Some people drink a beer (or two or three) while watching football. I tend to catch up on my econ reading. It's a personality flaw, I know. I'll probably end up in therapy.
But the reason for the counseling wouldn't be my below-average intake of alcohol. Rather, it's my above-average proclivity to get pretty livid about what's there, in the numbers, printed in black and white and all sorts of fancy colors and charts and sidebars and footnotes, that gets me into trouble. When combined with the main danger of (relative) youth, not having learned to accept yet that the world is as it is and can't be changed, it compels speaking out about what's going on. This information I think is very similar to the stories told about ourselves and our world through all the major forms of human expression, from music to painting to theater and so forth.
Like any other kind of expression, you have to know what you're looking for, otherwise it's easy to be overwhelmed by the sheer volume of information, or be distracted from the broader themes by a particular bit of noise. In fact, one of the aspects of highly skilled practitioners I find most interesting is that the experts in the field are most likely to get sidetracked by blemishes in the performance. Go see a movie with a film critic. Listen to a choir concert with a classically trained vocalist. Visit a museum with a painter. Talk about the meaning of life with a philosophy major.
Discuss political economy with someone who has a PhD in economics...**
It can be very rewarding and eye opening. But, it can also be distracting, because sometimes what's most important are the major themes, the 'big picture', not the intricate details and flaws and statistical noise and notes that were slightly off key and camera angles that should have been better and blocking that wasn't done perfectly and so forth.
What I want to do this afternoon is draw a few bits of information out of a couple reports, to purposefully take them out of context, because that allows us to be jarred and shaken by their sheer absurdity. In many ways, the story of our time is that we allow so much to happen in our country even though we know it's happening and have the tools to change it. That's how it's been; it undermines our capacity to be outraged that it continues to be. This is important for Democratic party politics because we are firmly in charge. We are responsible for our actions or inactions in addressing where we stand today. Most of us are familiar at some level with the main problem in our society, wealth concentration, that has been destabilizing both our economy and our democracy. I hope that this helps illustrate some particular ways of visualizing and understanding this foundational challenge. Often times, our online commentary is driven by trying to be the quickest to report on some fleetingly breaking event, but I think it's also valuable to go back and look in more detail at items made available during the year.
The two main documents I'm pulling from are the Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances [PDF warning] from the Federal Reserve this February and the Income, Poverty, and Health Insurance Coverage in the United States: 2008 [PDF warning] from the Census Bureau this September. The econ and finance world is pretty good about covering these things. What intrigues me is that the impact on our political discourse seems to be pretty fleeting most of the time.
Storyline #1: Median wages have never before fallen over an entire decade.
As David Leonhardt summarized:
Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.
The post war economy, where public policy was actively employed to link productivity and wages, is over. In our new economy, all the gains from work accrue to those at the very top. There is no market reason for this. This is because government has changed policy from rewarding work to rewarding wealth. The fundamental justification of capitalism is that it raises living standards over time. If it were capitalism that were broken, we'd need to find something else, and no one is quite sure what that would be. But our position, fortunately, is much easier to address. What is broken is public policy, and we have many easy policy fixes at our disposal. All we have to do is choose to use them (no easy task itself, of course, as the wealthy rather like owning most of the country).
Storyline #2: Homeowners are significantly wealthier than renters and homeless persons.
This of course is an aggregate statement. The richest renter is wealthier than the poorest homeowner. But the data is very clear. The disparities between these two groups are astonishingly overwhelming.
The Fed study pegged median homeowner net worth at $234,000, while the median net worth of those who don't own a home is $5,000. The mean figures are $778,000 for homeowners, $71,000 for renters/other.
Every time you hear some lobbyist from the National Association of Realtors or the National Association of Home Builders or the Mortgage Bankers Association or some other special interest group claim that taxpayer dollars should be used to support home ownership, keep this in mind. The home mortgage interest deduction, capital gains tax exemptions, low interest loans, unprecedented expansion of government guarantees of mortgages, loose prosecution of fraud, and so forth, collectively amount to a massively regressive transfer of wealth.
And remember, this isn't a heartless statement caring not about homeowners. The three most important policies to help struggling homeowners have nothing to do with the tax code; they are universal unemployment insurance, universal health insurance, and equitable bankruptcy codes (these are the three main solutions that match up with the three main problems in housing: income shocks, unexpected medical bills, and negative equity).
Storyline #3: Our economy is, by definition, racist.
If #2 didn't make some people uncomfortable, perhaps this one will.
The Census Bureau has been tracking median household income by race for a few decades; Blacks about 4, Whites and Hispanics for 3, and Asians for 2. This past year, there are some clear differences by race:
White, not Hispanic: $55,500
Hispanic, any race: $37,900
Now of course, it's possible that some sort of aberration occurred in 2008. One data point doesn't say a whole lot. There's a chart on page 7 that just absolutely has to be seen to fully grasp our history on this.
This ordering of race-based median household income holds in every year data is available. Every. Single. Year. The lines simply never cross.
