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Archive for November 29th, 2019

Job loss predictions over rising minimum wages have not come true

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Stef W. Kight and Dion Rabouin report in Axios:

Eighteen states rang in 2019 with minimum wage increases — some that will ultimately rise as high as $15 an hour — and so far, opponents’ dire predictions of job losses have not come true.

What it means: The data paint a clear picture: Higher minimum wage requirements haven’t reduced hiring in low-wage industries or overall.

State of play: Opponents have long argued that raising the minimum wage will cause workers to lose their jobs and prompt fast food chains (and other stores) to raise prices.

But job losses and price hikes haven’t been pronounced in the aftermath of a recent wave of city and state wage-boost laws.

  • And more economists are arguing that the link between minimum wage hikes and job losses was more hype than science.

What we’re hearing: “The minimum wage increase is not showing the detrimental effects people once would’ve predicted,” Diane Swonk, chief economist at international accounting firm Grant Thornton, tells Axios.

  • “A lot of what we’re seeing in politics is old economic ideology, not what economics is telling us today.”

The doom-and-gloom that opponents have predicted, “are part of the political policy debate,” Jeffrey Clemens, an economics professor at UC San Diego, tells Axios.

  • His research for the conservative American Enterprise Institute is often quoted in arguments against minimum wage increases.
  • But Clemens told Axios: “People will tend to make the most extreme argument that suits their policy preferences, and it’s not surprising if that ends up being out of whack with the way things unfold on the ground.”

Where it stands: Cities and states around the country are taking action as the federal minimum wage — $7.25 an hour — “has remained unchanged for the longest stretch of time since its 1938 inception under the Fair Labor Standards Act,” according to a recent paper by the New York Fed.

  • Cities like New York, Seattle, Chicago and San Francisco have raised local minimum wages, and individual companies have done so as well: Amazon set its minimum at $15 an hour last year.

As of July: “14 states plus the District of Columbia—home to 35% of Americans—have minimum wages above $10 per hour, as do numerous localities scattered across other states,” according to the N.Y. Fed.

  • Laws in New York, California, Connecticut, Illinois, Maryland, Massachusetts, and New Jersey will eventually increase minimum wages to $15 per hour.

Axios used Bureau of Labor Statistics data to compare job growth rates in four states with low minimum wages vs. eight states with high minimum wages:

  • Since 2016, when California became the first state to pass the $15 minimum wage law, all 12 states have seen growth in restaurant, bar and hotel jobs.
  • Three of the four states with job growth higher than the U.S. median have passed laws that will raise the state minimum wage to at least $13.50.
  • Three of the five states with the slowest job growth rates did not have a state minimum wage above the federal minimum of $7.25 an hour.
  • An outlier was Massachusetts, which had the slowest job growth in the sector and currently has the highest state minimum wage: $12 an hour.

The big picture: A number of peer-reviewed academic studies have found little to no impact on hiring as states and municipalities have raised the minimum wage.

  • Rather, such increases are likely to have increased hiring in the strong U.S. economy, Bill Spriggs, chief economist at labor union AFL-CIO, tells Axios.

Yes, but:  . . .

Continue reading.

Their conclusion:

The bottom line: Opposition to higher minimum wage laws is increasingly based in ideology and orthodoxy rather than real-world evidence, economists say.

Written by LeisureGuy

29 November 2019 at 6:12 pm

Cryptoqueen: How this woman scammed the world, then vanished

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A very long read about a very big scam. Jamie Bartlett reports for BBC News.

Written by LeisureGuy

29 November 2019 at 4:59 pm

The Real Class War

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Julius Krein writes in American Affairs:

Since at least 2016, the divide between the “working class” and the “elite” has been considered a defining issue in American (and Western) politics. This divide has been defined in occupational terms (“blue collar” versus “information workers”), geographic terms (rural and exurban regions versus major urban cores), and meritocratic terms (non-college-educated versus those with elite credentials). Oc­casionally, it is given an explicitly moral connotation (“somewheres” versus “anywheres,” “deplorables” versus “cosmopolitans”). All of these glosses effectively track basic economic categories: those who are seen to have enjoyed success in recent decades and those who have been “left behind.”

Like most clichés, this one contains elements of truth. The work­ing class has experienced economic stagnation and precarity, and even declining life expectancy in the United States, as well as lower family stability and civic engagement. Social mobility has declined, while inequality has widened.

But it is precisely for these reasons that the working class is unlikely to be decisive in shaping politics for the foreseeable future. However one defines the working class, it has scarcely any political agency in the current system and no apparent means for acquiring any. At most, working-class voters can cast their ballots for an “un­acceptable” candidate, but they can exercise no influence on policy formation or agency personnel, much less on governance areas that have been transferred to technocratic bodies. In countries like France, the working class might still be able to veto certain policies through public demonstrations, but such actions seem unlikely in the United States, and even the most heroic efforts of this kind show little prospect of achieving systemic reforms.

