Monthly Archives: November 2013

Moving Beyond GDP

The 2007 economic crisis and the lingering stagnation it wrought has lead economists, philosophers and policymakers to a profound rethinking of how we measure economic performance and social progress. As Joseph E. Stiglitz, Amartya Sen and Jean-Paul Fitoussi write in the foreward to their book, Mismeasuring Our Lives, during the run-up to the 2007 crisis, “the seemingly strong performance of some countries prior to the crisis (as predicted by GDP) was not sustainable and was based on “bubble” prices that exaggerated profits and output.”

The Inclusive Wealth Report introduces policymakers to a unique measure of economic progress that examines all of a country’s capital sources, including manufactured capital, human capital and natural capital. The Inclusive Wealth Index (IWI) measures the key inputs to a country’s productive capacity include natural capital, human capital and manufactured capital – later reports will also hopefully include a measure of social capital.  By examining progress towards a “Green Economy,” the Inclusive Wealth Report is a first step away from GDP and toward a more comprehensive metric of human progress.

GDP, the report notes, was developed during WWII to help policymakers determine what sectors of the economy were growing and which were lagging behind. It was never intended to be what it has become: the measure of a nation’s progress. The many shortcomings of GDP are laid out in a 2012 Demos report by Lew Daly and Stephen Posner.

The most important shortfall of GDP is that it measures income, not wealth. To see the difference, imagine two people, Bernie and Janice. Bernie earns $100,000 a year, but spends their entire on income on cruises to the Bahamas, pizza parties and wax statues. Janice earns only $50,000 a year, but uses $10,000 to go back to school and get a Master’s degree, $10,000 as a down-payment on a house and $10,000 to purchase stocks and bonds. Although Bernie’s income is higher, he has no capital stock, and therefore he has no wealth.

Countries, of course, are not like people. But the same distinction exists. Some countries spend their money on infrastructure and education, while others fritter it away on statues of their “Dear Leader.” Some countries work to use natural resources sustainably, others doze over rainforests.

GDP measures market output, but it does little to guide policymakers because it focuses exclusively on financial and physical assets. The most important forms of wealth are human, social and natural capital. This more expansive understanding of wealth is especially important given the current debate between austerity and reinvestment.

These shortcomings led the UN to develop the Human Development Index which considered indicators like literacy, mortality as well as the standard of living. Neither index however, takes into account the state of the environment and therefore the long-term  sustainability of growth.

The idea of sustainable development, or what E.F. Schumacher termed “Buddhist economics,” is not a new one. Schumacher feared, “An attitude to life which seeks fulfilment in the single-minded pursuit of wealth – in short, materialism – does not fit into this world, because it contains within itself no limiting principle, while the environment in which it is placed is strictly limited.” The inclusive wealth framework is an important step towards a more comprehensive measure of economic growth.

The framework moves from examining exclusively material progress to a framework that includes leisure, spiritual aspirations, social relations and environmental security. The framework was designed by the great Kenneth Arrow in collaboration with Partha Dasgupta, Lawrence Goulder, Gretchen Daily, Paul Ehrlich, Geoffrey Heal, Simon Levin, Karl-Goran Maler, Stephen Schneider, David Starrett and Brian Walker. In a 2004 Journal of Economic Perspectives essay entitled “Are We Consuming Too Much?” they propose the following criterion, whether a society’s investments in human and manufactured capital offset their use of natural capital.

By this measure, 14 of the 20 countries surveyed were growing sustainably, including the United States. However, the growth was not as dynamic as GDP growth. The United States provides an example. While GDP (the red line) increased by 37%, Inclusive Wealth Index (the dark green line) increased by only 13% because of a steep decline in natural capital (the light green line). Human capital (yellow line) increased by 8% and produced capital (grey line) increased by 68%.

In every country, human capital increased, and in most countries, produced capital increased as well. However, in Colombia, Nigeria, South Africa, Russia, Saudi Arabia, and Venezuela the natural capital depletion was not offset by increases in human capital and natural capital. This indicates that their economic growth is not sustainable.

By taking into account the capital formations which determine future growth, countries can better prepare themselves for the future. The U.N. report suggests that countries should target monetary and economic policy to IWI to ensure sustainable, rather than short-term growth. Such a shift was recently suggested by Jeffrey Sachs in a recent Huffington Post op-ed:

Since the 2008 financial crash, our country has been reeling without getting its economic policy right. What we needed then, and need now, is a new kind of macroeconomics; one that aims for investment-led growth, not consumption-led growth. But investment-led growth can’t be achieved by a temporary stimulus. It requires a very different kind of strategy and policy. Investment-led recovery requires a clear identification of our society’s longer-term needs, needs that can be filled through complementary investments by the public and private sectors. Think of railroads and farms in the late 19th century; highways, cars, and suburbs in the 1950s; and information technology, smart grids, and low-carbon energy for our time. And it requires a set of public policies to spur those investments, in part by using smart public investments to help leverage a private-sector investment boom.

If economic growth were targeted to the IWI instead of GDP, such a change would be easy. However, since GDP does a poor job of accounting for investments in human capital and the depletion of natural resources, it encourages policymakers to look toward short-term boosts, often encouraging wasteful spending. The changes Sachs wants to see will be nearly impossible politically as long as policymakers are arbitrarily constrained by the shortcomings of GDP.

The Real “Makers” and “Takers”

For those who haven’t had the great misfortune of reading Atlas Shrugged, the book is premised on the idea that if the world’s “creative leaders,” businessmen, innovators, artists (i.e., the “makers”) went on strike, our entire society would collapse. These strikers hide out in a utopian compound in the mountains of Colorado while the rest of us despondently wail and gnash our teeth and beg for them to once again bestow their creativity upon us.

The book mirrors in many ways the more lefty Elysium, where to escape the environmental degradation they have wrought, the wealthiest go off to form their own society in the sky. The rest of the human population remains mired in slum-like conditions, because the only thing standing between humanity and savagery is Bill Gates. But have no fear! Rather than collectively solving our problems, humanity needs a salvific “Jesus” in the form of (who else?) Matt Damon to make us citizens of Elysium and thereby save humanity. These two, very disparate tales of woe both have common elements (what I will call the “Randian vision”): society relies on the wealthy; collective action through government is either meaningless or detrimental; and a few individuals (“great men”) should be the center of social change and innovation. But all of these assumptions are false.

