a role with worry and stress, with the lowest income Americans carrying more of the emotional burden than the highest income Americans. Nearly seven in 10 Americans in the poorest 20% of the population said they experienced stress the previous day, compared with less than half (48%) of Americans in the richest 20%. Similarly, 56% of Americans in the poorest group said they worried a lot, compared with 41% in the richest group.

Generation Z is stressed, depressed and exam-obsessed
By The Economist

Surveys of American college students show that the proportion who report depressive tendencies has been rising since at least the 1950s. Today nearly a fifth of the country’s adults live with a mental-health condition, according to the National Institute of Mental Health.

The WHO estimates that depression and anxiety disorders cost the global economy about $1trn each year. It reckons that investing more in psychiatric treatment would help alleviate some of that burden, since it has calculated that every dollar a government spends on treatment leads to a return of $4 by improving health and productivity. America could certainly devote more than the 0.05% of its health budget that it currently does to such care.

More Millennials Are Dying ‘Deaths of Despair,’ as Overdose and Suicide Rates Climb
By Jamie Ducharme

Drug, alcohol and suicide deaths have risen in nearly every age group over the last decade, but the increase has been especially pronounced for younger Americans. Between 2007 and 2017, drug-related deaths increased by 108% among adults ages 18 to 34, while alcohol-related deaths increased by 69% and suicides increased by 35%, according to the report, which drew on Centers for Disease Control and Prevention data. All together, about 36,000 millennials died “deaths of despair” in 2017, with fatal drug overdoses being the biggest driver.

As in every age group, the opioid crisis has been a major cause of fatal drug overdoses among Millennials—though new federal estimates suggest these rates may be starting to slow. Opioids, including synthetic opioids like fentanyl, were involved in the majority of drug overdose deaths in 2017, the new report shows. Meanwhile, heavy drinking seems to be contributing to a disproportionate increase in alcohol-related deaths for younger Americans.

Young people, the report notes, are typically more likely than older adults to engage in risk-taking behaviors—including drug and alcohol use—due to their stage in development. But the report argues that there are also a number of generation-specific factors that are plaguing Millennials, including financial stressors stemming from student loan debt, health care and high housing costs. Social support may also be lacking for Millennials, as fewer people take part in faith- and community-based organizations and more people delay marriage.

Suicide rates among young Americans have hit their highest levels in almost 20 years
By Kashmira Gander

Suicide rates among young people in the U.S. have hit their highest levels in almost two decades, a study has revealed.

In 2017, a total of 6,241 people aged between 15 to 24 ended their lives, according to a study published in the journal JAMA. Of those, 5,016 were male and 1,225 were female.

That year, the suicide rate for teenagers aged between 15 to 19 was 11.8 percent 100,000, versus 8 per 100,000 in 2000.

Figures on those aged between 20 to 24 showed rates had gone up from 12.5 per 100,000 in 2000 to 17 per 100,000 in 2017.

The figures came from the Centers for Disease Control and Prevent Underlying Cause of Death database, which comes from information on death certificates and estimates from the U.S. Census Bureau.

However, the researchers at Harvard Medical School and Tel Aviv University pointed out the study was limited because the cause of death on certificates may have been documented incorrectly. They gave the example of an individual dying by suicide caused by opiods being mistaken for an accidental overdose.

Dr. Alexandra Pitman, associate professor in the division of psychiatry at UCL who was not involved in the research told Newsweek the research used robust statistical methods. She said the findings mirror the increases in young people presenting at emergency departments with self-harm between 2001 and 2015 in a separate study cited by the authors.

“Many people will be alarmed by these findings, but more alarmed to learn that we remain unclear about the causes of the observed increases. Explanations suggested include the pressures introduced by the culture of social media use in this age group, difficulties accessing mental health services, and changing attitudes to suicide as a means of coping with difficulties, fueled in part by media portrayals of suicide.

“These are all hypotheses, and they remain untested,” she stressed. “There is no reason to suspect that young people would respond less well to medication, therapy, or psychosocial interventions for depression or anxiety than people in other age groups. However, young people tend to be less well represented in trials of treatments to address common mental disorders than older people.”

Latest Suicide Data Show the Depth of U.S. Mental Health Crisis
By Cynthia Koons

In 2017, 47,000 people died by suicide, and there were 1.4 million suicide attempts. U.S. suicide rates are at the highest level since World War II, said the U.S. Centers for Disease Control and Prevention on June 20, when it released a study on the problem. And it’s getting worse: The U.S. suicide rate increased on average by about 1% a year from 2000 through 2006 and by 2% a year from 2006 through 2016.

Although suicide is the starkest indicator of mental distress, others abound. Drug overdoses claimed 70,000 lives in 2017, and 17.3 million, or 7%, of U.S. adults reported suffering at least one major depressive episode in the past year. Life expectancy, perhaps the broadest measure of a nation’s health, has fallen for three straight years, in part because of the rise in drug overdoses and suicides. That’s the first three-year drop since 1915 to 1918.

People with less severe issues also face hurdles when they need help. Most people are at the mercy of their company’s health plans when it comes to seeking care; a person with fewer benefits simply wouldn’t have access to the best resources for either crisis care or chronic mental health treatment. Even for those fortunate enough to be able to pay out of pocket, availability of providers ranges wildly across the U.S., from 50 psychiatrists per 100,000 people in Washington, D.C., for example, to 5.3 per 100,000 in Idaho, according to research from the University of Michigan’s School of Public Health Behavioral Health Workforce Research Center.

All-American Despair
By Stephen Rodrick

The Centers for Disease Control recorded 47,173 suicides in 2017, and there were an estimated 1.4 million total attempts. Many of society’s plagues strike heavier at women and minorities, but suicide in America is dominated by white men, who account for 70 percent of all cases. Middle-aged men walk the point. Men in the United States average 22 suicides per 100,000 people, with those ages 45 to 64 representing the fastest-growing group, up from 20.8 per 100,000 in 1999 to 30.1 in 2017. The states with the highest rates are Montana, with 28.9 per 100,000 people; Alaska, at 27 per 100,000; and Wyoming, at 26.9 per 100,000 — all roughly double the national rate. New Mexico, Idaho and Utah round out the top six states. All but Alaska fall in the Mountain time zone.

For years, a comfortable excuse for the ascending suicide rate in the rural West was tied to the crushing impact of the Great Recession. But it still climbs on a decade later.

“There was hope that ‘OK, as the economy recovers, boy, it’s going to be nice to see that suicide rate go down,’ ” says Dr. Jane Pearson, a suicide expert at the National Institute of Mental Health. “And there’s a lot of us really frustrated that didn’t happen. We’re asking, ‘What is going on?’ ”

The impact of hard times can linger long after the stock market recovers. A sense of community can disintegrate in lean years, a deadly factor when it comes to men separating themselves from their friends and family and stepping alone into the darkness.

“There’s been an increase in the ‘every-man-for-himself mentality,’ ” says Dr. Craig Bryan, who studies military and rural suicide at the University of Utah. “There doesn’t seem to be as strong a sense of ‘We’re all in this together.’ It’s much more ‘Hey, don’t infringe upon me. You’re on your own, and let me do my own thing.’ ”

An election all about our Gilded Age levels of inequality
By Greg Sargent

Plum Line: You can look at the 1980s as the beginning of a debate in which we were told that unshackling the economy through deregulation and tax cuts would benefit everyone. Yet what we saw was a kind of triumph of the super-rich that was much more dramatic than anyone expected.

Zucman: The United States has run an unprecedented social experiment since the 1980s — slashing the tax rate, deregulating finance and labor markets, cutting the minimum wage, and so on. Almost 40 years after the start of this experiment, we have the data to judge whether this experiment was successful or not.

What we are seeing is that for the bottom 50 percent of the income distribution, their average income was $16,000 a year per adult in 1980, adjusted for inflation. And it’s still $16,000 a year per adult today. The bottom half of the income distribution, on a pre-tax and -transfer basis, has had zero growth for more than a generation. What’s the lesson that we can draw from this experiment, and how can we do better?

Too much money (and too few places to invest it)
By Dion Rabouin

Why it matters: At a time when growing income inequality is fueling voter discontent and underpinning an array of social movements, the top 1% of earners and big companies are holding record levels of unused cash.

The big picture: U.S. companies raked in a record $2.3 trillion in corporate profits last year, while the country’s total wealth increased by $6 trillion to $98.2 trillion (40% of which went to those with wealth over $100,000).

So, where is all the money going? The IMF notes large companies around the world are overwhelmingly and uniformly choosing not to reinvest much of it into their businesses. They’re hoarding it in cash and buying back stock.

“There are only 2 things that money can do — sit on a balance sheet unused, where it’s just earned income earning an interest rate of zero,” ICI chief economist Sean Collins points out. “Or it makes sense to release it to share buybacks or dividends.”

  1. Companies could pay their workers more, but “that would be terrible for the stock market,” says Neil Shearing, chief economist at Capital Economics — half-jokingly.
  2. Companies made a record $1.1 trillion in stock buybacks in 2018 and are on track to surpass that number this year. But they still have record cash holdings of close to $3 trillion.

Wealthy households and individuals are pouring money into asset managers, betting on companies that lose $1 billion a year, bonds from little-known Middle Eastern republics, and giving hot Silicon Valley start-ups more venture capital than they can handle.

  1. And private equity has seen so much cashflow that firms have $2 trillion of unused capital.

But even that hasn’t been enough to account for all the new money. The top 1% of U.S. households are holding a record $303.9 billion of cash, a quantum leap from the under $15 billion they held just before the financial crisis.

