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Some amazing findings on income mobility in the US including this: the image of a static 1 and 99 percent is false
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In a 2014 New York Times article titled “From Rages to Riches to Rags” Washington University professor of social welfare Mark Rank presented some amazing and striking findings on income mobility in America, here’s a slice (my emphasis):
The picture drawn of the 1 percent has been that of a static population, just as the 99 percent is often portrayed as unchanging. There is a line drawn between these two groups, and never the two shall cross. But is it the case that the top 1 percent of the income distribution are the same people year in and year out? Or, for that matter, what about the top 5, 10 and 20 percent? To what extent do everyday Americans experience these levels of affluence, at least some of the time?
In order to answer such questions, Thomas A. Hirschl of Cornell and I looked at 44 years of longitudinal data regarding individuals from ages 25 to 60 to see what percentage of the American population would experience these different levels of affluence during their lives. The results were striking.
It turns out that 12 percent of the population will find themselves in the top 1 percent of the income distribution for at least one year. What’s more, 39 percent of Americans will spend a year in the top 5 percent of the income distribution, 56 percent will find themselves in the top 10 percent, and a whopping 73 percent will spend a year in the top 20 percent of the income distribution (see those statistics displayed in the chart above).
Yet while many Americans will experience some level of affluence during their lives, a much smaller percentage of them will do so for an extended period of time. Although 12 percent of the population will experience a year in which they find themselves in the top 1 percent of the income distribution, a mere 0.6 percent will do so in 10 consecutive years (see chart).
It is clear that the image of a static 1 and 99 percent is largely incorrect. The majority of Americans will experience at least one year of affluence at some point during their working careers. (This is just as true at the bottom of the income distribution scale, where 54 percent of Americans will experience poverty or near poverty at least once between the ages of 25 and 60).
Ultimately, this information casts serious doubt on the notion of a rigid class structure in the United States based upon income. It suggests that the United States is indeed a land of opportunity, that the American dream is still possible — but that it is also a land of widespread poverty. And rather than being a place of static, income-based social tiers, America is a place where a large majority of people will experience either wealth or poverty — or both — during their lifetimes.
Rather than talking about the 1 percent and the 99 percent as if they were forever fixed, it would make much more sense to talk about the fact that Americans are likely to be exposed to both prosperity and poverty during their lives, and to shape our policies accordingly. As such, we have much more in common with one another than we dare to realize.
Thanks to Professor Mark Rank for bringing some much-needed attention to the fact that there is dynamic movement up and down the income quintiles throughout most Americans’ lifetimes, and contrary to public opinion, the income categories for the top 1/5/10 percent of Americans are not fixed, static closed groups, but fluid, abstract categories with ever-changing composition of different Americans. It’s an important point that Thomas Sowell has been making for years, here’s an example of his from back in 2000, a column of his titled “Perennial Economic Fallacies“:
Alarmists are not talking about real flesh and blood people. They are talking about abstract categories like the top or bottom 10 percent or 20 percent of families or households. So long as all incomes are not identical, there will always be top and bottom 10 percents or 20 percents or any other percents. But these abstract categories do not contain the same people over time. Behind both the statistics on inequality that are spotlighted and the statistics on ever-changing personal incomes that are ignored is the simple fact that people just starting out in their careers usually do not make as much money as they will later, after they have had years of experience.
Who should be surprised that 60-year-olds have higher incomes and more wealth than 30-year-olds? Moreover, that was also true 30 years ago, when today’s 60-year-olds were just 30. But these are not different classes of people. They are the same people at different stages of their lives. At some times and places, there have been whole classes of people who lived permanently in poverty or in luxury. But, in the United States today, the percentage of Americans who fit either description does not reach beyond single digits.
It is one thing to be concerned about the fate of flesh and blood human beings. It is something very different to create alarms about statistical relationships between abstract categories.
Something to be thankful for: the cost of a 2017 Thanksgiving dinner is lower than last year and 23% lower than 1986
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From today’s annual report from the American Farm Bureau Federation (AFBF) on the cost of a classic holiday meal, “Farm Bureau Survey Reveals Lowest Thanksgiving Dinner Cost in Five Years”:
American Farm Bureau Federation’s 32nd annual price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $49.12, a 75-cent decrease from last year’s average of $49.87. The big ticket item – a 16-pound turkey – came in at a total of $22.38 this year. That’s roughly $1.40 per pound, a decrease of 2 cents per pound, or a total of 36 cents per whole turkey, compared to 2016.
“For the second consecutive year, the overall cost of Thanksgiving dinner has declined,” AFBF Director of Market Intelligence Dr. John Newton said. “The cost of the dinner is the lowest since 2013 and second-lowest since 2011. Even as America’s family farmers and ranchers continue to face economic challenges, they remain committed to providing a safe, abundant and affordable food supply for consumers at Thanksgiving and throughout the year.”
The shopping list for Farm Bureau’s informal survey includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a veggie tray, pumpkin pie with whipped cream, and coffee and milk, all in quantities sufficient to serve a family of 10 with plenty for leftovers. Consumers continue to see lower retail turkey prices due to continued large inventory in cold storage, which is up almost double digits from last year, Newton explained.
