America has two economies, and they’re diverging fast
brookings.edu
brookings.edu
https://svgur.com/i/F35.svg [SVG]
* Bar charts are preferred when presenting a population of something (people or jobs)
* Each Y-axis starts at zero
* Charts that (by definition) add up to 100% are shown as stacked
* The y-axis max is set to 100% where possible (except in one case, where this obscured the trend)
(I couldn't get Google Sheets to make a nice x-axis for the first chart)
I still think having only two data points (one during the Great Recession and one in 2018) reeks of cherry picking. I’d like the author to have provided more historical data to demonstrate the effect.
> a series of genuine, penetrating shifts have been happening at warp speed through the last decade. These shifts are massively altering the two parties’ economic identities.
The analysis of averages can be misleading. Democratic districts appear to include both some of the poorest urban cores and wealthiest suburbs. I wonder how the GINI coefficient of Republican versus Democratic districts compares?
Also, the makeup of the 111th House was 256 D, 178 R and the makeup of the 116th House was 235 D, 199 R, a swing of about 10 districts to the Republicans. But note that in the 114th House the makeup had been 188 D, 247 R and the map was even redder.
You can get an idea from the states.
https://en.wikipedia.org/wiki/List_of_U.S._states_by_Gini_co...
It won't surprise you to reveal that Utah features the greatest amount of economic equality. When you chart Democrats' income it tends to be bimodal--poor people voting for tax money and rich people voting for [insert mystery reasons here--stopping climate change? ethnic interests? to please TV clowns?].
So I think you are providing illogical reasons for other people to have a certain pattern of illogical beliefs, which is like doubtful squared for me.
Edit: Maybe I would expect the pattern you describe, but I would describe the reasons differently, at least. It is fundamentally irrational to vote as though your vote affects anything, so perhaps the people who are successful and fulfilled through work would tend to be rational, and regard voting as personal expression - whereas people who are not so rational would be more prone to vote their self-interest. Then, of course, one would ask if the irrational in this sense are the groups you mentioned. I don't know.
18 high GINI states, New York down to Arkansas (Alabama excepted) also all have two senators from the same party. There are 16 Ds and 20 Rs.
States with a split Senate delegation tend to be in the middle of the GINI range. States with senators from the same party tend to be at the ends of the GINI range, and at both ends there is only a slight preference for Republicans given that Republicans were in the overall majority.
The average GINI for Democratic Senators is 0.4677, and 0.4619 for Republicans.
> highly unequal, metro areas
You're saying the same thing as the article, IMHO.
Wikipedia has images that can give a vague idea of the geographic shift (which I like especially because they show which districts flipped in the election). It looks to me that some of the major shifts were independent of gerrymandering (e.g. Dakotas becoming solidly Republican, Dem control solidifying over coastal Pacific and around NYC), while others might have been tied to it (e.g. compaction of Dem control in UT, AL, MS).
2010 election: https://upload.wikimedia.org/wikipedia/commons/thumb/a/ac/20...
2012 election: https://upload.wikimedia.org/wikipedia/commons/thumb/b/b8/US...
2018 election: https://upload.wikimedia.org/wikipedia/commons/thumb/4/48/US...
The data isn’t measuring areas that most GDP over the past decade. It’s measuring the average GDP per capita of areas that voted Democrat/Republican in 2008 and 2016, which is a different set of areas. What it’s showing is the economic sorting that happened in the 2016 election, with higher income suburban areas voting more consistently Democrat, with lower income rural areas voting more consistently Republican. That doesn’t say anything about the incomes of any given place, since the set of places wasn’t held constant.
Only in America is adequate health provision considered "massive wealth transfer"
Total domestic hospital profits (including more than just public companies) is about $74 billion per year: https://www.modernhealthcare.com/article/20180104/NEWS/18010.... Insurance companies are $25 billion annualized: https://www.cnbc.com/2017/08/05/top-health-insurers-profit-s... ($7 billion per quarter for health insurers). The link above shows $100 billion in drug company profits worldwide; about half of revenues are in the US, so let’s say $100 billion in profits domestically. That’s $200 billion for the US healthcare industry, including non-public companies in addition to publicly traded companies.