The Wealth Detective Who Finds the Hidden Money of the Super Rich
By Ben Steverman

Zucman and Saez’s latest estimates show that the top 0.1% of taxpayers—about 170,000 families in a country of 330 million people—control 20% of American wealth, the highest share since 1929. The top 1% control 39% of U.S. wealth, and the bottom 90% have only 26%. The bottom half of Americans combined have a negative net worth. The shift in wealth concentration over time charts as a U, dropping rapidly through the Great Depression and World War II, staying low through the 1960s and ’70s, and surging after the ’80s as middle-class wealth rolled in the opposite direction. Zucman has also found that multinational corporations move 40% of their foreign profits, about $600 billion a year, out of the countries where their money was made and into lower-tax jurisdictions.

Like many economists, Zucman and Saez have embraced the political implications of their research. Unlike many, they champion policy recommendations that are bold and aggressive. Before Massachusetts Senator Elizabeth Warren started her 2020 presidential campaign by proposing a wealth tax, she consulted the pair, who estimated that her tax would bring in $2.8 trillion over the next decade. She conferred with them again before floating a corporate tax on profits above $100 million, which they calculated would raise more than $1 trillion over 10 years. Sanders came looking for their advice on his estate tax plan, which would establish rates as high as 77% on billionaires. And when New York Representative Alexandria Ocasio-Cortez proposed on 60 Minutes to hike the top marginal tax rate to as much as 70% on income above $10 million, Zucman and Saez were fast out with a New York Times op-ed in support.

The pair has now written a cookbook of sorts for any 2020 candidate looking to soak the rich. The Triumph of Injustice, to be published by W.W. Norton & Co. early next year, focuses on how wealth disparity can be fought with tax policy. The tools Zucman has identified to date challenge a series of assumptions, fiercely held by many economists and policymakers, about how the world works: That unfettered globalization is a win-win proposition. That low taxes stimulate growth. That billionaires, and the superprofitable companies they found, are proof capitalism works. For Zucman, the evidence suggests otherwise. And without taking action, he argues, we risk an economic and political backlash far more destabilizing than the financial crisis that sparked his work.

Since the era of liberalization and globalization began about 40 years ago, America’s economic growth has been markedly slower than it was the four decades prior. And though Zucman acknowledges that gross domestic product has risen faster in the U.S. than in other developed countries, he points out that the same is true of population. Measured in GDP per person or national income per adult, U.S. growth since 1980 is hard to distinguish from the pace in France, Germany, or Japan. Meanwhile, the typical worker was better off abroad. From 1980 to 2014, for example, incomes for the poorest half of Americans barely budged, while the poorest half in France saw a 31% increase. “The pie has not become bigger” in the U.S., Zucman says. “It’s just that a bigger slice is going to the top.”

The actual effect of lower taxes on the rich, he argues, isn’t to stimulate the economy but to further enrich the rich and further incentivize greed. In his analysis, when the wealthy get tax breaks, they focus less on reinvesting in businesses and more on hiring lobbyists, making campaign donations, and pursuing acquisitions that eliminate competitors. Chief executive officers, for their part, gain additional motivation to boost their own pay. “Once you’ve created a successful business and the wealth is established and you own billions of dollars, then what these people spend their time doing is trying to defend that position,” Zucman says.

UBS defends billionaires as the best corporate leaders
By Stefan Wagstyl

UBS has rushed to the defence of billionaires, arguing they outperform as corporate leaders and receive unfair criticism in the press.

The Swiss bank produced a report on Friday showing that listed companies run by billionaires do better on the stock market than peers with less wealthy chief executives and deliver wide-ranging economic benefit.

“I am not saying billionaires should be heroes,” said Josef Stadler, head of the ultra-high net worth unit at UBS, the world’s largest private wealth manager. “But at least they should be recognised.”

Shares in some 600 publicly quoted companies controlled by billionaires rose 17.8 per cent between 2003 and 2018 compared with an overall 9.1 per cent gain in global stock markets, as measured by the MSCI All-Country World index (ACWI), according to the research by UBS and PwC, the accountancy firm.

The report coincides with a growing debate in the US and Europe on wealth concentration and inequality.

Speaking to the Financial Times, Mr Stadler said there was “bias in the media” in reporting on billionaires. “In the talk of inequality, the debate that they are too greedy, that they make too much money on the back of poor people.”

He said: “The data tells me that the debate is one-sided and it’s a pity. There is a natural tendency today to be critical when it comes to wealth accumulation. There is sometimes a fear that there is a new aristocracy coming.”

Mr Stadler also acknowledged criticism of multinationals over cross-border tax minimisation schemes. “This certainly needs to be closely watched,” he said. UBS has been hit with billions of dollars in fines for helping rich clients evade taxes, including a €4.5bn penalty in France this year.

Why does everybody suddenly hate billionaires? Because they’ve made it easy.
By Roxanne Roberts

And yet billionaires, for the most part, have evaded criticism by branding themselves as great innovators, personifying the American ideals of rags-to-riches opportunity and hard work. (“If we did it, you can do it, too!”)

The 2008 recession challenged that narrative: An estimated 7 to 10 million Americans lost their homes; 8 million lost their jobs, and the average household lost a third of its net worth. Big banks got bailouts; homeowners didn’t. Only one banker went to jail, and Wall Street went back to business as usual, handing out millions in bonuses the following year.

The outrage bubbled up in 2011, when Occupy Wall Street took over New York City’s Zuccotti Park and camped out in other cities around the country. The protests made headlines with a message of economic inequality and corporate influence with the slogan “We are the 99 percent.”

Did anything change? Not really. The only lasting legacy of the movement is the term “the 1 percent.”

The ‘Self-Made Billionaire’ Is A Lie
By Emily Peck

The environment you grow up in ― the quality of education your parents can afford to give you, the investments they make in you, the relative affluence of your neighborhood ― is almost twice as important as biology, Black and her coauthors write in a working paper put out this month by the Centre for Economic Policy Research.

For their paper, the researchers looked at the parents of adopted children in Sweden, where there is robust data on both adoption and wealth. They examined kids’ biological and adoptive parents.

Then they looked at the wealth of those adopted children at around age 44 ― old enough to have established themselves as adults, but generally young enough to have not yet inherited their parents’ money. (They only looked at adopted children who still had at least one living parent.)

Black and her cohorts found that the adoptive parents’ wealth was a much better predictor of whether or not their adult child was wealthy.

Academics have done this kind of research before to try to tease out the relationship between, say, education and genetics. And in that case, genes do play a bigger role, she said. With income, a child’s genes play a slight role, too — but their environment is far more important, according to Black.

Wealthy parents have the money available to invest in their children ― in schooling, extracurricular activities, college funds. They also have connections to other wealthy people that the poor simply don’t have ― that means better access to investors in your new company, for example, or a leg up getting into an Ivy League school.

Kids with wealthy parents also have a fabulous safety net. And they’re apt to take more chances, plowing all their money into a lipstick company or overpaying for a piece of New York real estate.

Billionaire Facebook founder Mark Zuckerberg and billionaire Microsoft founder Bill Gates came from relatively well-off families, it’s worth noting. But they’re both considered “self-made.”

Entrepreneurs are much more likely to come from wealthy families, where they likely feel more comfortable gambling for success, research has found.

Trump’s father routinely rescued him from financial collapse. Though Jenner’s parents pushed her to go out on her own, I doubt they’d leave her in the streets to fend for herself if everything went belly-up.

How the 1 Percent Is Tearing America Apart
By Richard Florida

The rich and the poor occupy different places to begin with, so as income inequality rises, the geographic discrepancies also rise as a consequence, with rich places getting richer and poor places falling further behind. Or as he puts it: national inequality acts like a powerful wave that “washes over an uneven landscape, leaving behind deep pools in some areas and shallow puddles in others.” The rise in economic inequality, even though not inherently spatial, does in fact have spatial consequences.

Indeed, fully half of growth in spatial inequality over the past three decades can be pinned on the economic gains of the 1 percent, with the rest of the top 10 percent of income earners accounting for an additional 25 percent of America’s geographic divide. As the 1 percent has hauled in a growing share of the economic pie, the places where they live have pulled away from the rest of the country. “Income sorting has played a role in driving regional divergence, but income inequality has played a larger one,” Manduca writes.

“Regional income divergence results in large part from national trends, which are generally attributed to changes in economic policy and the economic environment like financial deregulation … and declines in the real minimum wage, among others in the 1970s and 1980s,” Manduca told me via email. “This means that regional income disparities are a national problem.”

And this has implications for the way we think about and respond to different parts of the country. “We’re often too harsh on economically struggling regions,” he adds. “We tend to blame them for their troubles, and say that they’re not doing enough to attract or create high-paying jobs.”At the other end of the economic spectrum, we also tend to blame expensive cities and their onerous land use restrictions for their increasingly unaffordable housing. Instead, it’s more helpful to think about how these local trends are largely a consequence of national-level policy changes.

In IPO-mad San Francisco, a crisis of wealth
By Katherine Boyle

The irony of this extreme concentration of wealth is that tech was supposed to solve this problem and allow people to innovate anywhere. Instead, this super-concentration of new wealth is likely to push talented people and their employers out of the area in search of more sustainable lifestyles — meaning the wealth is pushing people out of San Francisco, not the democratization of tech. It will also ensure that bashing tech companies is going to be the safest political sport for politicians in the months leading up to the 2020 election. Candidates on both the left and right will lift a page from the early-20th- century election playbook, when Standard Oil was depicted as an octopus, dexterous enough to parry Republicans and Democrats.

Inequality Will Eventually Hurt the Rich, Too
By Michael Pettis

Income inequality is harming the economy. Most people spend whatever extra money they earn. The rich, however, are disproportionately likely to save any additional income, which means that income concentration saps consumer demand and threatens the viability of new investments—just as in the 1920s and 1930s.