1. Compared to $49.87 last year, the cost this year for a classic Thanksgiving Day dinner for 10 people is $49.12, and 1.50% (and 75 cents) lower than the cost in 2016 (see dark blue line in top chart). That 1.50% decrease in the price for a turkey dinner in 2017 compares to increases over the last year of 2.00% for overall consumer prices and 2.3% for average hourly earnings.
2. The average price for a 16-pound turkey this year ($22.38) is 1.3% (and 36 cents) lower than last year’s price of $22.74, and the prices of other food items on the menu that fell from last year are were a gallon of milk, $2.99 this year; a dozen rolls, $2.26; two nine-inch pie shells, $2.45; a 3-pound bag of sweet potatoes, $3.52; a 1-pound bag of green peas, $1.53; and a group of miscellaneous items including coffee and ingredients necessary to prepare the meal (butter, evaporated milk, onions, eggs, sugar, and flour), $2.72.
3. Adjusted for inflation, the cost of a classic Thanksgiving dinner this year is 3.0% less expensive than last year, and the lowest since 2010 (see light blue line in top chart).
4. Compared to the cost of a Thanksgiving dinner in 1986 of $63.87 (in 2017 dollars), today’s classic turkey dinner is 23.1% cheaper at $49.12 this year.
5. Measured in time worked at the average hourly wage for all private production workers of $22.22 in October 2017, the “time cost” of this year’s classic turkey dinner is only 2.21 hours, down by 3.5% from 2.29 hours last year and at the lowest level since 1986 when this annual AFBF report started (see bottom chart). Compared to 1986 when the average American would have worked 3.21 hours to earn the income necessary to purchase the turkey dinner for 10, the “time cost” for a worker today (2.21 hours) is 31.2% lower.
Bottom Line: The fact that a family in America can celebrate Thanksgiving with a classic turkey feast for less than $50 and at a “time cost” of only 2.21 hours of work at the average hourly wage for one person means that we really have a lot to be thankful for on Thanksgiving: an abundance of cheap, affordable food. The average worker would earn enough money before their lunch break on just one day to be able to afford the cost of a traditional Thanksgiving meal. Compared to 1986, the inflation-adjusted cost of a turkey dinner today is more than 23% cheaper, and 31% cheaper measured in the “time cost” for the average worker. Relative to our income and relative to the cost of food in the past, food in America is more affordable today than almost any time in history.
Note: There has been criticism in past years that the AFBF’s classic Thanksgiving dinner menu wouldn’t really be enough food for 10 people. In that case, let’s say it’s more realistically a dinner for 4 or 8 people, or whatever number you think is more realistic. Whether it’s a Thanksgiving dinner for ten or one, the important point is that the AFBF determines the retail prices for a fixed basket of 12 food items every year and compares those retail prices over time. Call it a “Classic Thanksgiving Meal for X People,” and choose your own X – the comparison of the cost over time wouldn’t change!
According to the AFBF: “The Thanksgiving dinner survey was first conducted in 1986 and the survey menu has remained unchanged since 1986 to allow for consistent price comparisons.”
Details in BLS report suggest that earnings differentials by gender can be explained by age, marital status, children, hours worked
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The Bureau of Labor Statistics (BLS) releases an annual report every year on the “Highlights of Women’s Earnings” (since the BLS report actually analyzes equally both men’s and women’s earnings, one might ask why the report isn’t simply titled more accurately “Highlights of Earnings in America”?). Here’s the opening paragraph from the most recent BLS report “Highlights of Women’s Earnings in 2016” that was released in August:
In 2016, women who were full-time wage and salary workers had median usual weekly earnings that were 82 percent of those of male full-time wage and salary workers. In 1979, the first year for which comparable earnings data are available, women’s earnings were 62 percent of men’s. Most of the growth in women’s earnings relative to men’s occurred in the 1980s and 1990s. Since 2004, the women’s-to men’s earnings ratio has remained in the 80 to 83 percent range.
How do we explain the fact that women working full-time last year earned only 82 cents for every dollar men earned according to the BLS? Here’s how the National Committee on Pay Equity (NCPE) explains it:
The wage gap exists, in part, because many women and people of color are still segregated into a few low-paying occupations. Part of the wage gap results from differences in education, experience or time in the workforce. But a significant portion cannot be explained by any of those factors; it is attributable to discrimination. In other words, certain jobs pay less because they are held by women and people of color.
Let’s investigate the claim that the gender pay gap is a result of discrimination by looking at some of the data on wages and hours worked by gender and by marital status and age in the BLS report for 2016:
1. Among full-time workers (those working 35 hours or more per week), men were more likely than women to work a greater number of hours (see Table 5).
a. For example, 25.5% of men working full-time worked 41 or more hours per week in 2016, compared to only 14.5% of women who worked those hours, meaning that men working full-time last year were nearly twice as likely as women to work 41 hours per work or more.
b. Further, men working full-time were also 2.3 times more likely than women to work 60+ hour weeks: 6.1% of men worked 60 hours per week or more in 2016 compared to only 2.6% of women who worked those hours.
c. Also, women working full-time were about 2.5 times more likely than men to work shorter workweeks of 35 to 39 hours per week: 11.4% of full-time women worked those hours in 2016, compared to only 4.7% of men who did so.
