Those Disappearing Consumers…

A recent article in The Week considered the phenomenon of the retail apocalypse–the sudden loss of thousands of jobs in retailing.

Employment in general merchandise stores has fallen by almost 90,000 jobs since October. Just like manufacturing jobs before them, brick-and-mortar retail jobs are finally falling to the twin forces of technology and globalization — this time in the form of Amazon and e-commerce. Or so goes the narrative.

And what, exactly, is inaccurate about that narrative? According to the article–which goes into considerable detail–it omits a key cause. The story being told “vastly oversimplifies what’s going on with retail.” And it completely misses a significant cause of the collapse: the loss of a once-reliable mass of consumers and the effect of that loss on retail stores.

Things get interesting when we pick apart what we mean by “retail.” Employment in department stores has bled 500,000 jobs since 200118 times the number of jobs the coal industry lost in the same period.

 

 

Recognizable brands like Macy’s and Sears are looking shaky: the former plans to close 68 stores and lay off 10,000 workers, while the latter’s business model has been rotting for years and may collapse altogether. Malls across the country — long the home of these department store chains — are dying and emptying out.

As the article points out, department stores and malls depend upon a sufficient number of middle-income consumers. And those consumers need to live pretty much everywhere.

If you’re going to have a mall with department stores in every decent-sized town, you need middle-class consumers in every decent-sized town, too.

That’s precisely the sort of consumer we’ve lost. For the last few decades, middle- and lower-class wages have stagnated, while the portion of Americans high up the income ladder provide more and more of all consumer spending. The national economy has also gone through a remarkable geographic shift, in which pretty much all new job and business creation occurs in major cities.

The article concedes the significant role of the internet in our shifting consumption patterns, but insists that the major culprit is the loss of good-paying jobs–some as a result of trade, but far more as a result of automation and misguided economic policies that have abandoned the mid-century focus on full employment–a focus that drove up wages.

The culprit–the reason those middle-income consumers are vanishing–turns out to be low wages.

In the past few years, we’ve learned that resistance to raising the minimum wage was  based on erroneous assumptions, mostly the argument that a higher wage would lead to fewer jobs. But job creation has actually improved in places that have raised the minimum wage.

What the old argument missed suddenly seems so obvious: When workers have more money to spend, they buy stuff. They consume. When they can barely make ends meet, they don’t go to the mall. They don’t eat out. They don’t browse at the department store.

There’s no doubt that the nature of retailing is changing. The Internet, Amazon’s same or next day delivery, the convenience of online shopping–all present a very real challenge to conventional retail trade. That challenge will require adjustment and innovation.

But first, you need customers with money to spend.

“Those People”

Most of us have been in conversations that included someone’s dismissive reference to “those people.”

When I was growing up in Anderson, Indiana (with exactly 30 Jewish families in the whole town), the term was often applied to Jews. It was also–and remains–a favored euphemism when race is being discussed by people who don’t like to think of themselves as racists; they just substitute “those people” for the “n” word when discussing the “lower orders.”

“Those people” is also a term frequently applied to the growing number of poor Americans. And it is particularly harmful when used in the context of economic policy. “Those people” wouldn’t need health care if they didn’t eat junk foods and fail to exercise; “those people” wouldn’t need social welfare programs if they weren’t lazy; any benefits provided to “those people” must be closely monitored, because they will use food stamps for candy and/or booze…”Those people” are irresponsible.

Facts and evidence are inconvenient things. Most poor people, according to overwhelming evidence, work 40 or more hours a week. Most recipients of food stamps use them to buy food. And there is growing evidence that needy folks are anything but irresponsible when they are given cash in lieu of benefit programs that are strictly “monitored.”

A recent study conducted by the Roosevelt Institute describes that evidence.

Providing cash directly to individuals has often been met with criticism, suspicion, and fear: the thinking goes that people who need financial assistance are not to be trusted, as their financial position reflects a moral failing rather than a societal one. These objections to cash transfer programs are rooted more in myth than empirical evidence. As the debate about a universal basic income gains prominence, it is important to set the record straight about the behavioral effects of unconditional cash assistance.