We used to know this. Marriner Eccles, the former Federal Reserve chairman, explained in his 1951 memoir that the Great Depression had been preceded by an enormous concentration of American wealth, as if by a “great suction pump,” which took purchasing power away from those who spend most of what they earn on goods and services and transferred income to those who are most likely to save it.

That, Eccles argued, ultimately reduced the value of capital. After all, “as mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth to provide men with buying power equal to the amount of goods and services offered by the nation’s economic machinery.” Factories are worthless if no one can afford to buy what they produce.

Businesses today have access to near-unlimited amounts of capital at historically low interest rates, but find little reason to invest because the demand for their production is not growing quickly enough to justify more investment.

In this environment, income inequality is a drag on the economy. When U.S. businesses find it easy to raise money, rising inequality makes it harder for them to justify additional capital spending. The rising savings of the rich and the businesses they control must somehow be reconciled with the weakening growth of consumer incomes. There are only two ways this can happen: either household and government savings must decline, or national savings will decline because unemployment rises.

Put differently, the downward pressure on consumption growth caused by rising income inequality can either lead to the closing down of factories and businesses, with its attendant unemployment, or the central bank can fuel consumption growth with rising household or government indebtedness. The U.S. experienced both scenarios in the 1920s and 1930s, and again more recently.

When business investment is constrained only by expected future consumption rather than the cost of capital, income concentration leads to both lower consumption and lower investment. If income were more widely distributed, the U.S. economy would grow faster and would be able to avoid the rising indebtedness that would otherwise be needed to sustain consumption. Best of all, the benefits would eventually trickle up—even to the rich.

Warren Buffett’s Case for Capitalism
By Andrew Ross Sorkin

Some billionaires agonize about inequality and the education system, for example, but don’t push for higher taxes on the wealthy to help pay for fixes (one of Mr. Buffett’s preferred remedies). A raft of chief executives who boycotted going to Saudi Arabia after the murder of Jamal Khashoggi last year quickly returned to doing business with the kingdom when the headlines died down.

Mr. Buffett’s moral code is one of being direct, even when it is not politically correct. In his plain-spoken way, Mr. Buffett, a longtime Democrat, acknowledged that the goal of capitalism was “to be more productive all the time, which means turning out the same number of goods with fewer people or churning out more goods, with the same number,” he said.

“That is capitalism.” Two years ago at the same meeting, he bluntly said, “I’m afraid a capitalist system will always hurt some people.”

Middle-Class Shame Will Decide Where America Is Headed
By Alissa Quart

Anat Shenker-Osorio, a messaging expert, discovered that in focus groups which included middle-class people, she heard a lot of expressions of self-loathing. Between refrains about the cost of living and remarks like “I can’t get the kids to college,” participants made statements that conveyed their deeply held belief that not making it meant they were not working hard enough.

“They have imbibed this idea that your economic well-being is traceable principally to your own efforts,” Ms. Shenker-Osorio said.

As a result, what the electorate doesn’t need to hear are Horatio Alger stories of how candidates worked their way up from humble origins, with the implied moral that anyone can make it in America with enough hard work. These kinds of tales can insidiously lead middle-class people today to blame themselves more for not flourishing.

Instead, the new Congress and candidates of the future should tell voters that it’s O.K. to be mad about being in debt, that this is a savage society we now live in. They could talk about their own experience of debt, be it student or medical, or the debt of someone in their family. (What makes this a bit harder is how unrelatable, and depressing, the wealth of our Congress still is: in 2015, it was majority millionaire.)

To win the anxious middle-class vote, politicians must offer real solutions for the challenges in the lives of these voters, especially on health care and education. One example of this is the scholarship program that Gov. Andrew Cuomo of New York put in place: 940,000 middle-class families and individuals making up to $125,000 per year will qualify to attend tuition-free at colleges in the New York State and New York City public university systems. Though not perfect, it’s a step in the right direction.

It is important to get these voters beyond the shame of debt, perhaps by allowing student debtors to be able to declare bankruptcy related to student loans, something that is nearly impossible to do now, and obtain debt forgiveness.

An actual “Medicare for all” proposal would get at the heart of what is a real challenge for many. Michèle Lamont, a sociologist at Harvard who specializes in culture and inequality, told me that her work found that when candidates promote a policy like Medicare for all, even if it doesn’t come to fruition they are signaling that they understand voters’ need for solidarity and give voice to their hopes and difficulties by making them visible.

And politicians should not turn their backs on populism. Although now it may be seen as the province of the xenophobic right, it was, in previous eras (the 1890s!), a crucial progressive inspiration within our country.

Politicians from both parties understand the power of anger and anxiety as a motivating factor for voters. Post-President Trump, it’s impossible not to. But the frustration that comes from people who find themselves slipping down the economic gradient is one of the most powerful untapped resources in American politics today.

Four in 10 Americans Embrace Some Form of Socialism
By Mohamed Younis

Americans’ views on socialism are complex. While some recent data can easily lend to overstated conclusions, there are marked changes in Americans’ views of socialism when taking a longer, more historical look at the data. However, exactly what Americans mean by the term is nuanced and multifaceted. While half of Americans consider socialism as bad for the country, nearly two-thirds say that the U.S. economy is more influenced by the government than the free market, or that it reflects an equal mix of the two.

Additionally, while a majority of Democrats view socialism positively, that is not a major change in the eight years Gallup has tracked this metric. The major shift over this time has been the reduced rate of Democrats who now view capitalism positively (47%).

These data alone make it hard to generalize a simplistic conclusion about Americans’ opinions of, and willingness to entertain, socialism. But there are a few clear takeaways. About four in 10 Americans are accepting of some form of socialism or socialist policies, and Democrats currently have a more positive view of socialism than capitalism. In addition, the April survey found that 47% of Americans say they would vote for a socialist candidate for president. While that figure represents nearly half of the U.S. adult population, even higher percentages say they would vote for an atheist (58%) or Muslim (60%) presidential candidate.

However, when they are asked what role they would like to see the government play in certain areas of society, Americans continue to endorse the free market.

Big companies are crushing their competition in the US, and it’s creating a dangerous ‘fake capitalism’ that hurts workers and consumers
By Jonathan Tepper and Denise Hearn

If you believe in competitive free markets, you should be very concerned. If you believe in fair play and hate cronyism, you should be worried. With fake capitalism, CEOs cozy up to regulators to get the kind of rules they want and donate to get the laws they desire. Larger companies get larger, while the small disappear, and the consumer and worker are left with no choice.

The list of industries with dominant players, from beer corporations to internet providers, is endless. It gets even worse when you look at the world of technology. Laws are outdated to deal with the extreme winner-takes-all dynamics online. Google completely dominates internet searches with an almost 90% market share. Facebook has an almost 80% share of social networks. Both have a duopoly in advertising with no credible competition or regulation.

Amazon is crushing retailers and faces conflicts of interest as both the dominant e-commerce seller and the leading online platform for third-party sellers. It can determine what products can and cannot sell on its platform, and it competes with any customer that encounters success. Apple’s iPhone and Google’s Android completely control the mobile app market in a duopoly, and they determine whether businesses can reach their customers and on what terms.

Existing laws were not even written with digital platforms in mind. So far, these platforms appear to be benign dictators, but they are dictators nonetheless.

It was not always like this. Without almost any public debate, industries have now become much more concentrated than they were 30 and even 40 years ago.

After the dot-com bust, the economy rebounded but growth was more anemic than during the 1980s or even 1990s. After the financial crisis, growth was even more pathetic. Each expansion has experienced lower growth than the previous one. There is not one variable that answers all questions, but a growing mountain of research shows that less competition has led to lower wages, fewer jobs, fewer startups, and less economic growth.

Capitalism is a game where competitors play by rules that everyone agrees. The government is the referee, and just as you need a referee and a set of agreed rules for a good basketball game, you need rules to promote competition in the economy. Left to their own devices, firms will use any available means to crush their rivals. Today, the state, as referee, has not enforced rules that would increase competition, and through regulatory capture has created rules that limit competition.

Market Concentration Is Threatening the U.S. Economy
By Joseph E. Stiglitz

But an even deeper and more fundamental problem is the growing concentration of market power, which allows dominant firms to exploit their customers and squeeze their employees, whose own bargaining power and legal protections are being weakened. CEOs and senior executives are increasingly extracting higher pay for themselves at the expense of workers and investment.

For example, US corporate executives made sure that the vast majority of the benefits from the tax cut went into dividends and stock buybacks, which exceeded a record-breaking $1.1 trillion in 2018. Buybacks raised share prices and boosted the earnings-per-share ratio, on which many executives’ compensation is based. Meanwhile, at 13.7 percent of GDP, annual investment remained weak, while many corporate pensions went underfunded.

Evidence of rising market power can be found almost anywhere one looks. Large markups are contributing to high corporate profits. In sector after sector, from little things like cat food to big things like telecoms, cable providers, airlines, and technology platforms, a few firms now dominate 75–90 percent of the market, if not more; and the problem is even more pronounced at the level of local markets.

As corporate behemoths’ market power has increased, so, too, has their ability to influence America’s money-driven politics. And as the system has become more rigged in business’s favor, it has become much harder for ordinary citizens to seek redress for mistreatment or abuse. A perfect example of this is the spread of arbitration clauses in labor contracts and user agreements, which allow corporations to settle disputes with employees and customers through a sympathetic mediator, rather than in court.

When the Interests of Monopolists and Authoritarians Coalesce
By Raghuram Rajan

Power prefers permanence. Unregulated markets tend toward concentration as the successful try and entrench themselves by pulling up behind them the ladder of competition that they themselves climbed. Equally, the politically powerful are tempted to suppress any competitive threat to their future posed by democracy. James Madison was persuaded that democracy would work in the United States because in a large country with many different competing political interests, it would be hard for any specific interest to dominate. Yet interests can coalesce.

