In Our Own Personal Silos

The Brown Bear sent me this interesting article from The Economist.  The article is, on its surface, a rumination about Ohio Governor John Kasich and his new book, Two Paths:  America Divided or United, but the interesting stuff in the article wasn’t so much about the book as it was about our country.  It’s one of those articles that leave you nodding a bit, as you find that the conclusions drawn square with your own experience.

The gist of the underlying sociological message in the article is this:  Americans have become more and more confined and channeled in their interaction (or, more accurately, lack of interaction) with other Americans.  It isn’t just that Americans spend more time in individualized pursuits, such as watching TV, tapping away on their smart phones, working out, or surfing the internet — it’s that their entire lives are being designed, shaped, and structured to limit their exposure to people with different backgrounds, interests, and views.  In short, more and more people are living in their own personal silos.

silosOne element of this phenomenon is that Americans now are much less likely to participate in joint activities — be it bowling leagues, fraternal organizations, churches, or community groups — than used to be the case.  Alexis de Tocqueville noted, in the classic Democracy in America published way back in the 1830s, that Americans were unusually prone to forming associations and joining groups.  That remained true for decades; Grandpa Neal, for example, bowled in the Masonic League in Akron for more than 60 years and was a member of the Masons, the Odd Fellows, and a host of other civic and fraternal groups.  How many people do you know these days who are willing to spend their weekday evenings and weekends away from their homes and participating in such activities?  I don’t know many — and I include myself in that group.

But the change is even deeper than that.  The Economist article linked above notes that Americans now tend to live in distinct enclaves with people who share their political views and conditions.  One indicator of this is voting patterns in elections.  In the 1976 presidential election, some 27% of Americans lived in “landslide counties” that Jimmy Carter either won or lost by at least 20 percentage points.  In the 2004, 48 percent of the counties were “landslide counties,” and in 2016, fully 60 percent of the counties in America — nearly two thirds — voted for Donald Trump or Hillary Clinton by more than 20 percentage points.

What does this all mean?  It suggests that many Americans now tend not to even engage with people with different perspectives.  They don’t see them when they go home at night, they don’t talk to them, and they have no significant understanding of their thoughts, concerns, . . . or lives.  When people are so cloistered, looking only at the kind of websites that mirror their views and interacting only with people who share those views, there will inevitably be a great divide that will become increasingly difficult to bridge.  How do you get people who live in separate worlds, who don’t play softball or attend club meetings or participate in any interactive communal activities together, to understand and appreciate where people of different views are coming from, and why they hold those views in the first place?  Facile social media memes and tweets that depict people of opposing views as dolts, racists, sluggards, communists, or any of the other names that have become so common don’t seem to be working very well, do they?

This, I think, is one of the big-picture issues that we need to address as we work to get America back on track — and like many big-picture issues, it’s not really being discussed or addressed by anyone, because these days we focus on the small things.  I’m not saying, of course, that government should forcibly relocate people to achieve some kind of political or economic balance, or that government should focus on providing tax incentives to encourage people to join the local Moose lodge.  Government didn’t need to do that in colonial America or in the America of Grandpa Neal’s day, and it shouldn’t be needed now.  Somehow, though, Americans need to find a way to start actually talking to, and interacting with, each other again.

Here We Go Again

You’d think that, after the crash of the housing market, the failure of banks, the stock market plunge, and the Great Recession of 2008-2009 that still is affecting the economy in many parts of the country, modern Americans would have learned a painful but lasting lesson about taking on too much debt.

It looks like you’d be wrong.

The Federal Reserve Bank of New York report on household debt says that Americans are collectively approaching the record level of debt that we had accumulated in 2008, and probably will break through that record this year.  According to the report, by the end of 2016 our collective household debt, which includes everything from mortgages to credit cards to student loans to car loans, had risen to $12.58 trillion, which is just below the 2008 record of $12.68 trillion.  Even worse, last year our debt load increased by a whopping $460 billion, which is the largest increase in a decade.  Mortgage loan balances are now $8.48 trillion, which accounts for about 67 percent of the total debt load.  And the total amount of debt increased in every category being measured.

The experts say there’s reason to think that 2017 is different, because there are fewer delinquencies being reported now — about half as many as was the case in 2008 — and fewer consumer bankruptcies, too.  Who knows?  Maybe the banks that are extending all of that credit are a lot more judicious in their loan decisions than they were in 2006, 2007, and 2008, and maybe Americans have become much more capable of juggling enormous amounts of personal debt.

