Many Americas

Recently I was up in Detroit, gassing up the car at a service station at an exit just off one of the freeways, when I noticed this provocative sign on a tire business across the street.

Commerce doesn’t lie.  The business owner obviously thinks that theft of wheels from parked cars is a sufficiently widespread problem that advertising about the ability to help victims of the thefts will generate additional sales and revenue, and you have to assume that there’s a factual basis for that belief.  I thought:  “Really?  Wheels on cars parked on public streets are being stolen, and police haven’t caught the perpetrators of such brazen criminal activity?”  The sign, and the real message it was sending, made me uneasy.

The sign was just one more bit of tangible evidence that we don’t live in one America any more, if we ever really did.  Instead, there are lots of different Americas, dealing with lots of different issues.  Where I live, we thankfully don’t have to worry about coming out to our car and finding all of the wheels taken by wheel theft gangs.  In this particular neighborhood of Detroit, however, there is obviously a different reality.

This shouldn’t be a revelation, of course.  Read the news and you quickly understand, intellectually, that there are pockets of the country where the heroin epidemic is raging and leaving families devastated, where the local economy has been bottomed out and there are no jobs to be had, and where the relations between police and the local populace has been poisoned, and there are parts of America where people are concerned because housing values are too high, where companies are concerned because they just can’t hire enough high-tech workers, and where people are lining up to spend a thousand dollars on a new cell phone.  And don’t get me started about how different places like Hollywood, or Washington, D.C., seem to be from the rest of the country.

And yet, when you live in your own world, it’s easy to view everything from your own personal experience, and wonder why people could possibly have different perspectives on the issues of the day.  The next time I feel that kind of self-absorbed conceit, I’ll think about that unsettling sign in Detroit and try to remember that there are a lot of people in this country dealing with lots of issues and problems that I’m not even aware of — much less affected by.  America is a diverse place not only in terms of its population and demographics, but also in terms of personal experience.  We shouldn’t forget that.

 

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Spreading Out The Federal Effect

Where are the richest counties in the United States, as measured by median household income?  You might think one of the counties in Silicon Valley, or one of the high-end areas in Connecticut, or around Boston, or the home to bustling computer, software, and internet companies around Seattle . . . but you would be wrong.

According to recently released census data, the top four counties in the United States for median household income are all located in Virginia and Maryland — and all just happen to be suburbs of Washington, D.C.  In each of those counties, the median household income doubles the national average.  Moreover, nine of the top 20 highest household income counties in America are suburbs of our nation’s capital.

washington-capitol-building-money-cash-620x348This shouldn’t really surprise us.  The federal government is by far the biggest spender in the country, and there are lots of people — lobbyists, consultants, media analysts, messaging advisors, and countless others — who make a lot of money advising other people and groups about how to get their share of the money gushing out of the federal spigot.  And because Congress and the vast majority of the federal agencies are headquartered in the D.C. area, of course the money flowing in to try to line groups up for a share of the money flowing out is going to be concentrated in the D.C. area, too.

This is probably one reason why, in this past election, there was a clear disconnect between the political punditry and the rest of the country.  People in D.C. looked around, sipped their $10 caramel lattes after their hot yoga sessions, saw housing values going through the roof, and thought things were going pretty well in the U.S. of A.  They were blissfully unaware of what it was like in the parts of the country between the coasts — and the anger that many people apparently felt for the fat cats in Washington who were gleefully lining their pockets while the rest of the country struggled.

What to do about the income disparity?  How about considering whether some federal departments and agencies should move out of the D.C. metroplex, to be closer to the folks that they are regulating?  Is there any reason, for example, that the Department of Agriculture shouldn’t be headquartered in Iowa or Nebraska, the Department of Energy shouldn’t be headquartered in Texas or Louisiana, and the Department of Labor shouldn’t be headquartered in, say, Cleveland or Chicago?  And why can’t the Department of Housing and Urban Development, the Department of Health and Human Services, the Department of Education, and the Department of Commerce be moved to some other locations away from the D.C. Beltway?

The census data makes clear that the federal government has a significant impact on wealth production.  The U.S. is a big country; why not take steps to spread that income effect around a little?  Maybe doing so would also bring the regulators closer to the people they’re affecting, and at the same time help to minimize the “inside the Beltway” mentality that appears to be an increasing problem in the country.

Boom And Bust

The New York Times is reporting that the market for high-end real estate in Manhattan may have finally hit the wall.  Developers who are targeting buyers willing to pay more than $10 million for condominiums and apartments — and in some cases more than $100 million — are having to cut prices and repackage their products.

promo-01Even with the changes to meet falling demand in the market, the prices being asked for high-end New York City real estate are beyond the comprehension of everyday people.  For example, a skyscraper at 432 Park Avenue was asking $78 million to $85 million for full-floor apartments; now the units have been divided and are being priced for around $40 million.  Some poor schmucks who are trying to sell properties they bought during the boom are even listing their units for less than the purchase price they paid.  One seller has listed a three-bedroom apartment they bought for $31.67 million in 2014 for the bargain-basement price of $29.95 million.  (Incidentally, isn’t it heart-warming to see that, even at these astronomical numbers, the notion still holds that pricing just a bit less than the next whole number might cause some potential buyers to bite?  Whether it’s $299,500 or $29.95 million, the rules apparently don’t change.)

