Wednesday, December 21, 2016

America is the New France

We used to make fun of the French and all their socialist protectionist laws and lack of ethics in foreign policy.  But now it looks like the USA will be the new France, check out the comparison below:


Situation
France, Flag, Map, French Flag ...French Government Action
USA Flag, 6/2014 US Flag, ...Old US Government Action
... Trump | by Gage SkidmoreNew Trump US Government Action
A plant is being shut down and the production moved to a lower cost country
Government pressure on the company to keep the plant open.  Regulations and laws make it difficult to close.
No action, let the market take its course.
Government pressure on the company to keep the plant open.  Regulations and laws make it difficult to close.
A dictator is suppressing his people but also battling terrorists
Support the dictator.  Send weapons if needed.
Pressure on dictator to give up power.  Offer help to combat terrorists.
Support the dictator.  Send weapons if needed.
A rebellion is threatening US or French companies in a foreign country.
Send in the foreign legion to restore order.
Do nothing
Send in the special forces and/or arm the government.
A country invades another country and takes territory.
If it is good for France or has no impact, it is OK.
Condemnation, maybe armed intervention like the first gulf war.
If it is good for the USA or has no impact, then it is OK.
Foreign country makes higher quality lower cost products than domestic, eg Japanese cars
Raise tariffs or other barriers to the foreign products.
No action, let the market take its course.
Raise tariffs or other barriers to the foreign products.
Comedian makes fun of President
File a lawsuit.
Ignore the insult.
File a lawsuit.

Wednesday, December 14, 2016

Why are Americans Unhappy with America?

Lots of articles being written about how the average American worker has not advanced in terms of pay over the last 10 years or so.  The Economic Policy Institute statistics below show that pay has barely risen over 15 years, especially at the lowest income levels (10th to 50th percentile).

TABLE 2

Hourly wages by wage percentile, 2000–2015 (2015 dollars)

Wage by percentileWage ratio
10th20th30th40th50th60th70th80th90th95th50th/10th95th/50th95th/10th
2000$8.68$10.69$12.49$14.44$16.84$19.92$23.63$28.70$37.49$47.801.92.85.5
2007$8.90$10.80$12.61$14.79$17.27$20.49$24.32$30.00$40.19$52.081.93.05.9
2014$8.63$10.10$12.10$14.48$16.92$19.95$24.10$30.03$40.89$53.202.03.16.2
2015$8.92$10.22$12.35$14.80$17.21$20.18$24.82$30.89$42.57$56.601.93.36.3
Annualized percent changeWage ratio change
2000–20150.2%-0.3%-0.1%0.2%0.1%0.1%0.3%0.5%0.9%1.1%0.00.50.8
2000–20070.4%0.1%0.1%0.3%0.4%0.4%0.4%0.6%1.0%1.2%0.00.20.3
2007–20150.0%-0.7%-0.3%0.0%0.0%-0.2%0.3%0.4%0.7%1.0%0.00.30.5
2014–20153.3%1.2%2.0%2.2%1.7%1.2%3.0%2.9%4.1%6.4%


Meanwhile, Real GDP has grown from 12.6 Trillion dollars in 2000 to 16.4 trillion.  That is an increase of 1.7% per year or 30% over the 15 year period.

What is happening?  Wages adjusted for inflation did not increase or decreased for the bottom half of workers between 2000 and 2015 but GDP increased by 30%.  Who got the 30%??

The answer seems to be that the top 10% of earners got the money, or most of it.  See the table above, workers in the top 10% of income got about 1% a year in increases or 16% of the money.  This seems to be born out by the CBO statistics showing that the rich in the USA are getting richer and the poor are getting poorer, see the chart below.


So it seems that half of Americans are not sharing in the prosperity of the wealthiest and most prosperous country in the world, which might explain why they are unhappy and voting for a misogynistic blowhard billionaire who says he will "Make America Great Again".

Unfortunately, Trump's plan of cutting taxes for the wealthy and deregulation are most likely to benefit the rich and will not trickle down to those workers in the bottom half of the income distribution.