And maybe we’ll all live happily ever after in the Land of Narn.

It’s a good illustration of how people have changed.  Anyone who lived through the Great Depression was permanently scarred by the experience; they became forever frugal, suspicious of any kind of debt, and relentlessly focused on building up their savings and paying off that mortgage so they and their friends could hold a “burn the mortgage” party.  The lessons they learned during the Great Depression were still motivating their decisions decades later.

The “Great Recession” clearly hasn’t had the same kind of lasting impact.  It seems that modern Americans just never learn.

The Dow Hits 20,000

Yesterday the Dow Jones Industrial Average reached a new high, passing the 20,000 level.  The NASDAQ index and the Standard & Poor’s 500 index also are at all-time highs.

gomez3It’s an interesting milestone, and one that is very pleasing to the millions of Americans who have money invested in stocks or mutual funds.  Investment in the stock market — especially through managed mutual funds — is one way the average American can put money away for retirement and (we hope) earn a decent return on our savings.  Over its history the Dow has been pretty dependable in that regard, overcoming periodic drops and crashes and showing significant long-term increases both in absolute terms and on an inflation-adjusted basis.  That’s why, if you’re taking a long-term view, financial planners will tell you that the stock market is the best place to put your money.

These days, of course, there aren’t many alternatives for the average folks.  The interest rates on CDs are a pittance, and the returns offered by municipal bonds and corporate bonds that used to be the bedrock of retirement planning aren’t very attractive, either.  Investing in stocks in “emerging markets” seems pretty risky, too.  Those are all forces that help to explain why the stock market has been on a prolonged bull market run that has seen the Dow triple in value since it hit its low point in the dark days of March 2009.

Unfortunately, some Americans who might have shared in the Dow’s run-up got out of the market right as it hit its low point.  Gallup has determined that, in 2016, only 52 percent of Americans adults have investments in the stock market, down from the all-time high of 65 percent in 2007.  Obviously, many of those people bolted when the market crashed in 2008 and 2009 and they’ve never come back — perhaps because they are too afraid of another crash, or perhaps because they were so hurt economically by the Great Recession that they simply aren’t in a position to invest.  Those who rode out the sub-prime storm, kept their heads, and kept their investments benefited.  It’s a classic example of why anyone who invests in the stock market can’t try to time the market and has to take a long-term view that follows a long-term plan.

20,000 is an artificial milestone, of course, and we’ll no doubt see downturns in the future — but the stock market remains an important way for the average people to build their retirements and plan for the future.  For those who are in the market, 20,000 is a welcome number indeed.

‘Twas The Day After Christmas

It’s the day after Christmas — which for some beleaguered people in the package delivery business is probably about as important as Christmas itself.  This year online retailing once again set a record, which means the package delivery guys have been busting their behinds for weeks and probably are still hustling to deal with the last-minute orders.  As I reflected on the plight of these uniformed soldiers of the modern economy, the poetic muse once more took hold:

The Day After Christmas
abc_ntl_fedex_121210_wg

‘Twas the day after Christmas, and all through the land

Fed Ex and UPS remained fully manned

They’ve set a record for deliveries this year

But the last-minute orders have yet to appear

Oh, Amazon!  Oh, Apple!  Oh, Pajamagram!

Your specials and discounts created a jam

The packages and boxes were stacked to the ceiling

The onslaught of orders left deliverers reeling

And because so many waited ’til the last minute

The Christmas Crush?  They’re still in it!

The delivery guys are trying their best

But it’ll take time before they can give it a rest

So if your order hasn’t yet come to your door

Don’t take it out on the delivery corps!

And by the way, I’ll be doing whatever is necessary to avoid going within a one-mile radius of any shopping mall today.

Back And Forth On Globalization

One key theme is Donald Trump’s presidential campaign could be summarized — using one of Trump’s favorite adjectives — as “disastrous trade deals.”

Basically, Trump argues that, for decades, American leaders have been taken to the cleaners by foreign counterparts and have negotiated trade pacts that have cost countless American jobs, as cheap goods manufactured overseas have flooded the United States while companies have moved their operations to countries where products can be built more cheaply.  It’s a theme that Trump sounds whenever he comes to the industrial Midwest and can stand in front of an abandoned factory.