In this evidence review, we explore how unconditional cash transfers affected the behavior of recipients in three major natural experiments. While the amounts dispersed and time periods were distinct in each experiment, each provided money without set conditions and without a means test. We synthesize data for the following outcomes: consumption; labor force participation (employment, hours worked, and earnings); education; health; and other social outcomes, such as marriage or fertility choices. Each of these programs shares different components of a universal basic income (UBI), a cash transfer that everyone within a geographic/political territory receives on a regular basis with no conditions on a long-term basis. By understanding the effects of these programs, we can generate answers to how an unconditional cash transfer program might affect recipients in the future.

We may well be transitioning to an economy that simply cannot provide jobs for those who want them. Automation, as I’ve previously noted, is rapidly making many jobs obsolete. Changes in the way we purchase items–especially consumer goods– is inexorably reducing the number of workers in retail occupations.

The transformation of the economic landscape is accelerating, and it is a huge challenge–one which we ignore at our peril.

A UBI–a guaranteed basic income– may or may not be a viable approach to the dislocations to come. But continuing to sneer at the behavior of “those people” and dismissing emerging evidence of the utility of new social welfare proposals is clearly less viable.

A lot of the people who use the phrase aren’t all that far from becoming one of “those people” themselves.

 

What Do THEY Know??

The Trump Administration’s war on expertise continues to expand.

Jeff Sessions (memorably identified by a Facebook friend as one of those Confederate monuments that should be removed) ignores 40+ years of criminal justice research and intensifies the drug war.  Betsy DeVos gives a feminine finger to the mountains of data rebutting her insistence that vouchers improve educational outcomes. Scott Pruitt spits on the 98% of climate scientists who agree that climate change is (a) real; (b) accelerating and (c) caused by human activity, especially fossil fuel use.

There is a reason that terms like “Know Nothings,” “Keystone Kops,” and “Gang that Can’t Shoot Straight” are being retrieved from past usage and applied to this sorry band of incompetents and theocrats.

When it comes to economic policy, Trump’s alternate reality isn’t limited to his belief that he invented the term “priming the pump.” As a column from the Washington Post recently reported,

President Trump’s administration says his tax cut will pay for itself. It turns out it’s really hard to find an economist who agrees.

The University of Chicago’s Booth School of Business regularly polls economists on controversial questions. In a survey the school published last week on Trump’s tax plans, only two out of the 37 economists that responded said that the cuts would stimulate the economy enough to cancel out the effect on total tax revenue.

Those two economists now both say they made a mistake, and that they misunderstood the question.

So there is not a single economist in the Chicago poll who agrees with the President that his proposed tax cuts would pay for themselves.

Not that the opinion of 39 out of 39 experts has a chance in hell of influencing a Commander-in-Chief whose residence in a very bizarre alternate universe becomes more apparent every day.

In Trump World–a world shared to varying degrees by the members of his spectacularly ignorant and incompetent cabinet–Trump knows more than those elitists who actually studied their subject matter. Sissies read books and conduct empirical research; superior beings (i.e. rich guys) surround themselves with lackeys and listen to their guts.

What did Stephen Colbert call it? Oh yes–Truthiness.

To use a term dear to the heart of our linguistically-challenged President, SAD.

It’s the Constitution’s Fault!

As I watch the unfolding train wreck that is the Trump Administration, and talk with friends and colleagues, it’s increasingly clear that most of us are more mystified and appalled than angry. (Not that we aren’t angry…)

How, we ask each other, could anyone be so ignorant of the most basic rules that govern our society? How could someone whose background was entertainment and whose entire focus was ratings be so oblivious to massively negative public opinion? How can anyone get to the ripe old age of 70 without even a shred of self-awareness?

And of course, the recurring question: why would anyone vote for this ignorant buffoon? It’s not like his abundant deficits weren’t obvious during the campaign.

I don’t have answers to most of those questions, but I think a recent article in the Independent, a British newspaper, sheds some light on Trump’s path to constitutional crisis.

The article was one of many that attempted to evaluate Trump’s first 100 days in office; it reported on an interview with the President’s favorite source of “news.” (Note quotation marks.)

Donald Trump has blamed the US constitution for the problems he has encountered during his first 100 days in office.

In an interview with Fox News to mark the milestone, the Republican called the system of checks and balances on power “archaic”.

“It’s a very rough system,” he said. “It’s an archaic system … It’s really a bad thing for the country.”