The appeal of the Randian vision to today’s wealthy is obvious: it puts them back at the center of economic life. They long ago realized that rather than being the beneficent “makers” they had always imagined themselves to be, they were the parasitical “takers” they so despised. Their wealth, which was once a symbol that God praised their work, became an instrument for social change (Carnegie, Rockefeller) and eventually good in itself (Gates, Jobs). Social Darwinism, the idea that the economy is a “survival of the fittest” competition where the superior end up on top, exults the businessman as superior and deserving. But as Henry George noted of Herbert Spencer (the founder of Social Darwinism): “Mr. Spencer is like one who might insist that each should swim for himself in crossing a river, ignoring the fact that some had been artificially provided with corks and other artificially loaded with lead.” F. Scott Fitzgerald and Thorstein Veblen ridiculed the idea that the wealthy were in any way superior. Social Darwinism has resurged in conservative thought, supplementing the Randian vision to fortify a social order in which a minuscule proportion of society reaps its rewards.

Because the wealthy are no longer willing to use their wealth for good, they have decided to glorify the wealth itself as good, thus, Harry Bingswanger writes in Forbes,

Imagine the effect on our culture, particularly on the young, if the kind of fame and adulation bathing Lady Gaga attached to the more notable achievements of say, Warren Buffett. Or if the moral praise showered on Mother Teresa went to someone like Lloyd Blankfein, who, in guiding Goldman Sachs toward billions in profits, has done infinitely more for mankind. (Since profit is the market value of the product minus the market value of factors used, profit represents the value created.)

Here we see the Randian vision in all its idiotic glory. If you could make a profit by pressing puppies into coffee, you deserve more moral praise than someone who dedicates their life to the poor. As E.F. Schumacher observed about capitalism, “Call a thing immoral or ugly, soul-destroying or a degradation to man, a peril to the peace of the world or to the well-being of future generations: as long as you have not shown it to be ‘uneconomic’ [unprofitable] you have not really questioned its right to exist, grow, and prosper.” To justify their wealth, the titans of industry must make themselves the center of economic progress and society, but the dirty little secret is that they aren’t; they’re just along for the ride. As Richard Hofstadter observed about American capitalism, “Once great men created fortunes; today a great system creates fortunate men.”

This observation fits with the facts: William Baumol found in the 1960s that 90 percent of the United States’ GDP today is due to innovations since 1870. Nobel Prize winner Herbert Simon estimates that a flat tax of 90% of income is justifiable because “social capital” accounts for 90% of income in developed countries. The Human Genome Project cost the government $3.8 billion but generated $796 billion in economic gains. The project is expected to bring about returns of 140 to 1 to the public. Research by Kenneth Flam finds that, “eighteen of the twenty five most important breakthroughs in computer technology between 1950 and 1962 were funded by the government, and in many cases the first buyer of the technology was also the government.” The Randian vision praises hedge fund managers, even though most hedge funds underperform the market. Social Darwinism praises the CEO even though the most highly-paid CEOs are often unsuccessful and many companies run fine without them. Society praises Zuckerberg, Brin and Dorsey, but it was DARPA that made their coding possible. Much of the research the government pursues isn’t profitable enough to merit the attention of private companies, or is simply too risky. Private space flight is only imaginable because the government went there first.

It seems almost axiomatic that no good person has ever done something great merely for a profit. They seek something more important than material possession. So why should we fear if the wealthiest left us? I would fear for the world if the empathetic, the intelligent, the compassionate, the fearless and the creative left us. We don’t celebrate these virtues unless they somehow lead to monetary gain, but often they don’t. Norman Borlaug, father of the “Green Revolution” that by some estimates saved 1 billion people from starvation and who was hailed as “… a towering scientist whose work rivals that of the 20th century’s other great scientific benefactors of humankind,” didn’t work for money; he worked to help people. A Dallas Observer story about him noted that he,  “rarely indulged in the comforts of the industrialized West for any extended period of time. His choice has been to immerse himself in locales where people stare death in the face every day.” When a reporter saw Mother Teresa helping a disfigured leper, he said to her, “I wouldn’t do that for a million dollars.” Mother Teresa said, “Neither would I.”

The Walton family heirs, whose fortune relies entirely on predation — of labor, of the environment, of government, of small business — controls more wealth than the poorest 40 million Americans. Imagine what we could do with that fortune if they left. For all the credit Bill Gates gets, it may be worth wondering, as Peter Singer did, if he has given enough:

Gates may have given away nearly $30 billion, but that still leaves him sitting at the top of the Forbes list of the richest Americans, with $53 billion. His 66,000-square-foot high-tech lakeside estate near Seattle is reportedly worth more than $100 million. Property taxes are about $1 million. Among his possessions is the Leicester Codex, the only handwritten book by Leonardo da Vinci still in private hands, for which he paid $30.8 million in 1994. Has Bill Gates done enough? More pointedly, you might ask: if he really believes that all lives have equal value, what is he doing living in such an expensive house and owning a Leonardo Codex? Are there no more lives that could be saved by living more modestly and adding the money thus saved to the amount he has already given?

If Gates donated all $53 billion to foreign humanitarian aid, it would be double what the U.S. government gives yearly ($23 billion in 2013). Imagine the good we could do with the fortunes of the rich, who have only amassed the wealth because of the infrastructure developed by society. Innovators regularly rely on government and academic funding for projects that corporations don’t think will be profitable (according to Singer, “less than 10 percent of the world’s health research budget is spent on combating conditions that account for 90 percent of the global burden of disease”). The arts are largely supported by public funding, not private donations. And many businesses are less self-sufficient than they imagine, requiring bailouts and competition between states to support them. Many corporations, like Walmart, dump poor employees on to government largess rather than pay them enough to feed themselves. And who builds the roads and takes out the garbage?

Were the richest .01% to venture out and form their own society, the rest of us would not devolve into violent conflict; rather, without the expensive burden of the wealthy tapeworms siphoning our common wealth, we could begin to solve our problems. So to the rich who threaten to leave New York, I say, “go.” If the rich somehow manage to form their own planet, we can start fixing the problems on ours. We are the makers, they are the takers.

How to Destroy an Economy with Bad Economics

Imagine a world where Republican politicians understood economics. In 2008, Obama is elected to the Presidency and proposes a $2 trillion dollar stimulus program. This creates a deficit, but it’s not a problem because Bush hadn’t cut taxes, so the government has been running surpluses for 8 years. States happily take the money to invest in education, infrastructure and services. Hundreds of billions of dollars fund green jobs and worker-retraining programs keep down the numbers of long-term unemployed. The minimum wage is $10 and pegged to inflation, the EITC is expanded. The economy turns around slowly, but an active Fed keeps interest rates low, focusing with laser precision on unemployment.