What’s especially interesting is that women working 35-39 hours per week last year earned nearly 10% more than men who worked those hours, i.e. there was a 9.9% gender wage gap in favor of female workers for that cohort. Using the standard political and gender rhetoric of groups like the National Committee on Pay Equity, couldn’t that wage premium for women be mostly explained by gender discrimination against men in the labor market for employees working 35-39 hours per week? That is, to be consistent shouldn’t the claim here be that “certain jobs pay less because they are held by men”?
2. Although not reported by the BLS, I can estimate using its data that the average workweek for full-time workers last year was 41.4 hours for women and 43.2 hours for men. Therefore, the average man employed full-time worked nearly 2 more hours per week (1.80 hours) in 2016 compared to the average woman, which totals to an average of an additional 90 male work hours per year.
Comment: Because men work more hours on average than women, some of the raw wage gap naturally disappears just by simply controlling for the number of hours worked per week, an important factor not even mentioned by groups like the National Committee on Pay Equity. For example, women earned 81.9% of median male earnings for all workers working 35 hours per week or more, for a raw, unadjusted pay gap of 18.1% for all full-time workers. But for those workers with a 40-hour workweek (about three-quarters of all full-time female workers), women earned 89% of median male earnings, for a pay gap of only 11%. Therefore, once we control only for one variable – hours worked – and compare men and women both working 40-hours per week in 2016, nearly 40% of the raw 18.1% pay gap reported by the BLS disappears.
3. The BLS reports that for full-time single workers who have never married, women earned 91.6% of men’s earnings in 2016, which is a wage gap of only 8.4% (see Table 1 and chart above), compared to an overall unadjusted pay gap of 18.1% for workers in that group. When controlling for marital status and comparing the earnings of unmarried men and unmarried women, more than half (53.6%) of the raw 18.1% wage gap is explained by just one variable (among many): marital status.
4. In Table 7, the BLS reports that for full-time single workers with no children under 18 years old at home (includes never married, divorced, separated, and widowed), women’s median weekly earnings of $697 were 95.1% of the weekly earnings of $733 for their male counterparts in that cohort (see chart above). For this group, once you control for marital status and children at home, we can explain about two-thirds of the unadjusted gender earnings gap.
5. Also from Table 1 in the BLS report, we find that for married workers with a spouse present, women working full-time earned only 78.9% of what married men with a spouse present earned working full-time in 2016(see chart). Therefore, BLS data show that marriage has a significant and negative effect on women’s earnings relative to men’s, but we can realistically assume that marriage is a voluntary lifestyle choice, and it’s that personal decision, not necessarily labor market discrimination, that contributes to at least some of the gender wage gap for married full-time workers with a spouse present.
6. The BLS also reports in Table 1 that for young workers ages 20-24 years, women earned 95.6% of the median earnings of their male counterparts working full-time reflecting only a 4.4% gender wage gap for that age cohort in 2016. Once again, controlling for just a single important variable – age – we find that more than three-quarters of the overall unadjusted raw wage gap for all workers (18.1%) disappears for young workers.
7. Also from Table 7, married women (with spouse present) working full-time with children under 18 years at home earned 81.2% of what married men (spouse present) earned working full-time with children under 18 years (see chart). Once again, we find that marriage and motherhood have a significantly negative effect on women’s earnings; but those lower earnings don’t necessarily result from labor market discrimination, they more likely result from personal family choices about careers, family friendly and flexible workplaces, commute time, child care, and the number of hours worked, etc.
Bottom Line: When the BLS reports that women working full-time in 2016 earned 81.9% of what men earned working full-time, that is very much different from saying that women earned 81.9% of what men earned for doing exactly the same work while working the exact same number of hours in the same occupation, with exactly the same educational background and exactly the same years of continuous, uninterrupted work experience. As shown above, once we start controlling individually for the many relevant factors that affect earnings, e.g. hours worked, age, marital status, and having children, most of the raw earnings differential disappears. In a more comprehensive study that controlled for all of the relevant variables simultaneously, we would likely find that those variables would account for nearly 100% of the unadjusted, raw earnings differential of 18.1% for women’s earnings compared to men as reported by the BLS. Discrimination, to the extent that it does exist, would likely account for a very small portion of the raw 18.1% gender earnings gap.
For example, a comprehensive 2009 study from the Department of Labor (“An Analysis of Reasons for the Disparity in Wages Between Men and Women”) came to the following conclusion (emphasis added):
This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.
MP: Language and words can be important. And that’s why I think it’s important and more accurate to refer to a “gender earnings gap” rather than a “gender pay gap.” Note that the NCPE uses the terms “gender wage gap” and “wage gap” 12 times on just the Q&A page of its website and more than 20 times on its main website. The Department of Labor study also used the term “raw wage gap.” The underlying assumption with that language (“gender wage gap”) is that there is one hourly (or weekly or monthly) wage paid to men and a lower hourly (or weekly or monthly) wage paid to women working side-by-side their male counterparts doing the exact same job when both have the exact same educational and work backgrounds, etc. Switching to using the term “gender earnings gap” broadens the concept of earnings differentials by gender, and more accurately allows for the reality that women are usually making the same hourly (or weekly) wage as men doing the exact same job. But men often “earn” more on average than women because men are working longer hours on average, performing different jobs than women, working in jobs that are physically more rigorous (construction), working in jobs that are more dangerous (logging) and in more hostile work environments (oil rigs workers), involve longer commute times and may be less flexible and less family friendly. So can we completely scrap the term “gender wage gap” and replace it with the more accurate “gender earnings gap”?