It is when the behemoth of monopoly enterprise consorts with the leviathan of the authoritarian state that both are likely to achieve permanence. History is strewn with examples of these collusive arrangements, some of which we have already encountered. Communism brought all business enterprise under government planning and control, with the state dominated by the Communist Party, the self-appointed representatives of the proletariat. Business and the state were united under the proletarians. Fascism was different only in the language of the dominant group and its stated aims, which was national supremacy instead of the communist paradise of the universal brotherhood of workers. In practice, fascism too involved permanent party dominance of the state, and state control of industry. Today, we have milder versions of these totalitarian regimes, with state-controlled capitalism in countries like China and Russia, and authoritarian capitalism in Turkey.

While the nomenclatures vary, at the heart of such regimes is a pact between the cartelized market and the state, leaving little room for economic or political competition, or the community. Such arrangements are examples of what political economists Douglass North, John Wallis, and Barry Weingast call limited-access societies.

In contrast, the liberal market democracies in developed countries are what they call open-access societies, combining free and open markets with vibrant democratic control over the government. Implicit in the work of a number of political scientists is the belief that open-access societies are the desirable pinnacle of social development, and they will not regress back to limited- access societies because of the strong institutions that protect them. They are probably right in believing that open- access societies are the best we can do for now, but they are mistaken in thinking that open-access societies cannot regress.

Admissions scandal unfolds amid cynicism about moral values
By David Crary

Whether it’s gaming the system to secure entry to an elite college, or circumventing laws and ethical norms to evade taxes, swindle customers or pocket illicit gains, unethical behavior has always been among America’s national pastimes. Yet a strong case can be made that this moment is distinctive, with its constant stream of high-profile scandals entangling bankers, drug companies, sports organizations, government officials and others.

“There’s a rawer pursuit of opportunities and benefits than there once was,” said Cal Jillson, a political science professor at Southern Methodist University. “It was always there, but now it’s broader, and there are elements of society that once responded to social and professional restraints that no longer do so.”

Some rule-breakers get caught, of course. Martin Shkreli, who provoked outrage with a 5,000 percent hike in the price of a vital drug, is serving a seven-year sentence in federal prison for securities fraud. Paul Manafort, Donald Trump’s former campaign chairman, faces prison time for concealing his foreign lobbying work, laundering millions of dollars, and coaching witnesses to lie on his behalf.

However, public cynicism about America’s moral standards is high, as evidenced in the annual Values and Morals poll conducted by Gallup since 2002. In the latest poll, released last June, a record high 49 percent of respondents rated moral values in the U.S. as poor, and only 14 percent rated them excellent or good.

The perception that unethical behavior is increasingly commonplace could have a snowball effect, says Andrew Cullison, a philosophy professor who heads DePauw University’s Prindle Institute for Ethics.

“People think that if moral standards have eroded, why should they play by the rules,” he said. “If they’ve lost trust in some entity or institution, then that organization has lost the right to their compliance with the rules.”

How vulture capitalists ate Toys ‘R’ Us
By Jeff Spross

Frustratingly, the story of Toys ‘R’ Us’ debt burden has been a footnote in news coverage, buried under musings on how the company failed to compete with the likes of Amazon. And when the debt is covered, it’s often devoid of context: Toys ‘R’ Us just happened to borrow money, it proved to be a bad decision, and now the retailer is suffering the fate of imprudent borrowers everywhere. Rarely does anyone point out that debt was a deliberate Wall Street strategy.

Nor was it an isolated strategy. As David Dayen has diligently chronicled, these sorts of leveraged buyouts are dragging down retailers across the industry. In fact, we can widen our gaze further to the entire economy: In a remarkable turn, corporate payouts to shareholders and stock buybacks recently started to collectively exceed corporate profits. And the gap is made up by borrowing.

In short, how Bain, KKR, and Vornado treated Toys ‘R’ Us is how Wall Street treats American businesses writ large. And if inequality is dragging down the profits of retailers and other industries, then these cannibalistic practices are the other half of the feedback loop: driving inequality ever higher, and depriving Americans of the jobs and incomes they need to consume.

In other words, we are all Toys ‘R’ Us. And the vultures are hungry.

What’s Wrong with Contemporary Capitalism?
By Angus Deaton

With median household incomes largely stagnant and a growing share of wealth accruing to the rich, capitalism became manifestly unfair, losing its popular support. To manage its opponents, Behemoth called on Leviathan for protection, not understanding that a right-wing populist Leviathan eats Behemoth in the end.

Two points of Rajan’s story need to be emphasized. First, declining growth is a key, albeit low-frequency, cause of today’s social and economic distress. Second, the unfortunate consequences of the ICT revolution are not inherent properties of technological change. Rather, as Rajan notes, they reflect a “failure of the state and markets to modulate markets.” Though Rajan does not emphasize it, this second point gives us cause for hope. It means that ICT need not doom us to a jobless future; enlightened policymaking still has a role to play.

Rajan’s account of corporate misbehavior is very well told, and it is all the more effective coming from a professor at a prominent business school. From the start, the near-absolutist doctrine of shareholder primacy has served to protect managers at the expense of employees, and its malign effects have been exacerbated by the practice of paying managers in stock.

Forget China – it’s America’s own economic system that’s broken
By Robert Reich

At the core of the American system are 500 giant companies headquartered in the US but making, buying and selling things all over the world. Half of their employees are non-American, located outside the US. A third of their shareholders are non-American.

These giant corporations have no particular allegiance to America. Their only allegiance and responsibility is to their shareholders.

They’ll do whatever is necessary to get their share prices as high as possible – including keeping wages down, fighting unions, reclassifying employees as independent contractors, outsourcing anywhere around world where parts are cheapest, shifting their profits around the world wherever taxes are lowest, and paying their top CEOs ludicrous sums.

Last week, for example, Walmart, American’s largest employer, announced it would lay off 570 employees despite taking home more than $2bn courtesy of Trump and the Republican corporate tax cuts. Last year, the company closed dozens of Sam’s Club stores, leaving thousands of Americans out of work.

At the same time, Walmart has plowed more than $20bn into buying back shares of its own stock, which boosts the pay of Walmart executives and enriches wealthy investors but does nothing for the economy.

It should be noted that Walmart is a global company, not adverse to bribing foreign officials to get its way. On Thursday it agreed to pay $282m to settle federal allegations of overseas corruption, including channeling more than $500,000 to an intermediary in Brazil known as a “sorceress” for her ability to make construction permit problems disappear.

Across the American economy, the Trump tax cut did squat for jobs and wages but did nicely for corporate executives and big investors. Instead of reinvesting the savings into their businesses, the International Monetary Fund reports that companies used it to buy back stock.

Boeing and the siren call of share buybacks
By Jonathan Ford

The company might seem an odd candidate for a big buyback programme. Its civil aviation business involves huge multiyear projects in which billions of dollars of capital are put at risk. The programme for the 787 Dreamliner, for instance, lasted eight years and cost $32bn.

Yet Boeing has found the financial space to splurge on its own stock. Between 2013 and the end of the first quarter of this year, it retired a net 200m shares, handing back $43bn to holders. The number outstanding came down by 25 per cent.

One reason it could was because of savings on the company’s latest aircraft programme, the now notorious 737 Max, grounded after two recent crashes killed 346 people. Instead of building a wholly new aircraft, Boeing simply bolted new fuel-efficient engines on to a tweaked existing airframe. That significantly reduced the airframe development costs of the project, according to company insiders. Boeing was able to redirect some of those “savings” to repurchase stock instead.

It illustrates a choice that many chief executives have willingly made: to prioritise buybacks over investment. In this, they have received little but encouragement from their financial backers. Share repurchases seem a good bet to investors who are highly focused on short-term share price performance compared with the uncertain (and longer-term) gains from new product development.

Buybacks are, after all, the very purest form of financial engineering. Unlike special dividends, they don’t simply gear the balance sheet, they supply a further twist by reducing the number of shares in issue. The result is to manipulate upwards the earnings per share number — sometimes quite dramatically. In Boeing’s case its effect was to push EPS last year up 20-25 per cent against what it would have been without the repurchases since 2013.

Who benefits from this optical leverage? Not necessarily the shareholders. Buybacks tend to happen when share prices are rising anyway, exposing them to the risk of the company destroying economic value by repurchasing overpriced equity. The biggest winners are managers, especially those whose remuneration is tied to stock market measures such as EPS growth. Take Boeing’s chief executive Dennis Muilenburg. Since becoming the boss in 2015 his pay has doubled. Last year he took home a thumping $30m in compensation and gains from exercising options.

Boeing embarked on its buyback splurge against a backdrop of rapidly growing sales and profits due to the sales success of the 737 Max — on course before the crashes to be one of the best-selling airliners of all time. Now, however, the outlook has become extremely murky. Suggestions that Boeing indulged in shortcuts to speed the plane’s path to market may even imperil consumer trust.

The shares have fallen by nearly a quarter since the March crash, leading to the cancellation of a $20bn buyback programme announced in December. Investors are waiting to see how long the Max will be grounded, what the costs will be, and whether contracted sales will hold up.

Boeing faces a period of magnified instability. Investors might usefully ask themselves how much their focus on the short run has contributed to this predicament. Perhaps it might have been better had bosses indulged in rather less financial engineering and rather more of the real kind.

Boeing CEO Dennis Muilenburg replaced as board chair
By Douglas MacMillan and Aaron Gregg

Boeing has been working with the Federal Aviation Administration on a set of software fixes to the plane. After initially announcing that it would submit the fix for FAA review no later than April, the timeline for returning the Max to service has been continually pushed back. Some airlines are now preparing for a 737 Max grounding that could extend into 2020. The FAA has not committed to a firm timeline to lift the grounding order.

Boeing and its suppliers have been suffering financially. Boeing recently posted a $3.38 billion loss in the most recent quarter, the worst in company history.

