As the debate over teaching of “Critical Race Theory” heats up in the US, there were interesting findings from a new poll from Parents Defending Education (defenginged.org) (N=800).

“25% said it was somewhat or very important for schools to “teach students that their race is the most important thing about them” compared to 70% who said this is not important or not at all important.”

“When asked whether their local K-12 school has increased or decreased its emphasis on issues of race, gender, and activism in the last two years, 52% said it had increased a lot or a little. Only 2% said it had decreased. Similarly, 57% said their local schools had become more political, with only 4% saying less political.

“74% said they were somewhat or strongly opposed to teaching students that white people are inherently privileged and black and other people of color are inherently oppressed. Similarly, only 6% of respondents favored schools assigning white students the status of “privileged” and nonwhite students the status of “oppressed” – versus 88% opposed, including 78% strongly opposed.

“69% opposed schools teaching that America was founded on racism and is structurally racist."

"75% oppose teaching there is no such thing as biological sex, and that people should choose whatever gender they prefer for themselves. Only 18% supported teaching such concepts.”

If this (albeit relatively small) poll is even a roughly accurate summary of beliefs in America today about the cultural agenda of the “woke” left, Republicans have a powerful set of wedge issues to use against the Democratic Party in the 2022 Congressional elections.

And Joe Biden may face a growing challenge in trying to persuade the Congress to enact his fiscal stimulus agenda.

On the other hand, a blog post by Webber and Samaras from RAND highlights another US fault line with a high degree of tension on it.

“For COVID-19, we ask schoolchildren to wear masks all day in socially-distant classrooms or endure endless hours of staring at screens on computers, phones, or tablets for virtual classes without social stimulation with their friends... The risk of death or hospitalization for children is relatively lower, so ultimately their sacrifice is to protect older generations including their teachers, parents, and grandparents…The burden from COVID-19 on younger generations has been heavy…

“For climate change, society is asking older generations—today's decision makers—to build better infrastructure for tomorrow and to change our energy and land use patterns today tor educe and reverse emissions on behalf of schoolchildren and future generations that haven't been born yet. But unlike the schoolchildren who are sacrificing to protect older generations, the older generations do not seem willing to reciprocate. Rather, today's leaders put up a fight and resist the necessary changes.”

“COVID-19 and Climate Change Both Require One Generation to Sacrifice for Another”

Whether and how the conflict they highlight will spill over into the political arena remains to be seen.

This is a politically tricky juxtaposition of two powerful issues.

While the Biden Administration has laid out aggressive climate goals, the teachers unions, which fought hard to keep schools closed, are a major Democratic constituency.

In contrast, while Republicans have fought hard to reopen schools, much of their voter and donor base is opposed to the Biden Administration’s aggressive approach to climate issues.

“How America Fractured Into Four Parts”, by George Packer in The Atlantic

Packer has written a long and very thought provoking analysis of how four different narratives have emerged in recent years that disagree about the United States’ “purpose, values, history, and meaning”. Broadly, they are defined by a focus on either the individual or group, and by a Democratic or Republican orientation. Packer terms them “Free America” (I/R), “Smart America” (I/D), “Real America” (G/R), and “Just America”(G/D).

Interestingly, previous writers have also found four narratives or cultural orientations. In his 1989 book Albion’s Seed, David Hackett Fischer focused on the impact of four waves of early emigration to the US from different parts of England (to which Russell Shorto added the impact of Dutch emigration to New York in his 2001 book, “The Island in the Center of the World”).

In 2001, Walter Russell Mead’s book “Special Providence” found four durable traditions in American foreign policy, which he termed Hamiltonian, Wilsonian, Jeffersonian, and Jacksonian.

Fischer, Mead, and Shorto all describe how the traditions they identify have interacted over time, including their respective impacts on the Revolutionary and Civil Wars when differences between them became irreconcilable by peaceful means.

Packer raises a similar question about today, when he asks whether reconciliation is possible between the narratives he identifies.

He claims that, “all four of the narratives…emerged from America’s failure to sustain and enlarge the middle-class democracy of the post-war years” (I think Fischer, Mead, and Shorto might say there were also deeper historical forces at work).

Packer also warns that, the four narratives, “are driven by a competition for status that generates fierce anger and resentment. They all anoint winners and losers.”

Thus, the “tendency [of these four narratives] is to divide us, pitting tribe against tribe” and in so doing, “impoverish each narrative into a cramped and ever more extreme version of itself.”

As Packer says, “I don’t much want to live in the republic of any of them.”

He concludes that the way forward is “a road that tries to make us Equal Americans, all with the same rights and opportunities—the only basis for shared citizenship and self-government.”

“Bread and Circuses: The Replacement of American Community Life” by Lyman Stone from AEI

SURPRISE

“In recent years, policymakers and cultural commentators have identified “social capital” as a key factor in determining individual and societal wellbeing. But social capital is often hard to identify. Debates rage about what should count as social capital, how to measure it, what causes people or places to have more or less of it, and whether and how it affects important social outcomes of interest.

“This report focuses on one dimension of social capital as particularly important and more concrete: associational life: the various ways Americans spend time together, especially for purposes that are not strictly related to earning money and paying bills…

“Most of the change in American associational life can be attributed to essentially one factor: technological improvements leading to a higher standard of living. A wealthier society provides more benefits via the state instead of private organizations…

The rise of the modern bureaucratic and welfare state is clearly connected to the decline of many institutions it replaced…

“Piggybacking on mass media, popular sports have conquered the American calendar, displacing numerous other activities. This history cannot be undone… The appeal of sports to many Americans is precisely that they have no overt or obvious [political] meaning or significance. Their vapidity is their appeal…
“Changes in associational life in America have consequences. As Americans spend less time together, we have also become more suspicious and less trusting of one another, especially of civic and public institutions.
“As a result, our society has had a hard time confronting the challenges and obstacles that, throughout human history, have always arisen…

“Rebuilding lost associational life will require a critical mass of Americans to make costly personal choices to reinvest in their communities and relationships.

“Worryingly, COVID-19 may lead to an accelerating decline in associational life. After most natural disasters, communities band together to recover. But after pandemics, they often do not.”

While the US federal government has pledged over $100 billion in federal aid to school districts for the recovery of COVID learning losses, a surprising number of districts have not made plans for how to use it (see, “The Summer Puzzle: Summer Plans To Date Are Lacking In Key Areas”, by Christine Pitts).

This lack of planning has led to a growing number of published “Pre-Mortem” papers, looking back from an imagined future date to explain why this federal aid failed to recover students’ COVID learning losses (e.g., “Hindsight Is 2024: A Pre-Mortem On Districts' Return To School”, by Bree Dusseault from the Center for Reinventing Public Education).

Following on substantial public frustration over the quality of school districts’ remote learning offerings during the pandemic, and in many the slow return to in-person learning (often blamed on teachers unions’ opposition), the failure to recover students’ COVID learning losses will have a number of consequences. It will almost certainly lead to worsened lifetime economic outcomes for the affected students, especially given rapidly accelerating physical and cognitive automation technologies.

In turn, this will very likely incentivize employers to make greater investments in these technologies (though the success of these efforts will very likely be constrained by a shortage of the talent needed to make maximum use of them).

More uncertain, but potentially equally consequential will be the social and political consequences, especially as any failure to recover learning losses will occur in the context of growing frustration over the growth of “wokeism” in K-12 schools. For example, will parental and student anger strengthen anti-elite beliefs, and lead to greater support for right and left populism?

Hard to say at this point; however, I suspect that the potential impact is still underestimated by many.

“Elites and New York’s Future”, by Miller and de Quenoy

As someone who lived in New York City in the 1970s, this article powerfully hit home.

The authors begin with this arresting passage: “’New York City’s problems make for depressing front-page news. More than 11 percent of its jobs have vanished. Small shops are shuttered. Residents are fleeing. The city’s tax base has shrunk, just as its needs and crime rates soar. The celebrated melting pot is no longer melting.

“Over 30 percent of city residents receive public assistance. The mayor tries hiding New York’s dire fiscal straits, including its dwindling economic base and rising taxes, through accounting shenanigans, as the city’s deficit and long-term debt spiral’.

“This is not a portrait of New York after more than a year of pandemic, though it could be. It was how journalist Ken Auletta described his beloved “Statue of Liberty city” in 1979 in The Streets Were Paved With Gold”, his highly regarded account of how and why New York reached the edge of financial ruin” …

Yet, “In the mid-1970s, New York’s financial, labor, and political leaders came together to ward off bankruptcy by hammering out dramatic reforms and extracting drastic concessions from those with a stake in the city’s prosperity. The partnership among City Hall, the banks, municipal unions, big and small business, Albany, and the federal government produced compromises hard to imagine today”…

“One of the most striking features of New York’s current plight is the absence of a comparable group of would-be saviors. Many of the wealthiest and most influential residents have been asking not what they can do to help their city, but whether and how quickly they can move their families and companies to places with low taxes and laissez-faire regulation…

“There is no comparable effort today by the city’s political and financial elite to unite and forge the compromises and sacrifices needed to spur the city’s revival and save it from long-term decline,” said Richard Ravitch, one of the few veterans of the fiscal crisis still actively involved in efforts to enhance the city’s welfare.”

“Lessons From Denmark About Inequality And Social Mobility”, Heckman and Landersø

SURPRISE

“Many American policy analysts point to Denmark as a model welfare state with low levels of income inequality and high levels of income mobility across generations. It has in place many social policies now advocated for adoption in the U.S.

“Despite generous Danish social policies, family influence on important child outcomes in Denmark is about as strong as it is in the United States. More advantaged families are better able to access, utilize, and influence universally available programs. Purposive sorting by levels of family advantage create neighborhood effects.

“Powerful forces not easily mitigated by Danish-style welfare state programs operate in both countries.”

“Vanishing Size Of Critical Mass For Tipping Points In Social Convention”, by Iacopini et al

SURPRISE

“How can minorities of regular individuals overturn social conventions? Theoretical and empirical studies have proposed that when a committed minority reaches a critical group size, ranging from 10% of the population up to 40%, a cascade of behaviour change rapidly increases the acceptance of the minority view and apparently stable social norms can be overturned.

“However, several observations suggest that much smaller groups may be sufficient to bring the system to a tipping point.

“Here, we generalise a model previously used for both theoretical and empirical investigations of tipping points in social convention and find that the critical mass necessary to trigger behaviour change is dramatically reduced if individuals are less prone to change their views, i.e., are more resistant to social influence.

“We show that groups smaller than 3% of the population are effective on different kinds of social networks, both when pairwise or group interactions are considered, and in a broad region of the parameter space.

“In some cases, even groups as small as 0.3% may overturn the current social norm. Our findings reconcile the numerous observational accounts of rapid change in social convention triggered by committed minorities with the apparent difficulty of establishing such large minorities in the first place.”

“Exposure to Psychosocial Risk Factors in the Gig Economy: A Systematic Review”, by Pierre Berastegui

“The ‘gig economy’ refers to a market system in which companies or individual requesters hire workers to perform short assignments. These transactions are mediated through online labour platforms, either outsourcing work to a geographically dispersed crowd or allocating work to individuals in a specific area.

“Over the last decade, the diversity of activities mediated through online labour platforms has increased dramatically…

The author finds gig workers experience increasing stress due to: (1) Physical and social isolation; (2) Algorithmic management and digital surveillance; and (3) Work transience.

“Are Recent Cohorts Getting Worse? Trends in U.S. Adult Physiological Status, Mental Health, and Health Behaviors across a Century of Birth Cohorts”, by Hui and Echave

SURPRISE

“Morbidity and mortality have been increasing among middle-aged and young-old Americans since the turn of the century. We investigate whether these unfavorable trends extend to younger cohorts and their underlying physiological, psychological, and behavioral mechanisms…

We find that for all gender and racial groups, physiological dysregulation has increased continuously from Baby Boomers through late-Gen X and Gen Y. The magnitude of the increase is higher for White men than other groups…

“In addition, Whites undergo distinctive increases in anxiety, depression, and heavy drinking, and have a higher level than Blacks and Hispanics of smoking and drug use in recent cohorts...

“The worsening physiological and mental health profiles among younger generations imply a challenging morbidity and mortality prospect for the United States, one that may be particularly inauspicious for Whites.”

“Are Superstar Employees About To Be Offshored?” by Simon Kuper in the Financial Times

SURPRISE

“To quote the scary new mantra: If you can do your job from anywhere, someone anywhere can do your job” …

“There has been endless talk of remote workers moving from New York or London to Florida or Sussex. In fact, something more radical is happening: high-skilled jobs are being offshored out of superstar cities to the rest of the world.

“Like so many changes in this pandemic, what began as an emergency response may solidify into permanence…
“The victims of global remote work could be major business hubs such as New York, London, San Francisco and Toronto.

“Anglophone cities are the most at risk because so many highly skilled people around the world can work in English. Now companies in these places can tap a global talent pool while also reducing wages…For US companies it would help out with healthcare too…

“The biggest economic winners of the last 40 years were highly skilled natives living in superstar cities. They risk becoming the biggest losers of the next era.”

“Will Women Catch Up to Their Fertility Expectations?” by Chen and Gok

SURPRISE

Economic growth is a function of the rate of population growth, the percent of working age adults who are actually employed, and the rate at which their productivity grows over time.


This research reaches a depressing conclusion about the future rate of natural population growth (i.e., from births rather than immigration).

“In 2019, the total fertility rate in the United States dipped to 1.71 children per woman, an all-time low and far below the replacement rate of 2.10 children.

“However, data on “fertility expectations” suggest no cause for concern. Women in their early 30s today, when first asked about their childbearing expectations in their early 20s, said they intended to have more than two children, similar to previous cohorts. Even considering that “completed” fertility has historically fallen short of expectations by about 0.30 children, women currently in their childbearing years would still end up with around two children.

“But it turns out that today’s 30-year-olds are much farther from their original expectations than previous cohorts…

“Adjusting for the changing influence of the various factors over time produces a completed fertility rate of 1.96 children for the younger cohort.

“This finding means that the gap between expected and completed fertility will increase to 0.48, which is much larger than that of earlier cohorts…

“Moreover, COVID-19 will likely place downward pressure on fertility, which would increase the gap between expectations and reality. Thus, projected completed fertility, especially for younger cohorts, may not be as high as the estimated 1.96.”

“Reproductive Problems in Both Men and Women Are Rising at an Alarming Rate”, by Swan and Colino

SURPRISE

“The whole spectrum of reproductive problems in males are increasing by about 1 percent per year in Western countries. This “1 percent effect” includes the rates of declining sperm counts, decreasing testosterone levels and increasing rates of testicular cancer, as well as a rise in the prevalence of erectile dysfunction.

“On the female side of the equation, miscarriage rates are also increasing by about 1 percent per year in the U.S., and so is the rate of gestational surrogacy. Meanwhile, the total fertility rate worldwide has dropped by nearly 1 percent per year from 1960 to 2018…

“We continue to wonder: Where is the outrage on this issue? The annual 1 percent decline in reproductive health is faster than the rate of global warming (thankfully!)—and yet people are up in arms about global warming (and rightly so) but not about these reproductive health effects.

“To put the 1 percent effect in perspective, consider this: scientific data show a 1.1 percent per year increase in the number of children diagnosed with autism spectrum disorder between 2000 and 2016, according to the Centers for Disease Control and Prevention. People have been rightly unnerved about this.

“Why aren’t people equally troubled by reproductive damage to males and females? Maybe it’s because many don’t realize that these worrisome changes are happening, or that they’re marching along at the same rate. But everyone should. After all, these reproductive changes can hardly be a coincidence. They’re just too synchronous for that to be possible.

“The truth is, these reproductive health effects are interconnected, and they are largely driven by a common cause: the presence of hormone-altering chemicals (a.k.a., endocrine-disrupting chemicals, or EDCs) in our world.

“These hormone-hijacking chemicals, which include phthalates, bisphenol A, and flame retardants, among others, have become ubiquitous in modern life. They’re in water bottles and food packaging, electronic devices, personal-care products, cleaning supplies and many other items we use regularly. And they began being produced in increasing numbers after 1950, when sperm counts and fertility began their decline.”

“Social Class, Not Income Inequality, Predicts Social and Institutional Trust”, by Kim et al

SURPRISE

“Trust is the social glue that holds society together. The academic consensus is that trust is weaker among lower-class individuals and in unequal regions/countries, which is often considered a threat to a healthy society. However, existing studies are inconsistent and have two limitations: (i) variability in the measurement of social class and (ii) small numbers of higher-level units (regions and countries).

“We addressed these problems using large-scale (cross-)national representative surveys (encompassing 560,000+ participants from 1,500+ regional/national units). Multilevel analysis led to two consistent sets of findings.

“First, the effects of social class on social trust were systematically positive, whereas the effects on institutional trust depended on the way social class was measured.

“Second, the effects of income inequality on social and institutional trust were systematically nonsignificant.

“Social class—not income inequality—predicts trust.”

“Experts Say the ‘New Normal’ in 2025 Will Be Far More Tech-Driven, Presenting More Big Challenges”, by Anderson et al from Pew Research

“Asked to consider what life will be like in 2025 in the wake of the outbreak of the global pandemic and other crises in 2020, some 915 innovators, developers, business and policy leaders, researchers and activists responded…

“A plurality [47%] think sweeping societal change will make life worse for most people as greater inequality, rising authoritarianism and rampant misinformation take hold in the wake of the COVID-19 outbreak. Still, a portion [39%] believe life will be better in a ‘tele-everything’ world where workplaces health care and social activity improve.”

“The Family Income Supplemental Credit: Expanding the Social Compact for Working Families”, by Cass and King from The American Compass

We have long noted that in the US, the largest voter segment is the one least represented by existing parties: People who are relatively liberal on economic issues, and conservative on social issues.

This is the segment that Boris Johnson seems to be targeting in the UK; in the US, it is one on which Oren Cass’s new think tank, The American Compass, is targeting (Cass was formerly Mitt Romney’s policy director).

In this latest analysis, Cass and King propose “a per-child family benefit called the Family Income Supplemental Credit. We argue that such a policy should be understood not as a “child allowance,” but rather as a form of reciprocal social insurance paid only to working families.

“Those struggling to make ends meet as the pressures of raising young children simultaneously curtail their income and raise their expenses deserve the nation’s unqualified support. If and when they attain economic comfort themselves, they should repay the investment, contributing to the support of those facing the squeeze.

“An aggressive expansion of the nation’s social compact, backed by a major financial commitment, has the potential to shore up the economic and cultural foundations on which people build their lives.”

See also, the American Compass’s “Home Building Survey” on the state of families in America for more of its policy proposals.

“The Future of Work After COVID-19”, by the McKinsey Global Institute

SUPRRISE

“Our research suggests that the disruptions to work sparked by COVID‑19 will be larger than we had estimated in our prepandemic research, especially for the lowest-paid, least educated, and most vulnerable workers.

“We estimate that more than 100 million workers in the eight countries we studied may need to switch occupations, a 12 percent increase compared to before the pandemic overall and a 20 percent rise in advanced economies. These workers will face even greater gaps in skill requirements.

“Across countries, we find that job growth may concentrate more in high-wage jobs while middle and low wage jobs decline.”

“People Globally Offer Mixed Views Of The Impact Of Artificial Intelligence, Job Automation On Society”, by Pew Research

SURPRISE

It is interesting to contrast public perceptions of the impact of automation and AI with other sources of data on these technology’s diffusion and deployment and assessments of the risks they pose to future employment and job creation.

My key takeaway is that this polling data is further evidence that human beings struggle to think clearly about the implications of exponential rates of change.

In the 20 countries around the world where people were polled, “a median of about half (53%) say the development of artificial intelligence, or the use of computer systems designed to imitate human behaviors, has been a good thing for society, while 33% say it has been a bad thing. [In the US, the split was 47/44].

“Opinions are also divided on another major technological development: using robots to automate many jobs humans have done in the past. A median of 48% say job automation has been a good thing, while 42% say it’s had a negative impact on society. [In the US, the split was 41/50].

“Factors Associated With Psychological Distress During The Coronavirus Disease 2019 (COVID- 19) Pandemic on the Predominantly General Population: A Systematic Review and Metaanalysis” by Wang et al

“Pandemic Burnout On Rise As Latest Covid Lockdowns Take Toll”, by Sarah Marsh in The Guardian

SURPRISE

Based on surveys of 288,830 people in 19 countries, Wang et al find “the prevalence of anxiety and depression was, respectively, 33% (95% CI: 28%-39%) and 30% (26%-36%).” Women, younger adults, and people with lower socioeconomic status were more likely to suffer from these conditions. So too were people who had had COVID and who had longer media exposure.

These data line up with the Guardian’s finding that, in the UK, “psychologists are reporting a rise in ‘pandemic burnout’ as many people find the current phase of lockdowns harder, with an increasing number feeling worn out and unable to cope…

“Many are finding the latest lockdown more difficult because of a realisation that coronavirus will be around longer than expected, dashed hopes about an easing of restrictions, and a period of sustained stress similar to overwork, which has prompted symptoms such as fatigue… your concentration getting sluggish, finding it harder to pay attention, and having sleep and memory issues.”

“School Catchup Could Take Five Years, Says Education Recovery Tsar”, Financial Times

“Youth Who Graduate in a Crisis Will Be Profoundly Affected, and May Never Fully Recover” -- IMF

Nation’s are just beginning to grapple with the size of students’ COVID learning losses and the challenges they face in recovering them, in an economy where automation and AI technologies are improving at a rapid rate.
In the US, this challenge continues to grow in those school districts where teachers unions are still blocking the reopening of schools.

Unions are also arguing that standardized tests should be cancelled “because they would put too much stress on students.” However, that would also mean that the size of COVID learning losses would remain hidden, which would limit demands to substantially change school district budgets to recover them.

As I wrote in another publication, if learning losses are not recovered, “Dark Days Lie Ahead.”

“COVID’s Long Shadow: Social Repercussions of Pandemics”, by Barrett et al from the IMF

SURPRISE

“From the Plague of Justinian and the Black Death to the 1918 Influenza Epidemic, history is replete with examples of disease outbreaks casting long shadows of social repercussions: shaping politics, subverting the social order, and some ultimately causing social unrest.

“Why? One possible reason is that an epidemic can reveal or aggravate preexisting fault lines in society, such as inadequate social safety nets, lack of trust in institutions, or a perception of government indifference, incompetence, or corruption.

“Historically, outbreaks of contagious diseases have also led to ethnic or religious backlashes or worsened tensions among economic classes…
“Recent trends in social unrest immediately before and after the COVID-19 outbreak are consistent with this historic evidence.”

“Anger Increases Susceptibility to Misinformation”, by Greenstein and Franklin

SURRPISE

This paper provides additional support for the theory that increasing feelings of uncertainty and associated fears (due to multiple root causes) have also increased feelings of anger (a protective reaction against fear), which in turn have made people more susceptible to misinformation.

“Anger did not affect either recognition or source accuracy for true details about the initial event, but suggestibility for false details increased with anger. In spite of this increase in source errors (i.e., misinformation acceptance), both confidence in the accuracy of source attributions and decision speed for incorrect judgments also increased with anger.

See also: “Perceived Social Presence Reduces Fact Checking”, by Jun et al

“A Vicious Cycle: How Pandemics Lead to Economic Despair and Social Unrest”, by Saadi Sedik and Xu from the IMF

SURPRISE

“In this paper we analyze the dynamics among past major pandemics, economic growth, inequality, and social unrest. We provide evidence that past major pandemics, even though much smaller in scale than COVID-19, have led to a significant increase in social unrest by reducing output and increasing inequality.

“We also find that higher social unrest, in turn, is associated with lower output and higher inequality, pointing to a vicious cycle.”

“Our results suggest that without policy measures, the COVID-19 pandemic will likely increase inequality, trigger social unrest, and lower future output in the years to come.”

This raised the critical question about what those policy measures must be in order to avoid the vicious cycle the authors describe.

At the “zero lower bound”, monetary policy is far less effective than it was when interest rates were higher and their reduction had a strong impact on demand. Monetary policy has been further weakened by high levels of private sector debt.

As Furman and Summers note, this makes fiscal policy much more important. But the nature of that policy, not just the size of government deficits that support it, is also critical. Specifically, they point to the importance of using fiscal policy to fund investments that will increase long-term growth, and not just use it to fund transfer payments that support consumption in the short-term.

However, few appreciate the obstacles that must be overcome to achieve this result.

Larry Summers himself has written about the obstacles encountered by many infrastructure projects (e.g., see “A Lesson on Infrastructure from the Anderson Bridge Fiasco”). Similar problems will almost certainly be encountered by the very large investment in new electricity transmission lines that will be needed to implement the Green New Deal.

More broadly, serious attempts to increase productivity and economic growth will inevitably confront the obstacles that have long bedeviled structural policy, not the least in the healthcare and education sectors that account for a substantial portion of US GDP.

Whether the Biden administration will be willing to spend the substantial political capital required to overcome these obstacles remains to be seen.

“Middle-Class Redistribution: Tax and Transfer Policy for Most Americans”, by Looney et al

SURPRISE

A frequently recounted summary of the past 40 years says that the political consequences of the relatively slow growth in US middle class incomes was partially offset by falling prices for many goods and services, made possible by offshoring and automation of production. The glaring exception to this was exponential growth in the cost of housing, education, and healthcare, which led to growing middle class frustration and anger (which has increasingly been targeted at the nation’s elites, whose income has grown much faster).

This paper makes clear that the above story leaves out an important factor: How tax and transfer policies have been used (with much less public visibility) to prevent the middle class’s relative standard of living from falling even faster.

Critically, the authors argue that this cannot continue. In turn, this puts even more pressure on the Biden administration address the structural obstacles to faster economic growth and more equal distribution of its benefits.

“The “middle class” has benefitted from government redistribution in recent decades. For individuals in non-elderly households in the middle three income quintiles (the middle class), the share of federal taxes decreased, and the share of transfers increased.

“Between 1979 and 2016, market income per person increased 39 percent. But when accounting for taxes and transfers income increased 57 percent.
“Middle class income support, however, is a recent phenomenon. Before 2000, market income and income after taxes and transfers grew together. Since 2000, middle-class income after taxes and transfers grew three times faster than market income…

“While these changes were effective in boosting the after-tax, after-transfer income of non-elderly middle-class households, we are less optimistic they will be sources of future growth for middle-income households.

“Tailwinds from the “peace dividend” and increasing deficits have largely run their course. Even if deficits could remain at high levels, they cannot grow at high rates.

“Additionally, the aging of the population and the retirement of the Baby Boomer generation results in a headwind against the further expansion of benefits for the non-elderly middle-class.

“While increases in redistribution through the tax and transfer system are possible, raising the after-tax, after-transfer incomes of the middle class by the magnitudes achieved over the last two decades and financing it by increasing taxes only on top income households would require unprecedented tax rates.”

“Signaling Virtuous Victimhood as Indicators of Dark Triad Personalities”, by Ok et al

SURPRISE

The authors find that, “individuals with Dark Triad traits — Machiavellianism, Narcissism, Psychopathy — more frequently signal virtuous victimhood, controlling for demographic and socioeconomic variables that are commonly associated with victimization in Western societies.”

“Is Marriage Becoming Irrelevant?” by Gallup

SURPRISE

“Americans are less inclined now than in recent years to see marriage as critical for couples who have children together or for couples who plan to spend the rest of their lives together.

“Fewer U.S. adults now than in past years believe it is "very important" for couples who have children together to be married.

“Currently, 29% say it is very important that such a couple legally marry, down from 38% who held this view in 2013 and 49% in 2006. Another 31% of U.S. adults currently say it is "somewhat important" for couples with children to be married, bringing the total to 60% who consider it important to some degree.

“Meanwhile, four in 10 say it is not too (18%) or not at all (22%) important.
“In 2006, Americans were more than twice as likely to say it is very important (49%) for couples with children to wed as to say it is not important (23%).”

“The Long-Term Impact of the COVID-19 Unemployment Shock on Life Expectancy and Mortality Rates”, by Bianchini et al

SURPRISE

This paper provides further evidence that the long-term economic, social, and political costs of COVID are very likely underestimated at this point.

“We adopt a time series approach to investigate the historical relation between unemployment, life expectancy, and mortality rates…

“We find that shocks to unemployment are followed by statistically significant increases in mortality rates and declines in life expectancy.

“We use our results to assess the long-run effects of the COVID-19 economic recession on mortality and life expectancy. We estimate the size of the COVID-19-related unemployment to be between 2 and 5 times larger than the typical unemployment shock, depending on race/gender, resulting in a 3.0% increase in mortality rate and a 0.5% drop in life expectancy over the next 15 years for the over-all American population.