Update: Some definitions.
Wage: A payment of money for labor or services usually according to contract and paid on an hourly, daily, or piecework basis.
Earnings: Money obtained in return for labor or services.
MP: From the definition of “wage” the claim of a “gender wage gap” implies for many (like the NCPE?) that women are paid lower hourly or daily wages than men when they are working side-by-side for the same company doing the exact same job with the same educational and work backgrounds, no?
Quotation of the day on how the radical college left eliminated opposing voices and replaced them with extremism and demagoguery
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…. is from John M. Ellis, professor emeritus of German literature at the University of California-Santa Cruz and chairman of the California Association of Scholar, writing in today’s Wall Street Journal (“Higher Education’s Deeper Sickness“):
We are now close to the end of a half-century process by which the college campuses have been emptied of centrist and right-of-center voices. Well-balanced opposing views act as a corrective for each other: The weaker arguments of one side are pounced on and picked off by the other. Both remain consequently healthier and more intellectually viable. But intellectual dominance promotes stupidity. As one side becomes numerically stronger, its discipline weakens. The greater the imbalance between the two sides, the more incoherent and irrational the majority will become.
What we are now seeing on the campuses illustrates this general principle perfectly. The nearly complete exclusion of one side has led to complete irrationality on the other. With almost no intellectual opponents remaining, campus radicals have lost the ability to engage with arguments and resort instead to the lazy alternative of name-calling: Opponents are all “fascists,” “racists” or “white supremacists.”
In a state of balance between the two sides, leadership flows naturally to those better able to make the case for their side against the other. That takes knowledge and skill. But when one side has the field to itself, leadership flows instead to those who make the most uncompromising and therefore intellectually least defensible case, one that rouses followers to enthusiasm but can’t stand up to scrutiny. Extremism and demagoguery win out. Physical violence is the endpoint of this intellectual decay—the stage at which academic thought and indeed higher education have ceased to exist.
It is important to understand why the radical left cleared the campuses of opposing voices. It was not to advance higher education, for that must involve learning to evaluate competing ideas, to analyze the pros and cons of rival arguments and concepts. Shutting down all but one viewpoint is done to achieve the opposite: to pre-empt analysis and understanding. Only in the absence of competing ideas can the radical sect that now controls so much of the campuses hope to thrive and increase its numbers, because it can’t survive open debate and analysis, and its adherents know it.
NAFTA has been a smashing success, let’s hope the protectionist-in-chief doesn’t make America poorer by scrapping it
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Below are a few excerpts from some recent reports on NAFTA and Trump’s threat to pull out of what the protectionist-in-chief calls the “worst trade deal ever made.” From the Wall Street Journal’s editorial yesterday (“A NAFTA Recession?“), emphasis mine:
President Trump keeps touting the 3% U.S. GDP growth of the last two quarters and “record” stock prices, and the economy is his best talking point. But he might want to take a look at the latest Journal survey of economists about the impact of a U.S. withdrawal from the North American Free Trade Agreement.
Not a single economist said that the withdrawal Mr. Trump has threatened would help the economy. Some 82% said the economy would grow more slowly for the next two years than it would otherwise, and 7% predicted a recession. That underestimates the risks of recession in our view, given the political shock from such a reckless act by a U.S. President and the damage that would ensue to North American and even global supply chains.
Mr. Trump is doing well overall on economic policy, with deregulation and support for tax reform. But his Achilles’ heel is his protectionist trade agenda and his lack of knowledge about the international economy.
And this excerpt below is from Kevin Williamson’s cover story in the latest issue of National Review (“The Triumph of NAFTA: The Trade Pact is a Smashing Success — Why Does Everybody Hate It?“), subscription required (emphasis mine):
Trump has threatened to pull out of NAFTA if he does not get his way, a move that would be, in the estimate of the Wall Street Journal’s editorial page, the “worst economic blunder since Nixon.” The U.S. Chamber of Commerce shares this view, and hundreds of state and local Chamber affiliates signed a letter asking that Trump not inflict needless chaos on North American trade rules out of pure pique and malice and stupidity. (They did not put it quite like that.) The U.S. Automotive Policy Council is spooked by the prospect of losing NAFTA, a development that would constitute a “$10 billion tax on the auto industry in America.” The Boston Consulting Group says that losing NAFTA could cost 50,000 jobs in the auto-parts business alone, and American farmers do not want to see new tariffs on the $40 billion in farm produce they send to Canada and Mexico, two of our three largest export markets. In the years since NAFTA was enacted, U.S. manufacturing has grown, trade has grown, exports have grown, employment has grown, wages have grown, the services industry has absolutely boomed, and consumer prices for many North American–traded goods have gone down. Why mess with a good thing?