Total US healthcare spending is $3.5 trillion. Profits account for just 6% of that spending.
To reduce healthcare spending to the same levels as the rich European countries like Germany or France we’d have to cut spending about $1.25 trillion. Cutting healthcare industry profits to zero (and note that there are for-profit hospitals and drug companies in the EU and they don’t make zero profit!) would reduce healthcare expenditures by just 1/6 of the amount required.
Edit: oh yeah, and marketing. So much health industry money ends up in marketing. Something almost completely unnecessary under single-payer as well.
As to cost savings, you can’t use insurance industry revenue because that includes money spent on services. And a lot of the “paper shuffling” does need to exist under single payer. Most universal healthcare systems aren’t nationalized systems like the UK NHS. Germany for example has mandatory membership in Public health insurance organizations for those making under 60,000 euro. There are 100+ of those. Then 15% of the population has private health insurance. Care providers are mostly private. So there is still medical billing that needs to be done. Most EU countries are similar in that regard, and unlike the UK NHS.
As to marketing, now you’re talking about a drop in the bucket. Pharma industry advertising adds up to just $6 billion per year.
But people who advocate for this position (which, again, I believe in) all too often live in a fantasy world where we can magically switch systems and pay less. If we keep paying US medical personnel their prevailing wages, there is no way we’re going to lower costs.
Nurses and doctors are too popular in the US to ever even suggest that we reduce their wages to European levels.
Providing effective and low cost chronic care is an unsolved problem everywhere.
I can’t say that I support any and all entitlement schemes I’ve ever heard for chronic care, is why I was singling our acute care, where I do, but you’re right that I was mixing up arguments.
But of course when you provide low cost acute care, and don’t cover chronic conditions, there’s strong pressure for chronic problems to wait until they’re acute and harder to solve, and for chronic patients to use the acute system very inefficiently.
It is indeed a hard problem.
Yes, but some of this is funny money. Like when you go to the hospital and get charged $50 for a tablet of aspirin. I can see a coordinated national system to be far more efficient than the system we have now of fake list prices where some parties get a negotiated real price
Its not one guy digging a ditch and charging too much. Its that for every 6 people digging, 5 are racing behind them filling it back in and all of them are charging us for the "service".
First, the location and timing of accounting profits is not the same as economic profits and the return on capital.
Second, what do you think the point of single payer negotiation with healthcare providers is? The NHS in britian negotiates prices on behalf of the entire country. This system in the US would massively move producer surplus over to consumer surplus by reducing prices through negotiating power.
Lastly, healthcare outcomes in the US are terrible and prices are astronomical compared to Europe, do you think it's a coincidence that their systems are centralized while ours is distributed? The US system massively favors capital returns over service cost and quality.
Am not saying the system is problem free, but I've had multiple surgeries done for free, whereas in the U.S I'd most likely go bankrupt.
Also the point about waiting, not only did I not have to wait, but are you seriously comparing this to a system where I don't have to wait if am wealthy, but can wait until I die if am not?
> A study published in the journal Health Affairs reviewed Justice Department data and discovered that among Americans who cited medical debt as a contributing factor in their bankruptcy filing, only 12 to 13 percent of their total debts were medical.
Also the studies that are invoked for that proposition don’t distinguish between bankruptcies due to medical bills and bankruptcies resulting from reduced income due to health issues.
Your link makes no mention of mortgage or home loans. If they are included in the debts at bankruptcy, it's not in the least surprising that medical debt is "only" 12%.
The 12-13% was unsecured debt (which would exclude mortgages, which are secured by the house).