“We also predict that the shock will disproportionately affect African-Americans and women, over a short horizon, while white men might suffer large consequences over longer horizons.

“These figures translate in a staggering 0.89 million additional deaths over the next 15 years.”

“Deaths of Despair and the Incidence of Excess Mortality in 2020”, by Casey Mulligan

SUPRRISE

More evidence of the long-term costs of COVID.

“Weekly mortality through October 3 is partitioned into normal deaths, COVID, and non-COVID excess deaths (NCEDs).
“Before March, the excess is negative for the elderly, likely due to the mild flu season. From March onward, excess deaths are approximately 250,000, of which about 17,000 appear to be a COVID undercount and 30,000 non-COVID.

“Deaths of despair (drug overdose, suicide, alcohol) in 2017 and 2018 are good predictors of the demographic groups with NCEDs in 2020.

“The NCEDs are disproportionately experienced by men aged 15-55, including men aged 15-25. Local data on opioid overdoses further support the hypothesis that the pandemic and recession were associated with a 10 to 60 percent increase in deaths of despair above already high pre-pandemic levels.”

2021 Edelman Trust Barometer. This analysis of public trust in various institutions is published annually ahead of the World Economic Forum.

January to May saw significant increase in trust in government across developed nations. However all governments lost between May and Jan21.

Both US and Chinese national governments suffered substantial falls in public trusts.
In many countries, business os now more trusted that government, media, and NGOs.

Trust in all information sources now at record lows (search engines, traditional media, social media).

“Evaluating the Success of President Johnson’s War on Poverty: Revisiting the Historical Record Using a Full-Income Poverty Measure”, by Burkhauser et al

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“We evaluate progress in President's Johnson's War on Poverty. We do so relative to the scientifically arbitrary but policy relevant 20 percent baseline poverty rate he established for 1963. No existing poverty measure fully captures poverty reductions based on the standard that President Johnson set.

“To fill this gap, we develop a Full-income Poverty Measure with thresholds set to match the 1963 Official Poverty Rate. We include cash income, taxes, and major in-kind transfers and update poverty thresholds for inflation annually. While the Official Poverty Rate fell from 19.5 percent in 1963 to 12.3 percent in 2017, our Full-income Poverty Rate based on President Johnson’s standards fell from 19.5 percent to 2.3 percent over that period.

“Today, almost all Americans have income above the inflation-adjusted thresholds established in the 1960s. Although expectations for minimum living standards evolve, this suggests substantial progress combatting absolute poverty since the War on Poverty began.”

While this is a very impressive achievement, it is underreported because beyond a certain threshold (which the US has passed) poverty ceases to be measured against an absolute standard, and becomes relative.

“Do Family Policies Reduce Gender Inequality? Evidence From 60 Years Of Policy Experimentation”, by Kleven et al

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And this is in Austria!

“Do family policies reduce gender inequality in the labor market? We contribute to this debate by investigating the joint impact of parental leave and child care, using administrative data covering the labor market and birth histories of Austrian workers over more than half a century…

“Our results show that the enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence.”

“The Forest for the Trees” – Willis Krumholz review of “Billionaires in the Wilderness” by Justin Farrell

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Farrell’s book is an anthropological study of class differences in the very affluent ski resort town of Jackson, Wyoming. It is alternately fascinating and painful – but very revealing.

As Krumholz notes, “Today, the plight of the working class is not well understood, but it is well documented: families are brittle, young men are disconnected, and cities and neighborhoods have been hollowed out by the loss of industries.

“But there is also a sense that America’s rich have lost something significant, too. Perhaps as a consequence of the death of the small town, the wealthy have become disconnected from healthy communities and from American civic life. As working-class problems have grown, America’s upper class has withdrawn.”

In Jackson, “the middle class has already gone... In a country where modern-day feudalism is often said to be a creeping problem, Teton County [where Jackson is located] could be the closest thing America has to lords and serfs” …

“The story of the lost middle class does not start—or end—with high land values caused by amorphous “market forces.”

“Rather, it is the direct result of restrictions on land and housing that make only high-end homes possible in the county.

“These restrictions have been put in place by the elite through a system of self-serving charities that Farrell calls “Gilded Green Philanthropy.”

“Teton County is home to many tax-exempt charities, officially dedicated to environmental causes and usually backed by millions of dollars, which directly seek to restrict further development and which thereby boost existing home and land values. The wide use of tax breaks for conservation easements and land trusts means that the county suffers from a kind of nimbyism on steroids” ...

“Put simply, the charity of Teton County’s elite does virtually nothing to help the poor of the area. Of Teton County’s roughly two hundred nonprofit organizations, most are focused on land conservation and the arts.

“A deeper problem is the disparity in funding between different categories of organizations: of these two hundred nonprofits, some are bursting at the seams with cash, others struggle to get by. In general, nonprofits focused on social welfare are grossly underfunded or even ignored.

“Elites come to Jackson Hole and “get involved”—but not in humanitarian causes. Charities that serve the interests of people in need or that work to relieve the plight of the migrants who serve the rich in the county are dismissed because of their focus on “buzzkill issues” …

“Dig deep enough, and a key source of American political division comes down to disagreement over whether the great between America’s wealthy and its working class can be explained by merit alone or instead by some confluence of merit, policy, and privilege—but mostly policy and privilege. …

“The way the elite of Teton County view the poor is out of touch with reality, as Farrell discovers in interview after interview. In the minds of the elite, the poor in Teton County are “ski bums” and nature lovers who have given up the pursuit of wealth in favor of outdoor adventure. If they resent the rich, goes the elite thinking, it is because they secretly wish they had made better life choices. The rich therefore feel no moral imperative to help those whom they see as ski bums who, after all, chose to be poor.

“The reality of poverty in Teton County is quite different, however: the poor and working class residents of the area are disproportionately Hispanic migrant workers, whose wages have been stagnant for decades. Most work long hours at multiple jobs and still struggle to get by.” .

“When the elites are asked about their own wealth, by contrast, they sometimes offer a less traditionally American answer. Instead of hard work, a handful of Farrell’s interviewees attributed their wealth to natural advantage, crediting superior intellect or even genetics. “You know, that’s just how it is, and some people are born smarter than other people and it’s not their fault … some people just don’t have the capability,” a wealthy resident told Farrell. Another resident said that the “gene pool is another element of it” …

“American elites have a political ideology in common—one certainly not shared by the common folk. This ideology is a sort of “cafeteria libertarianism.” They are often liberal or agnostic on so-called social and cultural issues. On economics, they believe government should apply a light touch: it should do little to restrict immigration or trade; it should not seek to impose onerous antitrust requirements or heavily regulate corporate activity.

“Yet when the stock market crashes, these same elites clamor for the Federal Reserve to step in. If their company is in trouble, they do not hesitate to turn to the government for a bailout. Of course, they also insist that such a bailout should come with as few strings attached as possible—rules that would disallow offshoring jobs, or limit CEO salaries, or grant government equity in the company—because the government should not interfere with the free market.

“In other words, government intervention is bad when it is against their interests but good when it suits their interests.

“In Teton County, this inconsistency of principle transfers to local government issues: self-professed libertarians who speak to Farrell are quick to justify their support for restrictions on development. They did, after all, pay a lot to live in Teton County. At a certain point, it seems pedantic to point out the inconsistency of their principles; Farrell’s superrich simply don’t bother to distinguish between principles and self-interest at all.”

“The Drivers of Institutional Trust and Distrust”, by Kavanagh et al from RAND

“Trust in core institutions—government, media, corporations, the military—is central to the functioning of American society.

“Worryingly, polling data from multiple organizations reveal sizable decreases among the American public in trust of such institutions over the past two decades… Although these trends are well documented, they are not well understood…This report contributes to the existing understanding of trust in institutions by presenting and implementing a more comprehensive approach for assessing institutional trust…

“Five dimensions—competence, integrity, performance, accuracy, and relevance of information provided—emerged from our
analysis as perhaps the key drivers of trust in the institutions that we asked about…

“Across institutions, survey respondents reported that perceived competence and integrity of individuals within the institutions were key drivers of their reduced trust in the institutions themselves.”

See also, “Trust and the Coronavirus Pandemic: What are the Consequences of and for Trust? An Early Review of the Literature”, by Devine et al. The authors find that, on balance, COVID has led to a reduction in public trust in many institutions.

“Secularization and the Tribulations of the American Working-Class”, by Brian Wheaton

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Wheaton notes that, “Over the past several decades, working-class America has been plagued by multiple adverse trends: a sharp increase in social isolation, an even sharper increase in single parenthood, a decline in male labor force participation rates, and a decline intergenerational economic mobility – amongst other things”, and that “Material economic factors have been unable to fully explain these phenomena.”

He focuses on the potential impact of declining religiosity as an explanation, and finds that it has a strong effect, the bulk of which is driven by declining religious attendance rather than weakening beliefs.

In the middle of the COVID pandemic, the financial burdens imposed on individuals by the US healthcare system still weigh heavily on their decisions.

A new survey by HealthCare Insider and YouGov found that “56% of U.S. adults said they were either somewhat or very concerned that a health situation in their household could lead to bankruptcy or debt”, and 46% US adults said they postponed healthcare services in the past year.”

The primary, secondary, and tertiary (university) education sectors continue to be strongly affected by COVID-19.

Arguments between school leaders, teachers, parents, and employers over primary and secondary school openings are increasingly acrimonious, particularly as evidence accumulates that:

(1) inflection rates in schools are lower than in their surrounding communities, particularly among children (e.g., “What’s the Evidence for COVID-19 Transmission by Children in Schools?”;

(2) There are effective means to further limit that risk through better management of indoor air quality (e.g., “Are We Ready to Close School Windows?”);

(3) Learning losses due to closed schools and ineffective remote instruction are unlikely to be recovered (e.g., “COVID Learning Losses: Dark Days Lie Ahead”); and increasing criticism of the quality of the decision making processes for school reopening that are being used by government authorities (e.g., “When Should Schools Reopen?” by the Wharton School).

Increasing acrimony is very likely creating a window for substantial changes in these systems.

The same is true in the tertiary system, where COVID-19 has placed enormous strain on university’s economic models (e.g., due to the loss of foreign students). See, for example, “The Failing Business Model of American Universities”, by Eric Jansen).

“Rethinking AI Talent Strategy as Automated Machine Learning Comes of Age”, by Hurtgen et al from McKinsey

“In recent years, as the promise of artificial intelligence (AI) crystallized across industries, organizations revamped their talent strategies to gain the skills necessary to deploy and scale AI systems. They hired legions of data scientists and other data experts to build AI applications, trained analytics translators to connect the business and technical realms, and upskilled frontline staff to use AI applications effectively…

“One role in particular, the data scientist, has been especially difficult for leaders to fill as competition for its illusive knowledge increased…

“But there are also new tools that have the potential to fill the data-science talent gap and increase the efficiency of analytics teams. Automated machine learning (ML) tools, commonly called AutoML, are designed to automate many steps in developing machine learning models. Business experts armed with AutoML can build some types of models that once would have needed a trained data scientist.”

This article is a specific example of a larger problem: AI and automation technologies are improving at a faster rate than labor skills are improving (a situation that unrecovered COVID learning losses will only worsen).

This is why the World Economic Forum’s recent Future of Jobs report put so much emphasis on the need for better approaches to reskilling employees.

Unfortunately, that is no easy task, as the education sector in many countries (with notable exceptions like Switzerland) is riven by turf battles between well-entrenched interest groups across the secondary and tertiary systems.

This leads to calls for greater reskilling investments by employers. However, many companies face thin margins in an intensely competitive global economy.

Along with the fear of losing their investment in reskilled employees if they leave, this is incentivizing a growing number of companies to minimize reskilling in favor of greater investment in automation and AI technologies that will not walk out the door.

To be sure, there is an argument that, as was the case in the Industrial Revolution, job destruction will eventually be offset by the creation of new jobs, many of which don’t exist today.

However, especially if real wages remain stagnant, this argument says nothing about how to successfully deal with the medium term social and political problems that will arise from rising unemployment as more workers find themselves displaced by technology and lacking the skills to find a new job with comparable pay to the one they lost.

Evidence continues to accumulate that COVID-19 is producing social changes that will very likely be difficult, and/or take a long time to fully reverse after the pandemic ends.

For example:

COVID-19 is putting further downward pressure on birth rates, which, all else being equal, further dampen aggregate demand growth and intensify intergenerational conflicts (“The Pandemic May Be Leading To Fewer Babies In Rich Countries” in The Economist).

School closures and the shift to remote learning is pushing more women out of the workforce, increasing pressure on family finances and consumption spending (“Sitting It Out? Or Pushed Out? Women Are Leaving the Labor Force in Record Numbers” by Kathryn Edwards from RAND).

Despite higher rates of working from home, “individuals with higher education experienced a greater increase in depressive symptoms and a greater decrease in life satisfaction from before to duringCOVID-19 in comparison to those with lower education” (“Socioeconomic Status And Well-Being During COVID-19”, by Wannberg et al).

“America is Having a Moral Convulsion”, by David Brooks in The Atlantic

“Social trust is a measure of the moral quality of a society—of whether the people and institutions in it are trustworthy, whether they keep their promises and work for the common good…

“Levels of trust in this country—in our institutions, in our politics, and in one another—are in precipitous decline. And when social trust collapses, nations fail. Can we get it back before it’s too late?”

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This is an extremely thought provoking and definitely not optimistic essay that is well worth a read.

Among many other interesting observations, Brooks notes that, “The Baby Boomers grew up in the 1950s and ’60s, an era of family stability, widespread prosperity, and cultural cohesion. The mindset they embraced in the late 1960s and have embodied ever since was all about rebelling against authority, unshackling from institutions, and celebrating freedom, individualism, and liberation.”

In stark contrast, “the emerging generations today enjoy none of that sense of security. They grew up in a world in which institutions failed, financial systems collapsed, and families were fragile. Children can now expect to have a lower quality of life than their parents, the pandemic rages, climate change looms, and social media is vicious. Their worldview is predicated on threat, not safety. Thus the values of the Millennial and Gen Z generations that will dominate in the years ahead are the opposite of Boomer values: not liberation, but security; not freedom, but equality; not individualism, but the safety of the collective; not sink-or-swim meritocracy, but promotion on the basis of social justice.”

“Once a generation forms its general viewpoint during its young adulthood, it generally tends to carry that mentality with it to the grave 60 years later. A new culture is dawning. The Age of Precarity is here.”

Brooks concludes that, after the COVID pandemic arrived, “we had a chance, in crisis, to pull together as a nation and build trust. We did not. That has left us a broken, alienated society caught in a distrust doom loop… the events of these past six years, and especially of 2020, have made clear that we live in a broken nation. The cancer of distrust has spread to every vital organ.”

“Socially Distant How Our Divided Social Networks Explain Our Politics” by Cox et al from AEI

“Americans have a more positive view of the Democratic Party than the Republican Party, but only marginally so.

“Thirty-seven percent of Americans have a favorable view of the Republican Party, while close to half (45 percent) of the public expresses a positive opinion of the Democratic Party.

“A majority of Americans have a negative view of both the Republican Party (63 percent) and the Democratic Party (54 percent).

“Partisans generally express greater animosity toward the opposing party than affection for their own. More than three-quarters (78 percent) of Democrats have a favorable view of the Democratic Party, but only 23 percent express a very favorable opinion. Eighty-nine percent of Democrats view the GOP negatively, including 55 percent who have a very negative view.

“Seventy-seven percent of Republicans have positive impression of their party; however about only one-quarter (24 percent) say their view is very positive. More than nine in 10 (92 percent) Republicans view the Democratic Party unfavorably, while nearly two-thirds (64 percent) say they have a very unfavorable opinion.

“The immediate political social context appears to and influence how Democrats respond to the opposition.
“Democrats and Republicans who have more politically diverse social circles feel less hostility toward the opposing political party…

“Most partisans have close social ties that reflect their political predispositions. A majority (54 percent) of Republicans report that their core social network is exclusively composed of Donald Trump supporters. The pattern is identical among Democrats.”

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This paper describes some very important trends, and indirectly reflects others we have noted in our Evidence Files.

Back in 1988, Michael Weiss published “The Clustering of America”, which explored the extent to which American communities (defined by Zip Codes) were becoming more homogenous.

Twenty years later, Bill Bishop published his book, “The Big Sort”, which showed how acceleration of the trends identified by Weiss had led to an increasingly divided and polarized not-so-United States.

In 2012, Charles Murray published “Coming Apart”, and in 2015 Robert Putnam published “Our Kids” – books that focused on the destructive consequences of the increasing differences and mutual incomprehension (and increasing contempt) between the two Americas.

In 2016, the result was Donald Trump.

In parallel with this sorting trend there has been an accelerating decline in religious belief and participation (e.g., see “Giving Up on God” by Ronald Inglehart).

Whether it is a cause, effect, or coincidence with the decline of strongly felt religious identify, at the same time, multiple researchers have found that political parties have become “meta-identities” which can now be used to reliability predict members views on a much wider range of issues than before (e.g., “Identity as the Dependent Variable: How Americans Shift Their Identities to Align With Their Politics”, by Patrick Egan; “From Politics to the Pews: How Partisanship and the Political Environment Shape Religious Identity” by Michele Margolis, and “The Tie That Divides: Cross-National Evidence of the Primacy of Partyism”, by Westwood et al).

Most disturbing of all, perhaps, is evidence that the decline of religion and rise of political party as a meta-identity has led to party members having very different perceptions of the morality of the other party’s members (e.g., “Seeing Beyond Political Affiliations: The Mediating Role Of Perceived Moral Foundations On The Partisan Similarity-Liking Effect”, by Bruchmann et al).

This is dangerous, because perceived moral differences make compromise extremely difficult.

One of the effects of these interacting trends is what Cox et al found: Feelings of dislike (and, in their stronger forms, disrespect, animosity, and contempt) for members of the other party are much stronger than positive feelings towards one’s own.

In sum, it is clear that American politics has become tribal, which bodes ill for any leader’s ability to reverse the trend towards greater social and political conflict (at least in the absence of an existential external threat to the nation).

“Golfing with Trump: Social Capital, Decline, Inequality, and Populism in the US” by Rodriguez-Pose et al.

“This paper analyses the extent to which the election of Donald Trump was related to levels of social capital and interpersonal inequalities and posits a third alternative: that the rise in vote for Trump in 2016 was the result of long-term economic and population decline in areas with strong social capital.

“This hypothesis is confirmed by the econometric analysis conducted for counties across the US. Long-term declines in employment and population – rather than in earnings, salaries, or wages – in places with relatively strong social capital propelled Donald Trump to the presidency.

“By contrast, low social capital and high interpersonal inequality were not connected to a surge in support for Trump. These results are robust to the introduction of control variables and different inequality measures.

“The analysis also shows that the discontent at the base of the Trump margin is not just a consequence of the 2008 crisis but had been brewing for a long time…“The surge in populism in the US – epitomised by the election of Donald Trump in 2016 – may not have come from, as suggested by Putnam (2020), low social capital or high interpersonal inequality (at least, at the local level), or their combination.

“We argue that a fundamental driver in the swing of votes towards Donald Trump in the 2016 election is a factor that has remained relatively unnoticed not just in Putnam’s Bowling alone, but also in the overwhelming majority of the literature on the rise of populism in the US: The long-term economic and demographic decline of American towns and rural areas and the related rise in interterritorial inequality…

“Places in the US that remained cohesive but witnessed an enduring decline are no longer bowling alone, they are golfing with Trump.”

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This new analysis aligns with those noted above, but extends them to capture another effect of the combination of America’s “big sort” with the impact of globalization and technological change not on the economy overall, but on communities across the nation.

On a personal note, this paper really grabbed me, because it described my anecdotal experience with communities around where I grew up in the Northeast United States. Contrary to what many perceive to be a solid Democratic bloc, in 2016 the region also cast a surprising number of votes for Trump, many of them clustered in communities like those described by Rodriguez-Post and his fellow authors.

Rioting continued in some American cities, with looting in Chicago’s Magnificent Mile retail district receiving widespread coverage (e.g., see “When Authority Vanishes” by John McGinnis).

While the political benefits to the Trump campaign were obvious, the social forces operating below the surface are potentially more important.

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Martin Gurri, author of the book “The Revolt of the Public and the Crisis of Authority in the New Millennium” offered an insightful analysis in his article, “Why Were the Protests and Riots So Explosive?”

“The riots connect to something bigger and deeper: The tectonic collision between a public empowered by digital platforms and the elites who control the ruling institutions of modern society”…

“The information sphere today contains an immense universe of voices interested in talking about ever-fewer subjects.” Donald Trump as the dominant narrative was displaced by the COVID pandemic, and then by urban protests and riots. “The information sphere has taken on the traits of an obsessive-compulsive personality” …

Re: the mindset of the protesters. “Their visions of the future diverge wildly, but they are united and mobilized by a shared loathing of the established order. They stand ferociously against…

Any hint of a positive program would likely shatter the movement into its component war-bands, so revolt has come to mean an exercise in pure negation, in the repudiation of the status quo without an alternative in sight. At this point, the question of nihilism becomes impossible to avoid” …

“The last piece of the puzzle is the behavior of elected officials…This was a collapse in the self-confidence of our ruling elites … Many were paralyzed by fear of doing anything that might transform them into villains of the narrative … Those in charge continue to bleed out authority, and the democratic institutions they represent have begun to totter.”

In “Conformity to a Lie”, Heather McDonald argues that, “academia’s monolithic belief in systemic racism will further erode American institutions and the principles of our civilization…

“Academia was the ideological seedbed for that violence and for its elite justifications; it will prove just as critical in the accelerated transformation of the country.

“Fealty to “diversity” and denunciations of white privilege have been a unifying theme in academia for decades, of course.

“What’s different this time is the sheer venom of the denunciations. College presidents and deans competed for the most sweeping indictment of the American polity, rooted in the claim that blacks are everywhere and at all times under threat.”

“The claim that colleges are hotbeds of discrimination is a fantasy. Every university twists itself into knots to admit, hire, and promote as many black students and faculty as it possibly can, in light of the fierce bidding war among colleges for underrepresented minorities.

“It has been taboo to hint at the reason that the millions of dollars already expended on campus diversity initiatives have yet to engineer exact proportional representation of blacks in the student body and on the faculty: the vast academic skills gap.

“Now this truth will be even more professionally lethal to anyone who dares mention it. The highest reaches of the university have declared as a matter of self-evident fact that systemic racism is the defining feature of American society, one that explains every inequality. Fighting against that racism has now officially become colleges’ reason for being.”

The claim that systematic racism is responsible for the uneven racial distribution of educational, economic, and other outcomes clashes with the public’s views, as polled by Pew Research in February 2019.

Among those who said being black hurt people’s ability to get ahead, only 54% of whites believed racial discrimination is a major reason for this (versus 84% of blacks).

60% of whites said less access to good schools was a major reason, compared to 72% of blacks.

50% of whites said family instability was a major reason, compared to 42% of blacks.

In sum, the claim by academics and other progressives that systematic racism is the major cause of uneven racial outcomes in the United States is rejected by the majority of the public.

As such, the continued assertion of this claim will very likely further increase social and political conflict in the United States.

Two new papers highlight less understood negative effects from inequality of economic opportunity.

In “The Motivational Cost Of Inequality”, Gesiarz et al observe that, “economic inequality arising due to random circumstances is often viewed as unfair, and previous studies have shown that people support redistribution of wealth in such situations. However, much less is known about how opportunity gaps influence human motivation”.

They find that “across three experiments, the unequal distribution of potential rewards for performing the same task reduced participants’ motivation to pursue rewards, even when their relative position in the distribution was high, and despite the decision being of no benefit to others” ...

“Large disparities in potential rewards from work were associated with greater unhappiness, which was associated with lower willingness to work–even when controlling for absolute reward and its relative value…[In sum], “opportunity-gaps can trigger psychological dynamics that hurt the productivity and well-being of all involved.”

In another recent paper, Eric Protzer tests a number of different hypotheses and concludes that, “Social Mobility Explains Populism, Not Inequality or Culture.” Note that by “social mobility” the author refers to the perception that unequal outcomes are the result of a system that unfairly limits opportunity.

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These papers help to explain the clashing social views that underlie the rising levels of political conflict we see today in the United States and other western nations.

On one side are practitioners of identity politics, who ascribe inequality of outcomes to systematic racism.

On the other side are practitioners of something closer to traditional class politics, who ascribe inequality of outcomes to sources of systematic unfairness that go well beyond racism.

As the pandemic wears on, “COVID Fatigue” is taking a toll.

Even before the pandemic arrived, the prevalence of experiencing anxiety in the past month was on the rise, especially among young adults (from 8% in 2008 to 15% in 2018, as reported by Goodwin et al in “Trends in anxiety among adults in the United States, 2008-2018”).

Now prolonged exposure to multiple threats and fears triggered by COVID, along with restrictions on our access to many previous coping mechanisms (e.g., entertainment, socializing, restaurants, sports, in-person shopping, exercise) is producing a sharp increase in mental health problems.

For example, according to the BBC, the incidence rate of people in the UK reporting depressive symptoms has doubled from 10% in July 2019 to 20% in June 2020. The greatest increase was in people between 16 and 34, with 33% reporting moderate or severe depressive symptoms in July.

Similarly, the Federal Reserve Bank of New York reported on “The Disproportionate Effect of COVID-19 on Households with Children [under 18]”

Existing mental health resources are almost certainly insufficient to address the substantial increase in people needing professional treatment of anxiety, depression and other disorders triggered by extended exposure to the multiple challenges COVID-19 has created in many people’s lives.

It is very likely that this will lead to more pressure on local and state government budgets, as well as the capacity of the healthcare system. A more long lasting impact is likely to be a long-term reduction in the productivity and earning power of a significant percentage of the population.

In “Half a Million Fewer Children?” Brookings' Melissa Kearney and Phillip Levine analyze the likely impact of COVID-19 on US fertility rates that were already dropping before the pandemic arrived.

If not offset by higher immigration, a drop in native births will raise the US dependency ratio in future years (the ratio of retired adults and children to working adults).

If the US education system does not substantially improve (which is critical to higher future labor productivity), a sustained reduction in fertility and a rise in the dependency ratio will put additional downward pressure on future GDP growth.

In his book “Albion’s Seed”, David Hackett Fischer famously described the enduring impact on regional US culture of four early waves of colonists who came from different regions of England.

In “Rugged Individualism And Collective (In)Action During The Covid-19 Pandemic”, Bazzi et al provide further evidence of this phenomenon.

The authors find that, “Rugged individualism—the combination of individualism and anti-statism—is a prominent feature of American culture with deep roots in the country’s history of frontier settlement. Today, rugged individualism is more prevalent in counties with greater total frontier experience (TFE) during the era of westward expansion between 1790 and 1890.

“While individualism may be conducive to innovation, it can also undermine collective action, with potentially adverse social consequences.

“We show that America’s frontier culture hampered the response to the COVID-19 pandemic. Across U.S. counties, greater TFE is associated with less social distancing and mask use as well as weaker local government effort to control the virus. We argue that frontier culture lies at the root of several more proximate explanations for the weak collective response to public health risks, including a lack of civic duty, partisanship, and distrust in science.”

“Fertility, mortality, migration, and population scenarios for 195 countries and territories from 2017 to 2100: a forecasting analysis for the Global Burden of Disease Study”, by Vollset et al

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This study provides country level scenarios and estimates of coming population declines. For example, “if global labour force participation by age and sex remains the same from 2017 to 2100, the ratio of the non-working adult population to the working population might reach 1·16 globally, up from 0·80 in 2017… These population shifts have economic and fiscal consequences that will be extremely challenging.”

As the authors note, “responding to sustained low fertility is likely to become an overriding policy concern in many nations given the economic, social, environmental, and geopolitical consequences of low birth rates.”

“Social Capital: Why We Need It and How We Can Create More of It”, by Isabel Sawhill from Brookings

“Formal institutions, such as government and markets, require an underpinning of more informal relationships that enable them to function. Without a certain degree of social trust, without norms of appropriate vs. inappropriate behavior, without strong institutions that uphold unifying and transcendent values, neither democracy nor the economy will flourish. Social capital, in short, is the glue that makes a society work. But it is not the panacea that some suggest. It is only in concert with good government, and a more inclusive prosperity, that it can address what ails America.

