The Data And The Public

Axios has an annual Thanksgiving feature in which the publication looks at (verifiable) economic evidence for which we should be grateful. Given the mountains of misinformation and outright propaganda about the economy being promulgated for political purposes, it’s worth taking a look at what the numbers actually show.

First of all, the article says we should be grateful is that lots of Americans are working. Predictions that workers wouldn’t return to the labor force after the pandemic were simply wrong.

Workers have joined the job market in droves. The rebound in supply, lifted in part by an immigration surge, has helped the labor market come into better balance amid continued low unemployment.

The share of workers aged 25-54 who were employed was 80.6% in October — down slightly from a multi-decade high reached over the summer but higher than was seen in any month between June 2001 and January 2020.

For women aged between 25 and 54, the share who are in the labor force is near its highest level ever. So much for pandemic-era fears of a prolonged “she-cession.

Not only are people working, real wages are rising.

No matter your preferred wage growth measure, the data tells a similar story. While pay isn’t rising quite as fast as 2022’s breakneck pace, inflation has cooled much faster.

Not only that, wages finally began to outpace inflation this year; average hourly earnings for rank-and-file employees are up 4.4% over last year, and inflation is down to 3.2%. That should help keep consumer spending —a bedrock of the U.S. economy– healthy.

There are other grounds for gratitude:

The banking crisis that wasn’t. Eight months ago, the collapse of Silicon Valley Bank and two other large regional banks looked like the start of a banking crisis that risked choking off lending economy-wide. It hasn’t happened.

There have been no further major bank failures, and credit availability has generally remained stable.The government’s decision to use emergency authorities to make even the largest depositors in SVB whole instilled confidence in the banking system and prevented both mass outflow of deposits and large-scale contraction of bank lending.

If you are an enthusiast of the Fed’s H.8 report (Assets and Liabilities of Commercial Banks in the United States, as it is known) — and who isn’t — you will see that banks’ aggregate real estate loans, consumer loans and most other forms of lending are higher now than a year ago.

Commercial and industrial loans are down only very slightly, to $2.775 trillion in October from $2.777 trillion a year earlier.

And gas prices are coming down.

We need more media reports based upon economic reality, because there is a persistent difference between that reality and the public’s perception of the economy, which is much more sour than it should be in some areas, and far too sanguine in areas that ought to be seen as deeply troubling.

Take opinions about inflation. Polls show that Americans believe inflation to be much higher than the statistics show. There is scant media attention to the fact that the U.S. brought the rate of inflation down more rapidly than Europe (we won’t even discuss Argentina…)The annual inflation rate in the EC was 4.3% in September 2023, which was down from 5.2% in August. A year earlier, the rate had been 9.9%.

What is truly ironic is that Americans hold  these negative beliefs about what has been genuinely positive performance at the same time that most are blissfully ignorant of far more worrisome aspects of the economy.

According to a 2015 article in Scientific American,

The average American believes that the richest fifth own 59% of the wealth and that the bottom 40% own 9%. The reality is strikingly different. The top 20% of US households own more than 84% of the wealth, and the bottom 40% combine for a paltry 0.3%.

That gap has not narrowed.

I have spent the last 30 years warning about the consequences of the low levels of civic literacy in this country. My focus has been on the nation’s constitutional framework–the Constitution, the Bill of Rights, and the philosophical premises that undergird those documents. I now realize–thanks to the persistent disconnect between economic reality and public opinion about the economy– that the country has major problems with economic literacy as well.

Our economy has problems. They just aren’t the ones a majority of our citizens recognize or understand. We aren’t going to be able to address those problems unless a majority of our citizens can accurately identify them. Basic economic literacy is just as necessary as constitutional literacy if the voting public is going to install public officials who understand those basics.

I’m beginning to understand why we have so few citizens who cast truly informed votes.


Defining Privilege

Let me begin this discussion by admitting that communication is hard. Words mean different things to different people in different contexts, which is why consultants like Frank Luntz have made lots of money teaching Republicans to use phrases like “Death tax” rather than the demonstrably more accurate “estate tax.” (What the government is taxing, after all, is the estate–the assets left by the decedent–not the death.)

Understanding the power of language both to illuminate and confuse helps us recognize the problem with clumsy and misleading slogans (i.e. “defund the police.”)  There are also terms, however, that are arguably appropriate and/or accurate, but that nevertheless raise the hackles of folks who  (intentionally or unintentionally) interpret them differently.

One of those is  “privilege.” White privilege. Male privilege.