Criticisms of NAFTA tend to be either very vague or dramatically sweeping. But the economic data do not support the populist indictment of free trade and free-trade pacts. The overwhelming consensus among economists is that NAFTA has had a negligible to modestly positive impact on U.S. employment and wages, and a modest to substantial effect on GDP growth — adding as much as 0.5 percent annually by some estimates. It is true that manufacturing employment has declined in the NAFTA era. It was declining before that, too, beginning in the 1950s. As J. Bradford DeLong of Berkeley runs the numbers, the effect of free-trade pacts on manufacturing employment accounts for less than 5 percent of the job losses, and probably more like 1 percent. That “giant sucking sound” that H. Ross Perot so feared has not come to pass, and in certain high-paying industrial fields, such as automobile manufacturing, NAFTA has been a boon in unexpected ways: It is true that some manufacturing work has been outsourced to low-wage Mexico and to high-wage Canada, but access to an integrated North American supply chain and duty-free access to the three national markets are key parts of what brought the “transplants” — European and Asian automakers building in the United States with American labor — to places such as Texas and Alabama.
Prosperity always emerges in unexpected ways, and NAFTA is one way in which we get the bureaucrats and mandarins and central planners out of the way to let that happen.
MP: The map and table above help tell the story of the economic importance of NAFTA, and trade with Mexico and Canada, to each US state’s economy. The table above shows the total merchandise trade for each US state with Canada and Mexico last year (exports + imports), both in total volume and as a percentage of each state’s GDP. The map above displays the trade with Mexico + Canada in 2016 as a percentage of each state’s GDP. Note that for automotive manufacturing-intense states like Michigan, trade with Mexico ($61 billion) and Canada ($71 billion) last year represented more than 25% of the state’s GDP of $487 billion. Other states with significant automotive production like Texas, Kentucky, Indiana, Tennessee, Ohio, Alabama and South Carolina had trade with Canada and Mexico last year that represented more than 5% of state GDP. For border states like Texas, North Dakota, and Vermont, trade with NAFTA partners represented more than 10% of the state’s economic output in 2016. In total, merchandise trade with Mexico and Canada (exports + imports) last year totaled more than $1 trillion and represented nearly 6% of US GDP.
As the WSJ pointed out, Trump’s Achilles’ heel is his protectionist trade agenda and his lack of knowledge about the international economy. Part of that lack of knowledge about the international economy is Trump’s failure to appreciate how important NAFTA trade is for American workers and consumers. Kevin Williamson correctly assesses NAFTA as a “triumph” and a “smashing success.” The data support that assessment. Let’s hope the protectionist-in-chief reviews the economic data and hope that his Achilles’ heel for protectionism doesn’t result in scrapping a very successful economic trade deal that has generated significant economic benefits for the workers, consumers, and companies in all three countries.
2016 FBI data: Jews were 3X more likely than blacks, 1.5X more likely than Muslims to be a hate crime victim
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Members of which of these groups were most likely to be a victim of a hate crime in 2016: Muslims, Blacks or Jews? Based on media coverage, you would probably have to say Muslims or Blacks. According to a Google news search for the term “hate crimes” along with the name of each of those three groups, there are 131,000 results for “hate crimes” + black, 69,00 results for “hate crimes” + Muslims and only 32,500 results for “hate crimes” + Jews. Based on news reports, you might think that blacks were four times more likely than Jews to be the victim of a hate crime and that Muslims were almost more than twice as likely to be a hate crime victim compared to Jews.
Hate crime data released today by the FBI for 2016 reveal that there were 1,739 African-American victims of hate crimes last year, 684 Jewish victims of anti-religious hate crimes and 307 Muslim hate crime victims. Adjusting for the population size of each group (42.975 million blacks in 2016 according to the Census Bureau and 5.65 million Jews and 3.88 million Muslims based on Pew Research Center data for 2015 and making estimates for 2016 based on Pew projections), the hate crime victimization rates last year per 100,000 population of each group were 12.1 for Jews, 7.9 for Muslims and 4.0 for blacks (see chart above). Therefore, adjusted for population by group, American Jews were about three times more likely than blacks to be a victim of a hate crime last year, and 50% more likely than a Muslim to be a hate crime victim.
The FBI data for 2016 on anti-religion hate crimes also reveal that of the 1,273 victims of anti-religious hate crimes last year in the US, 684 were Jewish (53.7% of the total) and 307 were Muslim (24.1% of the total). Obviously, since more than half (53.7%) of the anti-religious hate crime victims in 2016 were Jewish, there were more Jewish victims last year of anti-religious hate crimes (684) than victims of all other religious groups combined (589). The FBI data also show that there were more hate crimes last year against Jews (684) than against gay men (675).
Without any adjustments for population, there were more than twice as many hate crimes against Jews (684) last year than there were against Muslims (307). And yet there were more than twice as many search results for news reports on hate crimes against Muslims (69,000) than there were for reports on hate crimes against Jews (32,500).
Question: Based on the actual hate crime victimization rates and the fact that Jews are so disproportionately targeted compared to blacks and Muslims, is it fair to say that hate crimes against Jews are routinely under-reported by the media relative to the reporting of hate crimes against blacks and Muslims?
Related: See last year’s CD post on 2015 hate crime data here.