None of this happened. Instead, the U.S., after a short bout of stimulus turned to a sequestration, one that has certainly hobbled the economy, and may actually increase deficits by slowing economic growth (this happened in Britain). The Fed has been barraged by inflation hawks, but has managed to keep strong in the wake of foolish economic advice. Republicans have fought the stimulus and Governors like Chris Christie nixed crucial infrastructure projects. The minimum wage is stuck at $7.25 an hour and fast food workerslanguish in poverty.

It may seem like these two worlds won’t matter much in five years. Certainly deficits will be higher in the second, GDP lower, workers less safe, but eventually, the economy will bounce back. A new paper by Dave Reifschneider, William L. Wascher and David Wilcox argues the opposite: the prolonged downturn following the “Great Recession” has likely caused long-term economic damage. The paper is primarily about the implications for monetary policy, since it’s written by three members of the Federal Reserve Board, but the most important point is that the recession has done permanent damage to the economy.

In economic jargon, what the economists describe is “hysteresis,” which first came from a1986 paper by Oliver Blanchard and Lawrence Summers entitled, “Hysteresis and the European Unemployment Problem,” in which the authors argue that large demand contractions can have long-term effects on unemployment and economic growth. Policymakers should intervene to prop up demand to limit long-term damage to the supply side of the economy. As Gavyn Davis notes in the Financial Times, the implication is that, “In a reversal of Say’s Law, and also a reversal of most US macro-economic thinking since Friedman, demand creates its own supply.”

So what are the implications of the Great Recession and our poor response to it? The authors write that, “potential GDP is currently about 7 percent below the trajectory it appeared to be on prior to 2007.” Even if we were to be hitting our full potential (we aren’t) GDP would still be 7 percent lower than had their not been a recession. CBO estimates that potential GDP for 2014 is $15 trillion. So if the authors are correct, that means our potential GDP is about $1 trillion lower than it would be without the Great Recession. That’s a lot of money.

When economists talk about unemployment, they often talk about a “natural rate” of unemployment, the level of unemployment that will exist, even when the economy is humming along. Hysteresis argues that a long-run depression of aggregate demand can increase the natural rate of unemployment. The authors believe this has indeed occurred in the wake of the recession, and the natural rate of unemployment may be between .5 percent and 1.5 percent higher than otherwise. That is, even when the economy gets rolling again, unemployment will still be higher and growth lower than if we had intervened sooner and more gusto.

Earlier this year, Summers and Bradford Delong argued in a bombshell paper that since a bad economy means low interest rates, slack employment, and the possibility of hysteresis a stimulus bill could actually be self-financing. They are careful to curb their argument (something their opponents rarely do), arguing that this only occurs in a deep recession. But this recession should certainly count. Had we intervened quickly, we could have new bridges, trained workers and a green economy. Instead, we have a deteriorating infrastructure, a dejected and poorly trained workforce and an aging capital stock. That is hysteresis.

Reigschneider, et al, confirm that inflation-mania and deficit-hawking are doing long-term damage to the economy. Yet the Economist argues that if anything, inflation is too low. As Paul Krugman notes:

I can, in a way, understand refusing to believe in global warming — that’s a noisy process, with lots of local variation, and the overall measures are devised by pointy-headed intellectuals who probably vote Democratic. I can even more easily understand refusing to believe in evolution. But the failure of predicted inflation to materialize is happening in real time, right in front of our eyes; people who kept believing in inflation just around the corner lost a lot of money. Yet the denial remains total.

The Republican ignorance of economics appears to be far more dangerous than previously believed.

Why Are Conservatives in Love With a Marxist Sponge?

Photo Credit: Conner Kennedy

SpongeBob SquarePants was once loathed by conservatives because he supposedly promoted the “homosexual agenda” and warned children about the dangers of global warming. But now he is one of the few Hollywood types conservatives can stand.

The Hollywood Reporter summarizes a “SpongeBob” episode that aired on Monday and has conservatives cheering:

One day [after being fired], SpongeBob is already a disheveled, wrinkled, unshaven beggar, and his friend Patrick is determined to show him the ways of “glorious unemployment,” which includes free stuff and lots of spare time.

“Being unemployed is the best gig I know,” Patrick tells SpongeBob. But at a no-charge, all-you-can eat meal, SpongeBob has an epiphany: “Unemployment may be fun for you, but I need to get a job,” he tells Patrick. At that moment, he’s instantly transformed into a sparkly clean, enthusiastic and energetic sponge again.

Fox News, Breitbart, the Washington Times and the New York Post see this as a denunciation of the welfare state;  Andrea Morabito writes in the Post, “Lest he sit around idly, mooching off the social services of Bikini Bottom, a depressed SpongeBob sets out to return to gainful employment wherever he can find it.” Fox News et al. based their analysis on this short clip, but if you watch the full episode (available on Amazon), a different story emerges.

SpongeBob arrives at work one day to discover he’s been fired from the Krusty Krab so that Mr. Krabs can save a nickel. “I love you like a son,” Mr. Krabs tells SpongeBob, “but you can’t argue with a nickel.” After being fired, SpongeBob does meet Patrick for “funemployment,” but the two don’t lounge on government benefits. First they anger Squidward who throws food at them — their breakfast. Then they participate in an experiment for Sandy that involves eating toxic (but free!) food. SpongeBob decides he needs a job, but, much like the long-term unemployed, finds his skills are no longer in demand. He tries to find employment at the Weenie Hut, the Pizza Piehole, the Taco Sombrero and the Wet Noodle, but he can only make patties. After being fired from each establishment he returns home dejected only to find he has no “Snailpo” to feed Gary. He cooks his own dinner, which both Gary and Patrick devour. Having realized that he should never have passed up SpongeBob, the owner of the Weenie Hut kidnaps him and forces him to work. Then the owners of the other restaurants fight to force SpongeBob to work for them. Finally Squidward begs SpongeBob to return because Mr. Krabs is a dreadful cook. SpongeBob rejoins the Krusty Krab and Mr. Krabs earns his nickel by installing a pay toilet.

The full episode has a different moral than conservatives imply. The fact that Mr. Krabs fires SpongeBob to make a nickel hardly constitutes a resounding endorsement of capitalism and the ethics of businessmen. And SpongeBob’s dilemma is reminiscent of the days before unemployment insurance, food stamps and welfare, when the unemployed had to depend on the unreliable compassion of strangers. Similarly, his struggle to find gainful unemployment is exacerbated by his unique skill set, which doesn’t translate easily to other jobs, emphasizing the importance of worker retraining. His kidnapping by the Weenie Hut warns viewers of the often exploitative nature of fast food companies. Given that the episode was released during the retail and fast food strikes, it could easily be interpreted as a sign of solidarity with the underpaid, overworked and insecure minimum-wage workers in the fast food industry.

