Month: November 2022

Here's a familiar headline from the Washington Post:

New class of combative MAGA candidates poised to roil House GOP

This happens every decade or so. In 1980 it was the Reaganauts. In 1994 it was Newt's New Model Army. In 2010 it was the tea party. This year it's MAGA.

It's the same story over and over and over. The Republican Party keeps getting pushed farther to the right by the latest crop of true believers, and every time the rest of us wonder if there's any farther it can go.

So far, the answer has always been yes.

One of my favorite statistics has finally been released for Q3: median asking rent. This is a survey figure from the Census Bureau, and unlike the figures they use for inflation this one is (a) timely and (b) accurate since it includes only asking prices for new rentals. So it gives us a genuinely good view of how much rents are increasing. Without further ado:

The rental market is clearly cooling down. In Q3 asking prices were up from $1314 to $1334, an increase of 6.2% on an annualized basis. Meanwhile, average wages were up 5.6%. That's practically identical.

In absolute dollars, monthly income was up $62 while rent was up $20.

Both of these are nominal figures, not adjusted for inflation. Since I'm comparing two numbers, there's no need. However, if you want to see asking rent adjusted for inflation, here it is:

Adjusted for inflation, asking rent is 2.4% higher than it was a year ago and 3.1% lower than its peak last year. By every measure, it looks like the rental market has come back to earth. And with housing prices set to fall, I wouldn't be surprised if rent flattens out or even starts declining by the end of the year.

I came across an old Bloomberg story today that points out something interesting:

A measure of US profit margins has reached its widest since 1950, suggesting that the prices charged by businesses are outpacing their increased costs for production and labor. After-tax profits as a share of gross value added for non-financial corporations....

Wait a second. What's this "after-tax profits as a share of gross value added" business?

In a word, it's a measure of markup, the amount a company charges for its products above and beyond the cost of raw materials and labor. For example, if I can make a widget for $100 and sell it for an average of $150, my markup is 50%. If I raise the price to $160, my markup is 60%.

Unless you can reduce the cost of manufacturing—by buying cheaper parts or paying workers less, which is unlikely these days—the only way to increase your markup is by increasing your selling price. So how about if we take a look at that over time?

First, take a look at the blue line: it represents the total cost of employing somebody, including wages and benefits. Since 2020 it's risen at less than the rate of inflation.

Now look at the red line: it represents after-tax profits as a share of gross value added, aka markup. Before 2020 it rose roughly in line with inflation, but since 2020 it's skyrocketed by more than half (you can see the underlying numbers here).

Corporations are increasing prices with abandon and blaming it on inflation. But it's not because of inflation. It's a cause of inflation. Prices are rising not because of workers, whose income is going up more slowly than inflation, and not only because raw materials are more expensive. It's mainly because companies are raising prices above and beyond that for no special reason except that they can. And all of us are paying the price.

This is someone waiting at the bright yellow doors in Les Andelys—which always looks like "Los Angeles" to me. I don't even know what these doors lead to. A school? I don't recall ever seeing a sign.

POSTSCRIPT: And what was yesterday's photo? A lot of you got close, but the answer is: a pair of Camaro headlights in my rear view mirror.

Well, this is interesting. Here are two different big investigative stories about the government's efforts to fight online lies:

Truth Cops: Leaked Documents Outline DHS’s Plans to Police Disinformation

and

How the Biden Administration Caved to Republicans on Fighting Election Disinformation

The first is by Ken Klippenstein and Lee Fang of The Intercept. The second is by Andrea Bernstein and Ilya Marritz of ProPublica. Both address the same topic, but they come to precisely opposite conclusions. For example, here is The Intercept:

Behind closed doors, and through pressure on private platforms, the U.S. government has used its power to try to shape online discourse....There is also a formalized process for government officials to directly flag content on Facebook or Instagram and request that it be throttled or suppressed through a special Facebook portal that requires a government or law enforcement email to use.

....The extent to which the DHS initiatives affect Americans’ daily social feeds is unclear. During the 2020 election, the government flagged numerous posts as suspicious, many of which were then taken down, documents cited in the Missouri attorney general’s lawsuit disclosed. And a 2021 report by the Election Integrity Partnership at Stanford University found that of nearly 4,800 flagged items, technology platforms took action on 35 percent — either removing, labeling, or soft-blocking speech, meaning the users were only able to view content after bypassing a warning screen.