Chart of the day: US trade deficits vs. US household net worth — they’ve risen in tandem over the last half century
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The chart above was inspired by a similar one that Don Boudreaux featured in the first round of his debate at Hillsdale College with Ian Fletcher last week (featured on CD here). It shows the annual US trade deficit (inverted, data here) and the annual dollar value of US household net worth (data here), from 1970 to 2016. As can be seen in the chart, the steady increase in the US trade deficit over the last nearly half-century to a peak of $770 billion in 2006 before falling to an average of about $525 billion during the last seven years has been accompanied by a steady increase in the value of US household net worth, which has increased nearly four-fold in inflation-adjusted dollars since 1970. In dollar terms, America’s household net worth last year rose to another fresh record high of almost $90 trillion, which is an average of more than $700,000 per US household and represents the total value of all household assets (real estate, vehicles, stock, savings, mutual funds, bonds, consumer durable goods, etc.) minus all debt (mortgages, car loans, consumer credit, etc.).
Thanks to the stock market rally to all-time record highs this year, household net worth topped $96 trillion in Q2 of this year, which was an $8.2 billion (and 9%) increase over a year ago. Not bad. Despite the $500 billion deficit that Trump is always complaining about and threatening to address because it’s “very one-sided and unfair,” the stock market is at record highs, along with the worth of American households at $96,000,000,000,000.
Over almost half a century, the correlation between the increasing trade deficit and the rise in US household net worth is stunningly high at 0.93. But according to Trump and his fellow protectionists, aren’t America’s $500 billion trade deficits supposed to be robbing us of our wealth and making us poorer, not richer? The data seem to be telling us that the opposite is actually true — that America and Americans keep getting consistently more wealthy over time, despite the rise in the US trade deficit. As Don Boudreaux commented in a post on Cafe Hayek that features the chart above, “A rising
U.S. trade deficit U.S. capital-inflow surplus does not mean that Americans are losing net wealth. Quite the opposite, as reality turns out.”
Profitable US airline oligopoly enjoys global marketplace but doesn’t like competition from low-cost Gulf carriers
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I flew recently on Delta Airlines and noticed that Delta is still bragging in its Sky Magazine (on p. 210, see graphic above) that the airline “can get you to more than 325 destinations in more than 60 countries on six continents” (see previous CD post about this topic here). But at the same time it enjoys operating in a global marketplace for air travel, Delta is engaged in a lobbying and intense public relations effort to maintain its entrenched domestic oligopoly position in the US market (along with United and American) by restricting foreign competition from more efficient, lower cost Gulf carriers like Emirates Airline, Etihad Airways and Qatar Airways (see full-page ad above, on left). Delta claims that foreign nations like Qatar and UAE are “unfairly” subsidizing the Gulf carriers in “an attempt to take over international aviation” by offering “unreasonably low prices.” Sounds a little dramatic to me.
And even if everything Delta says is accurate, well what a huge travel bonanza for Americans! “Unreasonably low prices” = a huge bargain and millions of dollars of cost savings for Americans. The lower the price the better for US consumers. And if foreign citizens and their governments are subsidizing the Gulf carriers (which Emirates denies, see below), why should Americans complain about that generous foreign aid in the form of “unreasonably low prices.” As consumers, we want the most unreasonably low prices possible, and the greatest amount of foreign aid possible in the form of foreign subsidies to foreign producers if that’s what makes those prices unreasonably low. So we need a little balance to Delta’s oligopolist, pro-producer, anti-consumer, protectionist position in its ad above (on the left) so that the viewpoint of American consumers is heard, and I’ll provide that below.
Note also that Delta’s lobbying effort in the ad above is being done under the guise of “defending U.S. jobs,” a politically popular theme right now, when in reality its main concern, as it should be as a profit-maximizing corporation, is protecting the profits of its shareholders. To reflect that economic reality, I’ve taken the liberty of adjusting Delta’s full-page ad in the Sky Magazine above (see graphic above)! It’s also important to note that Delta has had some very profitable years recently — for the last two years, the airline has earned an average of more than $12 million in profits every day of the year (nearly $9 billion total in 2015 and 2016).
Like I did in my last post, I’ve taken the liberty of making some pro-consumer edits to Delta’s protectionist message from its website dedicated to its lobbying efforts DELTA.COM/OURFIGHT:
Join the fight for fairer open, low-costcompetitive skies.
Emirates Airline. Etihad Airways. Qatar Airways. These three airlines, also known as the Gulf Carriers, are state-owned enterprises that are subsidized by their countries’ governments citizens and taxpayers. This means that they have a constant flow of money, and they can set ticket prices as low as they want, to the great advantage of Americans who fly internationally on these airlines. To the extent that the claim of subsidies is true (and that’s subject to debate, see below), American international travelers should be grateful to the citizens of those countries for their generous gift of foreign aid in the form of lower airline fares.
So while the Gulf Carriers are quickly expanding international services, high-cost U.S. oligopolistic legacy airlines can’t compete with their unreasonably extremely competitive low prices and are having to stop flights to international destinations. While that might be bad news for Delta Airlines, its shareholders, and its employees,it is great news for millions of other Americans, who now have more travel choices and will save millions of dollars when they fly internationally. Those cost savings from lower airfares offered by Gulf Carriers will be spent on other goods and services in America, supporting hundreds of thousands of new yet-to-be determined US jobs throughout the economy.
Even though the Gulf carriers are based in countries a fraction of the size of the U.S. and China, they have more than twice as many wide-body aircraft on order as both countries combined, and most of those orders are for aircraft made in the USA by American workers. For example, Emirates, the world’s largest international airline just placed a $15.1 billion order for 40 of Boeing’s Made-in-the-USA 787 Dreamliners at the 2017 Dubai Airshow this week.