> This past year, the U.S. Department of Justice (DOJ) responded to a request by Sen. Charles Grassley (R-IA) by examining 5,203 bankruptcy cases from the files of the U.S. Trustee Program. The filings occurred between 2000 and 2002, the same time frame as the filings studied by Himmelstein and colleagues. The DOJ reported that 90 percent of filers had medical debt of less than $5,000. Of those reporting medical debts, those debts accounted for only 13 percent of total unsecured debt. The DOJ summarizes the evidence against Himmelstein and colleagues' thesis as follows: “The conclusion that almost 50 percent of consumer bankruptcies are ‘medical related’ requires a broad definition and generally is not substantiated by the official documents filed by debtors.”
The study is a little old, but the “medical debt is the leading cause of bankruptcy” trope is also old.
Never heard of it being the leading cause of US bankruptcy btw. My distinctly European perspective is it's problematic it's a possible cause at all.
Using this definition, everything is paid for, and nothing is free except sunlight. This is obviously a useless definition.
“Paid for by [someone else]” is “free”. There is no other useful definition of the term.
I thought the uninsured rate was closer to 10%. Some googling suggests 8% or 9%. This is short of 33%.
Of course many are insured but under insured, or insured but paying (or in I guess 66% of cases having their employer pay) for massive amounts of waste. There are entire industries like medical billing which don't strictly need to exist.
If the 23% are already paying, why do they need a subsidy from someone else's employer? I guess there is an affordability issue and rising costs ... but this is true for everyone, even those who mask it by going through their employer.
https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
Then again perhaps the level US healthcare is considerably higher and it would mean lowering the average quality and availability of novel treatments.
If, for example, someone has a life threatening illness like cancer, they would gladly sell most of their stuff to pay to get their health back. Your health is more valuable than a garage full of Ferraris.
Taking care of that wealth is important. It baffles me how people can smoke sigaretes. It's like cleaning your Ferrari with a scouring pad.
Bad
Maybe you should consider that everyone deserves some wealth in general.
wealthy, adj. having a great deal of money, resources, or assets; rich
most people are not wealthy.
Health is not wealth.
You deserve access to life-saving health care you can't afford, even if you don't "deserve" to be rich.
If something isn't done, health insurance will become an empty promise. Even when people have it, it will be to expensive to be truly useful. There are already segments of the population where this is happening.
IMHO, that is massive wealth transfer: collecting all the premiums from working people and transferring it to the health care industry.
Paying for healthcare is, by contrast, not a wealth transfer because it’s payment for receipt of goods and services. As I outline in a response to a sibling post, profits account for just 6% of health spending. The rest goes to paying staff, for supplies and equipment, etc.
Which is also why cutting healthcare expenditures is a pipe dream. If you look at many places, the local hospital is the biggest employer. Nurses in the US make double or more what they make in the UK. Maybe we do a bunch of unnecessary tests, but we lay for lab techs to do those unnecessary tests. Real reductions in healthcare expenditures will require cutting salaries and cutting jobs, and that’s politically impossible.
Yes, some costs come down when insurance actually pays. But this still doesn't bring costs down to amounts that we see in Canada.
More and more no one can pay for healthcare anymore. Perhaps it will cost $3 trillion the first year but costs will drop as prices standardize and we start to see care become predictable. The alternative is prices that continue to rise with more and more bankruptcies and, eventually, more deaths due to lack of care. Even the insured cannot continue to afford these rising costs.
Wealth transfer... from where? The federal budget seems plenty big. $700 billion was transferred to banks staring in 2008, $4.6 trillion was paid out in eight years. I'd prefer a proactive solution, perhaps it will cost less in the end then our current plan to do nothing and fight what little regulation has been put in place.
This is not normal. Go to any medical clinic in Europe, and it's no different from the tech sector. One office admin, lots of doctors and nurses.
And it's not cheap either.