The Stock-Buyback Swindle
By Jerry Useem

Before the 1980s, corporations rarely repurchased shares of their own stock. When they started to, it was typically a defensive move intended to fend off raiders, who were drawn to cash piles on a company’s balance sheet. By contrast, according to Federal Reserve data compiled by Goldman Sachs, over the past nine years, corporations have put more money into their own stocks—an astonishing $3.8 trillion—than every other type of investor (individuals, mutual funds, pension funds, foreign investors) combined.

Corporations describe the practice as an efficient way to return money to shareholders. By reducing the number of shares outstanding in the market, a buyback lifts the price of each remaining share. But that spike is often short-lived: A study by the research firm Fortuna Advisors found that, five years out, the stocks of companies that engaged in heavy buybacks performed worse for shareholders than the stocks of companies that didn’t.

One class of shareholder, however, has benefited greatly from the temporary price jumps: the managers who initiate buybacks and are privy to their exact scope and timing. Last year, SEC Commissioner Robert Jackson Jr. instructed his staff to “take a look at how buybacks affect how much skin executives keep in the game.” This analysis revealed that in the eight days following a buyback announcement, executives on average sold five times as much stock as they had on an ordinary day. “Thus,” Jackson said, “executives personally capture the benefit of the short-term stock-price pop created by the buyback announcement.”

… take Craig Menear, the chairman and CEO of Home Depot. On a conference call with investors in February 2018, he and his team mentioned their “plan to repurchase approximately $4 billion of outstanding shares during the year.” That day, he sold 113,687 shares, netting $18 million. The following day, he was granted 38,689 new shares, and promptly unloaded 24,286 shares for a profit of $4.5 million. Though Menear’s stated compensation in SEC filings was $11.4 million for 2018, stock sales helped him earn an additional $30 million for the year.

By contrast, the median worker pay at Home Depot is $23,000 a year. If the money spent on buybacks had been used to boost salaries, the Roosevelt Institute and the National Employment Law Project calculated, each worker would have made an additional $18,000 a year. But buybacks are more than just unfair. They’re myopic. Amazon (which hasn’t repurchased a share in seven years) is presently making the sort of investments in people, technology, and products that could eventually make Home Depot irrelevant. When that happens, Home Depot will probably wish it hadn’t spent all those billions to buy back 35 percent of its shares. “When you’ve got a mature company, when everything seems to be going smoothly, that’s the exact moment you need to start worrying Jeff Bezos is going to start eating your lunch,” the shareholder activist Nell Minow told me.

When American Capitalism Meant Equality
By Matt Stoller

John Kenneth Galbraith, the preeminent economist of his day, jeered at the notion business executives sought excessively high pay. The “typical business executive,” he wrote in 1958, “would surely endanger his chance for advancement if he were suspected of goldbricking because of his resentment over the inadequacy of his after-tax income.”

Writing of John D. Rockefeller, Walter Lippmann stated in 1937: “Before he started his enterprises it was not possible to make so much money; before he died, it had become the settled policy of this country that no man would be permitted to make so much money. He lived long enough to see the methods by which such a fortune can be accumulated, outlawed by public opinion, forbidden by statute, and prevented by the tax laws.”

In 1952, New Dealer David Lilienthal argued that the New Deal had accomplished its purpose. “The all-powerful tyrannic employer is all but gone. Gone too, except for historians, is the picture of workers who must endure long hours of labor, with no vacations, no decent opportunity to have their grievances heard.”

To find monopoly and inequality, as Congressman and anti-monopolist Emanuel Celler wrote in his 1953 biography, you’d have to travel to Europe, where among the impoverished former aristocracies and kingdoms you’d observe “concentrated wealth in the hands of a few and the grim daily struggle for bread for the majority of the people.” Celler chalked these differences up to America’s market-based system of small business, versus Europe’s system of monopolies and cartels. “European production,” he observed, “to keep its profits high and its headaches few, rejected the vigor of competition, the infusion of new ideas the prod and the spur of matching wits, which create the dynamic economy.”

The Experts Keep Getting the Economy Wrong
By David Leonhardt

Despite all the savings available to be invested, companies are holding back. Some have grown so large and monopoly-like that they don’t need to invest in new projects to make profits. Think about your internet provider: It may have terrible customer service, but you don’t have a lot of alternatives. The company doesn’t need to invest in new technology or employees to keep you as a customer.

Beside a lack of competition, the investment slump stems from what Summers calls the de-massification of the economy. Developers aren’t building as many malls and stores, because goods now go straight from warehouses to homes. Offices don’t need as much storage space. Cellphones have replaced not just desktop computers but also cameras, stereos, books and more. Many young people have decided they’re happy living in small apartments, without cars.

Jamie Dimon says we’ve split the US economy, leaving the poor behind
By Hugh Son

J.P. Morgan Chase CEO Jamie Dimon said that the U.S. economy has essentially been split into those benefiting from thriving corporations and those who are left behind.

“I don’t want to be a tone deaf CEO; while the company is doing fine, it is absolutely obvious that a big chunk of [people] have been left behind,” Dimon said. “Forty percent of Americans make less than $15 an hour. Forty percent of Americans can’t afford a $400 bill, whether it’s medical or fixing their car. Fifteen percent of Americans make minimum wages, 70,000 die from opioids” annually.

“If you travel around to most neighborhoods where companies live, they’re doing fine,” Dimon said. “So we’ve kind of bifurcated the economy.”

How Economists’ Faith in Markets Broke America
By Sebastian Mallaby

The rise of economics, Appelbaum writes, “transformed the business of government, the conduct of business, and, as a result, the patterns of everyday life.” It was bound to have a marked effect on Berle’s pro-corporate liberalism. Lemann hangs this part of his story on Michael C. Jensen, an entertainingly impassioned financial economist who reframed attitudes toward the corporation in the mid-’70s.

Jensen agreed with Berle’s starting point: Corporate managers were unaccountable because shareholders could not restrain them. But rather than seeing a remedy in checks exerted by regulators and organized labor, Jensen proposed to overhaul the firm so that ownership and control were reunited. Executives should be rewarded more with stock and less with salary, so that they would think like shareholders and focus on the profits that shareholders wanted. Managers who failed to generate a good return would see their stock prices languish, which would create tempting takeover targets. A market for corporate control would redouble the pressure on bosses to behave like owners. Successful takeovers, in turn, would shift corporations into the hands of single, all-powerful proprietors, capable of overseeing management more effectively than scattered stockholders could. In sum, Jensen’s prescriptions inverted Berle’s. The market could be made to solve the problem of the firm. Government could pull back from regulation.

For ideas to have influence, Lemann observes, “there has to be a confluence between the ideas themselves, the spirit of the times, and the interests of powerful players who find the ideas congenial.” Berle had been lucky that his treatise on the corporation appeared when Roosevelt was launching his run for the presidency. Jensen was equally fortunate in his own way. Shortly after the publication of his research, the invention of junk bonds made hostile takeovers the rage. During the ’80s, more than a quarter of the companies on the Fortune 500 list were targeted. Jensen became the scholar who explained why this unprecedented boardroom bloodbath was good news for America.

And to a considerable extent, the news was good. Shielded from market discipline, the old corporate heads had deployed capital carelessly. They had expanded into new markets for reasons of vanity, squandered money on fancy management dining rooms, and signed labor contracts like the Treaty of Detroit, which—however statesmanlike—stored up liabilities to retirees that would ultimately hobble their companies. From 1977 to 1988, Jensen calculated, American corporations had increased in value by $500 billion as a result of the new market for corporate control. Reengineered and reinvigorated, American business staved off what might have been an existential threat from Japanese competition.

Yet a large cost eluded Jensen’s calculations. The social contract of the Berle era was gone: the unstated assumption of lifetime employment, the promise of retirement benefits, the sense of community and stability and shared purpose that gave millions of lives their meaning. Berle had viewed the corporation as a social and political institution as much as an economic one, and the dismembering of corporations on purely economic grounds was bound to generate fallout that had not been accounted for. Meanwhile, Jensen’s market-centric mind-set permeated finance, enabling opaque risks to build up in banks and other trading houses. As the collapse of Enron and other corporate darlings revealed, a good deal of non-market-related accounting fraud compounded the fragility. Even before the 2008 crash, Jensen disavowed the transactional culture he had helped to legitimize. Holy shit, Jensen remembers saying to himself. Anything can be corrupted.

The China Shock Doctrine
By Samuel Hammond

After the Soviet Union collapsed, for example, Western economists flocked to Moscow to assist in Russia’s transition to a market-based economy. Central to this effort was the Harvard Institute for International Development, a think tank internal to Harvard University that received funding from the United States Agency for International Development. HIID was headed by a young Jeffrey Sachs, the economics prodigy who earned a reputation for advising transitioning countries to reform as quickly as possible. The formula was to cut subsidies, eliminate price controls, deregulate industries, privatize state-owned assets, and open up to foreign investment. This approach, known as “shock therapy,” gained credence after it seemed to work in Poland. But reforming Russia would prove a more difficult challenge.

The impact of shock therapy on Russia is complex and hotly contested, even to this day, but few now argue that it worked as intended. The Soviet economy had been organized in an economically haphazard way, with factory “monotowns” dotting Russia’s hinterland as vestiges of 70 years of centrally planned industrialization. In the years following the first jolt of reforms, output fell by as much as half, poverty skyrocketed, and households saw their savings wiped out by hyperinflation. “Voucher privatization,” a scheme to provide households with shares in the sale of state-owned assets, wound up enriching a small class of oligarchs who were able to move their wealth abroad. And while economic growth eventually returned, Russia’s GDP per capita didn’t surpass its 1990 level until 2004.