Lest we shrug this off as just another “open mouth, let stuff come out” incident in Trump’s stream-of-(semi)consciousness mode of utterances, I would simply point out that everything he has done in office has been consistent with contempt for, or ignorance of, America’s charter, and his unwillingness to be bound by the rule of law–indeed, his clear lack of comprehension of what “rule of law” is or means.

I think I’m going to add a codicil to that question about American voters. Why would anyone vote for a man who quite clearly does not understand or even pretend to value the legal premises of the country he was proposing to lead–a man who is unwilling to give even lip service to the U.S. Constitution?

To date, I am unaware of any Republican criticism of Trump’s comment.

What happened to all the posturing bloviators who constantly profess their undying devotion to a constitution they clearly don’t understand? Why aren’t they registering shock and concern at the President’s airy dismissal of America’s founding document?

What happened to all those pompous assholes who whip a small copy of the Constitution out of their pockets at the slightest provocation? Where are the members of the NRA’s Church of the Second Amendment? Where are all the pious frauds who constantly promote their  ahistorical version of the First Amendment’s protection of religious liberty?

Surely they are all appalled. Where are they?

And a more pressing question: why are Congressional Republicans continuing to enable and defend a man who not only dishonors the Constitution by word and deed, but also poses an unmistakable threat to American democratic institutions at home and the country’s stature abroad?

Can you imagine their response if Obama had said or done any of these things?

Of course, Trump’s white. (Okay, orange, but close….)

Jeff Sessions, Drugs and the Late Lamented GOP

Jeff Sessions is a poster boy for the contemporary GOP–a perfect example of its takeover by racists, misogynists and anti-intellectuals, and its retreat from (and misapplication of) its philosophical roots.

Nowhere is the intellectual and moral corruption Sessions represents clearer than in his enthusiasm for re-instituting the War on Drugs–a counterproductive effort that even the rank and file of the GOP has largely abandoned.

Whether Sessions’ determination to go after marijuana, as well as harder drugs, is a result of his inability or unwillingness to understand the research, or is prompted by investments in the private prison industry, as has been speculated, is beside the point. In either case, Sessions is an example of the division–the abyss– between thoughtful adherents of principled conservatism and the ideologues who appeal to a far less thoughtful Republican base.

Nothing makes those contemporary Republican divisions clearer than a recent issue of Policy Analysis, a publication of the Cato Institute. Whether one agrees with its positions or not, Cato is indisputably home to legitimate scholars who make principled and consistent arguments for a libertarian point of view that used to be widely accepted–albeit never dominant–within the GOP.

Unlike today’s Republicans, Cato does not confine its application of libertarianism to economic issues and the boardroom while cheerfully endorsing theocratic control of personal behaviors.

The Institute’s current research adds to the great weight of evidence against Session-like drug policy, as the introduction makes clear:

Proponents of drug prohibition claim that such policies reduce drug-related crime, decrease drug-related disease and overdose, and are an effective means of disrupting and dismantling organized criminal enterprises.

We analyze the theoretical underpinnings of these claims, using tools and insights from economics, and explore the economics of prohibition and the veracity of proponent claims by analyzing data on overdose deaths, crime, and cartels. Moreover, we offer additional insights through an analysis of U.S. international drug policy utilizing data from U.S. drug policy in Afghanistan. While others have examined the effect of prohibition on domestic outcomes, few have asked how these programs impact foreign policy outcomes.

We conclude that prohibition is not only ineffective, but counterproductive, at achieving the goals of policymakers both domestically and abroad. Given the insights from economics and the available data, we find that the domestic War on Drugs has contributed to an increase in drug overdoses and fostered and sustained the creation of powerful drug cartels. Internationally, we find that prohibition not only fails in its own right, but also actively undermines the goals of the Global War on Terror.

Right now, all eyes are on the harm being done to our nation by the embarrassing buffoon in the Oval Office and his cabinet of theocrats and incompetents. That harm is real. But an even greater and more long-term harm comes from the collapse of a once-respectable political party capable of articulating a serious, intellectually  challenging conservative philosophy.

Much as partisans like to believe it, no political party has all the answers to the dilemmas of modern society. Without the advantage of adult conversation and debate, without the ability to consider and evaluate contending good-faith approaches to our common problems, America can’t move forward.

As long as the GOP remains dominated by clones of Jeff Sessions — in thrall to a rigid ideology, bound to partisan litmus tests, and convinced that genuine consideration of probative evidence is tantamount to betrayal– we all lose.