If we cut hospital administration costs to Dutch levels (as a %-age of GDP) we could save about $140 billion per year. It's not nothing, but it's also only about 4% of total U.S. health expenditures. As noted in my response to a sibling post, all profit in the system amounts to another 6%.
So even if you cut out all profit,[1] and reduced administrative costs to Dutch levels, you get a 10% cut. It's not nothing, but it doesn't even get you 30% of the way there to cutting our costs to rich-OECD country levels (as a %-age of GDP). You still need to find another $875 billion or so to cut.
[1] Which is of course unrealistic, because drug companies in the EU make significant profits too, and most countries like Germany and the Netherlands have private service providers who make profits.
We should look back to a time before national one-size-fits-all healthcare regulations that, based on crude generalizations, regiment a complex industry at great cost to innovation, and monolithic central-government-administered programs with no end user price incentives.
Also like I said, other countries get to utilize medical innovation produced in the US at subsidized rates.
And yes, for-profit healthcare should be allowed. Healthcare workers aren't all volunteers. They're doing it for money. The same applies to investors. Having laws limiting investment to philanthropy and taxpayers is totally destructive.
Healthcare costs are going down in cosmetic surgery, unlike other healthcare fields across the developed world. Cosmetic surgery is driven by price conscious consumers and profit-motivated practitioners. Self-interest is a powerful motivator and ignoring that leads to misguided bans on for-profit healthcare and inefficient, rent-seeking government-run healthcare bureaucracies and government-permissioned private industries shielded from competition by regulatory barriers.
>>Also we're paying for a lot of bad habits like overeating and not exercising. Lots of preventable diseases go into that mix, I dare say it's the majority of expenditures. There is virtually no governmental or social efforts being put into stopping those preventable diseases.
Agreed. I think health outcomes are mostly a result of non-healthcare factors. Having safer, denser and more pedestrian friendly cities would go a long way in improving health for example.
US healthcare functions more like a horrific reverse lottery where occasionally someone is sent a bill that bankrupts them for reasons they don't understand and had no control over.
It's not the market, but far more US liability laws and willingness to sue that brings the US tendency to over investigate, diagnose and treat, is it not? That seems to be the sole advantage of the US approach over others, and even that can be questioned in many areas.
All of those market pushes seem to be in the interests of medical CEOs and stockholders, not patients and citizens. I am far happier with a system that tries to remove or limit those for benefit of everyone. That tries (fallibly) to achieve fairness on medical not solely market grounds. I would prefer more openness too, but after the infamous farce of monoclonal antibodies, that's not realistic.
Seems more like we need to keep that invisible, and very imperfect hand out of healthcare as much as possible. Then heavily constrain it where we can't keep it out.
The recession did happen and it ended, as recessions tend to do. Recessions are always much briefer than expansions. Cheap money is helping but much of the expansion is driven by consumer spending and tech innovation, in America and China especially. Companies such as Facebook, Apple , Disney, Walmart, Google and Microsoft making record profits every quarter and have so much cash they are giving it away in the form of dividends and buybacks. As evidence of how the US economy is not dependent on the fed, when the fed began raising rates in 2015-2017, the market still rallied. I don't see any reason for the era of low rates to end. In spite of the huge rally in stocks over the past decade, there is still an aversion to risk, and that is why capital keeps flowing into low or native yielding debt. Companies such as Ubere are spending a lot of money, but similar to Tesla, they are cashflow positive. The money is spent on outlays and other lagre expenses. When the expenses end, they will be profitable similar to Amazon. People keep predicting that things will eventually have to change, but maybe they won't. I n 2012-2014 there was talk of a tech bubble, but now valuations for FANG stocks is the lowest the have been in a long time.
> A company like Uber, though amazing to me and I use all the time, could only exist with cheap money for a decade. The idea of building a company by losing money for 10 years in order to build your client base is impossible if rates are high.
Not necessarily true. Tech VC funding for money-losing companies was huge in the late 90s despite high interest rates.