How did conservative viewers get it so wrong? They have watched only one short clip of SpongeBob SquarePants. I’ve watched every episode numerous times, and have come to the opposite conclusion: SpongeBob is a Marxist. Here’s the evidence:

While classical and Austrian economists view the capitalist system as inherently competitive, Marx saw it as entirely uncompetitive. Bikini Bottom clearly resembles the latter. Competition doesn’t lead to innovation; there is no creative destruction, rather there is one monopoly firm (the Krusty Krab) and another firm (the Chum Bucket), constantly trying to siphon customers, not with a better product but by theft and through political manipulation. SpongeBob shows the capitalist mode of production, with its fealty to “competition,” to be entirely farcical. In Marxist economics, competition eventually leads to one monopolistic firm that exploits workers and customers. Sound familiar?

Speaking of exploitation, in SpongeBob’s world, production follows the labor theory of value that Marx predicts, rather than the marginal theory of value predicted by Austrian economists. SpongeBob is the greatest fry cook in the universe, yet he is paid almost nothing! The marginal theory of value predicts that a worker will be paid according to the value they add to the good. But SpongeBob, who can cook like a god, is paid less than minimum wage. His only attempt to obtain a raise ends in failure. This is what Marx’s labor theory of value predicts: Workers will be squeezed, they will never reap the full value of their contribution to the final product. Since the capitalist and the landlord input nothing, all their profits must come at the expense of the worker, and further, the more product the worker produces, the less value he has. Mr. Krabs definitely has enough money to pay SpongeBob more –  he’s a millionaire who at one point buys a massive hotel — yet he refuses to properly compensate his workers and regularly runs afoul of labor standards, like the 1920s robber barons and today’s megacorporations.

SpongeBob seems to inhabit an Oscar Wildean post-capitalist utopia. SpongeBob exemplifies  the “Soul of Man Under Socialism”: He loves his job and prefers cooperation to competition. He eschews a life of labor for a life of art, his “job” isn’t drudgery, but ratherbrings him joy. Rather than continuing to accumulate “long after he has got far more than he wants, or can use, or enjoy,” SpongeBob takes a job he loves and pursues a life of friendship, cooperation and love. This manifests itself in SpongeBob’s uncanny knack for art, which is juxtaposed with Squidward’s inability to produce art, presumably because his job is so draining.  In contrast to SpongeBob, Mr. Krabs is devoted entirely to the acquisition of money, to the point that he is willing to sacrifice his life and the lives of his customers for a cent.

SpongeBob is Ralph Nader, Naomi Klein and Eugene Debs rolled into one. In one episode, SpongeBob laments that corporate control of the Krusty Krab has led to a decline in the quality of service because the patties are made by machine, leading SpongeBob to wonder,“Where’s the love?”In another, SpongeBob protests a superhighway that will destroy jellyfish fields. The episode critiques the way corporations manipulate the political process (the plans are made in secret by Plankton to destroy the Krusty Krab), voter apathy (citizens were entirely unaware of the implications of the project, even Mr. Krabs votes aye) and the role of police in squashing dissidence (the police arrest SpongeBob numerous times on false pretenses when he tries to protest). SpongeBob makes a quixotic stand against corporate power: “Well all I have to say is that um, well, STOP THE MADNESS! We need to get Jellyfish Fields back to the jellyfish, which will restore their natural habitat so they will be in peace. So what do you say everybody, will you help me?” The crowd initially hesitates, then joins SpongeBob to prevent a tractor from destroying Jellyfish Fields. SpongeBob also dabbles in organized labor, joining Squidward on strike. The strike is largely ignored when Mr. Krabs brings in scabs, leading Squidward to note, “Nobody gives a care about the fate of labor as long as they can get their instant gratification.”

Nor is the show’s treatment of labor issues its only progressive element. SpongeBob’s inability to drive means he protects the environment by walking to work. Sandy Cheeks doesn’t stay home and cook for the kids, she defies gender stereotypes by being really, really good at science (she came to Bikini Bottom to study sea life). Patrick, by far the poorest member of Bikini Bottom, lives securely, yet has never been incredibly successful at holding a job. Conservatives should think twice before they make a kindhearted hippie-sponge their hero. Bikini Bottom is a liberal utopia where public transportation is the norm, women are free of ugly stereotypes and society adheres to the motto “from each according to his abilities, to each according to his needs.”

The Battle to Save Social Security

The establishment consensus is accurately summarized by Martin Feldstein, “Preventing an explosion of the national debt requires slowing the growth of the benefits of middle-class retirees.” But the truth is the opposite: the middle class and poor need more help than ever.

David Callahan has written here at Policyshop that cutting Social Security is the wrong culprit in the deficit debate and is more important than ever with over 4 million seniors are living in poverty. Duncan Black argues in USA Today that, “The majority of people nearing retirement will not have sufficient funds to retire with anything resembling economic security and comfort.”

There has been a disturbing spike in poverty among the elderly, reports the Philadelphia Inquirer,

Poverty among the elderly is growing. And deep or extreme poverty – defined by the government as a single person earning $5,700 a year or less – has taken a jump that even experts find astonishing.

For men over age 65 nationwide, the rate of deep poverty increased 23 percent between 2011 and 2012, according to analysis by the National Women’s Law Center, a nonprofit advocacy group. For women, it went up 18 percent. Overall, that means a total of 442,000 elderly men and 733,000 elderly women were living in deep poverty in America in 2012, the center’s figures show.

A report by the New America Foundation, co-written by Demos analyst Robert Hiltonsmith, finds that,

This consensus [that Social Security must be cut] is not only misconceived in its diagnosis but also mistaken in its prescriptions and potentially disastrous in its consequences. Retirement security is often thought of as three-legged ‘stool’ consisting of Social Security, employer retirement plans, and private savings. Social Security has been far more stable and successful than the other two legs of the stool. The reliance on these other legs of the system has resulted in a retirement security crisis for most Americans, shifting costs and risks onto individuals, even as the benefits of these programs go overwhelmingly to upper-income earners.

The report argues for a new universal flat benefit called Social Security Part B that would supplement the current Social Security system to be paid from general federal revenues. The program would be a guaranteed minimum income for seniors. Social Security Part A would resemble the current system and pay out according to wages. This would replace the confusing mess of private but tax-favoured supplements that seniors rely on today.

