Mall And Republicans And Terrorism, Oh My!

I really don't want to pick on John Kasich. In a Republican field that resembles March Madness more than a presidential primary, he stands out rather positively. Unlike Donald Trump, he is not a bloviating rabble rouser appealing to the lesser angels of our nature.  He has a resume that qualifies him to be president; Ben Carson does not. He isn't running because his father and brother held the office and now it's his turn. He also pays attention to detail; therefore, he will not utter "Oops" in the middle of a debate even if he doesn't wear the Clark Kent glasses Rick Perry suddenly favors.

Further, any Republican could have said the following, but since Kasich said it, he will have to own it.

.@JohnKasich on ISIS threat: "Are we going to be safe to go to the mall?" LIVE on @cspan.org http://t.co/wfjTm4Tm5l pic.twitter.com/uaxJ9IwX6b

— Emmanuel Touhey (@netouhey) July 21, 2015

First, it's not clear if shopping has become a Republican sacrament or their cure for terrorism. After all, George W. Bush recommended Americans undertake it shortly after 9/11. What should be indisputable is the fact that the United States has more important reasons to respond to ISIS than allowing Americans to continue to buy overpriced items at Hot Topic and eat at mediocre food courts.

More importantly, the statement reflects a Republican disconnect with the American middle class. People don't go to the mall as as they used to, and terrorism doesn't seem to be a reason as this US News article reports, "More than two dozen malls have shuttered their doors since 2010, according to Green Street Advisors real estate research company, and another 60 are particularly at risk of closure." The article continues, 

“If you’re a middle-class mall, and those are your anchors, what are you going to do?” asks Davidowitz, noting that "dollar stores" and stand-alone discount retailers like Walmart and T.J. Maxx have attracted traditional mall-goers who are now looking for cheaper alternatives. “The combination of e-commerce, what’s happening to the middle class and everything else is really bad news for the malls. It’s a tough business.”

Evidence of a “permanent shift in consumer behavior” is also mounting, says Neely Tamminga, a managing director and research analyst at Piper Jaffray & Co. investment bank and asset management firm.

“We talked to a thousand women on a panel every six months to gauge their spending behavior,” says Tamminga, who is involved in an ongoing research project through Piper Jaffray that began in the fall of 2013. “No matter how we ask the question, we are seeing an overall shift away from frequently going to the mall.”

Americans, in general, are not going to the mall because they are forced to look for cheaper alternatives or enjoy the convenience and affordability of e-commerce. Linking the mall to ISIS prevents any discussion about substantive ways to help the economy or contain terrorism.

Chart Of Day: American Equivalent Of Bread And Circuses Edition

Via an Andrew Sullivan post aptly titled "You Can't Feed Your Family With A New TV"

Life's good for those who don't need to go to college, never get sick,
don't need to repair the used vehicle they bought, and never eat

The Middle Class Ain't What It Used To Be

This William Galston Wall Street Journal editorial makes two key points about America's middle class. First, members of the middle class may be doing better than their parents did, but the middle class is shrinking:

Four decades later, the middle class share had declined by 10 percentage points to just 51%, while the upper class share increased by six points and the lower class by four. The U.S. income distribution is still a bell curve, but the left and right tails are fatter and the hump in the middle is lower.

This means that the middle class is less economically and socially dominant than it once was. Relatively speaking, more Americans are enjoying affluent lives at the same time that more are just barely making it (if at all). But that doesn't mean the middle class got poorer. During those 40 years, Pew calculates, the median income of middle-class households (adjusted for inflation) grew by 34%. The median grew for the others as well—by 43% for upper-income households and 29% for those with incomes below the middle class. This isn't surprising, because the median income for all U.S. households rose by 32% during that period, from $44,845 in 1970 to $59,127 in 2010. Indeed, 86% of middle-class Americans, and 84% of all Americans, enjoy higher incomes than their parents did.

Second, the current state of events may have some positive elements, but the recession devastated the middle class. Further, Galston points out that the efforts the middle class has undertaken to survive are unsustainable in the post-recession era:

We can argue about how squeezed the middle class was in the decades between the end of the postwar expansion and the onset of the Great Recession. But two things are clear: The coping mechanisms the middle class employed in those decades (fewer children, more hours worked, more borrowing against home equity) are played out, and it will take middle-class households years to recover from the recession-induced blow to their income and wealth. If we cannot restore a vigorously growing economy whose fruits are widely shared, the struggles of the middle class will persist, and our democratic distemper will deepen.