“Social capital is a somewhat amorphous and academic term, but the literature suggests that the decline in trust in others, in strong relationships, and in community ties is one reason that Trump was elected, one reason that our health and longevity have been deteriorating, and one reason that economic growth has slowed.

“What has gone wrong? The formation of character and the creation of prosocial norms depend on how families raise their children, how schools educate them, and how local institutions work to build a sense of community. All three of these institutions are now faltering.”

“The Demise of the Happy Two Parent Family Home”, by the US Congress Joint Economic Committee

The JEC has continued its multiyear research into social capital in the United States with this new report.

“As sources of valuable social capital, few relationships are as important as the family ties between parents and children. However, as with other features of our associational life, family ties have been weakening for several decades. Today, around 45 percent of American children spend some time without a biological parent by late adolescence. That is up from around one-third of children born in the 1960s and one-fifth to one-quarter born in the 1950s.

“Even more strikingly, among the most disadvantaged socioeconomic groups, even fewer children are raised in continuously intact families. Single parenthood is experienced by two-thirds of the children of mothers with less than a high school education and by eighty percent of black children. This inequality in family stability contributes to but also compounds economic inequality.”

“Social Bonds are Fraying Fast in America’s Cities”, by Samuel Abrams

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“The social fabric in our cities is not only rapidly breaking down, but the pandemic has also accelerated American’s interest in leaving cities for places where geography enables social bonds with others to be stronger.

"Before the pandemic, for instance, data collected by my colleagues and me at AEI revealed that 56 percent of urbanites stated that they knew their neighbors well. That figure has dropped to just 47 percent since the coronavirus appeared.

"In contrast, suburban areas— places traditionally considered desolate and isolated but with spaces to connect and be physically distanced—saw small sociability increases with coronavirus, with a 4 point bump from 48 percent to 52 percent. Rural areas have seen no real change, with almost two-thirds of rural residents stating they know their neighbors well…

“In urban areas, 42 percent of Americans state that they have been lonely a few times a week, nearly every day, or every day. This drops to 32 percent and 33 percent, respectively, for both suburban and rural areas and measures about depression are almost identical…

“Two years ago, Gallup found that Americans pined for green and open skies; 29 percent of Americans wished to live in large and small cities but the lion’s share wanted to be away: 27 percent longed for a rural area and the remaining 43 percent were wishing for a small towns or suburbs if they could live anywhere in the United States.

“The AEI data collected in the midst of the pandemic reveals that this desire to leave urban areas both big and small has accelerated with only 13 percent of Americans wanting to live in a city if they could live anywhere today. In contrast, 58 percent of Americans want to live in either a suburban area or a small town, and another 28 percent wanted a rural area.

The turn away from cities is a 55 percent drop from 2018.”

Multiple new studies have found that areas with higher levels of social capital had greater compliance with quarantine, physical distancing and mask wearing recommendations, and experienced lower rates of COVID infections.

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For example, in “Ties That Bind (and Social Distance): How Social Capital Helps Communities Weather the COVID-19 Pandemic”, Makridis and Wu find that, “on one hand, higher social capital could imply greater in-person interaction and risk of contagion. On the other hand, because social capital is associated with greater trust and relationships within a community, it could endow individuals with a greater concern for others, thereby leading to more hygienic practices and social distancing.

“Our results suggest that moving a US county from the 25th to the 75th percentile of the distribution of social capital would lead to a 20% decline in the number of infections, as well as a 0.28 percentage point decline in the growth rate of the virus (nearly 20% of the median growth rate).”

Similarly, using European data, Bartscher et al find that, “areas with high social capital registered between 12% and 32% fewer Covid-19 cases from mid-March until mid-May” (“The role of social capital in the spread of Covid-19”)

“Who Voted for Trump? Populism and Social Capital”, by Giuliano and Wacziarg

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The authors argue that, “low levels of social capital are conducive to the electoral success of populist movements. Using a variety of data sources for the 2016 US Presidential election at the county and individual levels, [they] show that social capital, measured either by the density of memberships in civic, religious and sports organizations or by generalized trust, is significantly negatively correlated with the vote share and favorability rating of Donald Trump around the time of the election.”

“How The Pandemic Could Force a Generation of Mothers Out of The Workforce”, by Paine and Thomson-DeVeaux

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“Studies have shown that women already shoulder much of the burden of caring for and educating their children at home; now, they’re also more likely than men to have lost their jobs thanks to the pandemic. And the collapse of the child care and public education infrastructure that so many parents rely on will only magnify these problems, even pushing some women out of the labor force entirely.”

“Twenty-Seven-Year Time Trends In Dementia Incidence In Europe And The United States”, by Wolters et al

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This is good news: Rates of dementia appear to be falling, which in the future will reduce the burdens on patients’ families and health system costs.

“An estimated 47 million people worldwide are living with dementia, making it a leading cause of dependence and disability. Because of rapid aging of the population, the number of people living with dementia is projected to triple in the next 30 years, and the socioeconomic burden of dementia to increase accordingly.

“The projected burden of dementia could be alleviated if improvements in life conditions and health care over the last decades have decreased dementia risk.”

Examining multiple studies from Europe and the United States, the authors find that, “Of 49,202 individuals, 4,253 (8.6%) developed dementia. The incidence rate of dementia increased with age, similarly for women and men, ranging from about 4 per 1,000 person-years in individuals aged 65–69 years to 65 per 1,000 person-years for those aged 85–89 years.

“The incidence rate of dementia declined by 13% per calendar decade (95% confidence interval [CI], 7%–19%), consistently across studies, and somewhat more pronouncedly in men than in women (24% [95% CI 14%–32%] vs. 8% [0%–15%])…

“If we assume continuation of this trend in Europe and North America into the coming decades—although this was not the main objective of our study—it could imply that 15 million fewer people will develop dementia by 2040 in high-income countries, compared to widely quoted projections of the global burden of disease.”

In the United States, there is evidence of a growing counter-reaction to “wokeism”, which the faltering Trump reelection campaign is attempting to capitalize on (see, for example, his July 4th speech at Mt. Rushmore).

For example, in “The American Press Is Destroying Itself”, the liberal commentator Matt Taibbi this month wrote that, “among self-described liberals, we’re watching an intellectual revolution. It feels liberating to say after years of tiptoeing around the fact, but the American left has lost its mind. It’s become a cowardly mob of upper-class social media addicts, Twitter Robespierres who move from discipline to discipline torching reputations and jobs with breathtaking casualness.

“The leaders of this new movement are replacing traditional liberal beliefs about tolerance, free inquiry, and even racial harmony with ideas so toxic and unattractive that they eschew debate, moving straight to shaming, threats, and intimidation. They are counting on the guilt-ridden, self-flagellating nature of traditional American progressives, who will not stand up for themselves, and will walk to the Razor voluntarily…

“Now, this madness is coming for journalism. Beginning on Friday, June 5th, a series of controversies rocked the media. By my count, at least eight news organizations dealt with internal uprisings (it was likely more). Most involved groups of reporters and staffers demanding the firing or reprimand of colleagues who’d made politically “problematic editorial or social media decisions.”
See also, “The New Truth” by Jacob Siegel and “Urban Blues” by Joel Kotkin, both in Tablet magazine

Another example of the pushback against woke identity politics this month came from the UK, where Joanna Williams from Civitas, the Institute for the Study of Civil Sociaty, published “The Corrosive Impact of Transgender Ideology.”

“In less than two decades ‘transgender’ has gone from a term representing individuals and little used outside of specialist communities, to signifying a powerful political ideology driving significant social change. At the level of the individual, this shift has occurred through the separation of gender from sex, before bringing biology back in via a brain-based sense of ‘gender-identity’. This return to biology allows for the formation of a distinct identity group, one that can stake a claim to being persecuted, and depends upon continual validation and confirmation from an external audience. All critical discussion is a threat to this public validation and it is often effectively curtailed.

However, this is only half of the story. The total number of transgender individuals remains tiny. That transgenderism has moved from niche to mainstream tells us more about the rest of society than it does about transgender individuals. People in positions of power within the realms of media, education, academia, police, social work, medicine, law, and local and national government have been prepared to coalesce behind the demands of a tiny transgender community.

“Previously authoritative institutions now lack confidence in their own ability to lead and look to the transgender community as a victimised group that can act as a source of moral authority. However, this, in turn, erodes sex-based rights and undermines child protection. The expansion of transgender rights has gone hand in hand with an expansion of state and institutional (both public and private) regulation of speech and behaviour.

“This highlights a significant difference between today’s transgender activists and the gay rights movement of a previous era. Whereas the gay rights movement was about demanding more freedom from the state for people to determine their sex lives unconstrained by the law, the transgender movement demands the opposite: it calls for recognition and protection from the state in the form of intervention to regulate the behaviour of those outside of the identity group. Whereas in the past, to be radical was to demand greater freedom from the state and institutional authority, today to be radical is to demand restrictions on free expression in the name of preventing offence.”

“How Widespread Unemployment Might Affect Retirement Security”, by Munnell et al

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“Ensuring retirement security for an aging population was one of the most compelling challenges facing the nation before the onslaught of COVID-19.

The unemployment associated with the pandemic…has worsened an already bleak outlook for retirement security.”

“Data Point to Soaring US Gun Sales in June”, by Fedor and Zhang in the Financial Times

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“A record 3.9m firearm background checks were conducted in June, according to new FBI figures that underscore the sharp rise in US gun sales since the start of the coronavirus pandemic and civil unrest following the killing of George Floyd.

“According to the FBI’s National Instant Criminal Background Check System, the number of firearm background checks conducted last month in the US was 71 per cent higher compared with the same time last year…

“Based on the Financial Times analysis, however, an estimated 2.4m firearms were sold in June, a year-on-year increase of 146 per cent.”

The past month saw multiple articles focused on various aspects of elite decline and destabilizing competition within the elites themselves.

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Many of these articles (e.g., “The Wealthy and Privileged Can Revolt Too”, by Noah Smith; “Our Suicidal Elites” by Joel Kotkin, and “The Rioters and the Rentiers” by Michael Lind) directly or implicitly refer to the work of professors Jack Goldstone and Peter Turchin, especially the latter’s 2010 article in Nature, “Political Instability May Be a Contributor in the Coming Decade”.

Turchin claimed that, “quantitative historical analysis reveals that complex human societies are affected by recurrent — and predictable — waves of political instability.

“In the United States, we have stagnating or declining real wages, a growing gap between rich and poor, overproduction of young graduates with advanced degrees, and exploding public debt. These seemingly disparate social indicators are actually related to each other dynamically.
“
They all experienced turning points during the 1970s. Historically, such developments have served as leading indicators of looming political instability” (For a retrospective review of that forecast, see, “The 2010 Structural-Demographic Forecast for the 2010-2020 Decade”, by Turchin and Korotayev).

A central contention of Goldstone and Turchin is that “Elite overproduction, presence of more elites and elite aspirants than the society can provide positions for, is inherently destabilizing. It reduces average elite incomes and increases intraelite competition and conflict because of large numbers of elite aspirants and, especially, counter-elites.

“Additionally, intraelite competition drives up conspicuous consumption, which has an effect of inflating the level of income that is deemed to be necessary to maintain elite status. Internal competition also plays a role in the unraveling of social cooperation norms.”

More broadly, Turchin notes that, “Specific triggers of political upheavals are difficult, perhaps even impossible to predict. On the other hand, structural pressures build up slowly and more predictably, and are amenable to analysis and forecasting.

“Furthermore, many triggering events themselves are ultimately caused by pent-up social pressures that seek an outlet—in other words, by the structural factors.

The main focus of Structural Demographic Theory is on the structural pressures undermining social resilience.” In “This model forecast the US's current unrest a decade ago. It now says civil war”, James Purtill of ABC Australia writes that in an as yet unpublished paper, Goldstone and Turchin conclude that the “The conditions for civil violence, they say, are the worst since the 19th century — in particular the years leading up to the start of the American Civil War in 1861.

The reason for this are trends that began in the 1980s, "with regard to inequality, selfish elites, and polarisation that have crippled the ability of the US government to mount an effective response to the pandemic disease," they write.

This has also "hampered our ability to deliver an inclusive economic relief policy, and exacerbated the tensions over racial injustice."

In another article, Andrew Michta blames failing education systems for “The Corrosive Decline of Our Elites.”

The reopening of primary, secondary, and post-secondary education systems (i.e., colleges and universities) is rapidly becoming another area of political conflict that has very serious potential economic, social, and political consequences. See, for example, “The Calm Before the Storm in Local Education Politics” by Hill and Jochin

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As the previously noted Brookings analysis showed, “Working Parents are the Key to COVID-19 Recovery.” If schools don’t open, many parents won’t be able to work, which will hobble the economic recovery from the pandemic.

Moreover, other researchers (e.g., the Center for Reinventing Public Education) have found that remote learning was poorly implemented by most school districts, and has resulted in substantial learning losses for many children. If these are not made up, those children will be at a long-term disadvantage in the harsh post-COVID economy, as will the companies that employ them. More broadly, since improved productivity is more important than ever in the highly indebted post-COVID economy. So too is educating more graduates who can make use of advancing technologies to deliver this critical result.

Yet we are now seeing a political tug of war between teachers unions (whose members are often older than average, and at greater risk of more serious consequences from COVID) that don’t want to reopen schools until an effective coronavirus vaccine is available, and a constellation of other parties who see that reopening schools is critical (e.g., parents, employers, and national governments).

An indicator of the seriousness of this conflict, and its potential use as a political wedge issue in November’s election, is Republicans’ growing support for reopening schools, and growing by Democrats and their teachers union allies.

“Tribalism Comes for Pandemic Science”, by Yuval Levin

Levin provides a painfully accurate description of how political polarization and increasing ideological rigidity in the United States has corrupted our national capacity for thinking and acting in the face the high and fast evolving uncertainty created by the COVID-19 pandemic.

“In this century, we have become accustomed to heated political debates that somehow avoid contact with reality. They involve genuine and important problems, but they are fought largely as posturing contests. Some are arguments over projected medium-term crises (like the federal debt, or climate change) which one party laments and the other ignores or denies — allowing each to assert its moral superiority while treating the other with contempt without paying any immediate price.

“Some are struggles over cultural or national identity (like the immigration or gun control debates) and so often aren’t really about what partisans argue on the surface. Many are fabricated outrages that serve as pure tests of tribal loyalty…

“The Covid-19 pandemic has tested our society in countless ways. From the health system to the school system, the economy, government, and family life, we have confronted some enormous and unfamiliar challenges. But many of these stresses are united by the need to constantly adapt to new information and evidence and accept that any knowledge we might have is only provisional.

“This demands a kind of humble restraint — on the part of public health experts, political leaders, and the public at large — that our society now finds very hard to muster.

“The virus is novel, so our understanding of what responding to it might require of us has had to be built on the fly. But the polarized culture war that pervades so much of our national life has made this kind of learning very difficult.

“Views developed in response to provisional assessments of incomplete evidence quickly rigidify as they are transformed into tribal markers and then cultural weapons. Soon there are left-wing and right-wing views on whether to wear masks, whether particular drugs are effective, or how to think about social distancing.

“New evidence is taken as an assault on these tribal commitments, and policy adjustments in response are seen as forms of surrender to the enemy. Every new piece of information gets filtered through partisan sieves, implicitly examined to see whose interest it serves, and then embraced or rejected on that basis.”

There is accumulating evidence from many sources that both the health and economic impacts of COVID-19 have been unevenly distributed across different groups (e.g., based on age, income, race, and gender), and are worsening existing inequalities.

This will likely further raise frustration and anger among many segments of society, which will inevitably seek various forms of political expression.

“America’s Hungry Turn to Foodbanks as Unemployment Rises” by Courtney Weaver in the Financial Times

“America’s food banks — charities across the country that provide donated food for the hungry — are being pressed into service as never before as unemployment surges during the coronavirus crisis and many working-class and middle-class families seek help for the first time.

“Feeding America, the largest US hunger relief organisation, representing 200 food banks across the country, said it had experienced a 70 per cent increase in those seeking food assistance since the crisis began. Roughly 40 per cent of the people wanting food are first time visitors, it said. In April alone, the group said it served 433m meals.”

Millions of Americans are losing employer provided health insurance as temporary job furloughs are converting to permanent layoffs as companies shrink or go out of business.

If people go onto Medicaid (assuming their income and assets are low enough), states will be forced to bear much higher costs at a time when their revenues are sharply falling. This will put further pressure on other parts of state budgets.

People who remain uninsured and seek treatment will either generate substantial costs for hospitals for “uncompensated care” (for which they will seek reimbursement from state budgets) and/or an increasing number of personal bankruptcies caused by unpayable health care bills.

As Marshall Toplansky notes in “Rethinking the Social Safety Net”, COVID-19 is causing a system that was already under increasing pressure to rupture at multiple points.

Going forward leaders will be faced with much louder demands for a wide range of improvements, covering not just healthcare, but also food, housing, and income security, and, potentially, lifetime learning/retraining to improve employability in a rapidly changing economy. In turn, that will create new pressures on governments’ budgets and existing revenue sources.

“Modigliani Meets Minsky: Inequality, Debt, and Financial Fragility in America, 1950-2016” by Bartscher et al

“The rising indebtedness of U.S. households is a much-debated phenomenon. The numbers are eye-catching. Between 1950 and the 2008 financial crisis, American household debt has grown fourfold relative to income. In 2010, the household debt-to-income ratio peaked at close to 120%, up from 30% at the end of World War II” …The underlying drivers of the process, however, remain controversial” …

This paper “studies the secular increase in U.S. household debt and its relation to growing income inequality and financial fragility. We exploit a new household-level data set that covers the joint distributions of debt, income, and wealth in the United States over the past seven decades.

“The data show that increased borrowing by middle-class families with low income growth played a central role in rising indebtedness. Debt-to-income ratios have risen most dramatically for households between the 50th and 90th percentiles of the income distribution.

“While their income growth was low, middle-class families borrowed against the sizable housing wealth gains from rising home prices. Home equity borrowing accounts for about half of the increase in U.S. housing debt between the 1980s and 2007. The resulting debt increase made balance sheets more sensitive to income and house price fluctuations and turned the American middle class into the epicenter of growing financial fragility.”

“The Tendency for Interpersonal Victimhood: The Personality Construct and Its Consequences” by Gabay et al

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The authors “introduce a conceptualization of the Tendency for Interpersonal Victimhood (TIV), which [they] define as an enduring feeling that the self is a victim across different kinds of interpersonal relationships…TIV has four dimensions: need for recognition, moral elitism, lack of empathy, and rumination (a focus of attention on the symptoms of one's distress, and its possible causes and consequences rather than its possible solutions)” …

“People who have a higher tendency for interpersonal victimhood feel victimized more often, more intensely, and for longer durations in interpersonal relations than do those who have a lower such tendency”…

In this paper, the authors report the results of a “comprehensive set of eight studies, which develop a measure for this novel personality trait and examine its correlates, as well as its affective, cognitive, and behavioral consequences.”

On May 25, 2020, George Floyd, a 46-year-old black man, was killed in Minneapolis, Minnesota during an arrest for allegedly using a counterfeit bill. The arrest was filmed, and clearly showed that Floyd died because the arresting police officer (who was himself later arrested) deliberately used excessive force.

After the video went viral, demonstrations erupted across the US (and later in other countries).

Many of these peaceful demonstrations later turned violent, with widespread destruction of property and looting.

And unlike the 1960s riots (or the 1992 Rodney King riot in Los Angeles), the 2020 riots spread to cities’ affluent neighborhoods.

Both from personal observation and the observations of others, the same three groups appeared to be involved in multiple cities: (1) a large, diverse crowd of peaceful demonstrators; (2) a much less diverse (and more white) crowd of what some have called “ANTIFA-types” that, as darkness fell and peaceful demonstrators went home, proceeded to destroy property and fight with the police; and (3) organized looters who took advantage of the chaos.

Unfortunately, given the polarization of America’s media today, few people saw this full story; too many viewers focused on only part of it, which very likely reinforced previously existing beliefs.

There is, obviously, considerable uncertainty about the long-term impact of these riots. One baseline is the riots of the 1960s, which led to flight from and worsening conditions in many cities. In recent decades, cities fortunes have improved, but most now have a “barbell” class structure, with a very small middle class. The key question is the extent to which COVID-19 and urban riots will now cause a significant percentage of the upper class that is so critical to cities’ economic health to abandon them (which working from home is now making much easier).

A related uncertainty is how the progressive political leadership of many of the hardest hit cities will respond to the aftermath of the riots, and whether that will serve to accelerate their cities’ decline (e.g., see, “Cheering for Chaos”, by Seth Barron).

A final uncertainty is the extent to which the demonstrations and riots were about something beyond anti-racism, and also reflected the intensifying economic and social frustrations of classes below the top 10% -- what some have called America’s rapidly growing “precariat.” To the extent this is the case, these pressures will almost certainly affect the outcome of the November election, and the evolution of politics in the coming years.

For example, in “The New Geography of America, Post-Corona Virus”, Joel Kotkin forecasts that, “The new America emerging from this crisis clearly will not be dominated by woke, super-dense cities filled with renters and singles. Nor will it reprise the narrow, culturally conformist past of suburban and small-town America. Instead the future will be shaped largely by people and families seeking a more affordable, safe, and healthy environment across a broad spectrum of American communities.

“They will likely support those who support their aspirations rather than indulge a never ending environment of ceaseless, and often pointless, political warfare.”

See also: “American Civilization and Its Discontents”, by Matthew Continetti; “Hub City Riot Ninjas” by Michael Lind; and “The Rebellion of America’s New Underclass” by Joel Kotkin.

“Changes in Assortative Matching:
Theory and Evidence for the US”, by Chiappori et al

“The extent to which like-with-like marry is particularly important for inequality as well as for the outcomes of children that result from the union…[We] conclude that assortative matching has increased in the United States, particularly at the top of the education distribution.”

“Population aging, migration, and productivity in Europe”, by Marois et al

This paper provides a systematic, multidimensional demographic analysis of the degree to which negative economic consequences of population aging can be mitigated by changes in migration and labor-force participation.

The authors “build scenarios of future changes in labor-force participation, migration volumes, and their educational composition and speed of integration for the 28 European Union (EU) member states.”

They also “study the consequences in terms of the conventional age-dependency ratio, the labor-force dependency ratio, and the productivity-weighted labor-force dependency ratio using education as a proxy of productivity, which accounts for the fact that not all individuals are equality productive in society…

“The results show that population aging looks less daunting than when only considering age structure. In terms of policy options, lifting labor force participation among the general population as in Sweden, and education-selective migration if accompanied by high integration [a big if], could even improve economic dependency. On the other hand, high immigration volumes combined with both low education and integration [which has often been the case] leads to increasing economic dependency.”

“Risk Perception Through the Lens of Politics in the Time of the COVID-19 Pandemic”, by Barrios and Hochberg

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“Even when, objectively speaking, death is on the line, partisan bias still colors beliefs about facts.” The authors find “that a higher share of Trump voters in a county is associated with lower perceptions of risk during the COVID-19 pandemic.

“As Trump voter share rises, individuals search less for information on the virus, and engage in less social distancing behavior, as measured by smartphone location patterns. These patterns persist in the face of state-level mandates to close schools and businesses or to stay home.”

According to Gallup, in U.S., 14% with likely COVID-19 have avoided seeking care because of its cost

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When more analyses of the spread of COVID19 in the United States are completed, they will likely show that this avoidance of treatment had a significant impact on the transmission of coronavirus and its impact on national infection and death rates. This will likely add to the pressure for substantial changes to the US healthcare system.

The health and economic impacts of COVID19 have split along age, gender, racial, class, geographic, and generational lines.

As in 2008, the response of elites to the crisis does not come off well (e.g., see increasing anger about how US COVID19 response spending has been divided between big, medium, and small businesses).

This will almost certainly produce very strong emotional reactions (led by anger as a protective response to fear) among people who still very clearly remember how in 2008 bankers were bailed out while they were left to suffer.

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In terms of case fatality rates, older people have been hit harder, along with blacks, males, and people with comorbidities, many of which (e.g., like obesity and diabetes) tend to be negatively correlated with education and income.

Economically, households with higher education and incomes have been the least affected. Some have alleged they are also the people most stridently demanding continuing quarantines until a vaccine is discovered and deployed, regardless of the horrible economic impact on their less well off fellow citizens.

To be sure, workers with less education and lower incomes have been recognized as essential and held up as heroes – but without any support by their betters for increases in their pay or improvements to their healthcare (in fact, some financially pressed hospitals in the US have been furloughing employees and/or cutting their pay).

Geographically, prosperous high density cities have been far harder hit than other regions of many countries, with disproportionate numbers of fatalities in places like Madrid, Milan, and New York. While it remains to be seen, it is very likely that another geographic distinction will also become relevant, with developing country populations harder hit than those in developed nations.
Generationally, young people have also been hit hard economically. Some are burdened with student loans, others have struggled since 2008 in the increasingly unequal economy. Others are suddenly confronting the likely inadequacy of the education they have received in the harsh economy that lies ahead.

The title of Annie Lowrey’s story in The Atlantic says it all: “Millennials Don’t Stand a Chance”.
Lowrey cites polling from Data for Progress Data that “found a staggering 52 percent of people under the age of 45 have lost a job, been put on leave, or had their hours reduced due to the pandemic, compared with 26 percent of people over the age of 45.”

That this is likely to lead to a lower birth rate in the future seems very likely at this point. Given equally likely restrictions on immigration, this will put more pressure on increased productivity as the driver of future economic growth. But that productivity growth will likely confront two obstacles: (1) resistance to automation if unemployment is still high, and (2) a lack of improvement in education results (see below).

The COVID19 shock could produce long-overdue changes in education systems that have long resisted change. However the chances of this happening seem even at best today.

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At the primary and secondary levels (K-12 in North America), closure of schools forced a sudden shift to remote learning, by school systems that had long enjoyed near monopolies and successfully resisted substantial change, despite stagnant or declining results. Such conditions typically produce weak management teams, poor governance, and often dysfunctional organizational cultures. K-12 has proven to be no exception to this general rule.

While Pew polling finds that “about two thirds of parents with children in K-12 are concerned their children are falling behind”, two databases of district responses to COVID19 maintained by the Center for Reinventing Public Education at the University of Washington and by the American Enterprise Institute tell the same story of many district teams struggling to shift to remote learning, and/or doing it poorly. In some cases, this has been compounded by teachers unions’ resistance to change.

To be sure, this hasn’t been true of all K-12 organizations. Large charter networks (e.g., Success Academy) have responded very well, as have some larger systems (like Alberta in Canada, where the switch to remote was facilitated by the common provincial curriculum). But these are exceptions. And further problems are likely to arise when plans to reopen schools and businesses clash (e.g., because schools insist that students learn remotely from home 2 or 3 days each week, forcing a parent to miss work).

Whether this will create both increased demands for new options based on the accumulation of competencies rather than classroom “seat time” (which seems very likely), and an increased supply of much higher quality offerings (which seems unlikely) remains to be seen. A key risk is that if only affluent parents and children can take advantage of these offerings, the education achievement gap will widen, and make it more difficult to reduce income inequality.

At tertiary (university) level, key challenges will include the almost certain failure of many financially weak institutions (as happened in the Great Depression). It will also include the evolution of remote education will evolve (e.g., will current leaders like Colorado and Arizona State Universities strengthen their market position, or will universities with premier brands (e.g., the Russell Group in the UK or the “Ivies plus” in the US) risk the wrath of their alumni by substantially scaling up their online degree offerings. Most fundamentally, students and employers may come to question the value of expensive degrees themselves, and speed the ongoing move towards greater reliance on “portfolios of certified competencies” acquired online and displayed on personal LinkedIn profiles.

Even after economies begin to reopen, behavioral habits adopted because of COVID19 (e.g., social distancing and wearing masks) appear unlikely to change (e.g., the Georgia example in the US) unless and until an effective coronavirus vaccine is developed and deployed at scale.

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This has profound implications, not just for the recovery of many businesses (e.g., restaurants, sports, theater, retail, etc.), but also for the recovery of institutions like churches and clubs that create and preserve social capital. With these only weakly functioning, it will be far more difficult to deal with the wave of mental health problems caused by COVID19 that many predict nations still have to face. As a result, “deaths of despair” will very likely increase.