I think the part of the recession that didn't happen was the failure and disintegration of at least a couple of very large banks and at least one car company, among other things. There was no fundamental reorganization to clean up a couple of decades of bad decisions, which signalled to the next round of players that high risk is not really high risk. One day the chickens will come home to roost.
Will they though?
wat. The great recession _did_ happen, and by all accounts came damn-near to devolving into a second Depression. There might be something to your complaints about capital markets' problems, but had to respond to that line...
There are no legends, so taken out of context you'd have to just know what the colors mean. In grayscale they are virtually the same, so you couldn't tell anyway. Even if they draw the lines the same, they could've used different style endpoints. Again though, without a legend you wouldn't know which is which. Even if you're not in "wellness" mode you may be in say, "color blind" mode (sadly not really optional) and in that case these may be particularly difficult to read.
They don't have vertical axes either, so putting the charts side by side or overlaid doesn't make sense, because you can't know if they are the same scale unless you compare the endpoint numbers. (Hint: they aren't the same scale.)
These charts aren't necessarily misleading by design, but they lack the fidelity they probably should have in order to be truly useful, particularly taken out of context.
How is productivity measured? I have wondered about this stat as I have seen it used many times over the years but I can't figure out what and how they are measuring or who is doing the measuring.
Take Weyerhaeuser as an example- they own 26 million acres of land across North America, have 10,000 employees and 7+ billion in revenue. Recently their corporate headquarters moved to Seattle. Is their 7 billion in revenue spread across all the loggers, drivers and mill workers in remote forest locations? Boeing is another example with headquarters in Chicago but as far as I know they don't make any planes in Chicago.
Are these stats pulled from census, irs, labor...? Am I wrong or cynical in thinking these are lazy stats and most of the "productivity" is attributed to the small percentage of employees in the corporate HQs? I can't imagine a fed bean-counter following around logging trucks in remote areas to make sure the productivity is attributed to the correct region.
You raise a good question about localization of GDP. The global economy is a highly-connected network. It's often unclear how to draw valid conclusions from national accounts, let alone the local accounting attempted here.
That said, I think there most likely is a trend of the kind imagined by the authors and that it's showing up in these figures. Showing up is the most it's doing though.
*https://brandongaille.com/24-interesting-republican-vs-democ...
Trump's economic sweet spot, for instance, was $75K. Not coincidentally, that is the median income for a two-earner family of two white high school graduates. But calling that "the working class" really misses the point.
Here is a point I will make that is political: The places that are run by very liberal local governments, such as California and New York have the majority of the growth. I always see these articles about how business and people are fleeing to low tax places. Except the growth continues to swamp that effect.
No, I'm saying that's not quite it. There is an income correlation among white voters: the poorer a white voter is, the less likely he was to vote for Trump. It's just a very shallow one with a couple of convex points at a couple of income levels.
People making >200k probably use almost no government resources, and are sick of getting taxed up the arse left and right at any opportunity.
I’d be happy to pay more tax if I had any faith the money would be used wisely, but I don’t. Hence, my goal when voting is tax minimization.
Americans are spoiled and don't realize how much the government does for them.
For a truly low govt society they can move to various third world countries.
> doesn't include liberals
Where did I ever say that, pray tell?
The last couple of paragraphs especially are pretty clearly pushing an agenda.
"Why aren't Democrats trying to answer everyone's problems? And realizing that someone is telling you they have a need if they vote for the other party?"
Turns out, politics is in its own filter bubble. Democrats honestly can't relate to rural or manufacturing areas anymore, and Republicans can't relate to urban or technology areas.
Not true in all cases. Particularly look at what is going on with farmers in the midwest voting directly against their economic self interest.
The issue I have is farmers relying on state welfare to stay solvent while they vote against their economic interests.
Two of the sectors where the author is touting gains for Democrats both have significant left-leaning bias: academia and tech. How does that play into this?
Democrats are getting more college degrees now, but which degrees?