For regimes that style themselves liberal democracies, this situation might be disconcerting, yet it has persisted for some time. The policy agenda that brought about the political and economic marginalization of the working class was adopted between the 1970s and the early 2000s. A more organized working class was unable to stop it then; it is difficult to imagine a weakened working class reversing it now.

While a restive working class might provide fertile ground for po­litical upheavals, any fundamental transformation of Western politics will necessarily be led by increasing numbers of the “elite” who defect from the dominant policy consensus and rethink their allegiance to establishment paradigms. Conventional narratives, including many that are critical of the status quo, paint the elite as a unified block aligned with neoliberalism. But the neoliberal economy has created a profound fracture within the elite, the significance of which is just beginning to be felt.

The socioeconomic divide that will determine the future of poli­tics, particularly in the United States, is not between the top 30 per­cent or 10 percent and the rest, nor even between the 1 percent and the 99 percent. The real class war is between the 0.1 percent and (at most) the 10 percent—or, more precisely, between elites primarily dependent on capital gains and those primarily dependent on profes­sional labor.

The last few years have brought about a new “discovery” of working-class immiseration—a media phenomenon arguably pro­voked by renewed elite anxieties. As a result, the story of a declining working class is now broadly understood. It is, after all, decades old, and it was entirely predictable if not exactly intended. Much less understood, however, is the more recent reshaping and radicalization of the professional managerial class. While the top 5 or 10 percent may not deserve public sympathy, their underperformance relative to the top 0.1 percent will be more politically significant than the hol­lowing out of the working or lower-middle classes. Unlike the work­ing class, the professional managerial class is still capable of, and re­quired for, wielding political power.

At bottom, the economy that has been constructed over the last few decades is nothing more than a capital accumulation economy. As long as returns on capital exceed returns on labor, then the largest capital holders benefit the most, inequality rises, and wealth becomes more and more narrowly concentrated.1 Labor—including elite la­bor—is inevitably left behind. Marxian thinkers have been analyzing these dynamics for almost two centuries, but they have often misread the political effects of these developments, which play out primarily among the elite managerial class, rather than within the binary of capitalists and proletarians.

The Forgotten Managers

Discussions of stagnant wage growth for nonmanagerial workers since the 1970s have become commonplace over the last few years, along with the story of hardening socioeconomic divides.2 “The 9.9 percent is the new American aristocracy,” as one Atlantic headline put it.3 Yet what is happening within the 9.9 percent has received little scrutiny. In fact, the fortunes of the members of this new “aristocra­cy” have diverged considerably. The performance gap between the top 1 or 0.1 percent versus the top 10 percent is actually larger than the gap between those right at 10 percent and any part of the bottom 90 percent.

Members of the top 5 or 10 percent have done better than the middle and working classes in recent decades, but this masks their dramatic underperformance relative to the top 1 percent (and espe­cially the top 0.1 percent). Since 1979, the real annual earnings growth of the top 1 percent has more than tripled that of earners at 10 percent, while growth for the 0.1 percent is, in turn, more than twice that of the 1 percent.

The picture is even darker when the elite category is expanded. Senator Ben Sasse, for example, drawing on Robert Putnam, has defined the “mobile educated elite” as the top 31 percent.4 But the top 1 percent has left the rest of this group far behind. According to the Congressional Budget Office, income grew 226 percent after taxes and transfers from 1979 to 2016 for the top 1 percent, but only 79 percent for the next 19 percent of Americans, and significantly less—47 percent—for the middle 60 percent.5 Whatever their cultural aspi­rations, the economic trajectory of someone at 31 percent is closer to that of the 61 percent than the 1 percent.

In addition, the year 2000 represented something of an inflection point for high earners—just as Chinese accession to the WTO around that time was a tipping point for manufacturing workers. After 2000, growth began to slow for all income groups, though massive inequality persisted. By contrast, from 1980 to 2000, incomes were growing at a healthy pace throughout the top 10 percent. Whatever the benefits of neoliberalism might have been, they were exhausted for all but the largest capital holders by 2000.

Lost amid the celebrations of the “information economy” in recent decades is the fact that elite career trajectories are no longer what they used to be. The performance gap of elites versus the working and middle classes has widened, but professionals outside the very top are unlikely to match the wealth accumulation of their parents.