Russia’s experience with shock therapy makes the American China shock look downright pleasant in comparison. But despite obvious differences in magnitude, some striking parallels stand out. Shock therapy and the China shock both represented epochal shifts in the forces shaping each economy. Both spurred rapid de-industrialization, with harms geographically concentrated in rural regions. Both hardened attitudes toward globalization, laying the foundation for the rise of illiberal political leaders years later.

The Last Man and the Future of History
By Francis Fukuyama, Charles Davidson and Jeffrey Gedmin

TAI: One thing we haven’t talked about is corruption and kleptocracy, and the enabling role the West plays for authoritarian regimes. Could you talk about that as a threat to democracy?

FF: What strikes me is how the free market ideology of the Reagan years ended up justifying tax havens. Rich people never want to pay taxes, nobody does, but they used to make a principled argument against taxes. This took the form of the Laffer Curve and all sorts of theories about how low rates of taxation were good for economic growth, or that if we pay taxes the government will just waste them on some pointless social program.

Now you have the proverbial nameless rich American who, say, established a charitable foundation, has funded a lot of good causes, but lives on a little island in the Caribbean because he doesn’t want to pay American taxes. And I don’t think he feels bad about it. He says, “Tax rates are too high in the United States, so why should I pay them?” And it’s perfectly legal to live in a tax haven.

The political obstacle is that people actually don’t want enforcement of these rules. They want private banking divisions of investment banks to help them hide their money from the taxman. I think that Reaganism, or Thatcherism, gave them a principled justification for doing this. It wasn’t just, “well, I should be richer than I am,” but this idea that it was unjust to tax productive people.

TAI: But it seems like something’s different from 25 and 50 years ago, that these issues have come into sharper relief.

FF: Well, I think capitalism always worked well when it was balanced by a sense of social responsibility and an awareness that capitalist institutions were embedded in a larger society that had norms, that put boundaries around certain kinds of behavior.

Paul Collier, the development economist at Oxford, has just written a very nice book, The Future of Capitalism, which makes this point about the nature of the firm. Back in 1970, Milton Friedman published a widely cited article that said the only business of a company is to benefit its owners. Collier argues that you have a whole couple of generations of business school students who have internalized this notion, and that’s led to squeezing employees, getting every last drop of pay out of them, cutting their benefits, using political power to prevent them from unionizing, and so forth.

And capitalism wasn’t always like that. Especially in Germany and Japan after the Second World War, the business elites realized that they had been feeding an incredibly adversarial relationship with their workers in the interwar period and that if they were actually going to have social peace and democratic political systems, they had to accept sharing the wealth a little bit. I think American capitalists were like that in an earlier generation too.

TAI: If these are matters of habits and values, behavior and culture, then how do we change things for the better?

FF: Part of it is going to be a natural political adjustment. You’re now seeing ideas that have not been articulated on the Left for a long time, like a 70 percent upper tax bracket, or breaking up Google and Facebook. Six months ago this would have seemed unthinkable, but now a lot of people are jumping on that bandwagon. I think there will be a big shift in the Overton Window in terms of economic policy. At the left edge of the window it’s going to go too far, but the middle of the window may find a place that’s appropriate.

I think what’s missing is a good articulation of a moral basis for doing all of this. There is a moralism on the Left, but what the Left really needs is a political entrepreneur to articulate exactly what kind of society you want to have emerge as a result of these economic policies. I haven’t seen that articulated yet.

A Call to Moral Capitalism
By Joe Kennedy III

American capitalism has undeniably done more good for more people than any other economic system. But capitalism as we know it today is badly broken and—rightfully—under attack. The sooner we confront that, the sooner we can strip it to the studs and build something better. A moral capitalism, judged not by how much it produces, but how broadly it empowers, backed by a government unafraid to set the conditions for fair and just markets.

Today, the United States government is called to be an economic activist; to remedy the injustice it has let fester on its watch; to jump off the sidelines of an economy with the highest disparities of almost any advanced nation on earth and demand, with the full force of its mighty laws, that we do better.

First, our government must aggressively address and redress economic abuse. Decades of trickle-down dogma created a tsunami of deregulation, union-busting, and rampant consolidation that destroyed any semblance of balance between corporate power and worker clout.

Reform efforts should end predatory corporate practices. From non-competes and no-poach agreements to outdated antitrust laws that have failed to check the consequences of monopoly power for both consumers and employees. Congress must flex its muscles and actively disincentivize the shareholder-first mentality that gave corporate America over $1 trillion in stock buybacks last year while working America got pink slips. Instead, we must defend a system of fair taxation that demands significantly more from those at the top.

Particular industries require extra vigilance, from the technology companies that commoditize our data, invade our privacy, and endanger our democracy—to the pharmaceutical companies that price patients out of life-saving treatment. Strong and smart regulation is not a weight on growth but a necessary condition for a capitalist system capable—and worthy—of survival.

Is there a crisis in capitalism?
By Bill Gates

At the corporate level, Collier criticizes the notion that a company’s only responsibility is to make money for its shareholders. This sole focus on the bottom line, he argues, means many companies no longer feel responsible to their employees or the communities where they operate. This has been a big driver, he says, of “the mass contempt in which capitalism is held—as greedy, selfish, corrupt.”

I agree that companies need to take a long-run view of their interests and not just focus on short-term profits. It matters how businesses are viewed in their communities and by their employees. I think the profit motive encourages companies to take such a broad view of their interests more often than Collier acknowledges, although there are plenty of exceptions. And when we want companies to act a certain way—for example to reduce pollution or pay a certain amount of taxes—I think it’s more effective to have the government pass laws than to expect them to voluntarily change their behavior.

If I had the chance, I would ask Collier more about this. I finished the book wondering if he thinks we can change the incentive structure so companies act differently. Or perhaps some companies don’t realize that their long-term interests require valuing things other than the bottom line. It would be fascinating to discuss with him.

I would also take Collier’s world/nation/company/family argument one step further. I would add a fifth category: community. We need to re-connect at the local level, where we’re physically close enough to help each other out in times of need. Churches can serve this purpose. So can community groups. Digital tools have also helped people connect with their neighbors, though I think there’s still more that could be done there.

With a complex subject like this, it is always easier to describe the problem than to solve it. The Future of Capitalism devotes a lot of time to how we might ease people’s anxieties, including more vocational training, support for families (what he calls “social maternalism”), and policies designed to make companies behave more ethically.

How to Keep Corporate Power in Check
By Federico Díez and Romain Duval

Any weakening of pro-competition policies could amplify winner-takes-most dynamics, and companies that have achieved market dominance primarily through innovative products and business practices may attempt to entrench their positions by erecting barriers to entry, such as high customer switching costs.

The overarching policy goal should be to ensure a level playing field among all companies, including possible new ones, particularly in nonmanufacturing industries where markups have increased the most. This means lowering domestic barriers to entry (for example, by reducing administrative burdens on start-ups) and reducing barriers to trade and foreign direct investment in services. Other measures include strengthening some features of competition law and policies—such as the role of market examinations—reforming corporate taxes so as to tax the excess returns on capital derived from market power, and ensuring that intellectual property rights encourage groundbreaking innovations more than incremental ones.

Group of top CEOs says maximizing shareholder profits no longer can be the primary goal of corporations
By Jena McGregor

In a new statement about the purpose of the corporation, the Business Roundtable, which represents the chief executives of 192 large companies, said business leaders should commit to balancing the needs of shareholders with customers, employees, suppliers and local communities.

“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” said the statement from the organization, which is chaired by JPMorgan Chase CEO Jamie Dimon. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

The statement comes amid a growing national debate about the responsibilities of corporations at a time of stark economic inequality. President Trump and the candidates vying for the Democratic presidential nomination have taken aim at companies for putting profits before the needs of workers and customers on issues as varied as drug pricing, outsourcing and data privacy. And for decades, wages have climbed only moderately as the pay of top executives at public companies has soared.

Top CEOs are reclaiming legitimacy by advancing a vision of what’s good for America
By Steven Pearlstein

In many ways, the Roundtable’s new policy represents a return to a view of corporate purpose that prevailed during the era of “managerial capitalism” of the 1950s and 60s. “For years, I thought what was good for our country was good for General Motors, and vice versa,” Charles Wilson, the carmaker’s chief executive, declared at his confirmation hearing to be defense secretary in 1952.

But after the decade of the 1970s — a decade during which stock prices failed to keep up with inflation and American businesses started to lose out to foreign competition — investors began demanding a new focus on profits and share prices. And executives who refused to get with the new program soon found themselves at the receiving end of a hostile takeover bid by “corporate raiders” or competitors who promised to send them packing.

Indeed, by the time the Roundtable issued a new statement of corporate purpose in 1997 declaring that “the principal objective of a business enterprise is to generate economic returns to its owners,” it was merely acknowledging what had already become the new norm. Executives had become so fixated on maximizing shareholder value that some (Remember Enron and WorldCom?) even began cooking the books to prevent those same shareholders from learning the true state of the business.

He Ran an Empire of Soap and Mayonnaise. Now He Wants to Reinvent Capitalism.
By David Gelles

One of the first things you did was stop issuing short-term guidance. Why was that important?

If you want to make the company grow longer term, you have to get out of this rat race of quarterly reporting and quarterly behavior. Many companies manipulate their behaviors, their spending, to avoid missing expectations. Jack Welch, in his book “Straight From the Gut,” talks about hitting quarterly expectations over and over and missing it only twice by one penny, how wonderful that was. But he obviously used G.E. Financial to manipulate that. If he was that wonderful, he should have been in Las Vegas.

We were doing the same thing. We were more occupied by the quarters and would hold spending back and start it again a month later, or do other things that weren’t in the best interest of the company. I wanted to get out of that. We needed to provide the environment for people to be successful. You cannot solve issues like poverty or climate change or food security with the myopic focus on quarterly reporting.