Why start so many graphs of Democrats doing better than Republicans in 2008 when we had a big recession and a new president who didn't prioritize rural America? Why not go back to 2000 or 1990 so we can get a bigger picture?
And pardon my ignorance, but "GDP per seat"? And why is this graph next to Median household income? Are they saying that the changes in median household income are causing "GDP per seat" to rise? Urban populations have changed a lot in the past 10 years, are we even talking about the same households?
Household income statistics are prone to distortions[0], GDP per seat is probably prone to even more, why not use GDP per capita? It feels like they were just happy to find two graphs where the Democrat line went up and the Republican line went down and they know most people will just glance at the graph without wasting their morning thinking about what GDP per seat really means and how it's affected by the population flows of the past decade.
[0] - https://www.creators.com/read/thomas-sowell/09/16/misleading...
It is more likely that coastal Democrat's income and education was always higher than rural leaning counties and remained at par between these two time periods. To state that this materially changes the Democratic party is not right.
The article over generalizes on geography. My city is deeply red but it recently passed San Francisco in population and is growing faster in nearly all metrics including jobs, housing, wages, and so forth. I think the article is generally correct in that urban clusters tend to be more blue and rural areas tend to be more red, but that is a product of population density more than anything economically related. Despite my city now having more people than San Francisco it is also growing geographically and can maintain its average density. It is now geographically larger than Dallas. If this rate of growth is maintained this city may enter the top ten of US cities, both area and population, over coming decades and it will probably continue to be a red congressional district.
Also, next door is a suburb that is possibly the wealthiest mid-sized city in the country and it’s also in this red district.
a quick edit: It's a question that really began gnawing at my mind over the last few minutes. What is a skill?
To tell you the (highly likely) truth, I could probably take on the jobs the authors hold and do a perfectly acceptable professional job given a desk, a library, a phone, a web browser, and a five minute head start. Are they 'skilled'?
My guess is that the dividing line between 'Red' and 'Blue' is being renegotiated as we speak. The post-WWI political arguments, largely about economics, are being replaced by something new. Trump obviously has a good nose for these matters.
Here is his CV:
https://www.brookings.edu/wp-content/uploads/2016/02/metro_2...
Including this gem from almost a decade ago:
“Bill Gates, Not Congress, Has the Solution to Global Warming.” The Avenue, A blog of The New Republic. January 25, 2010.
I'm glad that worked out so well for us.
Don't miss this:
https://www.brookings.edu/blog/the-avenue/2019/08/23/instead...
Tl;dr: "wealth work" is here to stay, yes it's a "servant economy" but we should just tax and regulate, so that the servants feel better about their jobs walking the dogs of people too rich and lazy to walk their own dogs.
Everyone in the country is losing except for Jeff Bezos and his caste of rich capitalists who are served by the corrupt politicians of either party.
Given more than 60% of tech workers do not identify as Democrat, the conclusions that tech workers are Democrats are silly.
I identify with only a few Democrat Candidates and fiscally think Democrats are regressive.
That said, Republicans also don't align with my social or economic views. (Tariffs and government spending)
If I had to guess why this article exists, they are pressuring people into thinking educated rich people vote Democrat.
[citation needed]
But for clarity, I'd like to see "identify as X" and "identify as neither".
For some numbers which don't agree see https://www.vox.com/policy-and-politics/2017/9/6/16260326/te...
"They found that, broadly speaking, tech entrepreneurs are pretty liberal. 75.2 percent voted for Hillary Clinton in 2016, and 61.3 percent identified as Democrats"
All I'm reading out of this--in-between the lines of course--is "Booga booga red staters! You're all going down into an abyss of poverty and opioid addiction. Better sell the farm, borrow six figures for a new job credential, prostrate yourself before any corporation that might take you in, move to the city, and spend $2k/month to live in a shoebox"
In other words, wall street wants even more tropical mansions.