Big Law, for example, has recovered from the immediate aftermath of the financial crisis, when articles proclaiming the death of that business model were being written every week.6 But the sector has still undergone some lasting structural austerity, particularly at the associate level, and remains far from its “golden age.”7 Associate salaries at white-shoe firms, for example, remained flat from 2007 to 2016.8 They began rising during the last two years, but analysts are already seeing industry demand slowing again.9

Finance is another sector that no longer delivers for the top 5 percent like it once did, even though firm profits are high. At Gold­man Sachs, according to Bloomberg, “Compensation per employee is down 61% . . . when adjusted for nominal wage growth in the period [since 2007].”10 Some of this decline is related to Goldman’s move into retail banking, but not all of it: “Traders have been the worst hit as trading isn’t what it used to be,” noted an analyst quoted in the Bloomberg report. Average compensation for mid-level employees in sales and trading has fallen by about half while investment banker salaries have been reduced by about one-third.11

Outside of the banks, hedge fund returns have been disappointing for decades. Of the thousands of funds that exist today, no more than a handful have any reason to exist. Accordingly, fees have been falling across the industry for several years.12 Typical employees can enjoy a comfortable lifestyle, to be sure, but they are unlikely to accumulate substantial capital themselves—certainly nothing equivalent to what their counterparts in the 1980s and ’90s achieved. Even at the very top, the latest generation of celebrity managers, such as Bill Ackman, Da­vid Einhorn, and Dan Loeb, have mostly fallen flat. They will never match the records of the older generation of stars who got their start in the Reagan era—though many of these managers have also sput­tered. Private equity is comparatively healthier, but it has become highly competitive and increasingly reliant on financial engineering gimmicks, such as selling companies between funds managed by the same firm.13 In short, the effects of financialization on the real econ­omy are being replicated within the industry itself—the upward redistribution of rents within a context of overall deceleration.

Silicon Valley, meanwhile, continues to be seen as the brightest star in the new economy universe. For founders and venture capitalists, it would be difficult to imagine a better system for minting billionaires—even if today’s most celebrated start-ups, like Uber and WeWork, increasingly look like attempts to subsidize revenue growth at a loss in order to pursue monopoly rents, although with dubious prospects.14 But the Valley has never been particularly fertile for the salaried professionals and “engineers” hired by these companies, who even now generally make less than their counterparts on Wall Street or in Big Law. Kindergarten playroom office spaces and other exag­gerated perks often serve to distract employees from this harsh reali­ty.15 The median salary for U.S. IT workers, who frequently must live in high-priced urban areas, is only $81,000.16 Moreover, increasing numbers of engineers, even at the most prestigious companies, are hired on temporary contracts. When the artificial growth model stalls, employees can expect mass layoffs, “anti-hierarchy” propaganda not­withstanding. Companies like Uber and WeWork are the most prominent cases recently, but employees at many oft-hyped tech companies report surprisingly high anxiety about job security: more than 70 percent of Tesla, eBay, and Snapchat employees said they were afraid of being laid off, according to one survey released this year.17

Other professionals often fare worse. Many positions that require advanced degrees, large student loans, and living in expensive cities barely pay $100,000 a year. The streets of Cambridge, Massachusetts, are filled with large numbers of scientists with doctorates from pres­tigious universities working at top biotech firms or research institutes, but living seven to a house with little hope of accumulating savings. The career prospects of journalists and academics—ironic casualties of the “information economy”—are declining even more relentlessly. When members of these professions write about embittered working-class Trump supporters in declining industries, they may as well be writing about themselves. Indeed the conspicuous embrace of “elite values” by journalists and academics is often little more than an aspi­rational attempt to remain connected to an economically distant elite—just as educated millennials’ conspicuous consumption of “ex­periences” often serves as a necessary distraction from the grim reality that most will never be able to own a home.

The Rising Costs of Elite Membership

Meanwhile, the costs of maintaining elite status—and passing it on to one’s children—have risen disproportionately for the top 5 or 10 percent. The ongoing decline of the middle and working classes may have reinforced the top 10 percent’s sense of elite status, but it also means that any backsliding would be catastrophic. These pressures have converged in two key areas in particular: real estate and education.

The narrowing of economic opportunity into a smaller number of sectors and geographies (partly due to deindustrialization) has result­ed in a clustering of elites into a handful of “superzips.” Even among those who have managed to do well in the heartland, their children will most likely leave for New York, San Francisco, or a handful of other cities. They often have to in order to achieve the same earning potential as their parents. Real estate prices in these areas have risen accordingly. A study by the Brookings Institution showed that the median income rose by 26 percent in San Francisco from 2008 to 2016, but rents more than doubled during the same period.18 Because of rising real estate costs, households earning in the top 25 percent nationally are actually classified as “low income” in San Francisco. The household “low income” threshold in the Golden Gate City is now approximately $117,000.19 By comparison, a household needs to earn about $100,000 to make it into the top 31 percent nationally; the national top 10 percent household income threshold is approximately $178,000.20

In addition to deindustrialization and sectoral clustering, financialization and rising intra-elite inequality added further pressure. The immediate effect of global oligarchs buying investment properties and pieds-à-terre in prime urban areas was to price out professional elites. These displaced elites then began gentrifying working-class and mid­dle-class neighborhoods. An entire “creative class” ideology was constructed to explain this phenomenon, but its intensity simply concealed the desperation of second-tier elites to assuage their status anxiety. In reality, they simply could not afford to live in the areas where people of their status used to live, just like the working-class people whom they were, in turn, pushing out even further. On the other hand, in areas that were casualties of deindustrialization, many elite neighborhoods steadily declined.