Concerns about the inadequacy of Social Security are finally reaching the public discussion. Sen. Tom Harkin has introduced a bill that would use a new inflation measure to calculate Social Security benefits. The new measure (called the CPI-E) would more accurately take into account the fact that seniors spend more money on medical goods.

Sen. Sherrod Brown is joining Harkin’s fight to increase Social Security benefits: “Senator Sherrod Brown is joining the push to expand Social Security, and he’s making a startling argument: Dems should go on offense on entitlements, rather than let Republicans and Beltway fiscal scolds frame the discussion as one over how much benefits should be cut, not one over whether they should be cut at all.”  He wants Democrats to go on the offensive, fighting for seniors who are finding out that their pensions are weaker than they thought.

He is joined by Bernie Sanders, who is on the budget committee working to eliminate the sequestration. Sanders writes in USA Today, “We must not cut Social Security, Medicare or Medicaid… Let’s be clear: Social Security is not an entitlement program. It is an earned income benefit that has been enormously successful in cutting the rate of senior poverty.”

Although the push-back against the “Very Serious People,” is welcome, it may appear surprising that it took so long to mobilize politicians in support of such a popular program. The political explanation for the backwards debate about Social Security is simple. Wealthy citizens have entirely divergent opinions for the average citizen and Congress is far more likely to listen to the former than the latter.  Larry Bartels, Benjamin Page and write in a 2013 paper on inequality and political preferences, “There was also a tendency for the wealthiest respondents to tilt even more than the less wealthy toward cutting back Social Security specifically.” Even while the Washington establishment discuss cutting social security, 75 percent of Americans favor discussing increasing benefits.

The explanation is simple: the wealthiest Americans don’t rely on Social Security (see chart).

Source: “Income of the Population 55 or Older, 2010” Table 10.5

As Brown explains in The Washington Post, “ ‘The Serious People — with a capital S and a capital P — all have really good pensions and good health care and good salaries…Raise the cap. There are ways we can bring a lot of money into Social Security. Some Democrats are a bit cowed by the Serious People.’ ”

At the same time, new research finds that Social Security is failing minorities and redistributing wealth from high earners to low earners. Stuerele, Carasso and Cohen concluded in 2004 that “less educated, lower-income, and nonwhite groups benefit little or not at all from redistribution in the old age and survivors insurance (OASI) part of Social Security.” This can be partially explained by the fact that poor people and minorities often lack health insurance and suffer bouts of unemployment that decreases their benefits.

Although a complete overhaul of the system, like the one proposed by the New America Foundation/Demos study, would be ideal, minor reforms are more likely to be political successful. One possible reform is to raise the cap on the Social Security tax, currently at $250,000. This would require wealthy individuals to pay more into the system. The system could also develop a more progressive benefit scheme, increasing benefits for those with low lifetime earnings unlikely to have a private pension.

The conventional wisdom in D.C. is that SS is a threat to the deficit and needs cutting. But, as J.K. Galbraith wrote of conventional wisdom, “The conventional view serves to protect us from the painful job of thinking.” Today the conventional wisdom is that Social Security needs cutting. It needs expanding, and thanks to Senators Brown, Harkin and Sanders it may well be.

The Sequestration Might Increase the Deficit

The most likely consequence of the sequestration will be be slower growth and lower tax revenues, and it’s a distinct possibility that the sequestration could actually increase the deficit. This week, the Supplemental Nutrition Assistance Program will face a $5 billion cut, which will likely slow economic growth further.

Repealing the sequestration economy could gain 1.6 million jobs and increase GDP by as much as 1.2% in FY 2014. A report by Macroeconomic Advisers, LLC finds that discretionary spending cuts since 2010 have reduced annual GDP growth by 0.7 percentage points since 2010 and raised the unemployment rate 0.8 percentage points, representing a cost of 1.2 million jobs. Goldman Sachs released the chart below in 2012 showing how federal policy since 2010 has been acting to slow growth.

The intellectual backing for tough austerity has been hammered this year. Recently, the IMF warned that private debt is slowing growth far more than government debt. Earlier this year a UMass-Amherst graduate student tried to replicate the results of the famous study by Carmen Reinhart and Kenneth Rogoff that purported to show how debt dragged on growth, he found it riddled with errors

Although the famous spreadsheet error (wherein RR failed to include cells in a calculation) made the biggest splash, the deeper error was a logical fallacy: Post hoc ergo propter hoc. Economists like Paul Krugman and Brad Delong argue that government debt doesn’t slow economic growth but rather slow economic growth causes the government to take on more debt. Research by Miles Kimball and Yichuan Wang find that this is the actual causation, so there is no evidence or logical reason to believe that reducing government debt right now will help the economy grow.

Britain provides an example of what could go wrong if the U.S. continues pushing austerity: austerity hobbled the economy and actually increased the UK’s debt as a % of GDP. Earlier this year, the CBO wrote:

According to CBO’s projections under current law, the contribution of automatic stabilizers to the federal budget deficit, measured as a share of potential GDP, will rise slightly in fiscal year 2013, to 2.5 percent. That contribution accounts for about half of the estimated deficit this year. The contribution will remain at 2.5 percent of potential GDP in 2014, accounting for roughly three-quarters of the projected deficit next year.

CBO expects that the budgetary effects of automatic stabilizers will remain large because of the continued weakness in the economy, which is caused in part by the fiscal tightening that is occurring in calendar year 2013 under current law.

Half of the deficit in 2013 this year is due to automatic stabilizers (the reduction in revenues and increase in spending that occurs when an economy enters a recession). If the economy was in full swing then, the deficit would immediately be halved.

Running deficits during a recession is one time when the government can have its cake and eat it too. Interest rates are low, so the cost of borrowing is negligible and the economic growth will eventually turn the deficits into surpluses, exactly what would have happened in the 2000s if there had been no tax cuts. In fact, the famous deficit-reduction of the Clinton era was due to economic growth, not policy.

Yes Virginia, The GOP Is Anti-Science

The Atlantic published an article on Tuesday by Mischa Fisher arguing that, Republicans have been unfairly characterized as “anti-science.” The piece begins with the lofty assertion that, “Republicans, conservatives, and the religious are no more uniquely “anti-science” than any other demographic or political group. It’s just that “anti-science” has been defined using a limited set of issues that make the right wing and religious look relatively worse.”