30501Today the Washington Post has an article that adds a bit of nuance to the globalization debate.  It’s about a Chinese billionaire named Cho Tak Wong who has bought a former GM factory in Moraine, Ohio to manufacture automotive glass.  Moraine is one of those “rust belt” communities that have been devastated by the departure of good-paying, steady blue collar jobs that used to be a staple of the Ohio economy, and local officials are hoping the factory will help to reverse that trend.  The Post reports that the purchase is part of a shift in globalization fortunes, as wealthy Chinese businessmen look to parlay their profits in China into purchases of American businesses.

Nothing is ever as simple as a presidential candidate presents it, and trade certainly falls into that category.  And blaming “trade deals” doesn’t recognize the impact that other decisions — like laws imposing increasing wage and benefit obligations on employers, or the ongoing pressure from the American consumer for products at cheaper costs — have had on the exodus of American jobs to places where labor and benefit costs are substantially cheaper.  You can argue the merits of “globalization,” but the reality is that we are in a global economy whether we like it or not.  It will be interesting to see whether what’s happening in Moraine, and elsewhere, will ultimately shift the debate.

The Fed On Facebook

Recently the Board of Governors of the Federal Reserve System — let’s call them the Fed — decided it would be a good idea to have a Facebook page.  You know . . . Facebook, that aging social media site where people post selfies and pictures of babies and weddings and political memes that don’t change anyone’s mind.  Yes, that Facebook.

So why did the Fed decide it needed a Facebook page?  It’s not entirely clear.  After all, the Fed has functioned for decades without having much of a public face.  It’s the grey, boring group behind currency and interest rate decisions, all of which are made by unelected people who are completely unknown to 99.99% of us.  So why Facebook?  Who knows?  Maybe the Fed, like other aging Facebookers, just wanted to get a little attention.

fed20reactions203You can see the Fed’s Facebook page here.  It’s a pretty hilarious page, actually, because the Fed decided to allow people to comment, and every post by the Fed features venomous comments from people who think the Fed has ruined American money, manipulated our currency, and should be audited to determine its fundamental solvency.  The Fed isn’t responding to the comments, so a bland post about one of the Fed’s “key functions” provokes an avalanche of over-the-top haymakers from the Fed haters.  It’s probably the most tonally disproportionate Facebook page in history, and even the American Banker, which is normally pretty sympathetic to the Fed, has declared the Fed’s Facebook page a full-fledged disaster.

It’s hard to imagine that a federal entity would think it’s wise to have a Facebook page, and it make you wonder how much it costs the Fed (that is, we taxpayers) to pay the schlub who writes the puff pieces that then get ripped to shreds by internet trolls who are happy to have a new target for their venom.  I can’t believe anybody at the Fed, or any other federal agency, honestly believes that people are going to learn about the agency and what they do by going to Facebook, as opposed to the agency’s own website or, God forbid, an actual book.  How many people go to Facebook expecting to get the unvarnished truth?   Does anyone?

Maybe there’s a positive in this catastrophic combination of faceless but powerful government entity and social media:  maybe the Fed will decide not to proceed with its impending dips into Tumblr, Ello, Hyper, Shots, and Bebo.

The Restaurant Canary

We’ve all heard about the proverbial canary in the coal mine.  In the days before air quality monitoring technology was developed, canaries were put into the mine shafts because they were especially sensitive to dust and gas in the air.  If you were a coal miner and you noticed that the canary wasn’t chirping any more, you knew it was time to grab your pick and hurry back up to the surface.

101815-cheese-foto4Is the restaurant sector the canary for the modern American economy?  Some economists think so.  They reach the logical inference — one that I’ve seen substantiated by personal experience in the past — that people are more likely to eat out when they’ve got cash on hand, and less likely to eat out when they know they’ve got to tighten their belts.  Going out to eat is one of the first “luxury” expenditures to hit the cutting room floor when times get lean because people can save money by making their own food and eating at home.

If restaurants are, in fact, a leading economic indicator, the canary may be indicating that tough times are ahead for the American economy.  Restaurant and bar sales have fallen in three of the last six months, and analysts have downgraded the stocks in the chain restaurants that are staples of the strip malls found at every crossroads in America — places like Chipotle, Panera Bread, and Cheesecake Factory.  One analyst says that the performance of the restaurant sector looks remarkably like what it was in 2000 and again in 2007, right before the last recessions hit.  Analysts also are noting that, in addition to declining consumer spending, restaurants are facing business and profitability challenges due to changes in overtime regulations and increases in the minimum wage.

The U.S. economy is so sprawling and multi-faceted, it’s hard to pick one area as the true canary.  But if the restaurant sector is the right choice, it may be time for the American consumer to start heading for the open air.