For every international route that U.S. airlines lose, 1,500 Americans lose their jobs. Let’s assume that estimate is true, and assume that Delta and its oligopoly partners (United and American) may lose some international routes to lower-cost competitors. Many of those lost US jobs that might be lost will likely be more than offset by US jobs created and supported by the aircraft orders from Gulf carriers. Applying the US Department of Commerce jobs multiplier (every $1 billion in US aerospace exports supports 5,200 American jobs), this new $15.1 billion order alone from Emirates will create and support more than 78,000 additional jobs in US aerospace manufacturing – not only with Boeing, but also with the thousands of other suppliers in the value chain across the US, many of which are medium and small-sized businesses. Those 78,000 new US jobs would offset the potential job losses from more than 50 lost international routes for US airlines.
The numbers just don’t add up for Delta’s profits and that’s why the airline is asking the government for protection against more competitive, lower-cost foreign rivals. The future of US aviation and aerospace manufacturing is at stake, and it’s time to speak up and protect it. the interests of American travelers and aerospace manufacturing workers by keeping our skies open to global competition.
What about the claims of “unfair” government/taxpayer subsidies for the Gulf Carriers? Despite those claims from Delta (and its oligopoly partners United and American Airline), Emirates emphatically denies that it receives subsidies from the Dubai government, and the Gulf carrier submitted a 200-page point-by-point rebuttal to the US government of all claims. In that June 2015 rebuttal (“Emirates’ response to claims raised about state-owned airlines in Qatar and the United Arab Emirates“), Emirates summarizes its position in the Executive Summary:
Emirates is one of the world’s leading airlines precisely because Emirates does not depend on government subsidies, bail-outs, and bankruptcy laws, but operates as a consumer-focused, profit-driven, commercial enterprise. Emirates has earned a profit for twenty-seven straight years, because Emirates: 1) is committed to world-class customer service, 2) is well-managed, and 3) has pioneered an innovative aviation model: long-haul to long-haul service that reduces costs and travel times and provides unrivaled global connectivity for international travelers, particularly in the heavily populated but under-served countries in the Indian Subcontinent and Africa.
Further, Emirates’ PwC-audited financials further confirm that. To date, Emirates has paid its shareholder, the Government of Dubai, $3.9 billion in dividends, complete opposite of what Delta alleges. What’s our secret: a fortuitous geographic location and a commitment to delivering an excellent value which is the proposition to customers who often vote us the No. 1 airline in the world.
In a 2-page summary of its rebuttal, Emirates makes the following points:
1. The Legacy Carriers’ real aim is to block competition, protect their entrenched domestic oligopoly position and record-breaking profits, deny consumers an alternative to the three global alliances they dominate, and enforce desertion of America’s successful pro-growth, pro-competition, and pro-consumer Open Skies policy. Simply put, they are demanding the U.S. Government puts their parochial self-interest ahead of the national interest in having robust air services trade, and the interest of consumers in competitive choice.
2. The Legacy Carriers have entered this debate with unclean hands.They have received more than $100 billion in government support since 2002 and share with other U.S. carriers in annual benefits potentially exceeding $24 billion. The support and benefits include U.S. Government assumption of airline pension obligations, airline stabilization grants, loan guarantees, grandfathering of airport slots, bankruptcy relief from debt and other obligations, direct grants and tax exemptions to support airport development, grants of antitrust immunity to form market-dominant alliances, protection of the U.S. aviation market from foreign competition, and the prohibition against majority foreign ownership.
3. All in all, the Legacy Carriers’ allegations against Emirates collapse under closer analysis. Their argument is nothing more than a mess of legal distortions and factual errors. Unlike the Legacy Carriers, Emirates is not subsidized. What the Legacy Carriers want is protection from competition, protection which would do irreparable harm to U.S. cities and airports, America’s world-leading aerospace industry, U.S. exports and jobs, U.S. air cargo carriers, and most of all, U.S. consumers. It would also undermine America’s leadership in international aviation—leadership that has made Open Skies the global template for air services. Therefore, the U.S. Government should reject the Legacy Carrier calls to take action against Emirates.
Bottom Line: As I wrote last June, it would probably be fair to say that Delta Airlines really doesn’t like any competition, whether it’s from domestic airlines like Sun Country or foreign carriers like Emirates. In the new protectionist, pro-American, pro-US jobs era, it makes sense politically for Delta and the legacy carriers to sell their call for protectionism as a pro-US jobs policy. But what gets overlooked in protectionism trade policies like this case, as usual, are the significant benefits to American consumers from the increased competition and savings from lower airfares offered by the Gulf carriers. And what also gets overlooked are the thousands, if not hundreds of thousands of US jobs that are created or supported by the cost savings from low-cost international air travel offered by foreign carriers, and the thousands of US aerospace manufacturing jobs from orders for American-made aircraft by foreign carriers. What Delta calls the “unreasonably low prices” of the Gulf carriers should instead be thought of as pro-competitive, job-stimulating, economic-enhancing prices that raise America’s standard of living and make the US more prosperous. And for that enhanced prosperity in America and despite what Delta tells us, we consumers should be grateful to Emirates and the Gulf carriers for the generosity they provide us through their so-called “unreasonably low prices.”