It’s another faux-moderate piece where “everyone is to blame,” for underfunding and misunderstanding science. Fisher calls himself a “centrist” which is hard to square with his bio: “Mischa Fisher is a former Republican science-policy staffer and legislative director in the House of Representatives.”

But let’s look at the case. Fisher starts with global warming, arguing that “the vast majority” of Republicans accept anthropogenic climate change, the problem is, “Conservatives believe many of the policies put forward to address the problem will lead to unacceptable levels of economic hardship. It’s not inherently anti-scientific to oppose cap and trade or carbon taxes.” This statement is dubious on three grounds.

First, it’s not true. As ThinkProgress notes, “almost 58 percent — of congressional Republicans refuse to accept it [global warming].” Second, global warming entails vast andunequal economic consequences, meaning that if we have to sacrifice some economic growth today for more in the future, that is a reasonable decision. And third, Republicans have opposed every Democratic-lead initiative to fight climate change, from Waxman-Markey, to carbon taxes to regulation through the EPA (that were based on the estimated cost per ton of carbon dioxide). If Fisher really wants to argue that Republicans understand the science of global warming, he needs to prove they’ve done something other than oppose every effort to stop global warming on the dubious grounds that it will harm economic growth.

The next argument is classic. Fisher argues that for every right-wing denial of science, there’s a hippie lefty denial:

Left-wing ideologues also frequently espouse an irrational fear of nuclear power, genetic modification, and industrial and agricultural chemistry—even though all of these scientific breakthroughs have enriched lives, lengthened lifespans, and produced substantial economic growth over the last century.

This argument rests on a false equivalence. The science of global warming is accepted by 97 percent of climatologists.  In contrast, nuclear energy is still a very alive debate withinthe scientific community. I would happily debate Fisher on the merits of nuclear power (I’m still undecided) but it’s misleading to compare the two. Fisher also neglects the fact that many Democratic politicians are behind nuclear power (including Obama…), so the point is moot, anyhow. As for GMOs, I’m unaware of any bills ever introduced by Congressional Democrats to ban their use (the bill Fisher cites is about labelling – and it was bipartisan), and it certainly isn’t in the Democratic platform — while the 2012 Republican platform explicitly dismisses climate science and any attempts to curtail global warming.There certainly is an anti-scientific left, but it hasn’t gained control of the Democratic party. The practicality of organic farming, like the nuclear power issue, remains a live debate in scientific circles (again, certainly not at the threshold of universal acceptance that global warming has reached).

For good measure, Fisher throws in a Solyndra reference:

Yet at the same time, billions of stimulus dollars were being lost on failed investments in the alternative-energy sector. Just the failed loans to Solyndra and Abound Solar would have kept the Tevatron operating for a decade.

First off, this is a question of politics and economics, not science. Alternative energy is an important part of Obama’s all-of-the-above strategy (which, remember, includes the nuclear power Fisher is so excited about) and stimulus spending was justified because of the recession. Scientific research is an important part of what the Congress does, but its not stimulative. So it would be absurd for the stimulus package to include money to keep the Tevatron open. Instead the stimulus package invested in energy efficiency ($29 b), renewable energy ($21 b), high speed railway ($18 b), research into carbon capture ($3 b) among other investments.

Solyndra was one of many investments, and it’s expected that some of the companies that received a loan guarantee would fail, but the number of bankrupt firms has actually been rather low. As it happens, often research projects fail to produce results, but we don’t stop performing research. Fisher’s argument here appears to be that Obama should look into the future and determine which investments and research projects will reap rewards.

Fisher argues that it is not Republicans, but rather Obama (!) who is underfunding the basic sciences (with another Solyndra reference!):

For every cheap shot a Republican member of Congress like Senator Tom Coburn has taken at National Science Foundation grants (see the unfairly maligned robo-squirrel), there are areas where Obama has undercut American leadership in basic science by favoring loan guarantees and industrial subsidies to the alternative-energy industry at the expense of science elsewhere.

We’ve seen this in his proposed cuts to high-energy physics, nuclear physics, planetary science, and other areas of research. Even in the much-maligned “Tea Party-dominated” House of Representatives, the GOP budget proposals provided more funding for the NSF than those of the Senate Democrats for the current 2013 fiscal year.”

Again we have the (entirely unfounded) assertion that the stimulus package investments in green jobs came at the expense of “science elsewhere.” This is a policy/economics question, not a science denial question. Many scientists support a move towards a greener economy, and alternative energy is a necessary investment to reduce carbon dioxide emissions and move away from fossil fuels. But, if we are talking politics, Obama has fought to get rid of the sequestration cuts that are decimating research. His budgetsregularly include far more money for science research than the Republican budgets do. In contrast, Republicans are working to cut science spending. Reuters reports that, “The Republican [2014] proposals also would cut NASA’s budget by $928 million compared to last year, cut another $198 million from the Department of Commerce and $259 million from the National Science Foundation, which funds an array of scientific research projects.”

Here’s how Science magazine reported on the sequestration:

The science committee of the U.S. House of Representatives has a long history of expressing bipartisan support for research. But science lobbyists have grumbled that the panel has become highly partisan in recent years, stacked with conservative Republicans who don’t necessarily believe that research spending is a high priority.

It’s ironic that Fisher is bringing up the NSF (National Science Foundation) now, since six days before his article was published, Nature reported that, “calling for the National Science Foundation (NSF) to justify every grant it awards as being in the ‘national interest’… scientists raised concerns that ‘national interest’ was defined much too narrowly.”

Throughout the article Fisher throws in snipes like: “Set aside the fact that twice as many Democrats as Republicans believe in astrology, a pseudoscientific medieval farce.” Great, but the argument is about policy and policymakers, and when a Democrat goes on Meet The Press to advocate for teaching astrology in the schools, I’ll happily concede the point. But right now, it’s Republicans spinning crazy anti-scientific theories about birth control,stem-cell researchabortion and creationism and trying to enshrine them as policy.

Towards the end of the essay, Fisher makes a surprising concession:

Supporters of federal science funding, a group of which I am a card-carrying member, can ill afford to lose Republican support for science. But if it is perceived as a partisan litmus test, it will not continue to exist in its current state as the government’s other financial obligations continue to grow. This may be stupid or petty and perhaps it ought not to matter whether or not it’s perceived as a partisan issue, but I’ve been on the Hill and this is how politics works.

Translation: if we don’t all close our eyes and pretend the Republicans are playing fair, we’ll lose it all. This is essentially the same argument Very Serious People are making on tax reform, immigration reform, gun control and deficits – pretend the Republicans are moderates, or else you don’t get anything.