Evidently, a lot of people hear the word “privilege” and assume it refers to luxury, or at least ease. What it actually is intended to convey is the absence of a barrier–White people don’t get followed around in shops by clerks convinced that Black people are likely to be shoplifters; men don’t face “casting couch” situations when they apply for jobs. They have the “privilege” of being judged on the basis of relevant credentials and behaviors.

I’m not sure what other word we might use to convey that absence of added burdens.

The Indianapolis Business Journal recently ran a column by Tom Gallagher that struck me as a perfect example of White privilege. It was about redlining.

Gallagher explained that, in the 1930s, the Federal Home Loan Bank Board and its operational arm, the Home Owners’ Loan Corp., were established to stabilize the real estate market as the Great Depression was ending.

They are also responsible for creating the maps that ultimately gave the discriminatory practice of redlining its name.

To encourage “responsible” lending practices, working with local real estate professionals, financiers and appraisers in communities across the nation of more than 40,000 people, Home Owners’ Loan Corp. created color-coded reference maps investors could use as a standard to determine the “security” of their investments. Based on their assessments, the “best” neighborhoods were graded “A” (in green). “B” (in blue) were “still desirable” and those given a “C” were considered “definitely declining” (in yellow). The neighborhoods given the lowest grade of “D” were regarded as “hazardous” and were, of course, colored in red.

The idea of a locally based, data-informed basis for decision-making was a good one. The problem arose in the values applied to the assessments. There was a clear bias toward newer and more spacious development, for example. Most shocking was that the residents were being graded, perhaps more than the real estate itself, not in terms of their credit value or economic viability but in terms of the “kind of people” they were. The Mapping Inequality project points out, “HOLC assumed and insisted that the residency of African Americans and immigrants, as well as working-class whites, compromised the values of homes and the security of mortgages.” To be sure, the maps didn’t create prejudice, but they did codify and normalize it.

As Gallagher and many others point out, the practice of redlining resulted in a “systematic and fundamental restructuring of our cities to favor the privileged and divert opportunities for wealth from those deemed unworthy.” It has had a lasting effect on the health and wealth of communities of color.

The Brookings Institution dubbed those effects the “destructive three “Ds.”

Black neighborhoods are denied the opportunity to build wealth through housing (which is the predominant mechanism through which White folks amass assets); they experience the systemic devaluation of their existing assets (both residential and business/commercial properties); and thanks to the results of redlining, banks frequently deny loans, which  leads to disinvestment that undermines efforts to arrest and reverse decline.

To those three “Ds,” Gallagher adds two others:  asset devaluation, which leads to a drop in prices and allows outside investors to step in, acquire property “on the cheap” and displace long-term residents and small businesses.

It seems accurate to describe those of us who don’t have to deal with the consequences of those racially discriminatory policies as privileged.

It also seems appropriate to note that redlining and its persistent after-effects are an excellent example of what we mean when we talk about structural/systemic racism–one of the “built into the law” systems that are the focus of  Critical Race Theory studied by law professors.

I don’t know whether Frank Luntz or one of his clones is responsible for turning that example of relatively arcane graduate-school study into a phrase meaning “hey, White people, ‘they’ are coming for you..,” but Republicans do have a genius for turning descriptive words into weapons.


Inequality–a Rumination

Over at Political Animal, David Atkins has reported on another recent, depressing study of the economic status of American families; as he notes,

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

Atkins discussed the dimensions and effects of the steady escalation of this division between rich and poor Americans, and his analysis is definitely worth a read. But I had just completed a 15-hour drive back from the beach when I read his post, and it made me think about a companion question, one I often ponder when–as on this drive through back roads, trying to avoid congestion–the landscape shows me a kind of American life that I can’t imagine living.

That certainly isn’t a moral judgment; it isn’t even an aesthetic one. It’s simply recognition that the lives of folks who inhabit the very small towns, or who live in the middle of broad fields miles from a grocery store or corner bar, live a life unfathomably different from my downtown urban neighborhood existence. I can’t help wondering how my opinions on matters of politics and policy would differ if I lived in a small house or converted double-wide on a lightly-traveled county road. Who would I talk to? Would we even discuss political issues beyond the most local concerns? Where would I get my civic information? Would I think of myself as a “have not,” or would I be satisfied with my situation? Would isolation bother me? What would I read, and why would I choose to read it?

Surely so incredibly different a life would have created an incredibly different me.

Us “city folks” who have trouble understanding why people don’t see things that seem so glaringly obvious to us need to take a drive across the back roads of rural America from time to time. Despite the country’s increasing urbanization, a lot of our fellow-citizens still live there.

I don’t really know where their “there” is. But then, I imagine they don’t relate very well to my life experience, either. There’s no right or wrong here–just difference.

The mutual incomprehension probably explains a lot, but it makes communication pretty tough.