395 (13 November 2019)

Welcome!  The articles below caught my attention this week.  What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  Article titles preceded by [SR] require a subscription.

(4 November 2019)The Talk Market: How Stories and Psychology Shape Our Economic LivesHidden Brain on NPR

********This 37-minute podcast has Hidden Brain host Shankar Vedantam interviewing Nobel Laureate Robert J. Shiller in the context of the publication of Narrative Economics. Shiller relates “the role stories play in our economic lives—not just the purchases we make as individuals, but the fate of entire economic systems.”  Shiller makes the case for the power of narratives, especially as spread through person-to-person and via the media. 

            An example of Shiller’s use of narrative is provided in “How Lying and Mistrust Could Hurt the American EconomyThe New York Times.  Shiller notes that “There is substantial evidence that if an atmosphere filled with lies or presumed lies spreads throughout a society, the effect might reduce economic growth rates.  Years of incremental damage would result in a substantially lower level of economic well-being than would otherwise have existed.  The central reason is basic: An atmosphere generated by a steady flow and variety of lies is like a dark cloud over the facts.  Businesses can’t plan effectively when they don’t know who or what can be trusted.”

            What then can we make out of the recent book by Andrew Marantz Antisocial: Online Extremists, Techno-Utopians, and the Hijacking of the American Conversation?  Terry Gross of “Fresh Air” interviewed Marantz who touched upon many types of deception used to great effect during the 2016 presidential election.  It is clear that the people Marantz interviewed and wrote about have mastered the skill of how to disseminate disinformation.  Presumably their activities act to create mistrust of institutions and one another.  Gross’s 36-minute interview is sobering.

(7 November 2019) Taxing the Ultra-Wealthy Forces Democrats to Get CreativeBloomberg.com

********This article discusses an array of considerations relating to the wealth taxes being touted by Democratic presidential candidates, from constitutionality to avoidability.  Bloomberg’s Bottom Line is “The very wealthy may never have to sell the majority of their assets, which makes them harder to tax.  One way to change that: Put a levy on their unrealized gains.”  The article “What if America introduces a wealth tax?The Economist explores constitutionality, avoidability  and other considerations, like wealth valuation, in its exploration of the wealth tax.  As it notes, “In 1990, 12 rich countries levied . . . [wealth taxes].  By 2017 only four did: France, Switzerland, Spain and Norway.  France has since mostly scrapped its levy, fearing that it made the country unfriendly to investors.”  The Washington Post argues, however, that the proposed wealth taxes for the U.S. are different than those that failed in Europe.  To learn more, read “Wealth taxes often failed in Europe.  They wouldn’t here.”  All this makes it clear that it isn’t enough to discuss the notion of ‘wealth tax’—its precise form matters.

            Estate taxes are one way for states—or the federal government—to increase tax receipts from the very wealthy.  Of course, at the state level, the very wealthy have the ability to move from states with estate taxes to states without estate taxes (and they do).  However, a recent study showed that “estate taxes raised more money for states that had them than they lost in income tax revenue when billionaires left.”  These points and more are discussed in “Estate Tax Can Pay Off for States, Even if the Superrich FleeThe New York Times.

(8 November 2019)A Candy Land-Inspired Journey Through the Books to Boost Your CareerBloomberg.com

********A colorful tour of nine books that have valuable things to say about various stages of a career.  Two books that stood out for me were Pivot, by Jenny Blake, which appears under the heading Career-Killing Chasm, and Age-Proof, by Jean Chatzky and Michael Roizen, which appears under the heading Peaceful Peak.  Many of these books are classic contributions.  Blake was the former career guru at Google.  She notes that “If change is the only constant, then it’s time to get better at it.”

(9 November 2019) [SR]A $45,000 Loan for a $27,000 Ride: More Borrowers Are Going Underwater on Car LoansThe Wall Street Journal

——–“Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value.  this phenomenon—referred to as negative equity, or being underwater—can leave car owners trapped.  some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago . . . Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans.  Five years ago the average was about $4,000.  Rising car prices have exacerbated an affordability gap that is increasingly getting filled with auto debt.  Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can last seven years or longer.”

********This article is a reminder that the next recession, whether great or not, will likely manifest in an area other than housing.  This is a bit like the adage “generals always fight the last war.”  What should we be looking at?  Auto indebtedness?  Or?

(11 November 2019)A Surprising Finding on Paid Leave: ‘This Is Not the Way We Teach This’The New York Times

——–“One of the biggest arguments for paid leave for new parents has been an economic one: Research has repeatedly shown that women with paid time off after childbirth are more likely to keep working.  But a new study, the largest to be done in the United States, found the opposite.  In California, which in 2004 became the first state to offer paid family leave, new mothers who took it that year ended up working less and earning less a decade later.  They averaged $24,000 in cumulative lost wages, it found.”

********The paper title, with Abstract, can be found here.  The article goes on to point out that “Keeping women in the labor force isn’t the only goal of paid leave policies.  Another is enabling parents to spend time with your children—and on that, the paper indicates that California’s policy was a success.  Children benefit from breastfeeding, bonding, consistent caregiving and hands-on parental involvement—things that are easier for parents to provide with paid leave.” 

(12 November 2019) [SR]Boomers Want to Stay Home.  Senior Housing Now Faces a Budding GlutThe Wall Street Journal

——–“The rise of technologies that help the elderly stay in their homes threatens to upend one of commercial real estate’s biggest bets: Aging baby boomers will leave their residences in droves for senior housing. . . . Venture capital and other firms are expected to invest about $1 billion this year in . . . so-called ‘aging in place’ technologies, according to 4Gen Ventures, a new venture-capital firm focusing on such startups.  That is about double the amount spent three years ago.”  Aging-in-place technologies mark “a challenge to the numerous real-estate developers who have been rushing to build senior housing to accommodate the roughly 72 million Americans born between 1946 and 1964 . . . In about one decade, boomers will start reaching their mid-80s, the typical move-in age for senior housing.”  It appears that builders of senior housing have not anticipated this change, giving rise to surplus housing in some areas.

********I was surprised, but perhaps I shouldn’t have been, to learn that “the average age that people enter senior housing has been rising . . . It is about 84 or 85 years today, compared with 82 one decade ago.”  As the article indicates, improving health is one of the likely reasons for entering senior housing later in life.  One of the reasons people enter senior housing, aside from health issues, is the ability to connect with others and escape the loneliness that other housing situations may have.  Technology is not likely to solve the loneliness problem, as Cindy Baier, the chief executive of Brookdale Senior Living Inc. notes.  Robots, such as those used in Japan, are likely to be a poor substitute for human interaction.

May you have a good week!  

Bruce

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