Left unsaid is an acknowledment that no one from the right, the left, or the center has new idea about how to "restore a vigorously growing economy whose fruits are widely shared," so the middle class will continue to struggle.

The Financial Cost Of Fear

Steve Clemons boils down the numbers:

Secondly, if one takes the approximate amount the United States was paying to "feel safe" on September 10, 2001 and account for inflationary growth since, the cumulative amount in just defense spending since is roughly $2.7 trillion. That doesn't include other domestic expenditures for Homeland Security which would make the collective bill even higher.

He acknowledges that comparing defense spending to other spending is an apples to oranges comparison, but it seems clear that costs of feeling safe have dangerous consequences:

To put the comparison in context, $2.7 trillion in economic activity in the private sector equates to approximately 6 million jobs sustained over the period between the 9/11 terror attacks and today.

Big, costly, unpaid-for wars are undermining the economic health of the country -- and are robbing growth and opportunity from the future to pay for these military objectives today.

It is a good debate to have whether the invasions of Iraq and the ongoing 'ownership' of the Afghanistan conflict have been worth the investment or not -- but not tending the economic health of America's core has been a strategic failure of enormous magnitude.

Six million jobs lost, $2.7 trillion borrowed, and lost civil liberties are high price for wars that have had a less than desirable result.

People And Prices: Following The People Equals Following The Money

The Atlantic is doing a series of articles developing the thesis that prices are people.  So far, the authors have been silent on the question of whether it's better to view people as prices or as corporations.

Stephen J. Rose points out that most people spend less on necessities than their parents or grandparents did.

Advances in technology and education have created massive productivity gains, which have made things cheaper and easier to obtain. Consider necessities like food and clothing, which gobbled up 42% of our spending in 1947. Six decades later—even in the face of exorbitant spending on frivolities like high-end coffee and designer clothes—food and clothing accounted for only 16% of spending.

Derek Thompson ups the ante a bit arguing that people are price destiny.

There is more to prices than employment figures, of course. Productivity and technology matter. Scarcity matters. Demand matters. But labor is such an important cost that at the broadest level, it can appear almost determinative.

Across the economy we can see that items that require fewer and fewer American workers per completion (think: socks) get cheaper, while services that can't find similar ways to replace American workers (think: health care, education, government) don't get cheaper at all. In fact, they often get more expensive.

In a second article, Thompson makes another comparison

Human-work costs money, and the more human-workers you need to complete a task, the harder it is to make that task cheap. Hand-stitched bags are more expensive than robot-stitched bags. If you own a closet full of purses, you're way ahead of me on this observation.

 Thompson also adds a little nuance to his earlier argument about the labor intensive service sector.

Yep, prices are people. "Baked into the price of everything we buy is the rising cost of advertising, accounting, legal services, insurance, real estate, consulting, and the like -- jobs performed by the high-wage workers of our modern economy," Rose elaborates.

From the stuff getting expensive the fastest, like hospital stays and elite college tuition, to the prices that are falling the fastest relative to wages, like television and freeze-dried prepared foods, we are paying for people -- just as we always have. The big idea here is that prices follow workers.

In short, accountants, lawyers, real estate agents, and insurance agents drive up the cost of everything. So do teachers and nurses.  Yet, no one seems to express outrage about the costs the other professions add to goods and services. On the other hand, a local woman getting a haircut next to me has no compunction uttering "those damned teachers have too much already."

I doubt that the other professions that Thompson lists add more to the economy than educators.  I'm not an economist, but as a simple thought experiment, I suggest imagining the country with 50% fewer real estate agents or 50% fewer insurance agents.  I'm sure there would be a negative impact, but I suspect the damage would be limited.  Now imagine the country with 50% fewer teachers and professors.  I expect that the economic impact would be cataclysmic, especially if one takes in the long term impacts.

Thompson seems to want to take his series in another direction, he writes,

As the economy leans more heavily on certain low-productivity sectors like health care to soak up workers from a growing population and recovering economy, health care will almost certainly become more expensive. But what if we solve the health care cost crisis? This is the trend we're going to pick up in the next installment of the Prices Are People series: If we make sectors like health care and education cheaper, where will the people go? 

I'm pretty sure the answer won't be real estate or insurance.