Month: November 2024

It's been a while since we looked at rising medical costs. Here's the latest:

Medical costs surged in the early '80s, but steadily came down over the next 20 years. Since 2000, medical inflation has been fairly well controlled, averaging about one percentage point higher than overall inflation.

More recently, medical care wasn't affected by the post-pandemic surge in prices. So medical inflation has been well under the overall rate of inflation. As a result, net medical inflation over the past dozen years has matched overall inflation exactly. They're both up 39% since 2012.

Here's an interesting chart from the Financial Times that shows how well governing parties have done in elections through the years:

The point of this chart is supposed to be that, for the first time ever, governing parties have lost every single election so far in 2024. People all over the globe wanted to throw the bums out, and they did. Kamala Harris was just an unfortunate victim of an unstoppable force.

Fair enough. But something else caught my eye. Take a look at the Great Depression of the 1930s. Governing parties were about 50-50. For the next fifty years, nothing. Then look at the big recession of the early '80s. It didn't have a huge effect, but governing parties clearly lost more than they won.

But the recession of the early '90s? Big effect. The Great Recession of 2008-09? An even bigger effect. And 2024 is the biggest effect of all.

What this seems to show is that in the past voters didn't especially punish governing parties for the state of the economy. But for the past 30 years they have. This is a small sample size, but still intriguing. If bad economies have spelled doom for governing parties only recently, why the change?

Over at Mother Jones, my old colleague Mike Mechanic says the reason for voter discontent is more fundamental than most pundits think:

I’m talking here about something even more basic, something that undergirds so much of America’s discontent. The best explanation, after all, is often the simplest:

Wealth inequality.

There is little that leaves people as pissed off and frustrated as the feeling that no matter how hard they work, they can’t ever seem to get ahead. And this feeling has been slowly festering since the 1980s, when Ronald Reagan and his cadre of supply-side economists launched the first salvos in what would become the great fucking-over of the American middle and working classes.

The frustration was evident in something two very different women in two very different states told me on the very same day in 2022 for a story on how America spends hundreds of billions of dollars a year subsidizing retirement plans mostly for rich people: “I’m going to have to work until I die.”

This is kind of maddening. My heart is with Mike, but my head has a hard time following. It's absolutely true that wealth inequality has increased over the past few decades. According to the Federal Reserve, the wealth difference of the top 10% compared to the working class was 33:1 in 1989. Today it's 41:1

And yet, that doesn't mean the working class is taking it in the shorts. Ditto for those at retirement age:

Adjusted for inflation, the median wealth of the working class has gone up 93% since 1989. That's not as good as the rich, and it hasn't quite kept up with economic growth. Still, it's nearly double.

As for retirement, I can't find wealth figures just for working class retirees, but median wealth for middle class retirees has gone up 129%.

I just don't know who's right here. I know very well that some people are struggling, and some people really do have to keep working longer than they want to. But how many? Simple, reliable data suggests that the working class is doing well, if not spectacularly, and that most people can still retire at age 65 if they want to.¹ What's more, although workers have gotten more pessimistic about retirement, actual retirees are almost all pretty satisfied:

It seems indisputable that lots of working class folks are unhappy about something, but the objective data doesn't give much of a clue about what it might be. Feel free to take your best guess in comments.

¹There's a PhD assignment here for some enterprising grad student. We know for sure that more people are working past 65, but a lot of this is by choice. Nobody has done any work to find out how many elderly people are working longer involuntarily. Somebody should do that and try to figure out if it's changed over time.

Here's a happier picture to make up for yesterday. It's a farmer (?) waving to us on the boat with a big smile on his face.

Why did Kamala Harris lose? Everyone knows the answer:

• Inflation.
• Refusal to break with an unpopular Biden.
• Too little appeal to the working class.
• Too woke.
• Press was derelict in warning the country about the danger of Trump.
• Gaza.
• Supporting biological trans boys in girls' sports.
• Liz Cheney.
• Avoiding media interviews for first month.
• Immigration.
• Latino men.
• Tidal wave of disinformation.
• Misogyny.
• Prosecuting Trump galvanized the GOP base.
• Too much flip flopping on fracking etc.
• Identity politics.
• Biden stayed in race too long.
• Keeping Jen O'Malley Dillon as campaign manager.
• Coronated too quickly with no public input.
• "Joy."
• "Fascist."
• Biden stimulus.
• Failure to go on Joe Rogan's podcast.
• Too lefty.
• Too centrist.
• Elon Musk.
• Laughed too much.
• Picking Tim Walz for VP instead of Josh Shapiro.
• No Sister Souljah moment.

Phew. It's a miracle she managed to get any electoral votes at all.

