2019 - A Look Back at a Strange Economic Year

[_honorentheos]

With the end of the year a few days away, it's inevitable that the news will be filled with retrospectives on both 2019 and the 2010's as a whole.

Of the ones I've seen so far, this one from Reason.com caught my eye for it's take on the economic state of the US over the last year. I thought it did a fair job in raising questions regarding the contrasts and disorienting directions that we can see in both economic activity as well as public political reactions to it. To borrow from Dickens, we seem to have a tale of three economies that represent the best of times, the worst of times as well as the weirdest of times. There is the economy according to Trump and his acolytes, the economy according to the Democratic Presidential candidates, and the economy as it seems to be operating that isn't reflected exactly in either of the former. Within each of those are the variety of ways people perceive the economy as it affects them which are too numerous to count. But overall, it has been a strange year with likely unavoidable consequences that will come due in the future.

https://reason.com/2019/12/26/was-2019- ... mentality/

Was 2019 the Year of Peak Entitlement Mentality? - Veronique de Rugy

Looking back at 2019 is incredibly disorienting. The country is horribly divided. In fact, the president of the United States was just impeached along partisan lines. The government is running $1 trillion (and growing) annual budget deficits, even though the economy is doing well. Still, listening to many politicians and pundits, you'd think the nation is doing terribly and the government isn't spending a dime. That's 2019 in a nutshell.

The economy is entering its 11th year of expansion. Poverty is at an all-time low; so are African American and Hispanic unemployment rates. The 3.5% overall unemployment rate hasn't been that low since 1969. The unemployment rate for women hasn't been this low since 1952. The employment rate for workers ages 25 to 54 is finally back above its pre-Great Recession level. Wages are on the rise, especially at the bottom of the income distribution. The stock market is on fire. Small businesses and many industries are complaining that they can't find enough workers to fill all the jobs they have.

Not everything is perfect, of course. There's still relative poverty, but that's an immutable fact of life—and of the way we define poverty. Many economists are concerned that productivity isn't growing as fast as it could. This matters because productivity growth is an important source of rising living standards. Manufacturing isn't doing great, either, thanks to the president's self-destructive trade war. Farmers are hurting badly due to the tariffs, as are many of the companies downstream of the tax. Yet the economy continues to show resilience in spite of this.

So what explains the gargantuan budget deficits? During good times, spending on many programs meant to alleviate poverty and economic hardship typically goes down. But not as much anymore. Ever-easier eligibility for programs like food stamps has deviated from the program's original intent. Medicare and Medicaid expansion have guaranteed that the programs will continue growing and adding to the deficit, whether times are good or bad.

Both political parties are carelessly spending on a whim. They just passed a spending package of $1.4 trillion alongside $500 billion in irresponsible tax breaks. And Democrats are actively trying to restore the state and local tax deduction, or SALT, a handout to rich people in high-tax states.

More intriguing is the political discourse. Listening to Democratic presidential candidates, you'd think that Americans are living in abject poverty that can only be remedied by government taking over all student debt, all medical costs and boosting the incomes of a politically powerful group who are already overrepresented in the top income quintile—namely, seniors. Listening to Republicans, you'd think that it's never been as hard to be a woman or raise a family in America. In fact, GOPers today call for programs like mandated paid leave—which they assert is an idea whose "time has finally come"—and large increases in the child tax credit. Others condemn the free-market system as if it hasn't delivered anything but grief to low-skilled workers and destruction to the environment.
The truth is quite different. When the economy is doing well, most people do well, including women and their families. More importantly, it's the same free-market economy that Republicans and Democrats today so vociferously condemn that has produced the wealth that everyone takes for granted.

According to research from the Massachusetts Institute of Technology, in order to get the standard of living that ordinary Americans enjoyed in 1975, today we would only have to work 23 weeks out of the year. To achieve 1950s standard of living now requires a mere 11 weeks of work! People were fairly content back then. In fact, many who complain that the free market has failed us point to those decades as America's golden age. This is an illusion, of course. Most of us make the choice to work more and acquire a significantly better living standard. Yet, few people realize and appreciate how very much more we have now.

At the end of this year, then, I'd venture to guess that the problem in 2019 isn't that free markets don't work but that we may have reached peak entitlement mentality. Let's hope we come back to Earth in 2020 and start to appreciate that while all isn't perfect, we're incredibly lucky to be alive today.

[_Brackite]

And Democrats are actively trying to restore the state and local tax deduction, or SALT, a handout to rich people in high-tax states.

If Democrats are trying to do that, then I disagree with them on that. That is about the only real good thing from the Tax Act law of 2017.

[_ajax18]

Yet, few people realize and appreciate how very much more we have now.

That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?

[_canpakes]

Yet, few people realize and appreciate how very much more we have now.

That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?

What are the causes of either?

Here's a hint:

[_honorentheos]

Yet, few people realize and appreciate how very much more we have now.

That's an interesting thought. Do we have more stuff because we buy more cheap stuff from China than people did in the 1950s?

On the other hand did people not earn significantly better wages (adjusted for inflation) with a high school degree or less in the 1950s versus what that level of education qualifies them to earn today?

The average poor family in the 1950s had the same number of personal computers, iPhones and flat screen TVs in their home as the wealthiest families did. Pretty sure that's socialism.

[_ajax18]

The average poor family in the 1950s had the same number of personal computers, iPhones and flat screen TVs in their home as the wealthiest families did. Pretty sure that's socialism.

I think you mistook my question for an attack.

Technology definitely seems to have improved life for about everyone, at least a little. I remember it cost my mom $150 to talk to me on the phone during my mission in South America. Now people can skype for next to nothing. Of course you need a computer, internet access, etc.

[_honorentheos]

It was meant as a joke, ajax. Look at that sentence in context -

According to research from the Massachusetts Institute of Technology, in order to get the standard of living that ordinary Americans enjoyed in 1975, today we would only have to work 23 weeks out of the year. To achieve 1950s standard of living now requires a mere 11 weeks of work! People were fairly content back then. In fact, many who complain that the free market has failed us point to those decades as America's golden age. This is an illusion, of course. Most of us make the choice to work more and acquire a significantly better living standard. Yet, few people realize and appreciate how very much more we have now.

Put simply, it's saying your 40 hour work week today is getting you a lot more than the average work week in the '50's afforded. The comment in the article is pointing out people lived with less back then, were content if most likely because they perceived it as living quite well compared to how we'd perceive living life that way today, and most of us don't realize how much life has changed for the average person in the United States over the last 60-70 years. It touches on both sides of your question, pointing out that the average family today has the benefits of technologies making their lives easier that were science fiction at best in these eras people imagine to be the golden years of American civilization. Within the statement, "To achieve 1950s standard of living now requires a mere 11 weeks of work!" is the fact the average person in the 1950's didn't own a television, maybe owned a single car shared by the family, may not have owned a refrigerator or washing machine, likely lived in a family with more kids than we do today, had a stay at home mom whose full-time job was to do the things most of us use machines to do today. The average home was less than 1000 sq. ft. Today we'd say the person living like the average person in the '50s was living in poverty.

It has nothing to do with cheap goods from China.

[_ajax18]

I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

[_Some Schmo]

I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

Yeah, remember the good ol' days when you could be openly racist and it was acceptable?

*sigh*

[_honorentheos]

I still think there were some things that were better in the 1950s and even 1970s. Our quality of life now is better but I disagree with the blanket statement that everything was worse in the past.

Saying a person today with the life circumstances of someone in the 50s would be considered as living in poverty isn't the same as saying things were worse in the past.

But for the sake of discussion, what do you have in mind?