The last paragraph is positively bonkers,

So if you count yourself a supporter of NASA, a supporter of the National Science Foundation, a supporter of the NIH, or a supporter of the Department of Energy’s science facilities and particle accelerators, don’t be goaded into a false dichotomy between those who support science and who oppose it. As Thomas Huxley said, “Science commits suicide when it adopts a creed.”

What is the false dichotomy between those who support science and those who oppose it? Scientists should actively war with any administration or politicians who opposes science. The Bush administration, for instance, happily filled up federal bureaucracies with partisans, and 60 scientists (including 20 Nobel Laureates) wrote a letter criticizing him for “distorting and suppressing findings that contradict administration policies, stacking panels with like-minded and underqualified scientists with ties to industry, and eliminating some advisory committees altogether.” In contrast, the Obama administration has poured money into mapping the brain and political capital into fighting climate change (perhaps one reason 68 Nobel-Prize winning scientists signed a letter endorsing Obama).

There is a real dichotomy between those who support science and those who don’t — and those who don’t are generally on the Republican side. 131 members of the Republican caucus deny the science behind climate change. A disturbing 17 of those Republican members are on the House Committee on Science, Space and Technology. As to the Huxley quote, scientists need to treat themselves like any other lobby, and support candidates and policies that promote their profession and research. That means supporting Democrats, as most of them do (only 6 percent of scientists identify as Republicans). The false equivalence that blames both parties for the cuts to science funding, the lack of research and our inadequate response to global warming will only make it harder to shame the party responsible for its intransigence.  The idea that Republicans are anti-science isn’t it a caricature. It’s a sad fact.

The Worst Way to Cut the Deficit

Let’s accept the premise that U.S. federal debt is out of control and cannot be reined in by efficiency in the healthcare sector (an arguable premise). The way the government is cutting the deficit is the absolutely, objectively worst way the government could cut the deficit. The basic goal in the long-term would be to come at an agreement with modest entitlement cuts and modest revenue increases. Over time these would, with economic growth, get the debt as a percentage of GDP to the mythical 60% – 80%. The problem is that so far, nearly all the cuts are to discretionary spending (renewed every year) and are thus economically dangerous and don’t affect the long term-deficit:

Keep in mind that this is just deficit reduction on paper. The CBO doesn’t do dynamic scoring, (taking into account the effects the policies have on the economy), so all those discretionary cuts could end up disappearing if they hobble the economy and thereby reduce revenues.

What’s particularly startling about the cuts to discretionary spending is that discretionary spending includes all of the important public investments we make to promote growth in the future. The Financial Times reports that, “Public investment in the US has hit its lowest level since demobilisation after the second world war because of Republican success in stymieing President Barack Obama’s push for more spending on infrastructure, science and education.”

Public investment is crucial to future growth. The economic boom in the 50s and 60s relied on government investments in education (G.I. Bill), infrastructure (National Highway System) and science (NASA). Now, education spending is hurting at the state level, our infrastructure is crumbling in front of our eyes and scientific researchers worry about the fate of their projects.


Investments in science produce huge benefits, both in terms of well-being and economic growth. The Human Genome Project, for instance, cost 3.8 billion in public funding and has produced economic gains of $796 billion (that’s a return of $140 to $1). The internet, too, was a product of government research and has produced tens of trillions in economic output and growth.


Our infrastructure is aging, and the American Society of Civil Engineers estimates that we will need to invest around 3.6 trillion by 2020 to move from a D + to a B. Numerous studies find that infrastructure investment brings about large economic returns.


But worst of all, public investment is going to decrease even more in the future, the only question is how much:

This will seriously harm U.S. competitiveness in the future; public investment spending provides immediate stimulus and productivity growth in the future. A Demos/Century Foundation/EPI study estimates that if the U.S. had begun investing about $250 billion a year into infrastructure in 2011, GDP growth each year would be .1 percentage points higher in 2021 and .5 percentage points higher by 2025. By By 2045, nominal GDP would be by 11.6% higher than baseline projections.


Corporations Take Battle Against Labor to the States

With gridlock and discord halting the right’s agenda in Congress, corporations have taken the war on labor to the states. The Economic Policy Institute recently released a new report, “The Legislative Attack on American Wages and Labor Standards, 2011-2012,” authored by Gordon Lafer. The report  documents a coordinated corporate attack on unions, workplace production and fair wages led by organizations like ALEC, the Chamber of Commerce and Americans for Prosperity.

Among other rollbacks, “Four states passed laws restricting the minimum wage, four lifted restrictions on child labor, and 16 imposed new limits on benefits for the unemployed.” These laws rarely were demanded by economic circumstances. For instance, Gov. Scott Walker’s famous push to end collective bargaining for Wisconsin’s public workers came after they had assented to “significant benefit reductions.” But the true motivation for Walker’s plan was not closing the budget gap, but rather crushing organized labor.

The report documents a nationwide crackdown on organized labor:

  • Fifteen states passed laws restricting public employees’ collective bargaining rights or ability to collect “fair share” dues through payroll deductions.

  • Nineteen states introduced “right-to-work” bills, and “right-to-work” laws affecting private-sector collective bargaining agreements were enacted in Michigan and Indiana.

Lafer notes that collective bargaining for teachers has been curtailed even in states like New Jersey and New Hampshire that rank in the top ten states for educational attainment.Pension reform, which is too often merely a guise to slash benefits and divert pension funds to expensive hedge funds, occurred in states like Wisconsin, Florida, and North Carolina, where pensions were far from underfunded.

Instead the states all share one thing in common: Republican governors. Similarly, Lafer points to evidence that the states that laid off the most workers were not the states with the highest deficits, but the states with the most far-right legislators. For instance, the 11 “newly red” states (those where the Republican revolution of 2010 gave Republicans total control of the legislature) and Texas accounted for 71.8 percent of the public jobs eliminated in 2011 but only 12.5 percent of the aggregate budget shortfall.

These legislators often follow by the letter the model legislation of organizations like ALEC which are rooted not in economics, but ideology. A recent report by Peter Fisher finds that ALEC, “fails to predict job creation, GDP growth, state and local revenue growth, or rising personal incomes.”

New Hampshire, for instance, repealed the minimum wage over a gubernatorial veto. The House Speaker (who is an ALEC member) cited the need to stimulate job growth – presumably an ALEC talking point. But in truth, economists have found no link between a minimum wage hike and an increase in unemployment, and research indicates that a higher minimum wage can create jobs by stimulating demand.