“Reweaving the social fabric after the crisis”, by Andy Haldane, Chief Economist of the Bank of England, in the Financial Times

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In this new column on the importance of social capital in the UK during and after COVID19, Haldane’s concerns echo those that have been raised in the United States by the US Congress’ Joint Economic Committee’s Social Capital Project, and before that by Charles Murray and Robert Putnam. What the different social sector responses to COVID19 in the UK and US have made clear, however, is that social capital in the UK appears to have declined far less than it has in the United States.
Haldane notes that, “pandemics erode the capital on which capitalism is built. They damage the lives and livelihoods of people, depreciating the human capital on which economies and their citizens rely. They lower asset prices, depressing the financial capital that fuels growth. And they threaten business activity, and often viability, causing physical capital to be paused or scrapped.

“This capital destruction is the reason why, historically, pandemics have caused large losses to jobs and living standards. The coronavirus crisis is unlikely to be an exception.

“Yet one source of capital, as in past pandemics, is bucking these trends: social capital. This typically refers to the network of relationships across communities that support and strengthen societies. From surveys, we know that people greatly value these networks, even though social capital itself is rarely assigned a monetary value.

“The social distancing policies enacted across the world to curb the spread of Covid-19 might have been expected to weaken social networks and damage social capital. In fact, the opposite has happened…

“The economic and social progress that followed the Industrial Revolution came courtesy of a three-way partnership among the private, public and social sectors. The private sector provided the innovative spark; the state provided insurance to the incomes, jobs and health of citizens; and the social sector provided the support network to cope with disruption to lives and livelihoods.

“Back then, social capital (every bit as much as human, financial and physical capital) provided the foundations on which capitalism was built.

“The importance of this trinity has been reinforced by this crisis. The private sector is innovating to supply digital connectivity, vaccines and medical equipment. The state is offering large-scale income insurance and investing heavily in health. And the social sector is rising to the challenge of supporting the left-behind and left-alone.

“For the social sector, two policy lessons follow from the experiences of the past few months and the past several centuries. The most immediate is that this sector needs financial as well as volunteer support if it is to serve as a countercyclical societal stabiliser…

“The second, longer-term, policy lesson is that societies and policymakers must recognize and strengthen the social sector in good times as well as bad. Failing to do so, as Raghuram Rajan wrote in The Third Pillar, has been a major contributor to the fractures appearing in the capitalist model.

“Restoring that third pillar requires much greater recognition of the importance social capital plays in our economies and societies.”

“In a polarized America, what can we do about civil disagreement?”, by Ashley Berner from Johns Hopkins University

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“Many democracies participate in the International Civic and Citizenship Education Study (ICCS), most recently released in 2018. The ICCS probes not only individual students’ civic skills and knowledge (akin to the US National Assessment of Educational Progress [NAEP] civics test), but also whether their teachers and classrooms routinely solicit multiple perspectives and support sustained deliberation on important subjects.

“According to the ICCS, the positive association between such classrooms and desirable civic outcomes has remained robust for more than 40 years…Deliberative classrooms matter...

“Despite this, the United States has not participated in an international civics assessment since 1999. While NAEP (known as “the nation’s report card”) charts the civic knowledge and skills of eighth-graders every four years, it does not investigate classroom- or school-level contexts. As a result, US policymakers have had no clear indication of whether classrooms are effectively cultivating democratic citizenship.

“To fill this critical gap, our research team at the Johns Hopkins Institute for Education Policy designed School Culture 360, a deep dive into the experiences that administrators, teachers, parents, and secondary students have within the school community. In doing so, we embedded questions from the ICCS and field-tested additional, often open-ended questions as well.

“We ask students whether their teachers introduce multiple perspectives on a given subject. We ask teachers whether students feel comfortable discussing current political controversies. We ask parents how important it is to them that their children receive instruction in civics and citizenship. We even ask students what they can’t talk about at school, which is just as illuminating as what they can.

“In our pilot cohort of 26,000 participants, we found lots of variation on such measures, even between schools of similar size serving similar students.

“The percentage of secondary students who “somewhat” or “strongly” agreed that their teachers encouraged discussions on important topics, for instance, was quite low in some schools, and quite high in others. Or, in some cases, parents and administrators in the same school community disagreed about the relative importance of “citizenship – or understanding institutions and public values.”

“One point of convergence, however, was the taboo subject that students across our pilot cohort listed most frequently: “Politics.” These young people, in other words, do not seem to be engaging with substantive economic and diplomatic issues or comparing the very policies that will affect students’ lives well into the future—much less learning to disagree, even strongly, and with civility.”

“Promise and Peril: The History of American Religiosity and Its Recent Decline”, by Lyman Stone

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“By any measure, religiosity in America is declining. As this report will show, since peaking in 1960, the share of American adults attending any religious service in a typical week has fallen from 50 percent to about 35 percent, while the share claimed as members by any religious body has fallen from over 75 percent to about 62 percent. Finally, the share of Americans who self-identify or report being affiliated with any religion has fallen from over 95 percent to about 75 percent…

“The present decline is striking in its speed and uniformity across different measures of religiosity. But a longer historical perspective suggests some caution in making overbold statements about what such a decline might portend. At the dawn of the American republic in the 1780s, probably just a third of Americans were members in any religious body, and just a fifth could be found at church on a given Sunday. This was an historic low ebb in American religiosity. Thus, in some important ways, America today is more religious than it was two centuries ago—and indeed at any point between 1750 and 1930.

“But the perception of an increasingly secular society is not wrong. Even in past periods when religious attendance and membership were low, other forms of religious attachment were still robust… Furthermore, early America was dominated by formal, official religion. Most of the 13 colonies had established religions, and legal favoritism for some religious groups continued in various forms and places until at least the 1950s…

“Today, all this has changed. More Americans have no religious identity at all. A quarter do not identify with any religion, less than a third are given names connected to any religion, and America’s legal environment is increasingly secular, explicitly limiting support for religion…

“Expansions in government service provision and especially increasingly secularized government control of education significantly drive secularization and can account for virtually the entire increase in secularization around the developed world. The decline in religiosity in America is not the product of a natural change in preferences, but an engineered outcome of clearly identifiable policy choices in the past.”

“Identifying Critical 21st-Century Skills for Workplace Success: A Content Analysis of Job Advertisements”, by Rios et al

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“Our descriptive analysis of 142,000 job advertisements provides two contributions. It is one of the first studies to empirically rank-order skill demand. In doing so, it is clear that oral and written communication, collaboration, and problem-solving skills are in high demand by employers, with particular emphasis on the pairing of oral and written communication.”

“Furthermore, it is apparent that many of the skills suggested in the literature as being critical for workplace success are in very low demand by employers, and some were not found to be mentioned at all (e.g., social responsibility).”

“How Do America’s Elites Stack Up?”, by Seth Kaplan

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This relatively pessimistic analysis is an excellent complement to our Feburary, 2020 feature article, “Civilization Decline and Collapse: What are the Warning Signs?”

While it was written before the arrival of COVID19, it is particularly important in light of widespread concerns about how the pandemic will affect society.

Kaplan notes that, “for the most part, studies of civilizational decline, consistently point to the importance of elites and social cohesion for the success of any polity—and see these two as being connected. Elites—groups with outsized power and influence over the major institutions in any society—were historically comprised of at most 2 percent of any people. Depending on how broadly one defines the term, “elites” comprise anywhere from 10 percent to 20 percent of the American population today.

"If a society is to prosper, elites must not only creatively address critical challenges, they must also avoid becoming disconnected from society and acting in ways that undermine its dynamism and loyalty.”

Kaplan then delivers a scathing critique of the modern American elite. He notes that they have, “many worries—maintaining geopolitical stability, reducing inequality, ending discrimination, and the like. But what if the greatest threat to the United States is not these things, but rather elites themselves—in particular their unwillingness to accept responsibility as stewards of society and their disengagement from the rest of the population?

"This ‘pulling away’ by elites compromises the country’s ability to address the various challenges it faces. Compounding this threat, American elites’ hubristic confidence that they are on ‘the right side of history’ limits what they might otherwise learn from the rise and fall of other societies.”

Kaplan notes two ways this could change for the better.

“The most obvious catalyst would be a national challenge that brought people together, prompted elite commitment to the country, yielded a rethink of values, and inspired a new patriotism. The threat from a rising China could potentially accomplish this, if it were utilized by the right leader. A highly charismatic politician who built a coalition government and rallied people around a transformative agenda that emphasized self-sacrifice for the common good would hold the best chance, but even if such a coalition introduced many changes, it would likely be difficult to sustain the necessary energy over the long term unless the threat was ongoing and severe (as in Israel). Even 9/11 did not modify behavior for any length of time, and the threat was highly palpable.”

The second way would be through (1) A combination reforms (e.g., in education and national service) that better prepared American elites for stewardship; (2) Disbursing elites from the limited number of places they now concentrate, and “embedding them in local communities” across the country; and (3) “Lastly, the country’s social, economic, and political leaders, as well as elite shaping institutions, need to instill a much greater sense of humility towards the fragility of society. Cultivating humility requires greater awareness of the history of other great civilizations and the likelihood that social decay will repeat itself.”

Civil society in many western nations was already under increasingly severe strain before the arrival of COVID19. However, there is growing evidence that the pandemic is making this much worse, as its social costs are not evenly distributed.

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For example, on 6Apr, CNBC reported that, “The coronavirus is taking a huge toll on workers’ mental health across America.” Similarly, McKinsey warned that “COVID-19 pandemic is a threat to our population, not only for its risk to human life and ensuing economic distress, but also for its invisible emotional strain. Recent days have seen the sharpest economic pullback in modern history and a record-breaking spike in unemployment. It is inevitable that the global pandemic, compounded by financial crisis, will have a material impact on the behavioral health of society…

"Beyond the negative impact of a traditional economic downturn, COVID-19 presents additional challenges—fear from the virus itself, collective grief, prolonged physical distancing and associated social isolation—that will compound the impact on our collective psyche” (“Returning to Resilience: The Impact of COVID19 on Mental Health and Substance Use” by Coe and Enomoto).

Other social costs will arise in the area of education, where school systems around the world have had to rapidly transition to remote learning, which is producing highly variable results. Given the difficulty of catching up students who fall behind, these educational losses will have long term effects, not only on individuals, but also potentially on efforts to increase national productivity growth.

These social costs will be unequally distributed geographically. In “The places a COVID-19 recession will likely hit hardest”, Muro et al from Brookings report that employment in five industries at high risk of COVID19 driven job losses is unequally distributed around the United States the same issue arises in other western nations).

Social costs will also be unequally distributed by age, with younger people, many already burdened by a volatile job market, stagnant real incomes and the high costs of housing, healthcare, and student debt, now faced with the prospect of even worse economic conditions (and, psychologically, more aversion to taking risks).

Social costs, as measured by death rates, are also falling more heavily on minority communities in the United States, and on men.

Many analysts have also noted that social costs will disproportionately fall upon the already struggling working and middle classes (e.g., “Virus lays bare the frailty of the social contract”, by the Editorial Board of the Financial Times, and “The COVID-19 upheaval scenario: Inequality and pandemic make an explosive mix, by Richard Baldwin).

Writing in Foreign Affairs, Branko Milanovic bluntly warned that “The Real Pandemic Danger Is Social Collapse As the Global Economy Comes Apart, Societies May, Too.” He argues that, “Those who are left hopeless, jobless, and without assets could easily turn against those who are better off. Already, some 30 percent of Americans have zero or negative wealth. If more people emerge from the current crisis with neither money, nor jobs, nor access to health care, and if these people become desperate and angry, scenes such as… the looting that followed Hurricane Katrina in New Orleans in 2005 might become commonplace.”

“A perfect storm': US facing hunger crisis as demand for food banks soars”, by Nina Lakhani, Guardian, 2Apr20

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“An unprecedented number of Americans have resorted to food banks for emergency supplies since the coronavirus pandemic triggered widespread layoffs.

“The demand for food aid has increased as much as eightfold in some areas, according to an investigation by the Guardian, which gives a nationwide snapshot of the hunger crisis facing the US as millions become unemployed.

“About one in three people seeking groceries at not-for-profit pantries last month have never previously needed emergency food aid, according to interviews with a dozen providers across the country.

“The national guard has been deployed to help food banks cope with rising demand in cities including Cleveland, Phoenix and St Louis amid growing concerns that supplies may run low as the crisis evolves. Overstretched food pantries are switching to drive-thrus and home deliveries to minimize the spread of Covid-19 as almost 300 million Americans are urged to stay at home…

“Last year, 4.3bn meals were distributed to more than 40 million Americans through a network of 200 food banks and 60,000 pantries, schools, soup kitchens and shelters, according to Feeding America, the national food bank network. The working poor, elderly and disabled and infirm accounted for the vast majority of food bank users.
“This week, the Guardian contacted food banks and pantries in nine states, which all reported unprecedented demand, plummeting donations from retailers, and a fall in personnel due to the coronavirus crisis.”

“Your Coronavirus Check Is Coming. Your Bank Can Grab It”, by David Dayen in The American Prospect

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Public anger over the government “bailing out the bankers” in 2008 has yet to subside. And now this, which seems guaranteed not to further increase social and political anger and conflict in the United States.

“This week, the $1,200 CARES Act payments Congress approved in response to the coronavirus crisis will begin to appear in Americans’ bank accounts. The funds will be wired to eligible recipients who previously authorized the IRS to post their refunds (or Social Security payments) through direct deposit. This will speed relief far more quickly than having the IRS mail a check, which could take up to five months.

“But the money may not make it into the hands of those who need it to pay bills, buy food, or just survive amid mass unemployment and widespread suffering. Individuals might first have to fend off their own bank, which has just been given the power to seize the $1,200 payment and use it to pay off outstanding debt.

“Congress did not exempt CARES Act payments from private debt collection, and the Treasury Department has been reluctant to exempt them through its rulemaking authority. This means that individuals could see their payments transferred from their hands into the hands of their creditors, potentially leaving them with nothing.”

If there are widespread reports of relief checks being seized by creditors, this will not end well…

“Fear, Frustration, and Faith: Americans Respond to the Coronavirus Outbreak”, by Cox et al from AEI

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In the face of an existential threat that forces people to confront the possibility of their own death, Pew finds that while barely half of Americans have prayed about coronavirus in the past week, and 28% have meditated, only 28% have participated in online worship.

This raises a critical question: How are people making sense of the confrontation with the eternal mysteries of suffering and death that COVID19 has forced upon them? And what does their means of coping with this portend for the future?

For many, the horrors of the First World War and the global Spanish Flu pandemic caused them to question (and sometimes abandon) long-held held beliefs and values, which gave rise to the exuberance and excess of the 1920s and later the darker extremes of the 1930s. History does not repeat, but, as they say, it often rhymes.

Pew finds that, “few Americans who belong to a church or other place of worship report that services are still being offered as usual. Only 12 percent of Americans who are members of a church, temple, synagogue, or mosque report that typical worship services are still being provided. Most (57 percent) report that worship services are being offered only online, while nearly one-third (30 percent) say that their place of worship is no longer offering any services”…

“Even though many places of worship are offering remote services, relatively few Americans report participating in them online. Less than one-third (28 percent) of Americans say they have participated in an online worship service or watched a sermon online.

“Patterns of online religious engagement vary significantly across religious traditions. More than half (53 percent) of white evangelical Protestants report that they attended a remote worship service or watched an online sermon. Considerably fewer black Protestants (36 percent), Catholics (34 percent), members of non-Christian religious traditions (25 percent), and white mainline Protestants (23 percent) report having participated in an online religious service…

More than half (51 percent) of Americans say they have prayed about the coronavirus in the past week. There are significant differences across traditions. Eighty-six percent of white evangelical Protestants report having prayed about COVID-19 in the past week. More than seven in ten black Protestants (71 percent), and a majority of white mainline Protestants (56 percent), and Catholics (56 percent) also say they prayed about the pandemic in the past week.

Fewer Americans report having engaged in meditation to cope with stress over the past week. Twenty-eight percent of Americans say they meditated in the past week to cope with feelings of stress. More than seven in 10 (72 percent) Americans say they have not done this.

“Five Ways COVID-19 Is Changing Global Migration”, by Erol Yaboke of CSIS

The COVID19 pandemic will likely lead many nations to raise barriers to inward migration. But at the same time, the impact of the coronavirus on poor nations will very likely lead to increased outward migration. This is will almost certainly lead to higher conflicts over migration flows, and push more of them into “shadowy, irregular pathways” that seek to evade government controls.

“Feel the Fear” by John Hagel

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Hagel captures something important that was at work in many countries, even before the arrival of COVID19.

“I perceive that fear is becoming pervasive and increasingly intense around the world…So, if I’m right that more and more of us are experiencing growing fear, why is that happening? There are certainly many reasons, but my research suggests that we are in the early stages of a Big Shift that is generating mounting performance pressure on all of us. No matter what our credentials and track record in the past, the pressure is mounting to get even better faster in the future. It’s totally natural that we would feel fear in that kind of world, especially if we were taught that getting the right degrees and pursuing the right jobs would ensure our success.

“This mounting performance pressure isn’t just about economic pressure and the ability to earn a living. It takes many different forms, including an accelerating pace of change where things we could rely on in our lives – values, norms, practices, etc. - suddenly are no longer there.

“But, it’s not just mounting performance pressure that’s driving the fear. There’s also a growing realization that our institutions are not equipped to help us respond to the mounting performance pressure. In fact, there’s a sense that our institutions are making us even more vulnerable to that growing pressure. That’s one of the key reasons that trust in all our institutions is rapidly eroding globally…

“If mounting performance pressure isn’t bad enough, we have a growing set of forces that are feeding that fear. More and more political rhetoric is using threat-based narratives to mobilize action: the enemy is coming to get us and we’re under attack, we need to mobilize now and resist. These threat-based narratives amplify and reinforce people’s feelings of fear.

“And there’s more. Our mass media (and social media) are increasingly focused on the terrible things that are happening in the world. Wherever there’s an earthquake, a terrorist attack, a wave of crime, an epidemic or some other disaster, we can count on it dominating the media. We have to look long and hard to find any good news. That can also feed our fear…

“If we allow fear to dominate our emotions, we’re at risk of unleashing a vicious cycle that can lead to an increasingly dysfunctional world. Fear cultivates a set of cognitive biases. First, we tend to become more risk averse – we emphasize the risk of action and discount the rewards that can come from action. As we become more risk averse, we tend to shrink our time horizons.

“We only focus on what we can do in the short-term because there’s more risk out in the future. As we shrink our time horizons, we fall into what economists call a “zero-sum” view of the world. If we’re only focused on today, there’s a given set of resources and the only question is who’s going to get them – you or me? It’s a win-lose view of the world. And in that kind of world, trust erodes quickly – you may seem like a really nice person, but I know at the end of the day only one of us is going to get those resources, and I want to be sure it’s me.

“And these cognitive biases can unleash a vicious cycle. The less trust we have, the more risk averse we become and the more we shrink our time horizons which further erodes trust, and on and on.”

“The Cost of Thriving”, by Oren Cass

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Cass was the domestic issues director on Mitt Romney’s presidential campaign. He has just launched a new think tank, American Compass. Its goal is to move Republican social and economic policy away from the libertarian right, and towards something that sounds similar to where Boris Johnson is taking the UK Conservative Party.

In Cass’ words, “The mission of American Compass is to restore an economic consensus that emphasizes the importance of family, community, and industry to the nation’s liberty and prosperity.”

In this column, (which complements Hagel's) Cass notes that, “alongside both the formal concept of “inflation” that measures the economy-wide price level, and a technical “cost of living” that aims to price a fixed level of material consumption, an accurate depiction and understanding of economic trends requires a measure that tracks the evolving basket of things a family needs to achieve the financial security and social engagement typical of a flourishing middle class. Call it the “cost of thriving”…

“As a starting point and proof of concept, I propose the following Cost-of-Thriving Index (COTI): the number of weeks of the median male wage required to pay for rent on a three-bedroom house at the 40th percentile of a local market’s prices, a family health insurance premium, a semester of public college, and the operation of a vehicle. A rising COTI indicates that economic trends are compounding the challenge of making ends meet, while a declining COTI would leave households with greater financial security and flexibility”…

“The COTI shows a declining capacity of a worker to meet the major costs of a typical middle-class household. As the COTI basket has become unaffordable, families have found workarounds, like having more household members work more hours, making do without, borrowing, and relying on government support. Each of these comes with its own costs, undermines the stability of families and the rationale for their formation, and creates high levels of stress and uncertainty.”

“From Pick-Up Artists to Incels: A Data-Driven Sketch of the Manosphere”, by Ribeiro et al

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We have previously noted articles that describe various aspects of a crisis enveloping men, from claims of a "war on boys" in elementary and secondary education, to sharp increases in the female/male ratio at many universities, to the shrinking number of men in the workforce and falling marriage rates. This article captures other aspects of these disturbing trends.

“Over the past few years, a number of “fringe” online communities have been orchestrating harassment campaigns and spreading extremist ideologies on the Web. In this paper, we present a large-scale characterization of the Manosphere, a conglomerate of predominantly Web-based misogynist movements roughly focused on men’s issues.

“We do so by gathering and analyzing 38 million posts obtained from 7 forums and 57 subreddits. We find that milder and older communities, such as Pick Up Artists and Men’s Rights Activists, are giving way to more extremist communities like Incels and Men Going Their Own Way, with a substantial migration of active users.

“We also show that the Manosphere is characterized by a volume of hateful speech appreciably higher than other Web communities.”

“The Epidemic of Despair: Will America’s Mortality Crisis Spread to the Rest of the World?” By Anne Case and Angus Deaton

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“Since the mid-1990s, the United States has been suffering from an epidemic of “deaths of despair”—a term we coined in 2015 to describe fatalities caused by drug overdose, alcoholic liver disease, or suicide. The inexorable increase in these deaths, together with a slowdown and reversal in the long-standing reduction in deaths from heart disease, led to an astonishing development: life expectancy at birth for Americans declined for three consecutive years, from 2015 through 2017, something that had not happened since the influenza pandemic at the end of World War I…

“Might American deaths of despair spread to other developed countries? On the one hand, perhaps not. Parsing the data shows just how uniquely bleak the situation is in the United States. When it comes to deaths of despair, the United States is hopefully less a bellwether than a warning, an example for the rest of the world of what to avoid.

“On the other hand, there are genuine reasons for concern. Already, deaths from drug overdose, alcohol, and suicide are on the rise in Australia, Canada, Ireland, and the United Kingdom. Although those countries have better health-care systems, stronger safety nets, and better control of opioids than the United States, their less educated citizens also face the relentless threats of globalization, outsourcing, and automation that erode working-class ways of life throughout the West and have helped fuel the crisis of deaths of despair in the United States.”

“Only Migration Can Save the Welfare State Rich Countries Need 380 Million More Workers By 2050”, by Lant Pritchett

“In the coming decades, the developed world will face a daunting demographic challenge. As life expectancy goes up and fertility rates go down in North America, Europe, and the Pacific nations of Australia, Japan, and New Zealand, older, retirement-age populations will grow while labor forces shrink. Rich countries, in other words, are running out of young people…

“The solution is at once simple and politically challenging: in the coming decades, rich countries should open their borders to more workers from poorer countries. At a time of rising nativism and xenophobia, calling for increased immigration may be unpopular. To allay legitimate concerns about rapid cultural change, developed nations can borrow from existing models of migration—in particular, those of Canada, Singapore, and Persian Gulf countries— that meet the demands of labor markets without upsetting social cohesion.

“It will be difficult to convince publics to accept more migrants, but wealthy countries don’t have much of a choice. If they can’t attract more workers from elsewhere, they will face demographic disaster.”

Clearly there is an implicit assumption in this argument that labor productivity will continue to grow much more slowly than in the past. And if that is the case, then more immigrants will be needed to sustain at least a constant, if not an increasing level of real per capita income. But even this conclusion rests on the assumption that the productivity of new immigrants will be at least equal to the current average – and that is not guaranteed to be the case.

“The Age of Decadence” by Ross Douthat

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“Everyone knows that we live in a time of constant acceleration, of vertiginous change, of transformation or looming disaster everywhere you look. Partisans are girding for civil war, robots are coming for our jobs, and the news feels like a multicar pileup every time you fire up Twitter. Our pessimists see crises everywhere; our optimists insist that we’re just anxious because the world is changing faster than our primitive ape-brains can process.

“But what if the feeling of acceleration is an illusion, conjured by our expectations of perpetual progress and exaggerated by the distorting filter of the internet? What if we — or at least we in the developed world, in America and Europe and the Pacific Rim — really inhabit an era in which repetition is more the norm than invention; in which stalemate rather than revolution stamps our politics; in which sclerosis afflicts public institutions and private life alike; in which new developments in science, new exploratory projects, consistently underdeliver?
What if the meltdown at the Iowa caucuses, an antique system undone by pseudo-innovation and incompetence, was much more emblematic of our age than any great catastrophe or breakthrough?

“The truth of the first decades of the 21st century, a truth that helped give us the Trump presidency but will still be an important truth when he is gone, is that we probably aren’t entering a 1930-style crisis for Western liberalism or hurtling forward toward transhumanism or extinction. Instead, we are aging, comfortable and stuck, cut off from the past and no longer optimistic about the future, spurning both memory and ambition while we await some saving innovation or revelation, growing old unhappily together in the light of tiny screens.

“The farther you get from that iPhone glow, the clearer it becomes: Our civilization has entered into decadence…

"Following in the footsteps of the great cultural critic Jacques Barzun, we can say that decadence refers to economic stagnation, institutional decay and cultural and intellectual exhaustion at a high level of material prosperity and technological development. Under decadence, Barzun wrote, “The forms of art as of life seem exhausted, the stages of development have been run through. Institutions function painfully. Repetition and frustration are the intolerable result…When people accept futility and the absurd as normal, the culture is decadent.”

“Crucially, the stagnation is often a consequence of previous development: The decadent society is, by definition, a victim of its own success…slowly compounding growth is not the same as dynamism. American entrepreneurship has been declining since the 1970s: Early in the Jimmy Carter presidency, 17 percent of all United States businesses had been founded in the previous year; by the start of Barack Obama’s second term, that rate was about 10 percent.”

“The Social Contract in the 21st Century”, by McKinsey and Company

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This is yet another report that builds on those noted above by Hagel, Cass, and Douthat — all of which described worsening strains and stresses in society even before the arrival of COVID19.

“This research finds that opportunities for work have expanded, employment rates have risen to record levels in many countries, and many benefits have improved, although not everywhere. At the same time, work polarization and income stagnation, while varying in magnitude across countries, have grown.

"While the availability and cost of many discretionary goods and services have fallen sharply, the cost of basic necessities such as housing, healthcare, and education has grown and is absorbing an ever‐larger proportion of incomes. Coupled with wage stagnation effects, this is eroding the welfare of the bottom three quintiles of the population by income level (roughly 500 million people in 22 countries)…

“While the average wealth for individuals has recovered to pre‐crisis levels, the wealth of the median individual is still almost one‐fourth below pre‐crisis levels. This contributes to rising economic insecurity and wealth inequality.
“In addition to changes in the outcomes for individuals, we also find quantifiable evidence that individuals have had to assume greater responsibility for their economic outcomes in the past two decades. While this research focuses on actual shifts this century, many of these outcomes and shifts and underlying trends began decades earlier…

“These changes in outcomes for individuals and the roles of institutions point to an evolution in the “social contract”: the arrangements and expectations, often implicit, that govern exchanges between individuals and institutions. While many have benefited from the evolution in the social contract, for a significant number of individuals the changes are spurring uncertainty, pessimism, and a general loss of trust in institutions…

“We highlight ten key problems that will need addressing in order to achieve better and more inclusive outcomes for individuals. We focus on those affecting large numbers of individuals and those likely to persist unless addressed, given current trends.

1. Persistent income polarization and wage stagnation. The uneven distribution of economic gains and prolonged wage stagnation are taking place at a time of positive aggregate growth. Wage stagnation has affected roughly 200 million people in the 22 countries in our sample. This could worsen given the impact of technology and automation. What can be done to enable a higher share of income going to labor?

2. Work fragility and transition supports in an evolving present and future of work. Employment‐related risks are rising and employment protection is on the wane, partly because of the increase in alternative work arrangements and growing challenges posed by automation and digitization. This issue is critical in a world in which, for example, percent of workers are in independent work and that proportion is growing. With automation, between 40 million and 150 million workers in advanced economies may need to switch job categories.65 Therefore, how can flexible, dynamic labor markets be supported, while also reducing fragility for workers?

3. Challenge of affordable housing. Rising housing costs have grown considerably faster than inflation in many markets and are absorbing much of the income gains of low‐ and middle‐income households; roughly 165 million people in the 22 countries are overburdened by housing costs.66 The housing challenge also has cascading effects on individuals as workers. What can be done to unlock supply and other constraints?