Now compare that to ProPublica:

In early 2022, the Cybersecurity and Infrastructure Security Agency, or CISA, which is part of DHS, was in talks to deploy a federally funded nonprofit to protect election workers from harassment and violence.

....At that time, DHS was establishing the Disinformation Governance Board....Just hours after word leaked of its formation, right-wing media influencer Jack Posobiec issued a series of tweets slamming the board. Soon, Republican lawmakers like Rep. Andrew Clyde, R-Ga., were calling the board a “Ministry of Truth”....About 70% of Fox News’ one-hour segments over the next week contained a reference to the board, according to a report by Advance Democracy, a nonprofit media research group.

....That’s when the word went out to DHS staffers that work on “sensitive” topics like disinformation should be put on hold.

These two outlets—both of which have a reputation for being skeptical of government—are reporting on different parts of the same elephant. One concludes that federal authorities are trying to control social media. The other concludes that right-wingers are spreading egregious lies through social media while the government is trying to get the truth out and protect election workers.

In this case, it's The Intercept that's been conned. Its story is almost completely lacking in any substance and contains no examples of the government trying to force its views on social media. The government merely flags things they think are dangerous lies and social media outlets are then free to investigate and take action as they see fit. This is not anything unusual.

ProPublica, by contrast, has the story right: the MAGA wing of the Republican Party has a well-known history of relying on disinformation and becoming outraged whenever anyone fights back. They scream "censorship" to cover up the fact that their existence depends on a steady stream of lies. If social media does anything to fight those lies, the MAGAnauts lose their greatest source of power.

Should we be careful about what kinds of information efforts the government engages in? Indeed we should, given their deserved reputation for being, um, less than fully truthful. But the fact remains that there's nothing even remotely unusual about what they're doing here. From the FBI's most wanted list to the Surgeon General's campaign against cigarettes, the federal government produces a flood of information on a routine basis—much of which involves judgment calls rather than simple facts and figures. Its election disinformation efforts should be judged not by the mere fact of their existence, but by whether they are being tolerably fairminded in what they go after. So far, the evidence suggests they are.

The Wall Street Journal is worried that high savings levels might sustain inflation for a long time. Let's take a look:

The red line shows the trend of savings levels. There are three spikes that coincide with three different stimulus packages, and during those spikes savings are above the trendline. This means families are saving more than they ordinarily would. But in mid-2021 savings go below the trendline, which means families are spending down their savings.

It's easy enough to calculate the monthly excess and see how it accumulates over time:

Savings above normal peaked at about $2 trillion, but families have been spending that down and excess savings are now just under $1 trillion. Fed experts, using a different calculation, put the number at $1.5 trillion, of which $350 billion belongs to non-rich people who might actually spend it. That's about 2% of our total spending of $17 trillion per year.

Will this excess savings prolong excess spending and therefore sustain high inflation rates beyond the end of the year? Maybe! But I wonder if it's even worth looking at this. Why not just look at this?

Regardless of where income is coming from or how high it is, what you care about in the end is whether people are spending at high rates. If they are, that might sustain inflation.

But they aren't. Spending is right on trendline, neither up nor down from normal. Without doing any complicated calculations that add up different sources of income and debt and consumer confidence and so forth—and then tossing in some complicated calculations about what motivates people and how they decide to spend money—you can put it all away in a black box and just see if they are, in fact, spending money.

The Fed would surely prefer it if people were reducing their spending, since this would slow the economy. That's not happening. But neither is spending accelerating, which would certainly give inflation a push. In reality, nothing is happening. Spending is normal and has been since last December. If you're looking for something to justify high interest rates, you're going to have to look elsewhere.

Excellent news for our nation's MAGAnauts:

JUST IN: Chief Justice Roberts grants Trump temporary stay on release of tax records to congressional committee. Asks for response from committee by Thursday

— Robert Barnes (@scotusreporter) November 1, 2022

Our newly conservative justice system has played its role perfectly. They don't need to rule in favor of Trump, after all. All they have to do is delay things until Democrats lose control of the House. That looks much less suspicious, doesn't it?