The attack on unions is incredibly important for national politics. The Organization for Economic Cooperation and Development (OECD) data for 2008 (the most recent year for which all countries are available) shows that the unionization rate for America is far below average. This means that in America we have two parties beholden to corporate interests and no counterbalance. Demos’ report, Stacked Deck, shows how politicians are more responsive to the interests of their wealthier constituents. There should be no surprise thatlower unionization rates correlate with higher levels of inequality. But if the union movement in America remains suppressed by powerful corporations, it’s hard to imagine anything other than ALEC-style legislation winning the day.

Similarly, the cruel austerity practiced by states actually deters growth. Adam Hersh, an economist at the Center for American Progress finds that states that cut public spending face bigger employment losses. After the Great Depression, expansionary federal fiscal policy was undermined by state-level belt-tightening. Across the country, Republican governors pass radical tax cuts and then use the budget hole to justify cuts to public services, which voters assent to feeling they have no other option. But as Lafer notes,

Indeed, if elected officials were simply concerned with closing budget gaps, they had many alternative methods for achieving this end without cutting essential services. For instance, in 2011 the deficits in all 50 states could have been erased entirely through two simple policy changes: effectively undoing the Bush tax cuts for the top 2 percent of income earners by imposing an equivalent income tax at the state level, and taxing capital gains at the same rate as ordinary income.

Instead of pursuing higher revenues, states slashed their most crucial investment: education. Lafer writes, “In 2010–2011, 70 percent of all U.S. school districts made cuts to essential services.” This was coupled with new laws in four states (Idaho, Wisconsin, Michigan, and Maine) rolling back child labor standards.

Lafer argues that rather than being a “localist” strategy tailored to each state, the attack on labor has been a coordinated one, and it has been focused on battleground states: Michigan, Indiana, Pennsylvania, and Ohio. If the corporate money machine can hobble unions and public employees in battlegrounds, they can influence key national elections.

The Five Craziest Things That Rich People Have Said About de Blasio

Bill de Blasio, the Democratic nominee for mayor of New York, is currently up 40% in the polls, having excited the New York lefties tired of the rampant economic inequality and racial profiling that marked the Bloomberg years. But that doesn’t mean everyone is happy. De Blasio’s “Tale of Two Cities” rhetoric has angered many of the city’s hyper-wealthy, who aren’t looking forward to paying higher taxes for dumb stuff like “affordable housing” and “education.” Where are we, Stalinist Russia? Can someone who is not a billionaire effectively manage a city? Can you fathom having a mayor whose life does not revolve around going to philanthropy galas? These are the questions the wealthy are asking behind closed doors. Out in the open, they say things like:

1. “I fear for New York City if Mr. de Blasio gets elected.”

“I fear for New York City if Mr. de Blasio gets elected,” said Muffie Potter Aston. “He just wants to tax everyone to smithereens.”

That’s right folks, de Blasio’s plan for a modest, less than 1% tax increase on those making more than $500,000 to pay for universal pre-K has ignited a new bout of class warfare! Have you seen the new Batman movie? That’s where we are headed if rich heiresses are forced to fork over 0.1%-0.5% of their income to give poor kids a chance at making it to the middle class.

2. “I’ve never understood why New Yorkers vote against their own interests.”

Jacqueline Weld Drake says: “I’ve never understood why New Yorkers vote against their own interests. New York is a city of financial entrepreneurs, of genius stock traders and bankers. It would be a smart idea to keep it that way. It’s not a city that’s going to benefit from high taxes because people who have substantial incomes have a choice. They have a choice of venues. New Jersey beckons. Florida beckons. All kinds of other states who do better at job creation. We are really biting the hand that feeds us. No question about it.”

Again, dear readers, we are talking about a less than 1% tax hike that may not happen, and even it if does, many rich people will most certainly circumvent it. Also, for the millions of parents of children who would benefit from the universal pre-K program, it’s definitely in their interests to vote for de Blasio. And Drake’s bluff is to move to Florida? Whatever. Rich people should take a look at what’s in store for them down there.

3. Bill de Blasio’s plan is “the most absurd thing I’ve ever heard.”

E.E. “Buzzy” Geduld called de Blasio’s plan “the most absurd thing I’ve ever heard” and “not a smart thing to do.”

It appears E.E. “Buzzy” Geduld clearly has not heard his own name said aloud, because that is actually the most absurd thing I’ve ever heard (“Buzzy?!”) But the irony of this quote is that Geduld is a trustee of Manhattan’s Dalton School, where tuition is $40,000 a year (nearly the median household income of the U.S.) What’s worse is that research shows early childhood education is a great investment, and moderates like Ben Bernanke are happy to get behind it.

4. “Attract more poor people, and inequality will grow.”

Harvard Professor Edward Glaeser writes, “Make New York City’s public sector far more generous to those at the bottom, and it will attract more poor people. Attract more poor people, and inequality will grow.”

That’s right folks, as Mayor Bloomberg has explained, “We have made our shelter system so much better that, unfortunately, when people are in it — or fortunately, depending on what your objective is — it is a much more pleasurable experience than they ever had before,” he said. In fact, the homeless shelters are so great, Bloomberg plans to take his next vacation in a homeless shelter, instead of his normal trip to Bermuda. After all, homeless shelters offer Barbara, a women interviewed by the New York Timesthe following perks:

Sometimes she takes a tote bag filled with dirty clothes to work to take to the laundromat afterward, she said, because the machines at the shelter are always either broken or being used. … There is no escaping the noise and fitful sleep of a dormitory shared with eight other women.

In the Wall Street JournalNicole Lee describes the other fancy accoutrements of the “luxury” shelters:

Oh my God, you got rats, holes in the wall, critters, water bugs, roaches. Some places are too hot, some are too cold. They don’t let you have an AC so it gets real hot.

It’s more likely, as de Blasio has argued, that many people, even those working two jobs, simply have no other option because of the demise of affordable housing.

5. Bill de Blasio’s campaign is “racist.”

The city’s single richest man, who has been known to go by the alias El Bloombito, first claimed that the de Blasio campaign was “racist” and then argued, “The way to help those who are less fortunate is, number one, to attract more very fortunate people. They are the ones that pay the bills … He’s a very populist, very left-wing guy, but this city is not two groups, and if to some extent it is, it’s one group paying for services for the other.” And, to top it off, he said, “By most of the world’s standards, you ain’t poor.”

So, to summarize, de Blasio is racist for marrying a black woman, rich bankers are the “makers” while subway workers are “takers,” and all you homeless people, well, “You ain’t poor.”

Good riddance.