4. Rising expense of and growing demand for healthcare and education. Healthcare and education costs have risen above general consumer prices. This significantly affects more than 125 million individuals who spend more than ten percent of their budgets on healthcare and education, as well as nearly 245 million people who are primarily supported by public funding. The need for more healthcare and education is likely to rise as people live longer, and as the nature of work changes and reskilling and lifelong learning become more important. How can technology and the competitive dynamics that benefited discretionary goods and services be harnessed to make healthcare and education more affordable as well as adapt to changing needs?

5. The growing savings and retirement problem. In a century of longer life expectancy and aging, how can the capacity and incentives for individuals to save more, and more effectively, be expanded? Although aggregate wealth is growing, approximately 440 million people reported that they did not save for old age.

6. The multiple pressures on low-income individuals. Roughly 335 million low‐income individuals in the 22 countries face difficulties as workers, consumers (especially with respect to basics such as housing), and savers, and their position has grown more precarious than it was in 2000. How can social safety nets and other supports be revamped for the current era and challenges? What market‐based mechanisms can be established to assist them?

7. A new era of challenging outcomes for the under-30 generation. Young people between 15 and 30 years old, who currently number 180 million, have less access than previous generations to well‐paid, stable employment, affordable housing, and decent savings. What can be done to support younger generations in an era of more precarious work and rapidly changing labor‐market skill dynamics?

8. The persistent gender and race gaps. Although more than 205 million working women have made strides in the labor market, they continue to lag behind men in employment, wages, and savings , and overall wealth. Similarly, the racial wealth and income gap in some countries, such as the United States, is both persistent and growing. How can opportunities presented by the future of work be harnessed to narrow the gap?

9. The growing challenges of place. Certain regions and local economies, mostly in Southern Europe and in declining industrial areas in the United States, where more than 215 million people live, have not recovered fully from the global financial crisis, which continues to weigh on individual outcomes. Some have not kept pace with or benefited from the changes driven by technology, globalization, and shifting focus of market and economic activity, as well as investment, many of which could persist. What can be done to better integrate regional labor markets into the growing economy?

10. The risk of unsustainable government funding. Tax collection and government revenue generation are not keeping pace with government spending, which has risen to support individuals coping with global trends. Healthcare and pension systems in particular are coming under stress because of aging populations. What can be done to ensure the sustainability of these public budgets?"

“Beware of Tech Bubbles: Long-Term Earnings of the Dot-Com Bubble Generation”, by Hombert and Matray

The authors “examine the long-term earnings of French high-skilled workers who started their
career during the last tech boom in the late 1990s.” They find “an ‘ICT boom cohort discount’, with high-skilled workers who started in the sector ending up earning almost 7% less than workers who started careers outside of ICT.

“One potential explanation for this is that human capital accumulated by high-skilled workers in a booming tech sector depreciates faster than usual because of accelerating technological change.”

“Dream Jobs? Teenagers’ Career Aspirations and the Future of Work” by Mann et al from the OECD

SURPRISE

“Across the world, the young people who leave education today are, on average, more highly qualified than any preceding generation in history. They often enter the working world with considerably more years of schooling than their parents or grandparents…

“And yet, in spite of completing an unprecedented number of years of formal education, young people continue to struggle in the job market, and governments continue to worry about the mismatch between what societies and economies demand and education systems supply. The coexistence of unemployed university graduates and employers who say they cannot find people with the skills they need, shows that more education does not automatically mean better jobs and better lives.

“For many young people, academic success alone has proved an insufficient means of ensuring a smooth transition into good employment”…
The authors find “that the career expectations of young people have changed little [since 2000]. If anything, they have become more concentrated in fewer occupations.

"In the 2018 PISA survey, 47% of 15-year-old boys and 53% of 15-year-old girls from 41 countries and economies (those that also took part in PISA 2000) said they expect to work in one of just 10 jobs by the age of 30 – an increase of 8 percentage points for boys and 4 percentage points for girls since the start of the century.

“Importantly, the growing concentration in career expectations is driven by changes in the expectations of young people from more disadvantaged backgrounds and by those who were weaker performers on the PISA tests in reading, mathematics and science…

“It is clear that it is overwhelmingly jobs with origins in the 20th century or earlier that are most attractive to young people. In many ways, it seems that labour market signals are failing to reach young people: accessible, well-paying jobs with a future do not seem to capture the imagination of teenagers. Many young people, particularly boys and teenagers from the most disadvantaged backgrounds, anticipate pursuing jobs that are at high risk of being automated.”

Edelman Global Trust Barometer 2020 Report

Trust in institutions continues to drop, reflecting a growing “crisis of competence” in their perceived ability to effectively respond to a growing range of complex challenges facing the world. In turn, this crisis of competence feeds the decline in the perceived legitimacy of many institutions, and thus the increase we see in support for populists of all stripes.

According to Edelman’s latest survey data, inequality now has a bigger impact on trust in government than the rate of GDP growth. 57% believe government serves the interests of only the few. The latest report found a record gap between elites and the masses trust in government, business, and the media.

In 21 out of 28 nations surveyed, a majority of respondents agreed with the statement “I worry about people like me losing the respect and dignity I once enjoyed in this country.” (Notable exceptions: Ireland, the UK, and Canada).

Also, 61% of employees fear losing their job to freelancers, 60% due to recession, 58% due to lack of training and skills, and 53% to automation.

“Education and Men Without Work” by Nicholas Eberstadt

SURPRISE

“America today is in the grip of a gradually building crisis that, despite its manifest importance, somehow managed to remain more or less invisible for decades — at least, until the political earthquake of 2016. That crisis is the collapse of work for adult men, and the retreat from the world of work of growing numbers of men of conventional working age…

“What economists call "demand-side effects" cannot plausibly account for America's overall men-without-work predicament — and might not even account for most of it. While more education may always be better than less, we cannot expect more education to solve a problem that a lack of education did not cause, and it is clear that male worklessness is due to much more than just a shortage of kills and training…

“To start, although discussion of family structure and its consequences is held to be in poor taste or even off-limits completely in some academic and political circles these days, the strong relationship between family structure and employment status for men is undeniable. Simply stated, family structure is a powerful predictor of male labor-force participation rates (among other things). Overall, labor force participation rates in 2018 were 10 percentage points lower for never-married prime-age men than for their currently married counterparts…

“Unfortunately, American family structure has been transformed over the past generation, and in ways that incontrovertibly created severe downward pressure on prime-age male labor-force participation rates. In 1965, 85% of prime-age men were married; by 2015, that share had dropped by nearly 30 percentage points…

“The second factor contributing to 'worklessness' that must be considered is dependence on government benefit programs, including disability programs intended to provide income, goods, and services to working-age men and women who are prevented from working or seeking work due to physical or mental impairment…

"Though they were designed as social-insurance platforms, evidence suggests they are increasingly used as income-support mechanism for men on a work-free life track."

“Who Signs Up to Fight? Makeup of U.S. Recruits Shows Glaring Disparity”, New York Times, 10Jan20

“For years, military leaders have been sounding the alarm over the growing gulf between communities that serve and those that do not, warning that relying on a small number of counties that reliably produce soldiers is unsustainable”…

Serving in the military is “increasingly a family business. The men and women who sign up overwhelmingly come from counties in the South and a scattering of communities at the gates of military bases…where the tradition of military service is deeply ingrained”…

“More and more, new recruits are the children of old recruits. In 2019, 79 percent of Army recruits reported having a family member who served. For nearly 30 percent, it was a parent — a striking point in a nation where less than 1 percent of the
population serves in the military.”

“The Case for Growth Centers”, by Atkinson et al, published by Brookings

SURPRISE

“Rather than growing together, the nation’s regions, metropolitan areas, and towns have been growing apart. That has been a shock, including for an economic and policy mainstream that has long trusted the self-regulating, welfare-enhancing nature of the regional economics market.

“For much of the 20th century, market forces had tended to reduce wage, investment, and business formation disparities between more- and less developed regions. By narrowing the divides, the economy ensured a welcome “convergence” among communities and regions.

“However, in the 1980s, that trend began to break down as digital technologies and innovation moved to the center of economic activity. Intense new demands for talent and insights increased the value of “agglomeration” economies, unleashing self-reinforcing dynamics that increasingly benefited big, coastal core regions, often to the detriment of cities and metro areas in other parts of the nation.

“The result is a crisis of regional imbalance. Among the superstar metro areas, the winner take most dynamics of the innovation economy have led to dominance but also livability and competitiveness crises: spiraling real estate costs, traffic gridlock, and increasingly uncompetitive wage and salary costs.

“Meanwhile, in many of the left-behind places, the struggle to keep up has brought stagnation and frustration. These uneven realities represent a serious productivity, competitiveness, and equity problem…

“The nation needs a major push to counter these dynamics.”

“Profiles of News Consumption” by Pollard and Kavanagh from RAND

The authors “explore how U.S. media consumers obtain news” by examining “the different forms of media delivery (e.g., online, television, print) that consumers rely on and the relationship between consumers’ news consumption profiles and their overall perceptions of media reliability…

“The analysis identified four news consumption profiles differentiated by clusters of how frequently individuals relied on different combinations of several news platforms: print and broadcast television platforms, online platforms (e.g., newspaper websites, such as nyt.com), radio, and social media (e.g., Twitter and Facebook) and in-person communication…

“Each profile has a distinct set of demographic characteristics…

“People whose primary news sources are social media and in-person contacts are generally younger and female, and they tend to have less education than a college degree and lower household incomes...

“People whose primary news sources are print publications and broadcast television tend to be significantly older, and they are less likely to be married…

“People whose primary news source is radio are significantly more likely to be male, less likely to be retired, and more likely to have a college degree...
“People whose primary news sources are online platforms are significantly younger, more likely to be male and have a college degree and higher income, and less likely to be black…

“Broadcast and cable television were perceived to be the most-reliable platforms by the largest number of people in our survey. The reliability of other platforms was ranked as follows: print, online news sites, radio, social media, and in-person communication…

“People who rated their general political ideology as more liberal were more likely to report that they “never or almost never” sought out sources that they knew would offer views that are different from their own.”

“Millennials Are Leaving Religion and Not Coming Back”, by Cox and Thomson-DeVeaux on fivethirtyeight.com

SURPRISE
“Millennials have earned a reputation for reshaping industries and institutions — shaking up the workplace, transforming dating culture, and rethinking parenthood. They’ve also had a dramatic impact on American religious life. Four in ten millennials now say they are religiously unaffiliated...In fact, millennials (those between the ages of 23 and 38) are now almost as likely to say they have no religion as they are to identify as Christian.

“For a long time, though, it wasn’t clear whether this youthful defection from religion would be temporary or permanent. It seemed possible that as millennials grew older, at least some would return to a more traditional religious life. But there’s mounting evidence that today’s younger generations may be leaving religion for good.”

“Most Americans Say the Current Economy is Helping the Rich, Hurting the Poor and Middle Class”, by Pew Research

“Lower-income Republicans are roughly four times as likely as those in the upper-income tier to give the economy an only fair or poor rating…

“To the extent that current economic conditions are helping particular groups, the public sees the benefits flowing mainly to the most well-off. Roughly seven-in-ten adults (69%) say today’s economy is helping people who are wealthy (only 10% say the wealthy are being hurt). At the same time, majorities of Americans say poor people, those without a college degree, older adults, younger adults and the middle class are being hurt rather than helped by current economic conditions…

“When asked how economic conditions are affecting them and their families, nearly half of adults (46%) say they are being hurt, 31% say they’re being helped and 22% say they don’t see much of an impact.”

“The Problem with the Culture Problem”, by Oren Cass

SURPRISE
Cass is one of the most interesting centrist policy writers active today. He recently left the Manhattan Institute to launch his own think tank. If effective and politically acceptable solutions to the economic and social challenges confronting the United States are to be found, Cass is likely to have a significant influence on them.

In this article he writes that, “we need to put behind us the false distinction between “economic” and “cultural.” It is better to think in terms of “resources” and “decisions.” The liberal explanation takes material resources as fundamental and seeks to alleviate hardship through government transfers. With greater resources, this model presumes, decision-making will improve. The conservative explanation takes people’s decisions as fundamental and seeks to encourage better ones by altering both social and economic incentives. Through better decisions, material conditions will improve…

A massive influx of resources over the last two generations has coincided with worsening decisions and thus conditions. Government spending on safety net programs quadrupled from $73 billion in 1965 to $271 billion in 1975, and quadrupled again to more than $1 trillion in 2015 (all figures in 2015 dollars)”…

That’s a real compound annual growth rate of about 5.4%. In comparison, the compound annual growth of the US population over the same period was 1.01%.

Cass notes that, “as proponents take pains to highlight, this strategy did work if the goal had merely been to meet material needs. Taking all these transfers into account, vanishingly few Americans would qualify as still “in poverty.” And yet the official poverty rate, which measures whether households earn sufficient income to support themselves, barely budged: The 2010s had a higher average poverty rate than the 1990s, which in turn had a higher rate than the 1970s. Family stability and community vitality plummeted. The underclass’s afflictions spread upward through the working class.

“Even if safety net spending did not worsen the problem, one would be hard-pressed to make the case that it contributed to a solution, or that yet another expansion will do the trick. Instead, social science research supports the primacy of decisions over resources…

“But a simplistic recital of “culture” as an explanation for social problems is inadequate. An emphasis on personal agency should not foreclose consideration of the many factors influencing how that agency is exercised.

“Policymakers eager to affirm personal responsibility should be equally eager to inquire why individuals make the choices they do—the design of safety net programs is one such consideration, but hardly the only one. People in similar circumstances make different choices, confirming the central role of personal agency. But we can also observe that people tend to make choices in accord with information and incentives that change over time, factors that are often influenced by public policy…

“For most decisions that matter, both economics and culture play a role.”

”The Real Class War” by Julius Krein, American Affairs Journal

SURPRISE
“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. Labor—including elite labor—is inevitably left behind….

The socioeconomic divide that will determine the future of politics, particularly in the United States, is not between the top 30 per cent or 10 percent and the rest, nor even between the 1 percent and the 99 percent…

“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…

“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…

“This underappreciated reality at least partially explains one of the apparent puzzles of American politics in recent years: namely, that members of the elite often seem far more radical than the working class, both in their candidate choices and overall outlook. Although better off than the working class, lower-level elites appear to be experiencing far more intense status anxiety.”

“Is College Still Worth It? The New Calculus of Falling Returns”, by Emmons et al from the Federal Reserve Bank of St. Louis

“The college income premium is the extra income earned by a family whose head has a college degree over the income earned by an otherwise similar family whose head does not have a college degree. This premium remains positive but has declined for recent graduates…

“The college wealth premium (extra net worth) has declined more noticeably among all cohorts born after 1940. Among families whose head is White and born in the 1980s, the college wealth premium of a terminal four-year bachelor’s degree is at a historic low; among families whose head is any other race and ethnicity born in that decade, the premium is statistically indistinguishable from zero. Among families whose head is of any race or ethnicity born in the 1980s and holding a postgraduate degree, the wealth premium is also indistinguishable from zero…

“Our results suggest that college and postgraduate education may be failing some recent graduates as a financial investment, due to the rising cost of college and the increasing burden of student debt.”

“Trends in Employer Health Care Coverage, 2008–2018: Higher Costs for Workers and Their Families”, by Collins et al from The Commonwealth Fund

The rising cost of healthcare in the United States relative to median income is driving increasing popular frustration with political leaders – from both parties – who seek ideologically pure rather than pragmatic solutions to a problem that weighs heavily on the lives of a large majority of Americans.

“Average annual growth in the combined cost of employees’ contributions to premiums and deductibles outpaced growth in U.S. median income between 2008 and 2018 in every state. Middle-income workers spent an average 6.8 percent of income on employer premium contributions in 2018; per-person deductibles across single and family plans amounted to 4.7 percent of median income.”

That’s 11.5% of income spent on healthcare…

“Europe’s Unauthorized Immigrant Population Peaks in 2016, then Levels Off; New Estimates Find Half Live in Germany and the UK” by Pew Research

SUPRRISE
“Europe has experienced a high level of immigration in recent years, driving debate about how countries should deal with immigrants when it comes to social services, security issues, deportation policies and integration efforts…
“Analysis based on European data sources estimates that at least 3.9 million unauthorized immigrants – and possibly as many as 4.8 million – lived in Europe in 2017. The total is up from 2014, when 3.0 million to 3.7 million unauthorized migrants lived in Europe, but is little changed from a recent peak of 4.1 million to 5.3 million in 2016.”

“Overall, unauthorized immigrants accounted for less than 1% of Europe’s total population of more than 500 million people.” In comparison, Pew Estimates that unauthorized immigrants make up 3.2% of the US population.

"The Geography of Desperation in America: Labor Force Participation, Mobility Trends, Place, and Well-being", by Graham and Pinto

SURPRISE
The authors deliver more evidence on the underlying and growing divisions in the United States that manifest themselves in rising social and political conflict.

They “track the reported well-being and ill-being of individuals and places [and] find large differences in these trends across education levels, races, and places. Desperation – and the associated trends in premature mortality – are concentrated among the less than college educated and are much higher among poor whites than poor minorities, who remain optimistic about their futures.

“The trends are also geographically dispersed, with racially and economically diverse urban and coastal places much more optimistic and with much lower incidences of premature mortality (on average). Both death and desperation are higher in the heartland and in particular in areas that were previously hubs for the manufacturing and mining jobs which have long since disappeared.”

“Millionaires expect billionaires to plug charity gaps”, by Stefan Wagstyl, FT 15Nov19

“Many of the world’s multimillionaires are limiting their donations to charity because they think supporting good causes is for those even richer than themselves. A survey by Barclays bank of 400 multimillionaires across nine countries [The Barclays study largely excludes the US, where the rich are, by international standards, big Donors], found that 75 per cent believed philanthropy was the responsibility of those wealthier than themselves. Some 46 per cent think financing good causes is the state’s job, 29 per cent say family and business commitments come first, and 27 per cent cite a lack of faith in how charities are run.”

“Tribalism is Human Nature”, by Clark et al

The commonly held belief that the other guys are tribal, but we're too civilized for that is quite wrong…

“Humans evolved in the context of intense intergroup competition, and groups comprised of loyal members more often succeeded than those that were not. Therefore, selective pressures have consistently sculpted human minds to be "tribal," and group loyalty and concomitant cognitive biases likely exist in all groups. Modern politics is one of the most salient forms of modern coalitional conflict and elicits substantial cognitive biases.

“Given the common evolutionary history of liberals and conservatives, there is little reason to expect pro-tribe biases to be higher on one side of the political spectrum than the other. We call this the evolutionarily plausible null hypothesis and recent research has supported it.

“In a recent meta-analysis, liberals and conservatives showed similar levels of partisan bias, and a number of pro-tribe cognitive tendencies often ascribed to conservatives (e.g., intolerance toward dissimilar others) have been found in similar degrees in liberals. We conclude that tribal bias is a natural and nearly ineradicable feature of human cognition, and that no group—not even one’s own—is immune.”

“Americans' Perceptions Of Success In The U.S.”, by Reinhart and Ritter from Gallup

SURPRISE
This new analysis provides compelling evidence of how far political beliefs on both extremes, not to mention the depictions of American life in much popular media, really are from America’s social center of gravity.

“How do Americans define success? While less than 10% of Americans personally define success in status-oriented, comparative or zero-sum ways, they largely believe other Americans do…

The most important domains in Americans’ personal definitions of success are education (17.1%), relationships (15.6%), and character (15.4%).”

The report also finds that, “there is a disconnect between Americans' perceptions of their attainment of personal success and what they believe society views as success…Many more Americans are achieving success according to their own views of success ("personal success") than what they believe to be society's views of success ("perceived societal success")…

Americans believe others in society have a one-size-fits-all definition of success, concentrated on status (45.9%), followed by education (19.8%) and finances (8.8%)…

“The average personal success score is 68 (on a 100-point scale), while the average perceived societal success score is 31.”

“Driven to the Edge”, by Ronald W. Dworkin

SUPRRISE
When I was in high school, back in the early 1970s, our class was assigned a book published in 1962: “Man Alone: Alienation in Modern Society” by Eric and Mary Josephson. It introduced me to a concept that I have never forgotten: The dangers that endogenously arise when societies evolve to the point that a majority of their people lose touch with traditional sources of meaning and purpose.

Dworkin argues that this is exactly what is happening in the United States today (and, I would argue, Europe). He claims that, “Millions of Americans today feel a unique sense of threat in their private, and sometimes inner, lives. More than class envy, this has led them to seek some vision of salvation in extremist ideologies far away from the political center…the intensity of that alienation, arising from changes in capitalism over the last half century, would have shocked even Marx. It is the basis for all extremist ideologies in American politics today…

“Many Americans today have embraced illusions and joined protest movements with goals that are not just economic, but also psychological, even exclusively psychological, adding to the sense of [social and political] unpredictability. The excitement these illusions produce in people’s hearts is palpable. If we want to bring some of them back toward the political center, thereby making American politics once again a game fought between the 40-yard lines, these psychological issues must be addressed” through policy changes that keep them clearly in mind.

“For the first time on record, fewer than 10% of Americans moved in a year”, by William Frey

“For the first time since the Census Bureau began recording annual migration statistics, fewer than 10% of Americans changed residence in a single year, according to just-released data for 2018-19. The new all-time low of 9.8% occurred on the heels of a year when the nation’s total population growth fell to an 80- year nadir, with only a modest increase in its foreign-born population—signaling a general stagnation of the nation’s demographic dynamics.”

“Together, these data run counter to economic trends reflecting an increasingly robust national economy a decade after the Great Recession.”

The US Fertility Rate has reached an all time low

The population replacement fertility rate is estimated to be 2.1 lifetime births per woman, which the US last reached in 2007. The most recent data shows it has continued to fall; the most recent data shows it was 1.73 in 2018. As demographer Wendell Cox notes in “New Fertility Data: Indication of a Cultural Divide?”, the lowest state fertility rates were concentrated in the Northeast, California, Oregon, and Colorado, while the highest were in the middle of the country, plus Utah.

“Median-Priced Homes Remain Unaffordable for Average Wage Earners In 74 Percent of U.S. Housing Markets”, by Attom Data Solutions

Surprise
“The median home prices in the third quarter of 2019 were not affordable for average wage earners in 371 of 498 U.S. counties analyzed…Among the 498 counties analyzed in the report, 304 (61 percent) were less affordable than their historic affordability averages in the third quarter of 2019.”

We have long noted that a key source of populist anger is that traditional trappings of a middle class lifestyle have risen far faster than median household income. These include health insurance, a house, college education, and adequate retirement savings.

“The Old Can Share the Wealth, or the Young Will Take It From Them”, by Joel Kotkin

Surprise
“The next great political civil wars won’t be over race, the nation-state, religion or even class. They will be generational, pitching the Boomers, who still dominate the global economy, against their offspring, the Millennials, who assuredly do not…Of course, generational conflict has been a feature of politics for, well, generations, but in the past older folks had at least bequeathed their offspring the prospect of a better future. Now, according to Pew, three in four American adults think their children will not grow up to be better-off than they are.

“Views about the future are, if anything, more pessimistic in France, Britain, Spain, Italy, and Germany…Even in China, many young people face a troubling economic future; in 2017, eight million graduates entered the job market, but most ended up in with salaries that could have been attained by going to work in a factory straight out of high school.”

“Partisan Antipathy: More Intense, More Personal” by Pew Research

“Three years ago, Pew Research Center found that the 2016 presidential campaign was “unfolding against a backdrop of intense partisan division and animosity.” Today, the level of division and animosity – including negative sentiments among partisans toward the members of the opposing party – has only deepened.”

“The share of Republicans who give Democrats a “cold” rating on a 0-100 thermometer has risen 14 percentage points since 2016 – with virtually all of the increase coming in “very cold” ratings (0-24). Democrats’ views of Republicans have followed a similar trajectory: 57% give Republicans a very cold rating, up from 41% three years ago” …

“The survey also finds that partisan hostility extends beyond politics. Fewer than half of Democrats (45%) and just 38% of Republicans say that while members of the other party feel differently about politics, they share many of their other values and goals. Majorities in both parties say those in the opposing party do not share their nonpolitical values and goals.”

“In the U.S., Decline of Christianity Continues at a Rapid Pace” by Pew Research

“65% of American adults describe themselves as Christians when asked about their religion, down 12 percentage points over the past decade. Meanwhile, the religiously unaffiliated share of the population, consisting of people who describe their religious identity as atheist, agnostic or “nothing in particular,” now stands at 26%, up from 17% in 2009” …

“The data shows that just like rates of religious affiliation, rates of religious attendance are declining. Over the last decade, the share of Americans who say they attend religious services at least once or twice a month dropped by 7 percentage points, while the share who say they attend religious services less often (if at all) has risen by the same degree. In 2009, regular worship attenders (those who attend religious services at least once or twice a month) outnumbered those who attend services only occasionally or not at all by a 52%-to-47% margin. Today those figures are reversed; more Americans now say they attend religious services a few times a year or less (54%) than say they attend at least monthly (45%).”

“Jobs training programs are rarely flexible enough to succeed”, by Gregory Ferenstein for Brookings

Surprise
This research has serious and underappreciated implications for the challenge, cost, and likelihood of success in re-employing workers who will be displaced by increasing use of automation and artificial intelligence technologies.

“In America, job training is only for the young, healthy, and unattached. It was designed during a time when people held one career their whole lives and could dedicate their early post-college years to the turbulence of entry-level job search”...
“Job training in America fails so often because both students and the government have radically underestimated how long it takes the average person to transition into a high-skill career.

“Most adults–especially those from disadvantaged backgrounds–have family obligations, precarious financial circumstances, and health issues that systematically prevent them from dedicating regular hours to skill building and job searching. Most schools and internships require a full-time commitment, and workers need to dedicate perhaps even more unpaid time to job search and self-study. Even for the few who can take out a loan to hire babysitters and take time off work to get a minimum wage internship, unexpected family emergencies or health issues can derail workers for weeks at a time. These roadblocks can completely knock them off their career path or add months to their timeline beyond what they had originally budgeted.”

“UN Survey Says Africa's Best Are Emigrating”, by Christoph Titz, Spiegel, 24Oct19

Surprise
This research makes it clear that Europe’s migrant crisis is far from over.

“Many Europeans are apprehensive about migrants coming to the continent. The United Nations has surveyed some 3,000 immigrants from African countries about their personal histories and plans -- and came to some astonishing conclusions” …

“Almost three-quarters (71 percent) of the surveyed immigrants come from the relatively prosperous and peaceful region of West Africa, primarily Nigeria and Senegal. In addition, most immigrants are better educated than their peers at home. Fifty-eight percent had regular jobs in their home countries or were pursuing an education before they left for Europe. And their earnings were higher than the national average.”

“They earned significantly more -- 60 percent more -- than their fellow citizens in their countries of origin, and thus were relatively well-off. Nevertheless, half of those who had a steady income say that it wasn't enough to live on…researchers came to the well-documented conclusion that migration is a step that only becomes possible when people experience economic and social improvements in their situation. As prosperity increases, it gives people the idea and the opportunity to embark on their journey” …

“In view of European campaigns to deter migrants even before they leave…neither more information about what life is actually like in Europe nor more knowledge about the dangers of traveling would have prevented migrants from setting off.”

“It’s Time for ‘LGB’ and ‘T’ to Go Their Separate Ways”, by Brad Palumbo

Surprise
“The growing rift between increasingly radicalized transgender-rights activists and the lesbian, gay and bisexual (LGB) communities has finally come out into the open. This week, Europe’s biggest LGBT-rights organization, the London-based Stonewall charity, was publicly accused of subordinating LGB rights to the group’s increasingly single-minded goal of replacing sex with gender as a marker of identity. As Helen Joyce recently wrote in Standpoint, ‘Stonewall went all in for gender self-ID. Its online glossary now describes biological sex as ‘assigned at birth’ (presumably by a midwife with a Hogwarts-style Sorting Hat). ‘Gay’ and ‘lesbian’ now mean same-gender, not same-sex, attraction” …

“‘Transphobia’ is the ‘fear or dislike of someone based on the fact that they are trans, including the denial/refusal to accept their gender identity.’ At a stroke, anyone who declares themselves exclusively attracted to people of the same sex has become a bigot” …

“In a relatively short period of time, the gay-rights movement fused with more radical campus-based gender and identity politics movements, to become the compound movement now known as “LGBTQ+”—lesbian, gay, bisexual, transgender, “queer” and more. Even many people within the movement now have trouble keeping up with all the new subcategories contained within that plus sign… We’ve been forced to watch the simple moral logic of non-discrimination be transformed into a self-parodic alphabet soup of invented identities.”