At the same time, the costs of passing elite status onto one’s children—elite education—rose rapidly. Between 1973 and 2013, tui­tion costs rose faster than even the 1 percent’s income growth—and more than twice the rate of the top 5 or 10 percent’s income growth.21

The 2019 “Varsity Blues” college admissions scandal offers a unique window into the pressures that educational credentialing is creating even at the top levels of the elite. The scandal involved a number of wealthy parents bribing college coaches to get their chil­dren into prestigious universities through athletic recruiting, along with fraudulent test scores. The orchestrator of the scheme described the process as a “side door”—in contrast to the “front door” (students getting in on their own) and the “back door” (families making large donations to the university).22 It should surprise no one, of course, that elites are using their wealth to allow their children to cut to the front of the line. American meritocracy has been a sham for a long time. Rather, what is new about this scandal is the fact that a former CEO of pimco, a managing partner and founder of TPG Capital, and the cochairman of Willkie Farr and Gallagher felt compelled to use the “side door,” presumably because they could not afford the “back door.” Whatever else the scandal says about elite universities circa 2019, it reveals the seedy depths of intra-elite inequality and competition.

Moreover, while the costs of education have risen, since 2000 the rewards have been declining. During the 1990s, the wage premium for college education grew significantly. From 2000 to 2014, however, wages for young college graduates actually fell.23 In recent quarters, wages for lower-income workers are growing faster.24 These trends, combined with real estate trends, have led to more college graduates—28 percent—living with their parents than ever before.25 (The numbers are around 40 percent in New York and Los Angeles.)

Upper-Middle-Class American Radicals

Since 2000, the combination of stagnation, widening inequality, and the increasing cost of maintaining elite status has arguably had a more pronounced impact on the professional elite than on the working class, which was already largely marginalized by that point. Elites outside of the very top found themselves falling further behind their supposed cultural peers, without being able to look forward to rapid­ly rising incomes for themselves.

This underappreciated reality at least partially explains one of the apparent puzzles of American politics in recent years: namely . . .

Continue reading. There’s much more.

Optimism seems increasingly out of touch.

Written by LeisureGuy

29 November 2019 at 4:44 pm

Morality and beliefs

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A recent Quora question I encountered was “Is it immoral to not believe in God’s existence?” I think it’s clear that the “existence” to which they refer is an objective existence independent of human culture — the existence of (say) the sun and birds rather than the existence of (for example) chess, jazz, and the German language. The sun and birds exist independently of human culture, and thus all human cultures include recognition of those. Chess, jazz, and the German language do exist (I play chess, enjoy listening to jazz, and know a little German), but their existence is only within human culture and most human cultures don’t know those. (In my view, the existence of God(s) is the latter sort of existence: within human culture.)

So to the question: “Is it immoral to believe that God has no existence outside human culture?”

I think it obviously is not, because morality is about behavior, not beliefs. You can believe anything you want, but whether you are moral or not depends on how you treat other people. Indeed, some people have morally admirable beliefs but immoral behavior. Chris Argyris wrote (very interesting) books about this in the context of business. He discussed how CEOs, lacking honest feedback, often find that their expressed code of behavior (their beliefs in how one should behave) drifts from their actual code of behavior (how they actually behave). For example, they may believe that open discussion of ideas is valued, but when they present plans they shut down any disagreement. Morality is concerned with their behavior, not with their beliefs and ideas.

Written by LeisureGuy

29 November 2019 at 9:17 am

Posted in Daily life

A better EJ clone, with LA Shaving Soap’s synergistic Vanilla/Eucalyptus/Mint

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Today’s natural-bristle brush begins the Wet Shaving Products shelf. I have several of their brushes, which I find to be excellent. Certainly this one, a Monarch, did a super job with LA Shaving Soap’s excellent Vanilla/Eucalyptus/Mint shaving soap. The lather is fragrant — and refreshing on the skin.

The RazoRock MJ-90A puts the Gillette Heritage in the shade: it shaves better, it’s much higher quality and has better materials and workmanship, and it costs less (presumably because “RazoRock” has not achieved the market recognition and appeal that “Gillette” has — but to be fair, “Gillette” has a head start of more than a century).

Three passes, lovely shave, perfectly smooth action, perfectly smooth result, and a tiny dab of Esbjerg Aftershave Gel to finish the job nicely.

A wonderful start to a sunny day.

Written by LeisureGuy

29 November 2019 at 8:17 am

Posted in Shaving

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