Boundless, Foundless Class Warfare
Class warfare is one of those political devices better pointed to and scorned than argued with, because, at least in the modern context, it’s founded on nothing but a thin layer of unctuous innuendo over a dry cake of insufficient thought. Bob Plain provided a fine petit four of that recipe on Friday, with his daily “Progress Report“:
You don’t need a degree in economics to understand why rent is skyrocketing while wages are stagnant. As the middle class is squeezed, fewer can afford the American dream of home ownership. So they rent instead. Demand then has its way with supply and the landlords win while the working class loses. Yet another failure of the trickle down theory.
I’ll confess to having no research on which to rely, here, but it has certainly seemed to me that most of the landlords I’ve known have in fact been middle class themselves. Indeed, owning rental property is not infrequently the investment that allows them to be middle class.
But apart from practical reality, Plain’s economic theory doesn’t provide much by way of justification for pitting “landlords” against the “working class.” As I’ve shown, Rhode Island’s single-family home inventory continues to climb, even as median sales prices drop, meaning that prices are not falling quickly enough to lure buyers and/or dissuade hesitant sellers from entering the market. Multiple factors have abetted this process, including the mortgage tax deduction, government efforts to assist homeowners at risk of foreclosure, the increasingly common heavy debt of college loans, and others. (I won’t, here, get into the effect of buying up land for public use and such things.)
Absent such incentives, real estate prices would drop more quickly toward a rate that might lure renters toward longer commitments. To the extent that a “trickle down” is faulty, it’s in the trickle from government to homeowners. It creates space at the high end of rents before purchase makes simple financial sense.
But if Plain’s going to raise “the American dream,” he might as well acknowledge the effects of changing lifestyles. With young adults’ proving less inclined than their elders to marry and to have children early, there are more single professionals with additional money to spend on housing. Arguably, those middle-class landlords, striving to support the families that they do have, are soaking up some of the discretionary income.
Again, though, I’m speculating, just as Plain is, the difference being that I’m not doing so in order to stoke division for political gain.
Finding More Buyers-In to the Pyramid
Here’s an interesting pension development in California:
California Governor Jerry Brown signed a law that permits as many as 6.3 million private workers without a pension plan to set aside retirement money for management by the state.
It is the first state-run pension program for nongovernment employees and may add as much as $6.6 billion to funds managed by the California Public Employees’ Retirement System, the biggest U.S. pension. Calpers, as the fund is known, has assets of $242 billion.
The law is aimed at businesses with five or more employees that don’t offer pensions or 401(k) savings programs. The law requires companies to contribute 3 percent of a worker’s salary to a retirement account. Workers will be enrolled in the program unless they choose to opt out.
Autumn Carter goes into some of the details, and some of the reasons it’s a dubious idea, and it must be noted that the details on public pensions can be mind-boggling in their complexity.
That said, the basic summary is that a dramatically underfunded pension system would bring billions of new dollars under public control, apparently with insurers liable for under-performance. From a distance, this looks like a way to bolster the ailing fund, trying to get it over the hump of what policymakers surely hope to be a temporary period of low returns.
In short, it’s a tack that I won’t be surprised to see proposed in Rhode Island in five to ten years, when it turns out that — surprise, surprise — the recent pension reform was nowhere near comprehensive enough.
The Underdog Shouldn’t Regionalize the Battle
Some day last week, I was listening to Dan Yorke when a listener called in to insist that government reform and economic performance won’t be possible, in Rhode Island, until regionalization limits the reach of unions. That’s a very common analysis, and as regular readers know, it’s one that I think misses a critical consideration: reality.
Perhaps an analogy will help. Suppose a bunch of loosely allied small armies are battling one big army along a line stretching hundreds of miles. The big army is clearly winning, but the little armies are fighting from positions that give them some leverage, such as ravines, in which the large army’s size is not as much of an advantage.
Regionalization is like the small armies’ getting together to forge paths above the ravine so they can send troops up high in an attempt to attack the big army from the sides. The problem is obvious: the big army has more capacity to take over the newly cleared land and swoop in behind the small armies.
Finding another battlefield is only strategic when the new terrain plays more to your favor. As horrendous as the odds may be, it still remains most advantageous to the citizenry to have as many skirmishes as possible in as local a capacity as possible.
No Time for Playing Around
Eventually, it seems, the experts get around to what everybody’s already known to be true. That’s my thought upon reaching the end of this gloomy post by James Pethokoukis:
If the above forecast is correct, the National Bureau of Economic Research might wind up declaring that the U.S. economy slipped back into recession in late 2012 even though the economy was actually not yet contracting at that point.
And if that happens, economic historians might well shove aside the weak three-year recovery and call the entire 2007-2013 period the Long Recession or some such. I already have been, just like the 1980-82 period was a long recession, two downturns sandwiching a brief recovery.
Frankly, when one speaks with ordinary folks or reads letters to the editors, the Great Recession is not something people seem to consider over. Of course, the recovery has been mainly on-paper-only, so perhaps we can forgive the number-crunchers for needing to confirm the felt reality on paper, too.
But that didn’t stop Jeff Carter from titling another gloomy post, “The Coming Recession“:
More and more people are left with no hope, even though we are rapidly making technological innovations that could turn the country around if government would unshackle them. The energy sector could become a vibrant job creator. We could have a lot more manufacturing jobs in the US with a change in tax policy. But instead of putting our faith in people, the proposals on the table increase taxes and spending when we should be cutting both. The incentive to work isn’t there, and people are leaving the labor force. They are frustrated.
At the national level, given the presidential election, the economy has become a massive and frightening political football. What concerns me most, though, writing from the incontinent employment bowels of New England, is that Rhode Island is in no condition to survive another national downturn. We’ve been counting on a national recovery to bring us back to health, and we didn’t use the crisis as an opportunity to reevaluate ways in which we might learn to walk on our own.
A View Toward Confusion on Voter ID
You can tell I was in a state of extreme procrastination, because I actually watched Ann Coulter’s romp with the ladies of The View. The headline controversy was that Whoopi Goldberg had to be “bleeped,” but locally, folks may find it of more interest that Rhode Island played a role in the argument. And it did so in such a way as to illustrate some confused thinking on race and voter ID:
BEHAR: It seems to me that voter suppression is happening in areas where black people and hispanics are and it is really being promoted by the Republicans, not the Democrats.
So, my view and I have a different one from you, it looks as though the Republicans are really going against blacks, not the Liberals. What do you say to that?
COULTER: It’s a perfect example, no i’ll explain why, of liberals using the label of civil rights to promote a liberal cause they support, ie voter fraud, in fact one of the first states in the union to pass voter ID bill was Rhode Island, 85 percent democrat legislature. And who pushed it? A black Democrat in the house, a black Democrat in the senate. That’s a fact!
BEHAR: You may pick out Rhode Island, but there are other states where it’s completely Republican driven
COULTER: Why would Black Democrats be pushing this? Because they’ve seen voter fraud!
BEHAR: Because they want the hispanic vote to go to Romney!
It sounds like Joy Behar misheard and was explaining why Republicans would promote voter ID, but even with that charitable interpretation, the thinking is muddled. In essence, one must believe that Republicans would attempt (in the liberal spin) “voter suppression” in black and Hispanic communities so that, I guess, Republican minorities are more likely to have the wherewithal to procure IDs than Democrat minorities… or something.
The argument I’ve heard from local progressives to explain voter ID in Democrat RI is that the black constituencies are attempting to retain power despite their communities’ increasing numbers of Hispanics. If that’s the case, though, then it only serves Coulter’s analysis the more, making the Republican Party the one on the side of the former.