“The American Working Man Still Isn’t Working”, by Jason Furman

Surprise
This article makes a critical point. Many have wondered why the current low reported unemployment rate hasn’t led to higher wage gains and inflation. The answer is that the numerator only includes people still looking for work, not the historically very large number who have given up. This represents yet another hidden deflationary and politically explosive force that is at work in the economy.

“The United States is in the midst of its longest-ever economic recovery…However, there is one important economic indicator that still hasn’t rebounded to pre-crisis levels: the employment rate among prime-age men—that is, men between the ages of 25 and 54. On the eve of the recession at the end of 2007, 12.8 percent of prime-age men didn’t have jobs. Now that figure stands at 13.7 percent. The headline unemployment rate for this group has fallen—from four percent to 3.1 percent—but only because many of these men have simply given up looking for work. When they stopped actively searching for jobs, they no longer qualified as “unemployed.” Instead, the government labeled them as “out of the labor force,” a designation that lowers the unemployment rate but is no less harmful to the economy.”

“STEM Careers and the Changing Skill Requirements of Work”, by Deming and Noray

Surprise
“Science, Technology, Engineering, and Math (STEM) jobs are a key contributor to economic growth and national competitiveness. Yet STEM workers are perceived to be in short supply. This paper shows that the “STEM shortage” phenomenon is explained by technological change, which introduces new job skills and makes old ones obsolete.”

The authors “find that the initially high economic return [wage premium] to applied STEM degrees declines by more than 50 percent in the first decade of working life…This pattern holds for “applied” STEM majors such as engineering and computer science, but not for “pure” STEM majors such as biology, chemistry, physics and mathematics.”

“America has two economies—and they’re diverging fast”, by Muro and Whiton from Brookings

and

“The Future of Work in America”, by McKinsey

Surprise
“Not only are red and blue America experiencing two different economies, but those economies are diverging fast. In fact, radical change is transforming the two parties’ economies in real time…These shifts are massively altering the two parties’ economic identities…With their output surging as a result of the big-city tilt of the decade’s “winner-take most” economy, Democratic districts have seen their median household income soar in a decade—from $54,000 in 2008 to $61,000 in 2018.

“By contrast, the income level in Republican districts began slightly higher in 2008, but then declined from $55,000 to $53,000…Today, therefore, neither party represents the same types of places it did just 10 years ago. As such, the Democratic Party is now anchored in the nation’s booming, but highly unequal, metro areas, while the GOP relies on aging and economically stagnant manufacturing-reliant rural and exurban communities…

“Just since 2008, Democratic districts’ share of professional and digital services employment surged from 63.7% to 71.1%, GOP districts’ professional and digital employment fell from 36.3% to 28.9% of the total in just 10 years.. There are few signs of any coming reversal of the decade’s divergence…

“For at least the foreseeable future, therefore, the nation seems destined to struggle with extreme economic, territorial, and political divides in which the two parties talk almost entirely past each other on the most important economic and social issues because they represent starkly separate and diverging worlds. Not only do the two parties adhere to very different views, but they inhabit increasingly different economies and environments.”

McKinsey’s analysis reflects this same conclusion, but at a more micro (city) level. They find that net job growth through 2030 will likely be concentrated in urban areas, while much of the country may see little employment growth or even lose jobs.

“U.S. obesity as delayed effect of excess sugar”, by Bentley et al

Surprise
This could portend a natural decline in rates of obesity and the cost pressure its associated medical problems put on healthcare systems.

“In the last century, U.S. diets were transformed, including the addition of sugars to industrially-processed foods. While excess sugar has often been implicated in the dramatic increase in U.S. adult obesity over the past 30 years, an unexplained question is why the increase in obesity took place many years after the increases in U.S. sugar consumption. To address this, here we explain adult obesity increase as the cumulative effect of increased sugar calories consumed over time. In our model, which uses annual data on U.S. sugar consumption as the input variable, each age cohort inherits the obesity rate in the previous year plus a simple function of the mean excess sugar consumed in the current year…

“This simple model replicates three aspects of the data: (a) the delayed timing and magnitude of the increase in average U.S. adult obesity (from about 15% in 1970 to almost 40% by 2015); (b) the increase of obesity rates by age group (reaching 47% obesity by age 50) for the year 2015 in a well-documented U.S. state; and (c) the pre-adult increase of obesity rates by several percent from 1988 to the mid-2000s, and subsequent modest decline in obesity rates among younger children since the mid-2000s. Under this model, the sharp rise in adult obesity after 1990 reflects the delayed effects of added sugar calories consumed among children of the 1970s and 1980s.”

In the United States, the outcome of the lawsuit alleging discrimination against Asians in the Harvard admissions process, and latest developments in the Operation Varsity Blues college admissions bribery scandal seem likely to further anger and already frustrated middle class

While a judge found that Harvard did not discriminate (a finding that will certainly be appealed) evidence presented in the trial presented a damning picture of the admissions process at an elite American university.

As described in a new research paper (“Legacy and Athlete Preferences at Harvard”, by Arcidiacono et al), “Using publicly released reports, we examine the preferences Harvard gives for recruited athletes, legacies, those on the dean’s interest list, and children of faculty and staff (ALDCs). Among white admits, over 43% are ALDC. Among admits who are African American, Asian American, and Hispanic, the share is less than 16% each. Our model of admissions shows that roughly three quarters of white ALDC admits would have been rejected if they had been treated as white non-ALDCs.”

“Removing preferences for athletes and legacies would significantly alter the racial distribution of admitted students, with the share of white admits falling and all other groups rising or remaining unchanged.”

In the Varsity Blues case, defendants who have pleaded guilty have thus far received relatively light sentences. More interesting will be the trials of defendants who are contesting the charges. For example, one has obtained damning internal emails from the University of Southern California showing how affluent parents were targeted in something that looks a lot like a “pay to play” admissions scheme. This defendant plans to claim he is not guilty, because he was only playing the established admissions game at USC.

“The Kids Aren’t All Right”, by Christine Rosen (in Commentary) and “Elite Failure Has Brought Americans to the Edge of an Existential Crisis”, by Derek Thompson (in The Atlantic).

Both of these articles (in journals from either side of the political spectrum) expressed surprise at three findings in the most recent Wall Street Journal/NBC News poll. In 1998, 70% said patriotism was an important value to them; in August 2019, this had dropped to 61%. In 1998, 62% said religion was an important value; by 2019 this had dropped to 48%. And in 1998, 59% said having children was an important value; by 2019 only 43% did. In contrast, in 1998, 31% said money was an important value; in 2019 that had risen to 41%. And in 1998, 47% said community involvement was important; by 2019 that had risen to 62%.

Rosen noted that, “The generational differences with regard to these values are especially stark. According to the survey, while 80 percent of Americans age 55 and older say patriotism is important, only 42 percent of Americans ages 18– 38 say the same. “Two-thirds of the older group cited religion as very important,” the pollsters report, “compared with fewer than one-third of the younger group.”

The greatest generational divide on values exists among Democrats: “Democrats over age 50 were more in line with those of younger Republicans than with younger members of their own party,” the survey found…

“Will More Workers Have Non-Traditional Jobs as Globalizatoin and Automation Spread?” by Ruttledge et al from the Center for Retirement Research at Boston College

SUPRRISE
The authors find that globalization has had a much smaller impact than automation on the increase in non-traditional jobs (e.g., gig work) characterized by higher income instability and a lack of healthcare and retirement benefits. Moreover, older workers are disproportionately affected by this trend. Their conclusion has substantial social and political implications: “As automation continues to increase, jobs that offer retirement savings, health insurance, and stable income may continue to decline, and the impact is likely to be particularly felt by older workers who may need these benefits the most.”

“Where Has the Money Gone?” by Phillip Sprincin, and “The Cost of Bad Intentions”, by Steve Malanga, both in City Journal

The accelerating decline of the once great City of San Francisco is both a national tragedy and a potent example of many of the pathologies at work in America’s large cities, including, as Sprincin notes, bureaucratic mismanagement and political indifference to efficient and effective public administration. To cite one example: The city’s budget (in constant 2019 dollars) has essentially doubled since 2000, with the average city employee now making $175,004/year in salary and benefits. Yet on multiple measures, quality of life in the City by the Bay is rapidly deteriorating. For example, as Malanga notes, San Francisco now has the highest property crime rate of any major city in America. Examples like this, which unfortunately abound, go a long way to explaining American’s cynicism about and anger at government and elites, which only grows more fervent when they are exposed to well-run cities, like many across their northern border.

Malanga’s longer article uses a broader range of examples to show how the progressive ideology of many urban leaders has led to enactment of a series of policies that, based on the evidence, are making things worse, not better.

“Five Decades of US, UK, German, and Dutch Music Charts Show that Cultural Processes are Accelerating”, by Schneider and Gros in Royal Society Open Science

The authors find that “the evolution of album lifetimes and of the size of weekly rank changes provide evidence for an acceleration of cultural processes. For most of the past five decades number one albums needed more than a month to climb to the top, nowadays an album is in contrast top ranked either from the start, or not at all. Over the last three decades, the number of top-listed albums increased as a consequence from roughly a dozen per year to about 40.”

“The distribution of album lifetimes evolved during the last decades from a log-normal distribution to a power law, a profound change.”

“This Will Be Catastrophic: Maine Families Face Elder Boom, Worker Shortage in Preview of Nation’s Future” by Jeff Stein in the Washington Post

SURPRISE
“Last year, Maine crossed a crucial aging milestone: A fifth of its population is older than 65, which meets the definition of “super-aged,” according to the World Bank. By 2026, Maine will be joined by more than 15 other states, according to Fitch Ratings, including Vermont and New Hampshire, Maine’s neighbors in the Northeast; Montana; Delaware; West Virginia; Wisconsin; and Pennsylvania…”

“With its 65-and-older population expected to grow by 55 percent by 2026, Maine needs more nurses, more home-care workers and more physicians than ever to keep pace with demand for long-term-care services. But the rising demand for care is occurring simultaneously with a dangerously low supply of workers.”

“The Future of Fentanyl and Other Synthetic Opioids”, by Pardo et al from RAND

SURPRISE
“The number of opioid-related deaths in the United States is truly astounding. There were on the order of 50,000 opioid-involved overdose fatalities in 2018…Ten years ago, few would have predicted that illicitly manufactured synthetic opioids from overseas would sweep through parts of Appalachia, New England, and the Midwest. As drug markets are flooded by fentanyl and other synthetic opioids, policymakers, researchers, and the public are trying to understand what to make of it and how to respond…

“The history of drug use and drug problems has been marked by a sequence of epidemics, but the synthetic opioid problem is different. Whereas previous epidemics often were spurred by growing demand, the transition to fentanyl and other synthetic opioids appears to be a supplier-led phenomenon…Thus, the traditional epidemic framework largely fails to capture the dynamics of the problem…

“Fentanyl and other synthetic opioids kill on a scale that is unprecedented among illegal drugs. The causes, dynamics, and likely future course are fundamentally different from other modern drug problems. These differences are not widely appreciated, and they matter in terms of how policymakers and society should respond. Existing strategies remain important, but they are not enough.”

“Modular Structure in Labour Networks Reveals Skill Basins”, by O’Clery et al

SURPRISE
The authors use innovative network analysis methods to produce important new insights about the operation of modern labor markets. Specifically, they “find workers from finance, computing, and the public sector rarely transition into the extended economy. Hence, these industries form isolated clusters which are disconnected from the broader economy, posing a range of risks to both workers and firms.”

“A Growing Problem in [US] Real Estate”, by Candace Taylor, in WSJ

“Baby boomers and retirees built large, elaborate dream homes across the Sunbelt—only to find that few people want to buy them…Many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them. Tastes—and access to credit—have shifted dramatically since the early 2000s.”

“Stranded! How Rising Inequality Suppressed US Migration and Hurt Those Left Behind”, by Bayoumi and Barkema of the IMF

SURPRISE This paper is another example of research into the underlying forces that have and continue to divide the United States into two very different economies, which in turn drives social and political divisions.

“Using data on migration across US metro areas, we find strong evidence that increasing house price and income inequality has reduced long distance migration, the type most linked to jobs. For those migrating uphill, from a less to a more prosperous location, lower mobility is driven by increasing house price inequality, as the disincentives from higher house prices dominate the incentives from higher earnings. By contrast, increasing income inequality drives the fall in downhill migration as the disincentives from lower earnings dominate the incentives from lower house prices.”

“The only child is becoming the norm”, by Camilla Cavendish in the Financial Times

SURPRISE
In the UK, 40 per cent of married couples have only one child and, among unmarried cohabitating couples and single parents, the share is even higher. In the US, around 23 per cent of families now have only one child.

“A Different Look at After-Tax Income Inequality”, by Alan Reynolds from the Cato Institute

SURPRISE
When examining inequality, the authors shows, “how crucial it is to take account of taxes (including refundable tax credits), and also to adjust average income or the different number of people and workers per household.” He makes his point by comparing the income of the highest and lowest 20% of the US population, using different metrics.

“The highest 20% earned 16.5 times as much as the lowest 20% when using income before taxes, but only 12.5 times as much after taxes. But simply adjusting household income for taxes is not enough. Average incomes cannot be properly compared between the highest and lowest quintiles because there are three times as many people per consumer unit (household) in the highest 20% as there are in the lowest. And there are four times as many workers in the highest 20% as there are in the lowest.”

“By adjusting for different household size, we find the highest 20% earned only 6.5 times as much after-tax income per person as the lowest 20%. But income is likely to be higher in households with two or more workers than it is in households with no workers or only one. Using after-tax income per worker, the highest 20% earned only 3 times per worker as much as the lowest 20%, after taxes.”

Regardless of how it is measured, data on income inequality provide only a partial picture of the forces that are creating social frustration and conflict in the United States and elsewhere. For example, according the US Bureau of Labor Statistics, median household income, in nominal terms, increased by 304% between 1982 and 2017.

But consider by how much prices in some major spending categories increased between 1982/84 and 2019: Personal computers (39%) – put differently, there was a very sharp drop in the price (adjusted for improving capabilities) of personal computers relative to income. Here are some others: consumer durables (105%), apparel (124%), energy (221%), and food (258%). On a national basis, housing prices (318%) kept pace with income growth, although that hides much variation between locations (e.g., the coasts versus the middle of the country). But now consider these two: Medical Care Services (533%) and College Tuition and Fees (977%).

Contrary to what we learned in microeconomics, we live in two economies today, that behave very differently. The first resembles what we were taught, where significant increases in productivity and competition (in part due to globalization and automation of supply chains) have led to significant falls in prices relative to income.

In the second, which includes health care and education services, both competition and productivity gains have been low or negative for almost 40 years. As a result, price increases in these areas – long viewed as some of the basics for being middle class – have been putting increasingly severe pressure on household incomes. And this pressure has only been partially relieved by falling prices for other goods and services.

“Diversity and its decomposition into variety, balance and disparity”, by Alje van Dam, published by the Royal Society

SURPRISE
“Diversity is a central concept in a wide range of scientific fields…But what exactly is diversity, and how can it be measured?”…

“Recent frameworks emphasize that diversity consists of three dimensions. First, the variety describes the number of different types, species or categories present. The variety is bounded by the total number of types in the classification or taxonomy that is used. Second, the balance describes how individuals or elements are distributed across these types. When elements are concentrated in few types the balance is low, while a high balance indicates a more even distribution.

Last, the disparity takes into account to what extent the types considered differ from each other in terms of some given features or characteristics. If the types considered are very similar, they have low disparity. An increase along any of these three dimensions corresponds to an increase in overall diversity. A proper measure of diversity should therefore take into account all three dimensions.”

“Despite the importance of diversity as a concept, there is no unified methodological framework to measure and analyse the three dimensions of diversity.”

In City Journal, Kay Hymowitz has written a thought provoking article titled “Alone”, which details how the decline of the family has led not just to an epidemic of loneliness (and its attendant pathologies), but to increasing “kinlessness” in old age.

SURPRISE
Hymowitz’ warnings about the implications or rising kinlessness in old age are born out in an academic paper, “Projections of White and Black Older Adults Wiithout Living Kin in the United States, 2015- 2060”, by Verdery and Margolis, who find that, “Close kin provide many important functions as adults age, affecting health, financial well-being, and happiness. Those without kin report higher rates of loneliness and experience elevated risks of chronic illness and nursing facility placement.”

The authors conclude that their “results suggest dramatic growth in the size of the kinless population.”

“How Rising Inequality Suppressed US Migration and Hurt Those Left Behind”, by the IMF

SURPRISE
“Using bilateral data on migration across US metro areas, we find strong evidence that increasing house price and income inequality has reduced long distance migration, the type most linked to jobs”, leading to worse outcomes for those “left behind.”

“For those migrating uphill, from a less to a more prosperous location, lower mobility is driven by increasing house price inequality, as the disincentives from higher house prices dominate the incentives from higher earnings. By contrast, increasing income inequality drives the fall in downhill migration as the disincentives from lower earnings dominate the incentives from lower house prices.”

Moreover, as Aaron Renn shows in a new column (“The Rust Belt’s Mixed Population Story”), this phenomenon is occurring within regions too, with larger cities gaining talent at the expense of their hinterlands.

A new report from the US Senate Joint Economic Committee explores the social impact of these mobility trends. In “Losing Our Minds: Brain Drain Across the United States”, the JEC finds that, “over the past 50 years, the United States has experienced major shifts in geographic mobility patterns among its highly-educated citizens. Some states today are keeping and receiving a greater share of these adults than they used to, while many others are both hemorrhaging their homegrown talent and failing to attract out-of-staters who are highly educated. This phenomenon has far-reaching implications for our collective social and political life, extending beyond the economic problems for states that lose highly-educated adults…”

“Our report provides evidence that highly-educated adults flowing to dynamic states with major metropolitan areas are, to a significant extent, leaving behind more rural and postindustrial states. This geographic sorting of the nation’s most-educated citizens may be among the factors driving economic stagnation—and declining social capital—in certain areas of the country.”

“The Best are None Too Good”: Ranking Transit Agencies” by The Antiplanner

SURPRISE
This fascinating research paper compares key operating results across most of the United States local mass transit systems. The results enlightening, but not encouraging.

“The nation’s worst-managed transit systems lose 65 cents for every dollar they spend on operating costs, fill only 42 percent of their seats, carry the average urban resident just 40 round trips per year, use almost as much energy and spew out almost as much greenhouse gases per passenger mile as the average car, carry fewer than 14 percent of low-income workers to work, and lost 4 percent of their customers in the last four years.”

“Oops—excuse me. Those are the numbers for the nation’s five best transit systems outside of New York (which is in a class by itself)”.

“The five worst systems, out of the nation’s fifty largest urban areas, lose 87 cents for every dollar they spend on operating costs, fill under 18 percent of their seats, carry the average urban resident less than four round trips per year, use more energy and spew out more greenhouse gases per passenger mile than the average Chevy Suburban, carry less than 2 percent of low-income workers to work, and lost more than 13 percent of their customers in the last four years.”

These data imply these transit systems will require even larger public subsidies in the years ahead, at a time when state and local budgets are likely to face rising pressures from pension, social safety net, infrastructure and other competing spending demands, while their tax revenues are constrained by a weak economy and the escalating mobility of their income and sales tax bases if marginal rates are raised beyond a tipping point.

For more on this, see Noah Smith’s column on Bloomberg, “New York’s Comeback Might Have Come and Gone”, and the forces that driving a reversal of fortune for a growing number of “superstar cities.”

A new paper on the impact of McMansions shows why social comparison can have a negative impact on your psychological and financial health.

Unfortunately, in today's world social comparison has been supercharged by unprecedented connectivity and powerful social media apps — especially those based on images and video.

In “The McMansion Effect: Top Size Inequality, House Satisfaction and Home Improvement in U.S. Suburbs”, Clement Bellet finds that, “Despite a major upscaling of [the size of] single-family houses since 1980, house satisfaction has remained steady in American suburbs…This can be explained by upward-looking comparisons in the size of neighboring houses…New constructions at the top of the house size distribution lower the satisfaction that neighbors derive from their own house size. Upward-looking comparisons are stronger among people living in larger houses and decrease with the distance from McMansions”…

“Homeowners exposed to the construction of big houses in their neighborhood put lower prices on their home, are more likely to upscale to a bigger house and take up more debt.”

“Red, White, And Gray Population Aging, Deaths Of Despair, And The Institutional Stagnation Of America”, by Lyman Stone, published by the American Enterprise Institute

In this provocative paper, Stone begins with an increasingly common observation: “American society is changing. As Americans have gotten older and more settled, our institutions have also become less dynamic. A country that was once typified by a sense that anyone could be or do anything is now hidebound by an increasingly heavy weight of rules and regulations.”

“While this trend toward more regulation and greater constraints on regular life can be seen across all walks of life, [Stone’s] report focuses on five main areas:

(1) Increasing stringency of land use regulations such as zoning,

(2) Greater prevalence of restrictions on work such as occupational licensing,

(3) Unusually high incarceration rates given currently low crime rates,

(4) An education system that forces people to spend more years in school for a higher cost and less value, and

(5) Growing debt and other financial burdens among households and at all levels of government.”

Stone provides evidence to support his claim that, “these trends can all be traced back to policy choices made between the 1940s and 1990s. That is to say, while they disproportionately afflict younger generations such as millennials, they are problems created by baby boomers and their parents.”

He concludes that, “if the United States is to have a 21st century as prosperous as its 20th century, these damaging legacies of the baby-boomer generation must be fixed.”

While Stone’s diagnosis seems right on target, as in the case of so many other similar papers I have read recently, I was less confident about the likelihood his proposed solutions will ever be implemented, dependent as they are on “policymakers mustering the political courage” to do so.

RAND released an interesting new report on “News in the Digital Age”

Three key takeaways:

First, “Print journalism and reporting on broadcast television have been mostly consistent in tone and style over the last 30 years. But since 2000, there’s been a gradual shift toward more subjective reporting.”

Second, “In stark contrast to the tone of broadcast television news, between 2000 and 2017, cable news featured content that was more subjective, abstract, argumentative, and based on opinion rather than reporting events.”

Third, “Old media is more grounded in traditional reporting. New media tends to lean more subjective. Through 2017 newspapers have remained anchored in traditional reporting techniques. These include strong use of characters, time, descriptive and concrete language, numbers, and retrospective reasoning. But online media outlets tend to deviate from this model, using more conversational language and putting more emphasis on interpersonal interactions and individual perspectives and opinions. Additionally, the tone in online media is often more argumentative and aims to persuade readers.”

“A new look at the declining labor share of income in the United States” by Manyika et al from the McKinsey Global Institute

SURPRISE
This analysis looks at the industry and firm level drivers of the other side of declining labor share – the rise in capital’s share of income.

“In analyzing the various hypotheses behind the labor share decline across these sectors, we find that a set of supercycle and boom-bust effects appears as the main driver, accounting for one-third of the total decline in labor share since 1998…The commodity supercycle notably increased profits in the mining sector, while the real estate boom temporarily increased capital stocks in the sector and its weight in the total economy…

“The second-most important factor (26 percent of the decline) is rising and faster depreciation, due to higher capital stocks and a shift to intangible assets with shorter life cycles. For example, computer and electronics manufacturing raised the share of assets from intellectual property products in total capital and, with it, depreciation. Pharmaceuticals and chemicals also used more intangible capital and experienced higher depreciation...

“Superstar effects—which see a small proportion of large firms capturing a disproportionately larger share of economic profit than their peers—along with industry consolidation appear to explain about 18 percent of the decline in labor share…
“Capital substitution of labor and automation underpin 12 percent of the labor share decline…[and] globalization and decreased labor bargaining power, which affected the automotive sector among others, account for the remaining 11 percent.”

“The Global Increase in Socioeconomic Achievement Gap, 1964 to 2015” by Anna Chmielewski, University of Toronto

SURPRISE
“The socioeconomic achievement gap —the disparity in academic achievement between students from high- and low-socioeconomic status (SES) backgrounds—is well-known in the sociology of education. The SES achievement gap has been documented across a wide range of countries. Yet in most countries, we do not know whether the SES achievement gap has been changing over time. This study combines 30 international large-scale assessments over 50 years, representing 100 countries and about 5.8 million students. SES achievement gaps are computed between the 90th and 10th percentiles of three available measures of family SES…

“Results indicate that achievement gaps increased in a majority of sample countries…

The largest increases are observed in countries with rapidly increasing school enrollments, implying that expanding access reveals educational inequality that was previously hidden outside the school system. However, gaps also increased in many countries with consistently high enrollments, suggesting that cognitive skills are an increasingly important dimension of educational stratification worldwide…

“Cognitive skills are increasingly seen as the most important outcome of schooling and replace direct inheritance as the only legitimate source of social stratification. In such a society, all parents may equally recognize the importance of academic skills, but higher-SES families have greater resources and information about how to foster their children’s achievement…

“Growing SES achievement gaps may also have political implications. Although belief in meritocracy is growing in many countries, this belief is strongly socioeconomically graded, particularly in countries with the highest income inequality A growing awareness of increasing SES achievement gaps—coupled with cases of outright fraud, such as the recent U.S. college admissions bribery scandal — may contribute to increased socioeconomic polarization of trust in the legitimacy of educational institutions.”

“Notwithstanding current global economic expansion and opportunity, millennials and Generation Z are expressing uneasiness and pessimism—about their careers, their lives in general, and the world around them. They appear to be struggling to find their safe havens, their beacons of trust…Economic and social/political optimism is at record lows. Respondents express a strong lack of faith in traditional societal institutions, including mass media, and are pessimistic about social progress.”

The CDC reported that in 2018, US births fell to the lowest level in 32 years

Albeit with a delay, the USA now appears to be following the sharp decline in the birth rate that has been observed in Europe in recent years. While one can speculate about the reasons for this (most of which are arguably negative indicators about current and expected social and economic conditions), declining birth rates imply lower future economic growth rates, unless immigration and/or productivity increases

“The Wealth of Relations” by the US Congress Joint Economic Committee

SURPRISE
The Joint Economic Committee of the US Congress has recently, and without much recognition, been pursuing an interesting and potentially important agenda for better understanding and rebuilding social capital as a critical foundation for expanded opportunity and reduced inequality. It is a project that bears watching.

“In more recent decades, researchers and theorists have described another source of wealth: social capital. While not previously unknown to economists, social capital was first comprehensively analyzed by political scientist Robert Putnam. It refers to the aspects of human relationships that may be expected to afford value to their possessors. Relationships inhere in social networks as well as in the institutions that people create together for specific purposes and in which they participate. These institutions are ubiquitous, ranging from families to schools to book clubs to unions to churches to athletic leagues.

“The social capital literature has suffered from inconsistent and imprecise definitions, and like human capital, the social variety presents complex measurement challenges…

“For two years, the Social Capital Project within the Joint Economic Committee (JEC) has documented trends in associational life—what we do together—and its distribution across the country. With this evidentiary base established, the Project now turns to the development of a policy agenda rooted in social capital.

“Specifically, the focus of the Project will be to craft an agenda to expand opportunity by strengthening families, communities, and civil society...

“Just as there is too often a narrow focus on economic outcomes in debates about opportunity, discussions too often emphasize economic or personal barriers. Among political liberals, in particular, “lifting artificial weights” and “clearing paths” mostly mean giving more money to poor, working class, and (increasingly) middle-class people. Hence the calls on the left for guaranteed jobs, a $15 minimum wage, universal child care, universal college, and a universal basic income guarantee.

“In contrast, conservatives have tended to point to personal barriers to opportunity. Different income levels in adulthood, for instance, may be due to unequal economic resources growing up, but they also may be the product of different orientations, preferences, values, and personal strengths and weaknesses. Equalizing incomes will not necessarily change these differences.

However, the conservative perspective is not without its own problems. Conservatives have tended to wield the concept of opportunity defensively, affirming their support for “equality of opportunity” as against the “equality of outcomes” that they accuse liberals of seeking. The distinction is rooted in conservatism’s view of people as mostly the captains of their own ships. Given that we have made great strides as a nation achieving formal political equality, the US is often thought to have realized actual equality of opportunity. If someone fails to realize her own definition of the good life—perhaps as a consequence of problematic orientations, preferences, values, and weaknesses—many conservatives view this failure as a personal shortcoming.