Who were the big winners in yesterday's big Trumptastic stock market rally? Crypto, Tesla, and Wall Street:

Coinbase jumped 31%.... Bitcoin topped $76,000, a record high..... Tesla surged 15%.... Bank stocks surged.... Citigroup was up 8.4%, Wells Fargo jumped 13%, Bank of America rose 8.4%, JPMorgan Chase was up 12%, Goldman Sachs gained 13%, and Morgan Stanley rose 12%.

And there were losers:

First Solar dropped 10%, Enphase Energy tumbled 17%, and other clean-energy stocks fell with a Trump presidency being considered negative for renewable energy companies.

Contrary to what you might think, crypto, Tesla, and banks are mostly the province of the affluent investor class. Green energy companies, by contrast, employ lots of middle-class workers. So.

The stock market is soaring, but not every stock has joined the celebration. DJT is down since Donald Trump won the election:

What's going on? Is there just lots of selling pressure as big investors get out while the getting is good? If any stock should have skyrocketed after Trump's win, it's Trump's own stock. I don't get it.

Donald Trump won by appealing to the working class with a bevy of promises. No tax on overtime! Bring back manufacturing! Tariffs on China and Mexico! Deport 20 million illegal immigrants! Slash energy prices!

But surprise! Can you guess what his top priority really is? Huh? Can you?

At the moment, I'm not much interested in the million and one liberal narratives floating around online explaining "why she lost"—all with remarkable certitude. Emotions are too raw and people are mostly just relitigating all their old grievances. But when a party suffers a six-point swing against it in every single state, the problem is something big and fundamental, not whether Kamala was chosen too quickly (please) or the press didn't tell people how bad Trump is (they did). A biggish slice of Americans just don't like the dog food Democrats are selling.

At the moment, I'd say the single most widespread self-critique is that Dems have abandoned the working class, so it should be no surprise that the working class abandoned Dems. The assumption generally is that we abandoned them economically, with no willingness to consider the possibility that liberals need to reconsider their cultural values. I suspect that's a serious mistake, but for now let's go with the economic argument.

Here's my question: What, exactly, can liberals do for the working class? The Trump answer, aside from rhetorical support, is basically (a) small tax cuts and (b) revenge against China for taking away our manufacturing jobs.¹ In other words, it's all vibes, since neither of those things will make the working class noticeably better off.

Kamala Harris's answer was a few small bore things like help with down payments. "Retraining" has historically been a popular suggestion, which wildly misreads what displaced working class folks want. Safety net programs? Liberals have long been hellbent on phasing them out at low income levels that bypass the working class. "Buy American" is popular with both parties, but it rarely gets enforced seriously and people are rightfully cynical about it. This kind of stuff just won't do the job.

I honestly don't know the answer. The problem is that Democrats have been remarkably successful over the years, leaving very few big-ticket social welfare items undone that might genuinely make a difference. Universal healthcare is the obvious exception, and putting long-term senior care under Medicare might be another. But they're both expensive and extremely difficult to pull off politically.

So if we confine ourselves to economic answers, there's not much available. Inflation was supposedly a huge issue this year, but if so it just means Democrats were doomed. Inflation was caused by the pandemic and ended by the pandemic. There was nothing anyone could do about it.

What's the answer? If we refuse to discuss culture-war moderation because, by God, those are moral issues and you don't compromise on morality, we're stuck with purely economic appeals to the working class. But what?

¹Some might add immigration hawkery, but I wouldn't. I feel pretty strongly that when you dig down, anti-immigrant sentiment is far more cultural than economic. "Oprima dos para español" pisses them off way more than the jobs virtually no white people ever lose to illegal immigrants.

Donald Trump might be the luckiest guy in the world. First off, in a single day he (a) was elected president of the United States, (b) escaped all of his criminal prosecutions, and (c) made several billion dollars from his now valuable holdings of Truth Social. He's also accomplished all of his promises:

He says he'll beat inflation, and it's already beaten. Last quarter it clocked in at 1.2% compared to the previous quarter. It was at 2.4% on a year-over-year basis.

He says he'll rein in illegal immigration, and it's already reined in. What's more, job demand has plummeted so pressure on the border will remain low.

He says he wants Israel to giddy up and finish off the war, and it's already winding down of its own accord because there are only so many Palestinians you can kill. It's likely to be over within his first year.

He says he'll turbocharge the economy, and it's already turbocharged. In the latest quarter, real GDP grew 2.8% and is now an astonishing 2.6% above potential GDP. That's the highest it's been in half a century.

He says he'll cut imports from China, and they've already been cut. Last year imports of goods from China came to 1.28% of GDP, the lowest in 20 years.

He says he'll get interest rates down, and they're already coming down. The Fed cut rates by half a point in September and has already promised more cuts to come.

He says he'll produce more oil and gas, and both are already at the highest levels in American history.

He says he'll get crime down, and it's already down because it never went up in the first place. The one thing that did go up was murder, and so far in 2024 it's plummeted to 4.4 per 100,000, the lowest rate in more than 40 years.

There's really not much left for Trump to do. All he has to do is not bollix things up.