Some links related to financial and economic matters.
Contrary to Andrew Yang's grim prophecies, automation is not rendering vast swathes of the public unemployable. What technology and trade have done, however, is displace millions of Americans from their middle-class jobs, and send them hurtling down the income ladder into less remunerative occupations. And while some dimensions of this development have inspired widespread political attention (if not meaningful political action), others have gone all but unmentioned. The plight of the downwardly mobile manufacturing worker is familiar to most Americans. But that of the displaced administrative assistant is less so. And yet, they are two sides of the same story: Since 2000, the U.S. economy has shed 2.9 million jobs in (disproportionately male) production occupations, and 2.1 million in (disproportionately female) administrative and office-support roles.
Interesting piece by the FT today that only one-third of Americans feel the benefits of the great bull market. Only 40 percent of the population realizes stocks are up for the year. These are tough numbers for a so-called "populist" president who claims the stock market bull as one of his greatest achievements and much of his base is not participating in the gains.
In my opinion, the central bankers are trying to fix problems that can't be fixed with ultra-easy monetary policies. They are trying to fight the four forces of deflation: Détente, Disruption, Debt, and Demographics.
If we had to choose one "big picture" reason why the vast majority of households are losing ground, it would be: the costs of essentials are spiraling out of control. I've often covered the dynamics of stagnating income for the bottom 90%, and real-world inflation, i.e. a decline in purchasing power.
But neither of these dynamics fully describes the relentless upward spiral of the cost basis of our economy, that is, the cost of big-ticket essentials: housing, education and healthcare.
An academic disagreement has big real-world implications
It is fiendishly complicated to calculate how much people earn in
a year or the value of the assets under their control, and thus
a country's level of income or wealth inequality. Some people
fail to complete government surveys; others undercount income
on their tax returns. And defining what counts as "income"
is surprisingly difficult, as is valuing assets such as unquoted
shares or artwork. Legions of academics, not to mention government
officials and researchers in think-tanks, are devoted to unpicking
these problems.
...
The conventional wisdom to have emerged from these efforts
revolves around four main points. First, over a period of four
to five decades the incomes of the top 1% have soared. Second,
the incomes of middle-earners have stagnated. Third, wages have
barely risen even though productivity has done so, meaning that
an increasing share of GDP has gone to investors in the form of
interest, dividends and capital gains, rather than to labour in
the form of wages. Fourth, the rich have reinvested the fruits of
their success, such that inequality of wealth (ie, the stock of
assets less liabilities such as mortgage debt) has risen, too.
Each argument has always had its doubters. But they have grown in number
as a series of new papers have called the existing estimates of inequality
into question.
...
But it is inequality in incomes after taxes and benefits that really
conveys differences in living standards, and in which Messrs Auten
and Splinter find little change. Some economists argue these figures
are distorted by the inclusion of Medicaid. But it is hard to deny
that the provision of free health care reduces inequality. The
question is whether "non-cash benefits" should properly count
as income.
Gregory Zuckerman discusses his new book, The Man Who Solved the Market, and how James Simons became one of the most successful investors in history.