Most conservatives would agree with Martin Luther King Jr. that “a productive and happy life is not something you find, it is something you make.” But we do not navigate our lives in isolation, we make a productive and happy life with other people. Supportive relationships and institutions are instrumental for expanding opportunity. In part, that is because they are instrumental in forming our orientations, preferences, values, and personal strengths and weaknesses.

“That is to say, opportunity depends on social capital—what is available to us from our relationships with family, friends, neighbors, congregants, coworkers, and others. In particular, the people to whom we are born and around whom we live are consequential for our opportunities. “Artificial weights” are not only economic, not only personal, but social as well.”

The OECD published a new report on “Under Pressure: The Squeezed Middle Class”

Based on a broader analysis than many other similar reports, the OECD still reaches familiar conclusions. Across many countries, the costs of housing and education are rising faster than incomes, and employment is increasingly uncertain and under threat from automation.

Moreover, “the middle class is also concerned about their children’s future prospects; the current generation is one of the most educated, and yet has lower chances of achieving the same standard of living as its parents.” All these factors are leading to higher levels of political instability and increasing the appeal of more extreme parties, messages, and candidates.”

The report concludes with a set of policy recommendations that are as familiar (e.g., “improve education and training”) as they are lacking in specifics about how to overcome the substantial obstacles to their successful implementation.
See also, “The Changing Nature of Work”, a major new report by the World Bank

“Accelerating Dynamics of Collective Attention” by Lorenz-Spreen et al in Nature Communications

SURPRISE
This paper provides new evidence that confirms many people’s lived experience: we face vastly more competition for our limited attention, which we find exhausting. This creates the potential for greater swings in public attention, narratives, beliefs, emotions and behavior over ever shorter periods.

“With news pushed to smart phones in real time and social media reactions spreading across the globe in seconds, the public discussion can appear accelerated and temporally fragmented.

“In longitudinal datasets across various domains, covering multiple decades, we find increasing gradients and shortened periods in the trajectories of how cultural items receive collective attention. Is this the inevitable conclusion of the way information is disseminated and consumed? Our findings support this hypothesis.

"Using a simple mathematical model of topics competing for finite collective attention, we are able to explain the empirical data remarkably well. Our modeling suggests that the accelerating ups and downs of popular content are driven by increasing production and consumption of content, resulting in a more rapid exhaustion of limited attention resources. In the interplay with competition for novelty, this causes growing turnover rates and individual topics receiving shorter intervals of collective attention.”

“America’s Upper Middle Class Feeling the Pinch Too”, by Alexandre Tanzi in Bloomberg, 13Apr19

This article highlights another source of heightened political frustration and instability.

“Newly available net worth data from the Federal Reserve suggests that the “left-behind” contagion has spread to all Americans aside from the top 10 percent. While still wealthier overall than most other groups, even the upper-middle class is feeling the pinch of income stagnation. The growth rate of this group’s incomes is lagging behind that of those both lower and higher on the socioeconomic ladder.

“The cost of many products and services the upper middle class buys, from autos to college educations, is outpacing overall inflation. While having access to credit, these households are increasingly tapping into costlier forms of debt”, [especially student loans.]”

“Narratives About Technology Induced Job Degradation Then and Now” by Robert Shiller

SURPRISE
This fascinating paper puts current concerns over the impact of artificial intelligence and automation into a much longer historical context. As Shiller notes, “Concerns that technological progress degrades job opportunities have been expressed over much of the last two centuries by both professional economists and the general public.

“These concerns can be seen in narratives both in scholarly publications and in the news media. Part of the expressed concern about jobs has been about the potential for increased economic inequality. But another part of the concern has been about a perceived decline in job quality in terms of its effects on monotony vs creativity of work, individual sense of identity, power to act independently, and meaning of life. Public policy should take account of both of these concerns, inequality and job quality.”

For an example of this, see, “How Amazon automatically tracks and fires warehouse workers for ‘productivity’”, by Colin Lecher

“The End of Aspiration”, by Joel Kotkin in Quillette

“Since the end of the Second World War, middle- and working-class people across the Western world have sought out—and, more often than not, achieved—their aspirations. These usually included a stable income, a home, a family, and the prospect of a comfortable retirement. However, from Sydney to San Francisco, this aspiration is rapidly fading as a result of a changing economy, soaring land costs, and a regulatory regime, all of which combine to make it increasingly difficult for the new generation to achieve a lifestyle like that enjoyed by their parents…

“Three quarters of American adults today predict their child will not grow up to be better-off than they are, according to Pew. These sentiments are even more pronounced in France, Britain, Spain, Italy, and Germany. In Japan, a remarkable three-quarters of those polled said they believe things will be worse for the next generation…This generational gap between aspiration and disappointment could define our demographic, political, and social future.”

“Divided Europe” by Colijn and Konings from ING Bank

SURPRISE
“In September 2008, the bankruptcy of Lehman Brothers marked the low point of the financial crisis. Ten years on, the European economy has recovered, but the scars of the crisis are still visible at a regional level. While employment – measured as employed persons - for the European Union is now 2% above the 2008 peak, this is not the case for many local economies. The crisis has had a long-lasting and deep effect on economic activity and on employment, and many regions have only recently begun to recover.

“Some regions have not even shown signs of bottoming out, with employment still in decline. Deep scars caused by the crisis are still impacting regional labour markets across Europe. Many regions are still recovering, with the unemployment rate still above the natural rate, according to our estimates.”

“Structural strength or weakness seems to be driven in part by the region’s digital infrastructure, the vulnerability to globalisation, the innovative capacity of the region and the residents’ level of education.

“A large divide between urbanised and younger regions and rural and ageing regions, with the latter in general performing much more poorly. This confirms the view of a split in society between areas that are vulnerable to population outflow and ones with prolonged high structural unemployment and those which are more vibrant and generally profit from large societal trends.

“More redistribution at the European level seems unlikely given the political environment at the moment. With stagnation a possibility for many regions, the appetite for the populist vote, from an economic perspective, at least, could increase.”

“The City of Europe’s Future”, by Ben Judah in The American Interest

The author provides a revealing in-depth analysis of Rotterdam.

SURPRISE
“Transformed not only by the European Single Market but also by mass migration, Rotterdam is an incubator for populist politics of all persuasions. It has a Muslim mayor, its own Islamist Party, and a statue of the pioneer of modern rightwing nativism, Pim Fortuyn…”

“In the most recent elections, Rotterdam seemed more polarized than ever. Thierry Baudet’s party came first, then Wilder’s party, winning a combined 29 percent. The Green Left came third, with 12 percent, with Denk winning 8 percent and Nida 2 percent of the vote. The traditional centrist parties, with no clear message in the culture war, struggled even in traditional fractured Dutch politics...

“This offers a sobering lesson to those in Britain and America who think populism can be calmed by strong growth, successful investment, and sinking unemployment. Because Rotterdam has all of those features and a prosperity hard to imagine for those who were born there a generation or more ago. Rather, Rotterdam appears to be warning, the great culture war that is emerging in Europe—in every election, in every country—really is about culture assimilation and ethnic change after all. It’s not the economy.”

“A new estimate suggests global migration is much higher than we thought”, by Urton-Washington, published by the World Economic Forum

SURPRISE
“Researchers have unveiled a new statistical method for estimating migration flows between countries...

“They show that rates of migration—defined as an international move followed by a stay of at least one year—are higher than previously thought, but also relatively stable, fluctuating between 1.1 and 1.3 percent of global population from 1990 to 2015…

“In addition, since 1990 approximately 45 percent of migrants have returned to their home countries, a much higher estimate than other methods…

Demographic change was in the news in March, with a number of articles reinforcing the message that it is just as important a macro driver as others that are more frequently discussed, like technological and climate change

Surprise
Writing in The American Interest, Larry Diamond presents an excellent summary of “The Coming Demographic Disruptions.” He notes than in many industrialized countries, fertility rates are now below population replacement rates, with the US, UK, France, Sweden, Canada, and Australia faring somewhat better than many others. The critical problem declining birth rates will create is “that there will be fewer and fewer workers to support rapidly aging populations, while life expectancy continues to lengthen.”

Writing in the Financial Times, Richard Milne reports from Helskini about “Finland Sends a Warning to Europe” about the consequences of this “demographic time bomb.” Milne notes that, “The lesson from Finland may be that trying to make health and elderly care costs sustainable involves the types of political choices few governments are willing to make, raising questions about long-term economic growth and the health of public finances for increasingly cash-strapped governments across Europe…

“It is a painful lesson for the rest of Europe as political fragmentation is increasing across the continent, making government formation in many countries highly difficult and complicating the chances of changing such sensitive policy areas as healthcare.

Diamond notes that one obvious answer to the drag on growth created by rapidly aging societies is to increase immigration, while also acknowledging the many nations’ limited cultural and political capacity to absorb more immigrants. Yet he also notes that rapidly increasing populations in African nations with weak economies is likely to drive even more migrants towards Europe in the future.

Spiegel also takes up this issue in “What to Do About Massive Population Growth”, noting that, “In the next 30 years, the population of the African continent will more than double, from 1.2 billion people today to 2.5 billion. The result will be a population of which 50 percent will be younger than 30 years old and won't have much of a future to look forward to if the continent's economic outlook doesn't change drastically. The threat of conflict over scarce resources, land, food, water and work is very real.”

Spiegel’s conclusion is not optimistic: “There is no clear prescription for countries facing demographic explosion. A decisive factor will be whether governments finally take the demographic challenges seriously and invest in the education and healthcare sectors, in comprehensive sex education campaigns and in family planning programs. At the same time, they will have to create jobs to provide millions of young people with at least a modicum of prosperity. That is much easier said than done, particularly given the incompetent and corrupt regimes in many African countries.”

David Frum tackles the immigration issue from a US perspective in a long and excellent analysis in the Atlantic, despite its unnecessarily inflammatory title: “If Liberals Won’t Enforce Borders, Fascists Will.”

Frum concludes, “Reducing immigration, and selecting immigrants more carefully, will enable the country to more quickly and successfully absorb the people who come here, and to ensure equality of opportunity to both the newly arrived and the long-settled—to restore to Americans the feeling of belonging to one united nation, responsible for the care and flourishing of all its people.”

In "From Managing Decline to Building the Future: Could a Heartland Visa Help Struggling Regions?” Ozimek et al present very detailed county level demographic data, and find that “86% of counties now grow more slowly than the nation as a whole, up from 64% in the 1990s.” Moreover, “population loss is hitting many places with already weak socioeconomic foundations”, and thus perpetuating their economic decline. Their key idea is to reinvigorate these counties via a new “place-based” visa program for skilled entrepreneurial immigrants.

Four new analyses provide further insight into both the current and projected future impact of rapidly improving labor-substituting technologies on society and politics

Surprise
In Demographics and Automation, Acemoglu and Resptrepo “argue theoretically and document empirically that aging leads to greater (industrial) automation, and in particular, to more intensive use and development of robots. Using US data, we document that robots substitute for middle-aged workers (those between the ages of 21 and 55). We show that demographic change—measured by an increase in the ratio of older to middle-aged workers—is associated with greater adoption of robots and other automation technologies across countries and with more robotics-related activities across US commuting zones.”

“We also provide evidence of more rapid development of automation technologies in countries undergoing greater demographic change. Our directed technological change model predicts that the induced adoption of automation technology should be more pronounced in industries that rely more on middle-aged workers and those that present greater opportunities for automation. Both of these predictions receive support from country-industry variation in the adoption of robots.”

The authors also find that these industries are experiencing faster productivity growth and a greater decline in labor’s share of income relative to other industries.

In a related paper, “Automation Perpetuates the Red-Blue Divide”, Muro et all from Brookings conclude that data “confirms both a stark history of automation in [states won by Donald Trump in 2016] and substantial future exposure to it”, that “points to more job uncertainty and potentially more political disruption.”

In “America at Work”, Walmart (with support from McKinsey) takes a very detailed look at county level data in the United States to gauge their resiliency, and capacity to respond to change, especially increased automation. They define 8 archetypical county types, and identify six types of responses to automation: (1) Creating new jobs; (2) Retraining and upskilling workers; (3) Boosting mobility within labor markets, for example, through greater use of certified competencies; (4) Improving infrastructure to foster economic development; (5) Modernizing social safety net programs; and (6) Improving education, including apprenticeship programs.

Counties are differentiated on the basis of their economic models, exposure to automation risk, and capacity to respond to its impact. The report also notes the many challenges in translating analysis into effective action.

It is also important to recognize the extent of uncertainty in analyses like those noted above.

These are highlighted in another new paper, “Toward Understanding the Impact of Artificial Intelligence on Labor”, by Morgan Frank and an all-star team of co-authors. They find that these critical uncertainties include, “the lack of high-quality data about the nature of work (e.g., the dynamic requirements of occupations), lack of empirically informed models of key micro-level processes (e.g., skill substitution and human–machine complementarity), and insufficient understanding of how cognitive technologies interact with broader economic dynamics.” Forecast accuracy will only improve if and when the barriers described in this paper are overcome.

“Digital Abundance and Scarce Genius: Implications for Wages, Interest Rates, and Growth”, by Benzell and Brynjolfsson

Surprise
The authors as, “Why, if emerging technologies are so impressive, are interest rates so low, wage growth so slow and investment rates so flat? And why is total factor productivity growth so lukewarm?...If digital labor and capital can be reproduced much more cheaply than its traditional forms. But if labor and capital are becoming more abundant, what is constraining growth? We posit a third factor, `genius', that cannot be duplicated by digital technologies...”

“Our model can explain why ordinary labor and ordinary capital haven't captured the gains from digitization, while a few superstars have earned immense fortunes. Their contributions, whether due to genius or luck, are both indispensable and impossible to digitize. This puts them in a position to capture the gains from digitization.”

“The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand”, by Acemoglu and Retrepo

Surprise
“Artificial Intelligence is set to influence every aspect of our lives, not least the way production is organized. AI, as a technology platform, can automate tasks previously performed by labor or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labor can be productively employed. The consequences of this choice have been stagnating labor demand, declining labor share in national income, rising inequality and lower productivity growth.”

Could this have anything to do with K-12 education systems in different nations failing to improve at anywhere near the same pace as automation and AI technologies? Unfortunately, I think so. Given the poor results achieved over the past decade from initiatives intended to substantially improve US K-12 education performance, there is no reason not to expect the trends identified in this report to continue, with increasingly negative social and political consequences.

The OECD’s “Risks that Matter” report summarizes the results of a 2018 survey covering 22,000 people in 21 OECD countries.

Key findings include: (1) “Falling ill and making ends meet are the biggest short-term concerns.”

(2) “When thinking about the longer term, most people list financial security in old age, as well as worrying about their children reaching levels of status and comfort similar to their own.”

(3) “Many people are dissatisfied and disillusioned with social policy. Across countries, large numbers of respondents believe that public benefits and services are hard to reach and many lack confidence in the government’s ability to provide adequate support should they lose their income. Many respondents also express strong feelings of injustice in benefit receipt. They believe they are not receiving the benefits they should get relative to the taxes they pay, and that many others are picking up more than they deserve.”

(4) “People want more from government, with better public health care and pensions the priorities.”

A critical uncertainty is whether government structures, processes, system, and/or staff can be sufficiently changed to meet these expectations.

“Looking to the Future, Public Sees an America in Decline on Many Fronts”, by Pew Research

Surprise
This is not an uplifting report. But it is an important one, as the United States heads into the 2020 presidential election campaign. Pew sums up its findings like this:

“When Americans peer 30 years into the future, they see a country in decline economically, politically and on the world stage. While a narrow majority of the public (56%) say they are at least somewhat optimistic about America’s future, hope gives way to doubt when the focus turns to specific issues…Majorities predict a weaker economy, a growing income divide, a degraded environment, and a broken political system.”

“In the face of these problems and threats, the majority of Americans have little confidence that the federal government and their elected officials are up to meeting the major challenges that lie ahead. More than eight-in-ten say they are worried about the way the government in Washington works, including 49% who are very worried. A similar share worries about the ability of political leaders to solve the nation’s biggest problems, with 48% saying they are very worried about this. And, when asked what impact the federal government will have on finding solutions to the country’s future problems, more say Washington will have a negative impact than a positive one (55% vs. 44%)…”

“Roughly four-in-ten Americans (43%) say they are very worried about the nation’s morals, while another 34% are fairly worried…”

"Only 38% of Americans say the public education system will improve over the next 30 years, while 52% say it will get worse…"

“When Americans predict what the economic circumstances of the average family will be in 2050, they do so with more trepidation than hope. More than four-in-ten (44%) predict that the average family’s standard of living will get worse over the next 30 years, roughly double the share who expect that families will live better in 2050 than they do today. About a third (35%) predict no real change…”

“About three-quarters of all Americans (73%) expect the gap between the rich and the poor to grow over the next 30 years, a view shared by large majorities across major demographic and political groups…”

“When asked what the federal government should do to improve the quality of life for future generations, providing high-quality, affordable health care for all Americans stands out as the most popular policy prescription. Roughly two-thirds (68%) say this should be a top priority for government in the future.”

“America Stopped Building” by Jim Clifton from Gallup

“I'm concerned there's a mistaken understanding of U.S. economic dynamism. The New York Times, The Wall Street Journal, Financial Times, Fox, MSNBC, all the networks -- the Federal Reserve, too -- all say the same thing: The job market is strong and the economy is growing. We're in a recovery. That's only partly true.

As optimistic Americans, we really want to believe this narrative. I want to. But it is hard to square this with the fact that half of Americans are making less than they were 35 years ago in real terms…

Making things worse, the cost of housing, healthcare and education are exploding while paycheck sizes are frozen or even declining.

Many citizens don't buy that the economy is growing. Recently, Gallup found that 56% of Americans say the economy is slowing down -- or worse.”

“Are We Long –or Short – on Talent?” McKinsey Quarterly

“Expanding Economic Opportunity for More Americans”, report of the Economic Strategy Group of the Aspen Institute

This is yet another analysis by a very distinguished bipartisan group that is long on policy recommendations, but short on practical details about how to implement them in order to produce substantial, measurable improvements in the problems they aim to solve.

For example, the report has chapters that recommend expanding both Career and Technical Education and Apprenticeships. Yet as I have found over the last nine years in Colorado, implementing these policies is far more difficult than these authors may realize (see, “https://medium.com/@tcoyne/the-promise-and-the-peril-of-career-and-technical-education-in-colorado-398775dbb750 )

Five recent articles and papers provide more insight into the sources of social turmoil and alienation in the United States, and help refine our model of how complex social changes connect technological and economic change to political change.

SURPRISE
In “Is Automation Labor-Displacing Productivity Growth, Employment, And the Labor Share?”, Autor and Salomons find that while in the past increased automation augmented labor, increasing productivity and wages, in recent decades it has become more labor displacing, which has put downward pressure on wages.

In his New York Times column, Eduardo Porter takes a micro look at this process as it has unfolded in Phoenix, finding that, “Despite all its shiny new high-tech businesses, the vast majority of new jobs are in workaday service industries, like health care, hospitality, retail and building services, where productivity growth and pay are mediocre…

The 58 most productive industries in Phoenix — where productivity ranges from$210,000 to $30 million per worker — employed only 162,000 people in 2017, 14,000 more than in 2010. Employment in the 58 industries with the lowest productivity, where it tops out at $65,000 per worker, grew 10 times as much over the period, to 673,000.”

Chapman University’s Joel Kotkin has termed this state of affairs, “the new feudalism” (see his report, “California Feudalism: The Squeeze on the Middle Class”).

In “Narratives about Technology-Induced Job Degradation Then and Now” Robert Shiller notes that, “Part of the expressed concern about jobs has been rising inequality. But another part of the concern has been a decline in job quality in terms of its effects on monotony vs creativity of work, individual sense of identity, power to act independently, and of meaning of life…the spell of unemployment [caused by improved technology] may not be the dominant concern. There is also the fear that the resulting eventual job switch will be to a job that is demeaning.”

In “America’s Religion is Work”, Derek Thompson shows why this is fear is likely to be widely prevalent in America today. As he notes, “The decline of traditional faith in America has coincided with an explosion of new atheisms. Some people worship beauty, some worship political identities,and others worship their children. But everybody worships something.

“And workism is among the most potent of the new religions competing for congregants.

“What is workism? It is the belief that work is not only necessary to economic production, but also the centerpiece of one’s identity and life’s purpose… In the past century, the American conception of work has shifted from jobs to careers to callings—from necessity to status to meaning.”

Finally, the impact of these and other social trends is clearly affecting teenagers as well as adults. For example, Pew Research recently reported that 70% of American teens said that anxiety and depression are a major problem for people their age in the community where they live.

It is therefore no surprise that Gallup has found that among people age 18-29, only 45% had a positive view of capitalism in 2018, down from 68% in 2010 (e.g., see “Millennial Socialists Want to Shake Up the Economy and Save the Climate”, in The Economist, 14Feb19)

“Why Do We Retire?” a new whitepaper published by Aegon

Many developed nations face an imminent tsunami of newly retired workers, and pressure on public and private sector pension plans. Aegon aptly notes that too much of the discussion about this upcoming wave has been focused on the financial and government budget issues it raises (e.g., pensions and healthcare expenditures), and not on other issues that are equally important – for example, social connection and loneliness, and the desire of many future retirees to cut back on work, but not wholly abandon it (which would also sharply reduce stress on inadequate pension resources). This paper does a good job of framing the issues many nations will soon have to confront.

“By Mollycoddling Our Children, We're Fuelling Mental Illness in Teenagers”, by Haidt and Paresky, calls attention to trends that are likely to affect society for years to come.

SURPRISE
The authors note a number of trends that seem sure to affect future political dynamics as todays’ teenagers enter the electorate.

“Rates of anxiety disorders and depression are rising rapidly among teenagers, and US universities can’t hire therapists fast enough to keep up with the demand…We recently co-wrote a book, with Greg Lukianoff, titled The Coddling of the American Mind, about the culture that erupted on American university campuses around 2014, and has spread to some campuses in the UK and Canada. In the book we describe how they began using the language of safety and danger to describe ideas and speakers, and to demand policies based on the premise that some students are fragile (or “vulnerable”). Terms such as “safe space”, “trigger warning” and “microaggression” entered the language. These, we believe, are requests made by a generation that was deprived of the necessary quantity of social immunisations. Students now react with a kind of emotional allergic response (often referred to as being “triggered”) to things that previous generations would have either brushed off or argued against.

“It’s not the kids’ fault. In the UK, as in the US, parents became much more fearful in the 1980s and 1990s as cable TV and later the internet exposed everyone, more and more, to those rare occurrences of brutal crimes and freak accidents that, as we report in our book, now occur less and less. Outdoor play and independent mobility went down; screen time and adult-supervised activities went up…

“Mental health statistics in the US and UK tell the same awful story: kids born after 1994 – now known as “iGen” or “Gen-Z” – are suffering from much higher rates of anxiety disorders and depression than did the previous generation (millennials), born between 1982 and 1994.

“The upward trends for depression among teenage boys and girls are happening in the UK too. Yearly measures of major depression are not available in the UK, but the NHS reports extensive mental health statistics for England from 2004 and 2017 that allow us to make a direct comparison for the same time period. Using a stricter criterion, which finds lower overall rates, the pattern is similar: up slightly for boys, nearly double for girls.

“This alarming rise does not just reflect an increase in teenagers’ willingness to talk about mental health; it is showing up in their behaviour too, particularly in the rising rates at which teenage girls are admitted to hospital for deliberately harming themselves, mostly by intentionally cutting themselves. Large studies In the US and UK using data through to 2014 show sharply rising curves in the years after 2009, with increases of more than 60% in both countries. A 2017 Guardian study of more recent NHS data found a 68% rise in hospital admissions for selfharm by English teenage girls, over the previous decade.

“Even more tragically, we also see this trend in the rate of teenage suicide, which is rising for both sexes in the US and the UK. The suicide rate is up 34% for teenage boys in the US (in 2016, compared with the average rate from 2006-2010). For girls, it is up an astonishing 82%. In the UK, the corresponding increase for teenage boys through to 2017 is 17%, while the increase for girls is 46%. Nobody knows for certain why recent years have seen so much more of a change for girls than boys, but the leading explanation is the arrival of smartphones and social media.

“Girls use social media more than boys, and they seem to be more affected by the chronic social comparison, focus on physical appearance, awareness of being left out, and social or relational aggression that social media facilitates”.

“Universal Basic Income: Debate and Impact Assessment” by Francese and Prady of the IMF

The rapid improvement of automation and artificial intelligence technologies, along with stagnant K12 education results, has increased interest in the consequences of a future scenario in which the number of employed people sharply falls, and/or income inequality significantly worsens. One solution that has been proposed is a “universal basic income” provided by the government and financed with higher taxes. This new IMF paper breaks new ground with its rigorous analytical approach to the impact of different approaches to structuring a UBI program – e.g., high/low progressivity, and high/low coverage of the population.

While this paper makes no policy recommendations, it does an excellent job of framing the issues surrounding a concept that may become a much more popular topic of conversation in the years ahead.

Demographia 2019 Housing Affordability Survey

The inability to purchase a home of one’s own is an important source of underlying social frustration. While this is drive by economic factors (and before that technological change), growing frustration eventually finds expression in politics. These data are therefore of more than passing importance for what they may portend for politics in the future.

As Wendell Cox writes on newgeography.com, the survey “rates middle-income housing affordability using the “Median Multiple,” which is the median house price divided by the median household income” Ratios of 3.0 and under are deemed affordable, while those of 5.1 and over are “severely unaffordable”.

“There are 9 affordable major housing markets, all in the United States. There are 29 severely unaffordable major housing markets, including all in Australia (5) and New Zealand (1) …Thirteen of the major markets in the United States are severely unaffordable (out of 55), seven in the United Kingdom (out of 21 major markets) and two out of Canada’s six.”

“The most affordable major housing markets are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Canada (4.3) and Singapore (4.6). Ireland and the United Kingdom both have Median Multiples of 4.8. The major markets of Australia (6.9), New Zealand (9.0) and Hong Kong (20.9) are severely unaffordable.”

“Why the Housing Ladder Doesn’t Exist Anymore” by Thomas Hale, Financial Times 15Jan19

This excellent article shows why the traditional assumption that one should start out by buying a small property and then trade-up over time to larger ones may be fatally flawed in today’s economy. If this is the case, once many of the people who believed in this approach discover that their dreams have been dashed, it seems likely to add to the current level of social frustration and anger directed towards elites.

“What The Next 20 Years Will Mean For Jobs – And How To Prepare”, by Stephane Kasriel for the World Economic Forum

This forecast of a future economic scenario has important implications for future social and political developments. Some highlights: “The majority of the workforce will freelance by 2027 (see, “Freelancing in America 2017”)… Fast technological change means that the people operating constantly evolving machines need to learn new skills – quickly. Our current education system adapts to change too slowly and operates too ineffectively for this new world… Our tax, healthcare, unemployment insurance and pension systems were all created for the industrial era, and they won’t serve anyone in the future if we can’t make significant reforms.”

Unfortunately, there is little evidence that the political system is coming to terms with these changes and the social uncertainty, fear, and frustration they are creating in the middle class. To cite but one example: in a world where employment is more uncertain than ever, a single payer government program that separates health insurance from employment seems eminently logical – but it is already the target of multiple attacks in the United States.

“Beyond Gentrification” by Joel Kotkin and Wendell Cox for he Center for Opportunity Urbanism

The authors highlight how the gentrification process in many cities has led to social frustration and, as we have seen (e.g., in the Brexit and US presidential votes in 2016) political consequences. And there are no signs these trends are reversing.

“We found that, in most cities, unbalanced urban growth has exacerbated class divisions, while doing little to address the decline of middle class households…Cities are battling for high-tech jobs, sometimes offering lavish inducements, but few poor inner-city residents are likely to work as coders for Amazon or Google… Little effort is being made to encourage the creation of sustainable middle-income jobs in industrial, warehouse, and business service firms, which once sustained communities outside the urban “glamour zone…Cities need a new urban development paradigm that goes beyond the current focus on tourism, media, and tech, which creates many high and low-end jobs but few in the middle.”

“How Real is Systematic Racism Today?” by John Staddon is a James B. Duke Professor of Psychology and Professor of Biology, Emeritus, at Duke University

SURPRISE
In a world where systematic racism in increasingly claimed to be the cause of many social ills, this paper provides a rigorous analysis of this issue. For that alone, it is well worth a read. The author concludes: “the charge of systemic discrimination deflects attention from the proximal causes, endogenous as well as exogenous, of the racial disparities that led to its invention. Disparities—racial, ethnic, or gender-based—are not proof of anything. Disparities raise questions about their cause. Absent further information, a racial disparity does not favor one answer over others. To say, as some academic critics have, that “When I See Racial Disparities, I See Racism” is simply wrong…

“The beauty of ‘systemic racism’ is its air of permanence. It is here forever, and its victims must be compensated in perpetuity. It has become the elusive and inexpugnable cause of all the ills of people of color. And it provides an endless supply of ammunition for those whose careers depend on the persistence of racism. It has become a cause of racial division rather than part of the cure. It should be abandoned.”