View related content: Carpe Diem
…. is on taxpayer subsidies and lobbyists from the Wall Street Journal’s editorial board in yesterday’s paper:
This goes to show that as long as a subsidy has life, it has lobbyists.
That was in regard to the generous taxpayer subsidies for wind energy, which under the current draft tax reform will be reduced to their 1992 levels and eliminated after 2020. Obviously, the Big Wind lobby is not happy. Here’s more (my emphasis):
In the 1980s wind power was dubbed an “infant industry” that needed federal help to grow. More than three decades and tens of billions of dollars in subsidies later, the business of making electricity from spinning turbines remains inefficient and heavily dependent on federal aid—i.e., the American taxpayer. Tax reform is a chance to tell the wind racket to get off the dole but it isn’t clear Republicans are up to the task.
As Warren Buffett explained in 2014: We “get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.” This also explains why producers are known to sell their output below cost merely to cash in on the subsidy.
It’s common knowledge that current wind-power technology cannot compete in the electricity market and propping it up drains federal coffers. It also removes the incentive to innovate. But wind blows in red states and the subsidy has created an interest group. Iowa’s Chuck Grassley has released a statement rejecting the House proposal, and the Senate’s draft tax bill sticks with the current production credit.
This goes to show that as long as a subsidy has life, it has lobbyists. No one should be surprised if the wind-power production tax credit survives.
View related content: Carpe Diem
1. Chart of the Day I (above) shows the close statistical correlation (0.964) over time from 1980 to 2016 (logarithmic scaling) between: a) annual US real imports of goods and services and b) annual US civilian employment. Don’t we always hear from Trump and other protectionists that imports lead to US job losses? According to the actual data and economic reality real US imports and US employment have gone up in perfect unison over the last 36 years.
2. Video of the Day I (above) features the first round of a debate between Don Boudreaux and anti-free trade protectionist Ian Fletcher (author of the book Free Trade Doesn’t Work) that took place earlier this week on Tuesday at Hillsdale College. The chart of the day above was inspired by a similar one that Don used at about 12:00 in his presentation.
3. Video of the Day II (above) shows the second round of the Hillsdale College debate between Don Boudreaux and Ian Fletcher. God Bless Don Boudreaux for his patience debating such a clueless anti-trade protectionist.
4. Chart of the Day II (above) shows the historic energy milestone that went mostly unnoticed this week when the EIA’s weekly petroleum report showed that daily crude oil output in the US last week at 9.62 million barrels was the highest level of domestic oil production since May 1971, more than 46 years ago. At the current of production increases, daily US crude oil production is on track to top 10 million barrels by as early as next February and could shortly after that exceed the previous record of 10.04M barrels per day set back in November 1970. Carpe oleum.
5. Video of the Day III (above) from PragerU features James Damore, the Google software engineer who was fired for disagreeing with Google’s left-wing orthodoxy. Among James Damore’s unforgivable “crimes”? He dared to suggest that men and women on average are different.
6. More on the Sacrilege and Heresy of Suggesting That Men and Women Might Be Different. What unforgivable crimes did politically liberal Erica Komisar commit to become “a pariah on the left”? She recently published a book “Being There: Why Prioritizing Motherhood in the First Three Years Matters” where she dared to suggest that men and women aren’t interchangeable and fungible when it comes to nurturing infant children:
Women produce more oxytocin than men do, which answers the obvious question of why fathers aren’t as well-suited as mothers for “sensitive, empathetic nurturing.” People “want to feel that men and women are fungible,” observes Ms. Komisar—but they aren’t, at least not when it comes to parental roles. Fathers produce a “different nurturing hormone” known as vasopressin, “what we call the protective, aggressive hormone.” And therefore that mothers “need to be there as much as possible, both physically and emotionally, for children in the first 1,000 days.”
Read more here of James Taranto’s profile of Erica Komisar in the Wall Street Journal.
7. Who’d a-Thunk It? Solar Garden Power is Twice as Expensive as Other Sources? That’s what Minneapolis-based Excel Energy recently revealed about the solar energy that’s being forced on it by government edict according to this report from the Center of the American Experiment. Here’s more:
The higher costs for solar power are borne by the vast majority of Minnesotans who’ve never heard of a community solar garden, much less signed up for one. Xcel passes those additional costs onto all of its consumers by charging them more for fuel. For every 100 MW of community solar that comes online, it costs customers an additional $17 million, an Excel Energy spokesman said.
I wrote back in June about the community solar garden/solar time share scam in Minnesota here.
8. Markets in Everything. Uber Express POOL is the consumer-friendly ride-sharing company’s latest innovation to shave another 25 percent or so off the price of a ride.
9. Chart of the Day III (above) shows a comparison of material well-being in matched communist vs. non-communist countries in 1991 (based on per-capita GDP) that was featured on blogs here (a few days ago) and here (in 2010)
Conclusion: Communism robs a nation’s people of nearly 90% of their potential economic well-being.
10. Chart of the Day IV (above) shows new data from the IRS on federal income tax shares by various income groups in 2015. Note that the top 0.001% (1,412) of taxpayers paid a greater share of federal income taxes (3.5%) than the 2.8% share of the entire bottom 50% (70.6 million) of taxpayers.