If a private employer, or a housing association, or a government agency, or other such group operated this way, they'd be sued into oblivion. But when our economy as a whole operates this way, we largely just acclimate to it and move on. One of the great advances brought about through the 1950s and 1960s is widespread consensus that personal acts of racism are simply unacceptable in our social contract. Yet we have largely chosen to ignore (or even make worse) the racism institutionalized into our educational system, healthcare system, criminal justice system, environmental protection, and so forth. Again, this is an area where public policy is responsible for much of the situation. We could act, if we so desired, to change things for the better.
Storyline #4: There are broad regional differences in household income.
There's a natural tendency for some competition among people from different parts of the country. We like to take sides, form teams, and then go on about how our team's superior to your team. To a point, that can be fun and healthy. It would actually be kind of boring living in a world where no one was passionate about the place they call home.
There is also a tendency in our political discourse, though, to elevate these friendly outlets into something more profound and divisive, as if New York bankers must by definition be more financially literate than Kansas City bankers or Californians necessarily more liberal than Georgians.
Here's a list of median household income by broad region:
That strikes me as not insignificant. Some of the people who most need the protection of our United States, of our federal system of governance, are those who live in flyover country and the Bible Belt. And, these are also some of the people who have driven 'progressive' or 'populist' ideas the hardest. Not only should we not talk about abandoning some regions or some states because we have a duty to them, but also, because they make the Democratic Party stronger. We are not a party, or a country, of 20 or 30 states. We are 50 states, plus some other interesting territories and protectorates and whatnot. One of the primary reasons that more 'liberal' states are net exporters of tax dollars to less liberal ones, for example, is simply that the Midwest and South are poorer, relatively speaking.
Storyline #5: We take advantage of immigrants, not the other way around.
I get a kick out of the right-wingers who go on about immigrants taking our jobs. Generally speaking, it's our own public policy that is driving them here in the first place. To think that someone desires to leave their family, their home, their culture, their language, in short, everything that's familiar, and go somewhere else is funny. It's just laugh-out-loud, stand up comedy. The easy way to deal with immigration is to make gaining legal citizenship a clear, straightforward process, rewrite corporate trade pacts to be market-based trade pacts that reflect our values (like environmental protection, worker rights, health & safety standards, and so forth), and stop inflicting economic sanctions on foreign countries. Most Mexicans and Cubans and Haitians and so forth would much prefer to make their own country stronger, not migrate to the US.
And then, when immigrants get here, we don't even pay them well. Check out this category from the Census Bureau:
The median income of a native born citizen is $51,100.
The median income of a naturalized citizen is slightly higher, $51,500.
But the median income of foreign citizens is only $38,000.
Tell me again, who's getting the short end of the stick on that one?
Storyline #6: We have a suburban/everywhere else split, not an urban/rural split.
To me, one of the interesting developments in development is that neither cities nor the countryside are where our wealth is anymore. People of means choose to live in between, in these various suburbs and exurbs that neither enjoy the benefit of high density urbanization nor the natural charm of rural life.
Those who live 'inside principal cities' had median income of $44,200.
Those who live entirely outside a Metropolitan Statistical Area had median income of $40,800.
Those who live in an MSA, but outside the principal cities, had median income of $57,900.
Storyline #7: Men still make $10,000 more than women.
I saved this one for last because what's notable about the gender gap is that it is closing. There has been progress made on this front. Women entering the workforce are in a much better position relative to men than those entering the workforce 20 or 30 or 50 years ago. Unfortunately, the primary reasons for this have been a harmonization downward of men's income, not exactly the ideal means of reaching equilibrium, and public policy that purposefully undermines service sector wages that are dominated by women, like daycare, home healthcare, housekeeping, and so forth. And it's still amazing to see the number. For full-time people employed for a full year, at the end of the day, men still earned 10 gees more than women.
For men: $46,400.
For women: $35,700.
To me, the most tragic differences are those we can do something about. We have lots of good options, from lots of brilliant people, to effect real change in our country. Hopefully you can pick out a storyline or two that's particularly meaningful to you, and you'll ask people you know what we're doing to make it better.
** Update: As this wanders off into perpetuity in the lovely eternal world of the intertubes, I want to explicitly append one bit of editorial commentary here. This is one of the reasons that I am a big defender of people like Paul Krugman, Dean Baker, Robert Kuttner, Elizabeth Warren, Joseph Stiglitz, Brad Delong, and so forth. Of course we're not going to agree with every word written and spoken (democracy is majority tyranny, not consensus tyranny, after all). What's valuable is the striving to bridge the gap between hyper-compartmentalized, mathematically fortified disciplines and popular understanding. We owe a lot to professionals like these who are willing to stick their necks out in their fields a bit to try and communicate with a broader audience (ie, us).
Update 2: Yves Smith posted a particularly poignant exploration today of one family's story that ties in nicely to this, both in the circumstances of the family and in how our perspectives shape our reactions to the situation. And James Kwak added some quite useful commentary to this theme.