Why has the market for ultra high-end properties topped out?  Some developers blame uncertainties created by Brexit, some cite Chinese restrictions on cash leaving the country, some point to lower oil prices curbing spending by the sheiks and sultans, and some note that the U.S. government has started to pay attention to people paying cash — cash! — for these pleasure domes.  Note that most of these reasons implicitly acknowledge that a lot of the buyers for Manhattan glitter palaces come from overseas.  Others involved in the business identify more conventional reasons:  real-estate developers have saturated what was always a small market to begin with, there’s little to differentiate the properties, and pricing just hit a ceiling.  In short, the laws of supply and demand still hold, and there are only so many jet-setters in the world who can comfortably drop between $50 and $100 million on living space they probably only use once in a while.

Fortunately for those of us worried about the financial health of Manhattan, the Times reports that the real estate market in lower price ranges remains robust, with lots of competition for homes selling for less than $3 million.  Less than $3 million?  In Manhattan?  What does that get you — a one-bedroom efficiency on the lower East side?

The “Affluenza” Kid

If you’ve read or heard about the “affluenza” kid, you’re probably angry.

affluenza17n-7-webThe kid’s name is Ethan Couch.  When he was 16, he went driving while drunk and struck and killed four pedestrians near Fort Worth, Texas.  Prosecutors wanted him to spend 20 years in prison.  Instead, his case was heard in juvenile court, where an expert testified and Couch’s attorney argued that Couch suffered from “affluenza” — the purported inability to tell right from wrong because he’d been spoiled by wealthy parents who never punished him for misbehaving.  (“Affluenza” is not a psychological condition recognized by the Diagnostic and Statistical Manual of Mental Disorders, although psychologists have no doubt that chronic spoiling of kids influences their behavior.)

To the outrage of the local community and the relatives of those killed in the drunk driving accident, the juvenile court judge did not sentence Couch to any jail time.  Instead, he got 10 years probation and had to do a stint at a rehab facility.  The lack of substantial consequences caused some people to argue about the injustice of our justice system — where the rich, who can hire the best lawyers and experts, can perversely argue that their own wealth can render their kids not culpable when they commit heinous crimes and kill multiple people.

But the “affluenza kid” did it again.  Ethan Couch allegedly drank alcohol at a party, in violation of his probation, and was being investigated by authorities.  Rather than face the consequences, Couch and his mom, Tonya Couch, fled to Mexico, where Couch died his hair and they hung out at the resort town of Puerto Vallarta.  But — in a nice little “affluenza” touch — authorities say that before they skipped town they had a going-away party for Couch and his friends.

Now Couch and his Mom have been caught, thanks in part to information provided by friends of the family, so we get to see some dead-eyed perp pictures of Couch and his dyed chin whiskers.  Couch’s Dad, who runs a successful business, apparently was one of the people who cooperated with authorities and is not suspected of being involved in his wife and kid’s decision to flee the U.S.

Unfortunately, Ethan Couch probably isn’t going to deal with much in the way of consequences for this misconduct, either.  Because Couch is still subject to the juvenile court system, and will be until he turns 19 in April, prosecutors say he is likely to face no more than 120 days in detention — after which he would be released, subject to another period of probation.   Tonya Couch, on the other hand, is going to be charged with hindering an arrest, which carries a sentence of two to 10 years.

It’s an infuriating and sordid story of a spoiled brat who apparently suffers no guilt from killing four people, was too stupid to recognize that he was lucky enough to get a second chance and blew it, and likely still won’t face punishment that is commensurate with his crime, and an enabling mother who probably spoiled the kid in the first place.

I don’t think it’s likely that Ethan Couch will become a productive member of society, and I hope he one day will be held accountable for his crimes.  As for his mother — who is supposed to be the adult in this situation — I hope they throw the book at her and get the maximum sentence, because somebody needs to actually feel the long arm of the law for making authorities engage in an international manhunt.  Who knows?  If Ethan Couch and his “affluenza” are incapable of distinguishing right from wrong, maybe he’ll at least feel some remorse for sending Mommy Dearest to the Big House.

Kowtowing To The Rich And Famous

Nobody likes traveling through the LAX airport, one of the many airports serving southern California.  It’s crowded and hectic, jammed with luggage-toting people heading east and west and crammed with the fast food outlets and franchise shops you find in every airport.