Not many companies have followed your lead. What will it take for more companies to start acting more responsibly?

If it was that easy, it would have been done. It’s hard work. The road to change has a lot of skeptics and cynics.

We need to reinvent capitalism, to move financial markets to the longer term. C.E.O.s are basically good people. There are no C.E.O.s who want more unemployment, or more people going to bed hungry, or more air pollution. But then why collectively do we behave so miserably? It’s because we spend too much time on dealing with the impacts and not with the underlying causes.

We have to move the financial markets to the long term as systems change. We need to decarbonize this global economy if we want to keep it livable. We need to find an economic system that is more inclusive.

How Globalization Saved the World and Damned the West
By Derek Thompson

If this movement is going to succeed, however, it will have to identify not only global capitalism’s problems, but also its benefits. There is no question that free trade and increased immigration have reduced poverty and improved global living standards at a historic rate in the past 30 years. For all the hatred directed toward the Davos crowd, there will be no economic growth in the West without policies that promote entrepreneurship and innovation.

Climate change offers an interesting challenge for the movement. The Green New Deal, an environmentalist platform that would include massive public-sector investments in clean energy and infrastructure, is a part of the left’s effort to rebalance the economy away from free markets and private goods. But any realistic plan to decarbonize the U.S. economy will almost surely require the sort of commercial technological breakthroughs that tend to come from private entrepreneurs tinkering with the products of publicly funded research. And to reduce global emissions, the United States will have to share its eco-technology with China, southeastern Asian countries, and African nations, which account for most of the growth in future emissions. In other words, saving the American middle class might take a leftist intervention, but saving the world will also require something very much like free-market globalism.

Globalization’s Wrong Turn
By Dani Rodrik

The premise of the Bretton Woods regime had been that the GATT and other international agreements would act as a counterweight to powerful protectionists at home—labor unions and firms serving mainly the domestic market. By the 1990s, however, the balance of political power in rich countries had swung away from the protectionists toward exporter and investor lobbies.

The trade deals that emerged in the 1990s reflected the strength of those lobbies. The clearest illustration of that power came when international trade agreements incorporated domestic protections for intellectual property rights, the result of aggressive lobbying by pharmaceutical firms eager to capture profits by extending their monopoly power to foreign markets. To this day, Big Pharma is the single largest lobby behind trade deals. International investors also won special privileges in trade agreements, allowing them (and only them) to directly sue governments in international tribunals for alleged violations of their property rights. Big banks, with the power of the U.S. Treasury behind them, pushed countries to open up to international finance.

Those who lost out from hyper-globalization received little support. Many manufacturing-dependent communities in the United States saw their jobs shipped off to China and Mexico and suffered serious economic and social consequences, ranging from joblessness to epidemics of drug addiction. In principle, workers hurt by trade should have been compensated through the federal Trade Adjustment Assistance program, but politicians had no incentives to fund it adequately or to make sure it was working well.

Economists were brimming with confidence in the 1990s about globalization as an engine of growth. The game was to encourage exports and attract foreign investment. Do that, and the gains would prove so large that everyone would eventually win. This technocratic consensus served to legitimize and further reinforce the power of globalizing corporate and financial special interests.

An important element of hyper-globalist triumphalism was the belief that countries with different economic and social models would ultimately converge, if not on identical models, at least on sufficiently similar market economy models. China’s admission to the WTO, in particular, was predicated on the expectation in the West that the state would give up directing economic activity. The Chinese government, however, had different ideas. It saw little reason to move away from the kind of managed economy that had produced such miraculous results over the previous 40 years. Western investors’ complaints that China was violating its WTO commitments and engaging in unfair economic practices fell on deaf ears. Regardless of the legal merits of each side’s case, the deeper problem lay elsewhere: the new trade regime could not accommodate the full range of institutional diversity among the world’s largest economies.

If China and the United States are to resolve their trade conflict, they need to acknowledge that the differences between their economies are not going away. The Chinese economic miracle was built on industrial and financial policies that violated key tenets of the new hyperglobalist regime: subsidies for preferred industries, requirements that foreign companies transfer technology to domestic firms if they wanted to operate in China, pervasive state ownership, and currency controls. The Chinese government is not going to abandon such policies now. What U.S. companies see as the theft of intellectual property is a time-honored practice, in which a young United States itself engaged back when it was playing catch-up with industrializing England in the nineteenth century. For its part, China must realize that the United States and European countries have legitimate reasons to protect their social contracts and homegrown technologies from Chinese practices. Taking a page from the U.S.-Soviet relationship during the Cold War, China and the United States should aim for peaceful coexistence rather than convergence.

In international finance, countries should reinstate the norm that domestic governments get to control the cross-border mobility of capital, especially of the short-term kind. The rules should prioritize the integrity of domestic macroeconomic policies, tax systems, and financial regulations over free capital flows. The International Monetary Fund has already reversed its categorical opposition to capital controls, but governments and international institutions should do more to legitimize their use. For example, governments can make their domestic economies more stable by using “countercyclical capital regulation,” that is, restricting capital inflows when the economy is running hot and taxing outflows during a downturn. Governments should also crack down on tax evasion by the wealthy by establishing a global financial registry that would record the residence and nationality of shareholders and the actual owners of financial assets.

Left to its own devices, globalization always creates winners and losers. A key principle for a new globalization should be that changes in its rules must produce benefits for all rather than the few.

Why economist Joseph Stiglitz is advocating for “progressive capitalism”
By Sasa Woodruff and David Brancaccio

David Brancaccio: I was interviewing an expert on the effects of robots, A.I. and other automation in the workforce, and he felt that our political process will ultimately do the right thing to mitigate the possibly disruptive effects of all this technology. What do you think? Do you see a political process that’s poised to do the right thing?

Joseph Stiglitz: I think it’s part of the big political battle that we’re engaged in right now. Remember that there have been large pieces of legislation and many court decisions which have weakened the bargaining power of workers, making them even more precarious positions, and many of the new technologies having increased the precariousness of workers, undermining their bargaining positions. And this brings together several of the themes that I’ve talked about in the book, for instance the fact that globalization, the way it’s been managed, has resulted in pitting American workers against low-skilled workers, low-wage workers in developing countries. Again, eviscerating their bargaining power.

David Brancaccio: And your point is it didn’t have to be that way. That globalization could have been managed differently.

Joseph Stiglitz: Very much so. Other countries have managed it much better. Particular criticism I raise is against what are called the “investment provisions” of a number of trade agreements, which basically extend stronger property rights to American firms that invest abroad, protecting them against changes and regulations in ways they are not protected in the United States, and allowing them to despoil the environment, impose safety risks on workers and so forth. The way we managed globalization actually exacerbated the weakening of workers’ bargaining power.

David Brancaccio: But you’re very open in the book. I mean, something big has to change for these shifts to even begin to happen. A lot of it has to do with the role of money in politics, you argue.

Joseph Stiglitz: That’s right. If we’re going to actually achieve the kinds of changes that we need, we’re going to have to have a better politics. A concern that I raise is that we’ve been engaged in processes which entail disenfranchisement, weakening the power of ordinary individuals in the political process, both through gerrymandering and through the power of money, and weakening some of those systems of checks and balances. In fact, we’ve wound up with a system where a minority is determining our politics. We used to worry about a majority, and then protecting the rights of minority. Now we’re in a situation where the question is: Are we protecting the interests of the majority?

David Brancaccio: So, some form of campaign finance reform. But also you argue for addressing the issue of redistricting gerrymandering that accentuates the polarization in American politics.

Joseph Stiglitz: Very much so. And there are lots of other reforms, for instance, the United States is one of the few countries where polling occurs on a workday, and some states have deliberately tried to make it more difficult for people to cast their ballot. They make it more difficult for them to register, they have short polling hours, they put the polling booths in inconvenient places when they’re trying to discourage certain groups from voting. So, we’ve actually had a war, almost, against a full representation of the views of large parts of the country.

Everyone Claims They’re Worried About Global Finance. But Only One Side Has a Plan.
By Quinn Slobodian and Alexander Kentikelenis

For decades, it has been common sense that states have no choice but to don “golden handcuffs” and clear the way for borderless finance. Finance has not delivered the promised rewards. The United Nations recently reported that despite a massive recent expansion of global debt, investment in developing countries has only marginally increased, and that in rich countries has actually decreased.

What gains there are have accrued to the few. The profits of transnational corporations have increased, alongside their sophistication in using tax loopholes to pay as little tax as possible — ideally zero.

Even while corporate tax rates have dropped to historic lows, transnational corporations — with the support of bankers and lawyers — shift a growing share of their profits to tax havens around the world. Estimates suggest that this costs the United States approximately 15 percent of its corporate tax revenue.

Right-wing economic nationalists speak of increasing the welfare of “their” people, but they do so by scapegoating outsiders and turning a blind eye to — if not actively supporting — the very machinery that has helped produce domestic inequality.

‘The Next Backlash Is Going to Be Against Technology’
By Keith Johnson

FP: One thing that puzzles me, and you addressed it in the book, is that many populists pursue policies that are directly antithetical to their supporters’ interests, yet they continue to enjoy support. Why is that?

DR: I look at it through the lens of supply and demand side, in politics. There is the demand side, the communities that have been badly harmed by the policies of the last quarter century, and they demand change, and they are looking for new leaders with answers. But these economic anxieties and economic difficulties don’t necessarily express themselves in fully formed, programmatic agendas. So the demand side that creates the opportunity for populists to arise is strong but inchoate.

Then you have the supply side of politics, the supply of leaders, movements, political parties that are going to provide the answers—they’ll provide the narratives and stories about what’s causing the problem. And by and large, a nativist right-wing framing has been very successful, that blames immigrants and foreigners as the culprit, and that’s what we have with right-wing populists, whether Trump or the National Front in France or AfD in Germany.