“What You Do At Work Matters: New Lenses On Labour” by Mealy et al

SURPRISE
The authors create a new way of categorizing jobs by the activities performed. They then use network science to relate clusters of job activities to each other, to assess the ease of moving across occupations, which is a critical issue as the replacement of labor by automation, AI and other technologies accelerates.

Critically, “they find strongly segregated clustering of high and low risk occupations…Such divisions in labour not only reiterate current concerns about the distributional consequences of automation, but also highlight potential challenges for workers seeking to transition into jobs with lower automation risk.”

This points to more intense social and political conflicts if more creative policy solutions are not created and effectively implemented.

“Why Big Brother Doesn’t Bother Most Chinese” by Adam Minter, on Bloomberg

SURPRISE
This is an extremely disturbing article, and therefore likely an important one. The author writes, “Chinese have already embraced a whole range of private and government systems that gather, aggregate and distribute records of digital and offline behavior. Depicted outside of China as a creepy digital panopticon, this network of so-called social-credit systems is seen within China as a means to generate something the country sorely lacks: trust. For that, perpetual surveillance and the loss of privacy are a small price to pay.”

To be sure, in the past research has found that China is a society relatively low in trust; as in other nations with similar levels of trust, this has historically led to a preference for family groups as the dominant form of business organization. Yet for this same reason, the social credit system seems to be acceptable to many people. With measures of interpersonal trust trending downward in many western nations, developments in China have potentially worrisome implications for future developments in other nations.

Released in conjunction with the World Economic Forum, the latest Edelman Trust Barometer evidences continuing disillusion among publics around the world that is increasing the attractiveness of more extreme political views.

Across a range of countries, only 20% believe the system is working for them. In most developed countries, a majority of the population does not believe they will be better off in five years. Across both developed and developing nations, media is now trusted less than business and government.

“Feel the Fear” by John Hagel on Edge Perspectives

SURPRISE
Hagel writes, perceptively I think, that “fear is becoming pervasive and increasingly intense around the world…Why is that happening? There are certainly many reasons, but my research suggests that we are in the early stages of a Big Shift that is generating mounting performance pressure on all of us. No matter what our credentials and track record in the past, the pressure is mounting to get even better faster in the future. It’s totally natural that we would feel fear in that kind of world, especially if we were taught that getting the right degrees and pursuing the right jobs would ensure our success.

“This mounting performance pressure isn’t just about economic pressure and the ability to earn a living. It takes many different forms, including an accelerating pace of change where things we could rely on in our lives – values, norms, practices, etc. - suddenly are no longer there. But, it’s not just mounting performance pressure that’s driving the fear. There’s also a growing realization that our institutions are not equipped to help us respond to the mounting performance pressure. In fact, there’s a sense that our institutions are making us even more vulnerable to that growing pressure. That’s one of the key reasons that trust in all our institutions is rapidly eroding globally.”

At some point, the mounting feeling of fear that Hagel so well captures, and the inability of our institutions to successfully address its root causes, will inevitably produce even more changes in the political environment than we have already seen.

Three recent papers highlight the important changes underway in the United States’ population dynamics.

In “US population growth hits 80-year low, capping off a year of demographic stagnation”, William Frey from Brookings notes that falling fertility and rising death rates as the population ages have sharply reduced population growth. He also notes how rates of geographic mobility are at record low levels. Both of these trends reduce economic growth potential.

In “Declining Fertility in America”, Lyman Stone from the American Enterprise Institute begins by highlighting research that shows Americans want more children than they are actually having. Stone then identifies and analyzes the obstacles to higher fertility rates, including heavy student debt burdens, rising housing costs, expensive childcare costs. He concludes that, “Young families today face a sufficiently wide range of challenges to childbearing, and policy responses are likely to be sufficiently anemic, that a major recovery in fertility seems unlikely. Rather, fertility will likely remain below the historic average until the next recession, when it will plummet even lower.”

Finally, in “Economic Uncertainty and Fertility Cycles”, Chabe-Ferret and Gobbi “find that economic uncertainty has a large and robust negative effect on fertility.”

Stagnant population growth, aging, and declining fertility, naturally lead to discussion of immigration as an obvious solution to the demographic drag on economic growth (the other one being the path Japan has pursued, higher productivity growth).

According to the Pew and Ipsos MORI survey data cited in Remi Adekoya’s article “Anxiety About Immigration is a Global Issue”, it is not just developed western nations that are struggling with this issue (which will only get worse if climate change and/or economic and political crises boost the number of migrants in the years ahead).

Yet to varying degrees, concerns about immigration may be based on beliefs that are both widespread and mistaken. An excellent example of this is found in Janan Ganesh’s column on “America’s Future is Asian, Not Hispanic” (Financial Times, 19Dec18), who notes, “You would not guess from the present acrimony that more people have immigrated to the US from Asia than from Latin America in every year since 2010.”

“Inequality And Visibility Of Wealth In Experimental Social Networks”, by Nishi et al

SURPRISE

In essence, the authors of this important paper have used advanced network analysis and simulation methods to find that Thorsten Veblen’s warnings about the dangers of inequality combined with conspicuous consumption were right on target. They conclude that making wealth inequality visible reduces social connectivity and cooperation between people with differing levels of wealth. At the aggregate level, this reduces the society’s overall level of wealth.

Supporters of progressive consumption taxes will be embolden by this research.

Three interesting new articles all focus on the decline of religion in America, and the different paths people are taking in the search for sources of transcendent meaning.

In “America’s New Religions”, Andrew Sullivan asks what happens when religion is removed as a source of ultimate meaning, and concludes that too many people are turning to illiberal politics to fill the resulting void. He notes that, “We have the cult of Trump on the right, a demigod who, among his worshippers, can do no wrong…and we have the cult of social justice on the left, a religion whose followers show the same zeal as any born-again Evangelical. They are filling the void that Christianity once owned, without any of the wisdom and culture and restraint that Christianity once provided.”

In “From Astrology to Cult Politics—the Many Ways We Try (and Fail) to Replace Religion”, Clay Routledge begins by noting that, “the degree to which humans perceive their lives as meaningful correlates reliably with observable measures of psychological and physical health. A sense of meaning also helps people mobilize toward the pursuit of their goals (persistence), and serves to protect them from the negative effects of stress and trauma (resilience). In short, people who view their lives as full of meaning are more likely to thrive than those who don’t.”

While Sullivan sees more people turning to illiberal politics for meaning, Routledge notes that the “decline of traditional religion has been accompanied by a rise in a diverse range of supernatural, paranormal and related beliefs”, including “transhumanism, whose adherents dream of transcending mortality through medicine and bioengineering.”

Finally, in their new report “Where Americans Find Meaning in Life”, Pew Research reports that when Americans were asked what provides them with a sense of meaning, 69% said family, 34% said career, 23% money, 20% spirituality and faith, 19% friends, and 19% activities and hobbies. When asked to name the single most important source of meaning in their lives, 40% said family, and 20% said their religious faith. The two next highest replies were “caring for pets” at 6%, and being outdoors, at 5%.

Finally, two articles this month were both widely read, and seemed to capture something important about the current state of our society.

In “The West at an Impasse” (New York Times 19Dec18), Ross Douthat claims that, “when meritocracy loses credibility and legitimacy, the result is a political impasse. The official elite becomes too arrogant and self‑deceiving and unpopular to govern effectively, but the populist alternative is… disorganized, ill‑led, susceptible to snake‑oil salesmen and vulnerable to manipulation by factions within the upper class.” He notes that, “different versions of this impasse exist in Britain, France, and the United States.” As he sums it up, we are confronted today with “a governing class that has vaulting self‑confidence and dwindling credibility, locked in stalemate with populist movements that are easily grifted upon and offer more grievances than plans.”

One of the most compelling (and painful) portraits of the anxieties and fears confronting middle and upper middle class Americans today is Austin Murphy’s “I Used to Write for Sports Illustrated. Now I Deliver Packages for Amazon” (Atlantic Monthly, 25Dec18). It did not surprise me at all that this was one of the most read articles in the Atlantic, which is a left of center publication.

“How to Save Globalization” by Scheve and Slaughter, in Foreign Affairs

“In a series of recent studies we conducted in communities across the United States, we heard the same sentiments from a range of respondents in a variety of circumstances: anxiety and anger about globalization and change that was not related to income alone but more broadly concerned whether Americans can still secure meaningful roles in their families and communities…

“But because the problem goes beyond income inequality, the usual policy solutions are inadequate. It is not enough simply to redistribute income to financially compensate the losers from globalization. Addressing the backlash requires giving all Americans the tools they need to carve out the sense of security and purpose they have lost amid change. That can happen only if the United States completely transforms the way it invests in and builds human capital.”

Unfortunately, defining specific policy changes to implement this strategy, and then successfully implementing them (and overcoming the dogged defense of the status quo by many interest groups, like K12 school districts and higher education institutions) is the hard part…

“Strategies for Left Behind Places”, by Hendrickson et al, published by Brookings

Clearly, the policy community in the United States is focused on, and struggling with, how to meet the economic and social challenges that in 2016 gave rise to the Trump presidency.

“The 2016 election revealed a dramatic gap between two Americas—one based in large, diverse, thriving metropolitan regions; the other found in more homogeneous small towns and rural areas struggling under the weight of economic stagnation and social decline.”

“This gap between two American geographies came as a shock to many observers….the lion’s share of growth in the last decade has been concentrated—with relatively few exceptions—in a small cohort of urban hubs while the rest of the country has drifted or lost ground…”

“Public policy has done little to halt or even mitigate this trend. Indeed, taken as a whole, the policies of recent decades have almost certainly exacerbated it…Now, the political impacts of these sins of omission and commission are clear.”

“As the country has pulled apart economically is also pulling apart politically…Political parties that once brought voters together across regional lines now focus their appeal on the particular interests and outlook of a single kind of region. In the United States and throughout the West, parties with their principal support in metropolitan areas do battle with parties based in less densely populated areas. …Making matters even worse, these political divisions mirror widening differences between diverse, liberal, internationally minded cities and more homogenous, conservative, and locally focused small towns and rural areas, spawning a new culture war.”

“The crystallization of these dueling political identities has shaken the liberal democratic order in the United States and beyond. Throughout the West, parties representing those who feel that they have lost out stand opposed to parties representing those who have benefitted from the economic and cultural changes of recent decades.”

“Work, Skills, Community: Restoring Opportunity for the Working Class”, by Opportunity America, cosponsored by the American Enterprise Institute and the Brookings Institution

Opportunity America is an important joint effort by the United States leading center left and center right Think Tanks to better understand and devise policy solution for better addressing the worsening inequality that has arguably been a critical root cause of many of the nation’s social and political conflicts.

“Looking back, it’s clear that we as a nation should have seen the problem coming: the symptoms were stark and alarming.”

Still, for all the attention of the past two years, it isn’t clear that anyone, left or right, understands working-class America. Who makes up the working class today? What exactly is it that ails them? Why, unlike in so many other parts of America, do their fortunes seem to be declining rather than improving? And what can government—state or federal government— do to remedy the collapse in blue-collar communities?”

The authors’ definition of “working class” is: people with at least a high school diploma but less than a four-year college degree living in households between the 20th and 50th income percentiles—roughly $30,000 to $69,000 a year for a household with two adults and one child.”

The report notes that, “We as a nation can and must renew the social contract that once bound us—the promise that if you worked hard and played by the rules, you could get ahead…That promise is no longer true for much of the working class, and we must restore it.”

The report concludes with a long list of policy initiatives that would not worsen the current US federal budget deficit

“Male Earnings, Marriageable Men, And Nonmarital Fertility: Evidence From The Fracking Boom” , by Kearney and Wilson

SURPRISE

“There has been a well-documented retreat from marriage among less educated individuals in the U.S. and non-marital childbearing has become the norm among young mothers and mothers with low levels of education. One hypothesis is that the declining economic position of men in these populations is at least partially responsible for these trends. That leads to the reverse hypothesis that an increase in potential earnings of less-educated men would correspondingly lead to an increase in marriage and a reduction in non-marital births.”

“To investigate this possibility, we empirically exploit the positive economic shock associated with localized “fracking booms” throughout the U.S. in recent decades. We confirm that these localized fracking booms led to increased wages for non-college-educated men…Analysis reveals that in response to local-area fracking production, both marital and non-marital births increase and there is no evidence of an increase in marriage rates. The pattern of results is consistent with positive income effects on births, but no associated increase in marriage.”

In sum, it’s not just the economy. Social values have also changed, perhaps permanently.

“How Britain Can Heal Its Ailing Social; Care System”, by Camilla Cavendish in the Financial Times, 10Nov18

A critical question as populations age is the relationship between, and funding of, not just medical and hospital care, but also what is known as “social care”, including assisted living and skilled nursing facilities, and services that enable elderly people to remain in their own homes. When the latter fail, the result is usually an increase in hospitalizations, which reduces the number of beds available for acute care patients.

“Every rich country is grappling with how to look after a growing number of elderly people with increasingly complex conditions. It’s no coincidence that two of the nations that are aging most rapidly — Germany and Japan— have pioneered the most comprehensive responses Germany’s mandatory long-term care insurance system was introduced in 1995, when its care system looked about as frayed as England’s does now. The scheme was crafted to ensure that everyone got something, no one got something for nothing and everyone put something in. Workers pay a compulsory levy. Employers contribute half; and the retired pay in full. The government did a deal with voters: you pay more in, but you get more out. The burden is shared and the risk is pooled…”

“Japan introduced a similar system in 2000…The German and Japanese systems are not perfect. Some Germans gripe about care staff but they like the option of using the fund to pay their own relatives to provide care. In Japan, people feel strongly that they don’t want to rely on the state if they can possibly help it and they do worry that the taxes to maintain the fund keep rising as the population ages. But they enjoy the security.”

“No one in those two countries is living with the crippling uncertainty or the sense of unfairness that haunts us here [in the UK].” Or in the US...

“Are Millennials Different?” by Kurz et al from the Federal Reserve Bank of New York

SURPRISE

History shows that it is rarely the working class that drives disruptive political change; rather the risk of such change peaks at times when the middle class finds its reality far below its expectations.

For some time there have been questions about the extent to which this applies to Millennials, with some claims that they have different desires that previous generations – e.g., regarding a preference for renting city apartments versus owning homes in a suburb. This study dispels some of those beliefs, and makes clear that many aspiring middle class millennials have found their consumption desires frustrated. This further suggests that his frustration will inevitably find political expression, for example in stronger support for progressive and populist solutions, and in particular to growing calls for a national solution to the problem of high health care cost in the United States.

The authors note that, “relative to members of earlier generations, millennials are more racially diverse, more educated, and more likely to have deferred marriage; these comparisons are continuations of longer-run trends in the population. Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth. For debt, millennials hold levels similar to those of Generation X and more than those of the baby boomers. Conditional on their age and other factors [including, critically, their higher levels of student debt], millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.”

“Liberal Parents, Radical Children”, by David Brooks, New York Times, 26Nov18

“When I meet someone who runs an organization in a blue state, I often ask: Do you have a generation gap where you work? The answer — whether the person leads a college, a nonprofit, a tech company, an entertainment company or a publication — is generally the same: Yes, and it’s massive.”

“The managers at these places, who are generally 35 and above, are liberals. They vote Democratic and cheer on all the proper causes of the left. But some of the people under 35 are not liberals, but rather are militant progressives. The older people in the organization often have nicknames for the younger set: the Resistance, Al Jazeera, the revolutionaries. The young militants are the ones who stage the protests if someone does something deemed wrong…”

“On the left, the big difference is over meliorism. The older liberals are appalled by President Trump, alarmed by global warming, disgusted by widening income inequality, and so on, but are more likely to believe the structures of society are basically sound. You can make change by voting for the right candidates and passing the right laws. You can change individual minds through education and debate.”

“The militants are more likely to believe that the system itself is rotten and needs to be torn down. We live in a rape culture, with systemic racism and systems of oppression inextricably tied to our institutions. We live in a capitalist society, a neoliberal system of exploitation. A person’s ideology is determined by his or her status in the power structure.”

“Two great belief systems are clashing here. The older liberals tend to be individualistic and meritocratic. A citizen’s job is to be activist, compassionate and egalitarian. Boomers generally think they earned their success through effort and talent.”

“The younger militants tend to have been influenced by the cultural Marxism that is now the lingua franca in the elite academy. Group identity is what matters. Society is a clash of oppressed and oppressor groups. People who are successful usually got that way through some form of group privilege and a legacy of oppression…”

“I guess the final irony is this: Liberal educated boomers have hogged the spotlight since Woodstock. But now events are driven by the oldsters who fuel Trump and the young wokesters who drive the left. The boomer finally got the top jobs, but feel weak and beleaguered.”

“The Opportunity Atlas Mapping the Childhood Roots of Social Mobility”, by Chetty et al

“Economic mobility varies dramatically across the US. This paper introduces a new interactive mapping tool that traces the roots of outcomes such as poverty and incarceration back to the neighbourhoods in which children grew up. Among the insights the data reveal are that children who grow up a few miles apart in families with comparable incomes have very different life outcomes, and that moving in early childhood to a neighbourhood with better outcomes can increase a child’s income by several thousands of dollars later in life.”

The website tool can be found here:
https://www.opportunityatlas.org

“What explains America’s mysterious baby bust?”, in The Economist, 24Nov18

Japan and more recently Europe have been experiencing dropping fertility rates for years. American was long thought to be immune to this decline. However, three years of data have now raised serious questions about that belief.“

America’s total fertility rate, which can be thought of as the number of children the average woman will bear, has fallen from 2.12 to 1.77. It is now almost exactly the same as England’s rate, and well below that of France.”

The Economist also notes falls in fertility rates among Hispanics and city dwellers as key drivers of national level results.

This has serious consequences. For any given level of target economic growth, a lower domestic birthrate means that either higher immigration or higher productivity growth will be required to achieve it.

“Be Afraid? Yes, But Don’t Overdo It” by Adam Garfinkle in The American Interest 29Oct18

Garfinkle provides a succinct summary of seven important sources of rising individual and group uncertainty and fear that are driving other social and political phenomena:

“A technology tsunami that is arguably unprecedented in nature and scope” that is “producing an accelerating cascade of eruptive discontinuities in social life affecting work and the economy more broadly, family structures, and political life.”

“Our politics have grown polarized and shrill, our military wins battles but not wars, and our political elites – of both major parties – have consistently made promises that fell short.”

“Terrorism has rattled us, starting with 9/11 but continuing through lesser forms of murder and mayhem ever since.”

“Broken families produce insecure children; kids who feel emotionally betrayed by those who are supposed to love and protect them often grow into insecure adults, replicating insecurity by often failing to form secure loving bonds.”

“Mean World Syndrome – research has demonstrated that people who watch a lot of commercial television and Hollywood shock flicks come to believe that violence, perversion, and plain evil are as plentiful in real life as they are in mass entertainment fiction.”

“There has been, arguably, too much immigration too fast into the United States to assimilate in a culture whose swoon in collective self-confidence has made local elites feel guilty about demanding assimilation.”

“Finally, since fear is ubiquitous, every civilization has devised ways to manage it. That has typically been accomplished in the context of religious culture. Dangers are easier to cope with when they are seen as something other than completely random and meaningless, when they are integrated into a shared narrative that makes a certain kind of emotional sense. When traditional religious templates erode, as they have in most Western societies in recent times, the frameworks that control the psycho-social impact of fear erode with them. They have been replaced, in a manner of speaking, with the pseudo-religion of the therapeutic, whose obsession with absolute security has only served to make nearly everyone more anxious, not less.”

“Well-Being in Metrics and Policy” by Graham, et al

The paper reviews cumulative research findings on the correlates of self-reported well-being.

Findings about China were particularly interesting: “China is perhaps the most successful example of rapid growth and poverty reduction in modern history. GDP per capita increased fourfold between 1990 and 2005, and life expectancy increased from 67 to 73.5 years. Yet life satisfaction fell dramatically, and suicide increased, reaching one of the highest rates in the world. The unhappiest cohorts were educated workers in the private sector, who benefited from the growing economy but suffered from long working hours and lack of sleep and leisure time.”

This is yet another indicator of underlying domestic fragility in China.

“Associations between screen time and lower psychological well-being among children and adolescents: Evidence from a population-based study”, by Twenge and Campbell

This indicator confirms other research that has reached similar conclusions. However, this research is based on a larger sample set than previous studies.

“After 1 hour/day of use, more hours of daily screen time were associated with lower psychological wellbeing, including less curiosity, lower self-control, more distractibility, more difficulty making friends, less emotional stability, being more difficult to care for, and inability to finish tasks. Among 14- to 17-year-olds, high users of screens (7+ h/day vs. low users of 1 h/day) were more than twice as likely to ever have been diagnosed with depression, ever diagnosed with anxiety, treated by a mental health professional (RR 2.22, CI 1.62, 3.03) or have taken medication for a psychological or behavioral issue in the last 12 months.

“Moderate use of screens (4 h/day) was also associated with lower psychological well-being.”

“Non-users and low users of screens generally did not differ in well-being. Associations between screen time and lower psychological well-being were larger among adolescents than younger children.”

Going forward, the individual and social consequences of intensive personal technology use seem poised to become a much more contentious issue.

“California Feudalism: The Squeeze on the Middle Class” by Kotkin and Toplansky from the Center for Demographics and Policy at Chapman University

Kotkin and Toplansky have provided a very thought provoking analysis of the consequences of a particular mix of progressive policies in California.

“California has now taken on an increasingly feudal cast, with a small but growing group of the ultra-rich, a diminishing middle class, and a large, rising segment of the population that is in or near poverty. Indeed, amidst some of the greatest accumulations of wealth in history, California has emerged as a leader in poverty, particularly among its minority and immigrant populations and throughout its interior…

“Yet our state leaders, and too many of our business and civic leaders, are convinced that California, far from being something of a cautionary tale, offers a great “role model” for the rest of the country. The state’s drift towards an ever more unequal, feudalized society, characterized by concentrated property ownership, persistent poverty levels, and demographic stagnation does not seem to concern our Sacramento leadership.”

The authors describe how this situation has developed in California, and what could alter its present course.

“The Genetics of University Success” by Smith-Woolley et al, in Scientific Reports, 18Oct18

See also, “What Does Genetic Research Tell Us About Equal Opportunity and Meritocracy?” by Robert Plomin in Quillette on 15Oct18

SURPRISE.

These studies are further indicators of the rapidly accumulating evidence that the impact of genetics on a wide range of life outcomes is significantly larger than previously thought. In the short term, these findings are very much at odds with both conservative and progressive ideologies, and are thus almost certain to be a source of rising conflict. Over the medium term, these genetic findings will also have substantial policy implications in many areas, not the least of which are education, health, and risk management.

“The difference in earnings between high school and university graduates is estimated at $1 million over the course of the lifetime. However, the difference in earnings varies by the type of university attended, as well as achievement at university.”

“Furthermore, the benefits associated with obtaining a university education extend beyond earnings, to include better health and wellbeing, higher rates of employment and even increased life expectancy.”

“Despite this, little is known about the causes and correlates of differences in university-level outcomes, including entrance into university, achievement at university and the quality of university attended. University success, which includes enrolment in and achievement at university, as well as quality of the university, have all been linked to later earnings, health and wellbeing. However, little is known about the causes and correlates of differences in university-level outcomes. Capitalizing on both quantitative and molecular genetic data, we perform the first genetically sensitive investigation of university success with a UK-representative sample of 3,000 genotyped individuals and 3,000 twin pairs.”

“Twin analyses indicate substantial additive genetic influence on university entrance exam achievement (57%), university enrolment (51%), university quality (57%) and university achievement (46%). We find that environmental effects tend to be non-shared, although the shared environment is substantial for university enrolment. Furthermore, using multivariate twin analysis, we show moderate to high genetic correlations between university success variables (0.27–0.76). Analyses using DNA alone also support genetic influence on university success. Indeed, a genome-wide polygenic score, derived from a 2016 genome-wide association study of years of education, predicts up to 5% of the variance in each university success variable”.
“These findings suggest young adults select and modify their educational experiences in part based on their genetic propensities and highlight the potential for DNA-based predictions of real-world outcomes, which will continue to increase in predictive power.”

“Beyond Four Walls: A New Era of Life at Home” by Ikea

This report is another indicator of the extent of the social transformation underway in many societies, and in particular suggests further erosion of the family and home as fundamental social units.

“When we talk about what makes a home, we talk about four dimensions that are shared by everyone: space, place, relationships, and things. Five core emotional needs are connected with the home: privacy, security, comfort, ownership, and belonging. Belonging is the need least satisfied by our residential homes. Today, one in three people around the world say there are places they feel more at home than where they live.”

“Experimental Evidence for Tipping Points in Social Convention” by Centola et al.

The authors study “an artificial system of social conventions in which human subjects interact to establish a new coordination equilibrium. The findings provide direct empirical demonstration
of the existence of a tipping point in the dynamics of changing social conventions.

When minority groups reached the critical mass—that is, the critical group size for initiating social change—they were consistently able to overturn the established behavior…Our theoretical predictions for the size of the critical mass were determined by two parameters: individual memory length (M) and population size (N)…When participants have shorter memories, the size of the critical mass is smaller. Even under the assumption
that people have very long memories, the predicted critical mass size remains well below 50% of the population,
indicating that critical mass dynamics may be possible even in systems with long histories.

Variations in population size were explored computationally were not found to significantly affect the predicted critical mass size.

Over all trials, populations with a critical mass equal to or greater than 25% of the population were significantly more likely to overturn the dominant convention than populations with a committed minority below 25%.”

This paper helps to refine our mental model the drivers of sharp changes in sentiment, expectations, and other forms of conventional wisdom in a range of areas, from economics to social values to politics.

An interesting question to ponder is whether the current environment of information overload, constant stimulation, and incessant demands for our limited attention has effectively shortened our memories, and thus reduced the percentage of people in a population who can trigger substantial change.

“How Persistent are the Effects of Sentiment Shocks?” by Benhabib et al from the Federal Reserve Bank of San Francisco.

The economic effects of negative sentiment shocks can persist for up to five years.

“What to Do About Africa’s Dangerous Baby Boom” in the Economist.

“THE 21st century, in one way at least, will be African. In 1990 sub-Saharan Africa accounted for 16% of the world’s births. Because African birth rates are so much higher than elsewhere, the proportion has risen to 27% and is expected to hit 37% in 2050. About a decade later, more babies will be born in sub-Saharan Africa than in the whole of Asia, including India and China. These projections by the UN, if correct, are astounding (see article). There is good reason for the world to worry about Africa’s baby boom…The real problem is that too many babies sap economic development and make it harder to lift Africans out of poverty. In the world as a whole, the dependency ratio —the share of people under the age of 20 or older than 64, who are provided for by working-age people—stands at 74:100. In sub-Saharan Africa it is a staggering 129:100.

In stark contrast with most of the world, notably Asia, the number of extremely poor Africans is rising, in part because the highest birth rates are in the poorest parts of the continent.

This has clear implications for future economic migrant flows, and potentially for the emergence of more failed states in Africa, and thus refugee flows.

“Workers with Low levels of Education Still Haven’t Recovered for the Great Recession”, by the Brookings Institution

“Why Lots of Americans are Sour on the Economy” by Noah Smith, on Bloomberg

Clear implications for the potential social and political implications of another severe economic downturn, such as increased polarization and susceptibility to more extreme political solutions.

Applies to more countries than just the US – e.g., Jeremy Corbyn in the UK, and the rise of more extreme parties on the continent, which is matched by the lack of strong policy prescriptions and attractive political leaders in the center.

Smith notes that many members of the middle and upper middle class are increasingly frustrated, which magnifies the potential for social, political, and economic change.

“The Collapse of Civilizations” by Malcolm Wiener, published by the Belfer Center at Harvard’s Kennedy School

The author reviews the historical record and finds five recurring (and often interrelated) causes of civilizational collapse: (1) major episodes of climate change; (2) crisis-induced mass migrations; (3) pandemics; (4) dramatic advances in methods of warfare and transport; and (5) lack of societal resilience and the madness, incompetence, and ignorance of rulers.