So, nobody likes traveling through LAX.  But you know who really doesn’t like LAX?  Movie stars.  Star athletes.  The random celebrities who have somehow become famous in America despite their apparent lack of any discernible talent or known accomplishment.  They hate rubbing elbows with the hoi polloi, being recognized despite their ever-present sunglasses, being photographed by paparazzi and the masses alike, and being pestered by fans for an autograph.  God forbid that they should have to hobnob, unprotected, with the common folks who buy the tickets to their movies or games or watch their reality TV shows.

paris-hilton-walking-through-lax-airportSo what do you do if you’re on the Board of Airport Commissioners that controls LAX and you learn of the evident dissatisfaction of the rich and famous with LAX?  Tell them, sorry, but they’ll just have to suck it up and endure an occasional interaction with the plebes when the celebs pass through a facility built largely with public funds?

Nah!  You vote to authorize the construction of a private lounge for the glitterati in a converted cargo facility, where the celebrities and sports stars and one-percenters can use a private parking lot and access area, sip wine and eat brie in posh, ultra-private suites, and be whisked off to their boarding areas in private shuttles if they’re unfortunate enough to be traveling by a commercial flight.  Of course, they’ll pay for the privilege of being shielded from the smelly, bustling peasants, and the operators of LAX will earn additional millions in revenue from the fees paid by the VIPs and the company that will run their special little enclave.

It’s just another example of the trend toward kowtowing to the rich and famous and allowing them, for a price, to be removed from any of the unseemly disruption that is part and parcel of everyday life for the common man.  They can pay to skip lines at amusement parks, pay to bypass the standard security screening at airports, watch movies at private screenings, sit at private boxes at sporting events, avoid buying their own groceries, hire private assistants to handle their daily affairs, and otherwise avoid the hassles that are all-too-familiar to the rest of us.

There’s nothing to be done about it, because money talks, and airport commissions and sports franchises and restaurants and other businesses are perfectly happy to honor the celebrity desire for separation . . . for a hefty price.  But just remember, the next time a celebrity tells you who to vote for, or offers their confident, all-knowing assessment of how to cure the country’s or the world’s ills — the speaker is someone who probably has only a hazy understanding of the realities of everyday life and who would rather shell out thousands of dollars than walk through an airport concourse with the likes of you and me.

So why in the world would we listen to what they have to say?

You Can Never Be Too Rich, Or Too Thin

If you’re one of those “keeping up with the Joneses” competitive types, you may as well just give it up.  Some Russian megabillionaire named Andrey Melnichenko is spending $450 million on the world’s largest sailing yacht.

One of our friends once observed that if you’re measuring your self-worth by comparing your bankroll to others, you’re doomed to failure.  There’s always going to be someone, like Mr. Melnichenko, whose financial statement will  to blow you out of the water.  And in fact Mr. Melnichenko, whose yacht will weigh 14,224 tons, is worth about $9 billion — an unimaginably huge sum to most of us — but he’s only ranked 97th on the Forbes list of world billionaires.  (He’s also married to a “supermodel” unknown to me, by the way.)

So how do you complete with somebody like Mr. M?  How about in the creativity department?  He’s named his massive craft “Sailing Yacht A.”

The Impoverished Millennials

For years, Americans have always been fervently optimistic about the financial course of their families.  Parents and grandparents were confident that the generations to come would be wealthier and better educated than they were — and for much of American history their optimism was justified by the reality.

Is that true any longer, with the so-called Millennial Generations, which consists of adults under age 35?  A troubling article in the Wall Street Journal indicates that there are disturbing signs that the Millennials are instead on track for lives of financial difficulty.

The article looks at the savings rates of Americans by generation through an analysis of consumer finances and financial accounts.  It finds that, after a brief blip of increased savings during the Great Recession, Millennials now aren’t saving much of anything.  In fact, their generational savings rate is a negative 2% — which means many of them are burning through the savings they accumulated previously, or spending their inheritances.  They are less likely to have any investments or investment accounts, which means they have no cushion to fall back on if they lose their jobs or hit another financial bump in the road.

In short, forget about saving to make a down payment on a house — these young people are hanging on by their fingernails, hoping to make their credit card and student loan payments, and eating into their seed corn savings in order to do so.

Some of this predicament clearly is the product of bad planning and poor personal financial management.  If you’re barely making your credit card payments, maybe you should skip that expensive “destination” bachelorette party with your college pals.  But some of it is larger forces — like a weak job market, student loan debt that is far greater than that carried by prior generations, and flat wage and salary growth.  The fear is that the Millennials will become trapped and never be able to break out of a cycle of debt that leaves them living hand to mouth for most of their adult lives and limits their abilities to buy homes, start families, and ultimately to retire.

It’s not a pretty picture, and we can only begin to perceive what the ripple effects of an impoverished Millennial generation might be for our country and its economy.  Perhaps we should stop worrying so much about senior citizens and start thinking about how to create more opportunities for the younger people who must carry the country forward.