One of the downsides of right-wing populists is that not only do they not provide an appropriate economic remedy, they can often provide cover for the continuation of many of the same plutocratic policies, and that is certainly what we have seen in the United States, with tax policies and deregulatory policies moving in exactly the opposite direction from what would be required.

There is an alternative framing, a left-wing framing, that in U.S. history goes back to the late 19th century. It responds to these economic anxieties in terms of economic solutions, by pointing to economic elites, by pointing to the role of large corporations and banks and plutocrats as those who have created an unlevel playing field.

And that is in many ways the more productive agenda, because in some ways it fundamentally targets the source of the economic problems rather than subverting the issue in nativist terms. So I am hopeful as time goes on that we will see more of the left-wing variant of populism, and less of the right wing.

Why capitalism needs populism
By Raghuram Rajan

Incumbents will always be tempted to sustain their positions through anti-competitive means. By supporting legislation such as the 1984 Computer Fraud and Abuse Act and the 1998 Digital Millennium Copyright Act, the leading Internet firms have ensured that competitors cannot plug into their platforms to benefit from user-generated network effects. Similarly, after the 2009 financial crisis, the big banks accepted the inevitability of increased regulations, and then lobbied for rules that just so happened to raise compliance costs, thereby disadvantaging smaller competitors. And now that the Trump administration has become trigger-happy with import tariffs, well-connected firms can influence who gets protection and who bears the costs.

More generally, the more that government-defined intellectual-property rights, regulations, and tariffs – rather than productivity – bolster a corporation’s profits, the more dependent it becomes on government benevolence. The only guarantee of corporate efficiency and independence tomorrow is competition today.

The pressure on the government to keep capitalism competitive, and impede its natural drift toward domination by a dependent few, typically comes from ordinary people, organizing democratically in their communities. Not possessing the influence of the elite, they often want more competition and open access. In the US, the late-nineteenth-century Populist movement and the early-twentieth-century Progressive movement were reactions to monopolization in critical industries such as railroads and banking. These grassroots mobilizations led to regulations like the 1890 Sherman Antitrust Act, the 1933 Glass-Steagall Act (albeit less directly), and measures to improve access to education, health, credit, and business opportunities. By supporting competition, these movements not only kept capitalism vibrant, but also averted the risk of corporatist authoritarianism.

Today, as the best jobs drift to superstar firms that recruit primarily from a few prestigious universities, as small and medium-size companies find the path to growth strewn with impediments laid by dominant firms, and as economic activity abandons small towns and semi-rural communities for megacities, populism is emerging again. Politicians are scrambling to respond, but there is no guarantee that their proposals will move us in the right direction. As the 1930s made clear, there can be much darker alternatives to the status quo. If voters in decaying French villages and small-town America succumb to despair and lose hope in the market economy, they will be vulnerable to the siren song of ethnic nationalism or full-bore socialism, either of which would destroy the delicate balance between markets and the state. That will put an end to both prosperity and democracy.

The Inequality Paradox: Rising Inequalities Nationally, Diminishing Inequality Worldwide
By Branko Milanovic

The knee-jerk answer is to shut down integration and globalization, since those developments are at the origin of the problem. But that intuitive reaction does not take into account that globalization is also at the origin of many income gains in rich countries, that it enables specialization in the areas where countries are more efficient, and that neither slamming of tariffs nor a ban on outsourcing will substantially help domestic workers or overturn the process of globalization that has gone too far. Even the most powerful countries like the United States become “small” when contrasted with the world: It might have been different in the 1950s when US Gross Domestic Product accounted for 40 percent of the world’s output, but today it is only 16 percent …

Thus, overturning globalization will neither work nor bring a real improvement to the Western middle classes. What will? Only domestic policies whose objective is either direct compensation of those who have lost their jobs, or (much better) greater efforts in matching the new workers’ skills to the demand, and especially in improving the quality and accessibility of education for all. This has been realized to be a problem in the United States where the quality of public education, due to neglect and lack of funds, has deteriorated, and where what used to be probably the best system of public education in the world has slipped much in the rankings (as measured by students’ scores on math and sciences).

How to Save Globalization
By Kenneth F. Scheve and Matthew J. Slaughter

The stew of vast success for a few, uneasy stagnation for the great majority, and an actual decline for many others came to a boil in the 2016 election. Leading presidential candidates for both parties called for less globalization, not more.

Our diagnosis a decade ago emphasized that income growth in the United States had become extremely skewed. That trend has continued. From 2000 through 2016, the inflation-adjusted total money income (the broadest official measure of worker compensation) of most Americans fell. The only two educational categories to enjoy an increase were workers with advanced professional degrees and those with doctorates. For the vast majority of American workers, earnings fell: by 0.7 percent for high school graduates and high school dropouts, by 7.2 percent for those with some college, by 4.3 percent for college graduates, and by 5.5 percent for those with a nonprofessional master’s degree. In 2016, the median household’s real income stood at $59,039—only $374 higher than it had been a generation earlier, in 1999.

People care not just about their absolute levels of income but also about their incomes over time—relative to their expectations and relative to what their parents made and other reference points. In the United States today, fewer children are growing up to earn more than their parents. For the cohort of Americans born in 1940, more than 90 percent earned more at age 30 than their parents did at the same age. For the cohort of Americans born in 1984, this share had fallen to barely 50 percent. Moreover, a growing number of Americans have stopped seeking work altogether. Labor-market participation, especially among the groups with stagnant incomes, has fallen dramatically in recent years. From 1970 to 2015, among American men with only a high school degree, the labor-force participation rate fell from 98 percent to 85 percent. For American male high school dropouts, that rate fell from 94 percent to 79 percent.

As of 2016, there were 53 metropolitan areas in the United States with a population of at least one million. From 2010 through 2016, their output grew by an average of more than 14 percent, compared with under seven percent for cities with populations under 250,000. Total employment in the largest cities grew by 15 percent, compared with just four percent in small cities and two percent in rural areas. Those 53 cities have accounted for 93 percent of the United States’ population growth over the past decade, even though they account for only 56 percent of the overall population. From 2010 through 2016, they also accounted for about two-thirds of total GDP growth and nearly three-quarters of total job growth. And even among the largest cities, there has been growing divergence. Over the last three and a half decades, the difference in GDP per capita between the ten wealthiest and the ten poorest large cities more than doubled in real dollars.

If the backlash against globalization is driven by such developments, that does not mean that simply letting the backlash proceed—shutting down trade, cutting off imports, putting up walls—will solve the underlying problems. Despite its very real role in increasing inequality, globalization does, as its champions argue, still do more good than harm. The United States’ connections to the global economy through trade, investment, and immigration have spurred gains for millions of American workers, families, and communities that, in total, exceed the losses. One study by the Peterson Institute for International Economics estimated that U.S. national output and income today would be about ten percent lower had the United States not liberalized international trade and investment as it did over the past two generations.

Indeed, the research shows that global engagement is correlated with innovation—which, by driving productivity, is the key factor in raising incomes. Companies that export and import or are part of a multinational enterprise tend to outperform their purely domestic counterparts, and global companies pay higher wages. Consider the performance of U.S.-based multinational companies. In 2015 (the last year for which data are available), they spent $700 billion on new capital investment, 43 percent of all private-sector nonresidential investment in the United States; exported $794 billion worth of goods, 53 percent of all U.S. goods exported; and spent $284 billion on research and development, a remarkable 79 percent of total U.S. private-sector R & D. That translates directly into good jobs. In 2015, U.S. multinationals employed 28 million Americans (making up 23 percent of all private-sector jobs), paying them a third more than the average private-sector job. And contrary to conventional wisdom, academic research has repeatedly found that expansion abroad in these companies’ foreign affiliates tends to create jobs in their U.S. parents, not destroy them.

Perhaps the most immediate and long-lasting damage from walling off the United States would come from new restrictions on the immigration of high-skilled workers. Immigrants have long made substantial contributions to American innovation. Immigrants, only 13 percent of all U.S. residents today, made up 39 percent of the U.S.-resident Nobel Prize winners in chemistry, medicine, and physics over the past 20 years; 31 percent of the U.S.-resident Nobel winners in all categories during that time; and 37 percent of all the U.S.-based MacArthur Foundation “genius award” winners since 2000. One recent study by the Kauffman Foundation concluded that immigrants accounted for 25 percent of all new high-tech companies founded from 2006 through 2012. As of 2017, immigrants or their children had founded 43 percent of Fortune 500 companies.

On top of the economic case for saving globalization, there is a national security case. Open markets contribute to peaceful relations between countries by raising the costs of military disputes. As trade fosters economic development, it also contributes to greater state capacity and political stability, preventing civil conflict and state failure, which can create the conditions for terrorism and other threats. And the United States’ outsized role in launching and governing institutions such as the International Monetary Fund and the World Trade Organization has projected U.S. power and values in peaceful ways unprecedented in world history.

Saving globalization requires restoring to tens of millions of Americans the dignity and the trust and faith in the United States that they have lost. This, in turn, requires building a lifelong ladder of opportunity that will give all citizens the human capital needed to adapt to the forces of globalization. Such a ladder would not guarantee success for everyone. But it is human capital, more than any other asset, that determines an individual’s chances of thriving in a dynamic economy. The United States should expand its investments in human capital at every stage of every American’s life.

The large number of Americans who believe that the United States’ economic and political institutions are no longer delivering enough opportunity are right. It should be no surprise that they are anxious, angry, and open to proposals to build walls to keep out the rest of the world. But the right response to these trends is not complacently accepting the status quo or simply letting the backlash against globalization proceed. By investing seriously in ladders of opportunity, the United States can give all its citizens the human capital that will let them take part in a changing economy—not just saving globalization but also ensuring that Americans benefit from it.

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