Wealth & Health
November 12, 2019
“Wealth consists not in having great possessions, but in having few wants.” – Epictetus
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” – Franklin D. Roosevelt
It’s Big Business World and They Just Let Us Live In It
The Sherman Antitrust Act of 1890 was the first federal effort to curb monopolistic business practices that interfered with trade and reduce economic competition. There are currently several antitrust laws are on the books which have been partially enforced by the Federal Trade Commission and the Department of Justice. Legal proceedings can also be brought by states, businesses, and individuals though the ultimate beneficiary of antitrust enforcement is ostensibly the consumer.
However, in the 21st century, the consolidation of corporate America has become severe enough to have macroeconomic effects. The biggest firms drive profits higher while depressing wages and limiting opportunities for investment, innovation, and growth. In nearly all industries, a few companies have grown so large that they have the power to keep prices high and wages low.
Leading economist Thomas Philippon says this is great for corporations, but bad for almost everyone else. In his book, The Great Reversal, How America Gave Up on Free Markets, Philippon argues that many key problems of the American economy are due not to the flaws of capitalism or even globalization, but the concentration of corporate power. He estimates that this era of oligopoly costs the typical American household more than $5,000 a year.
Philippon says it is ironic that Europe is implementing market-based ideas – like telecommunication deregulation and low-cost airlines – that Americans helped pioneer. The EU’s independent competition agency is willing to block mergers like General Electric-Honeywell and Siemens-Alstom, but the process in America is more political. Companies spend vastly more money on campaign donations and lobbying. “E.U. consumers are better off than American consumers today because the E.U. has adopted the U.S. playbook, which the U.S. itself has abandoned.”
The Great European Heist
- A Brussels-based thinktank published a paper last May entitled: The Big European Sort? The diverging fortunes of Europe’s regions. The “sort” refers to a sifting process that is steadily transforming the demography of EU member states, and driving the polarization that is defining European politics.
- The authors argued that the post-industrial city is a success story based on the clustering of high-end services in the great metropolises. As industrial heartlands in Europe, like the Ruhr in Germany, were declining in industrial output toward the end of the last century, the largest cities like Paris and London were replacing declining industrial output with high-value services.
- The result has been a damaging divide between ageing towns and rural areas and the great cities. Politically it’s meant a regional sorting – a “frustration at the relative economic decline in poorer regions, a sense of loss of community as younger people leave, and grievance about metropolitan ‘elites’ running the country for their own benefit.” (Guardian)
- Additional Read: Europe Is Toughest on Big Tech, Yet Big Tech Still Reigns (NYT, $)
If You Can’t Handle the Pollution, Eat Some Carrots
- Delhi, India is arguable the most polluted city in the world. On November 2, 21 of the 37 air quality monitoring stations in Delhi registered in the “severe” category.
- Residents complain of watering eyes, a persistent cough and a dull headache that lasts all day. Children, the elderly, asthma sufferers and the poor are especially vulnerable. In the ensuing days flights were cancelled, schools were shut and the government advised people to stay indoors.
- But at the peak of Delhi’s pollution, when people all over the city were struggling to breathe, India’s minister for health and family welfare, science and technology tweeted that eating carrots would help, and the minister of environment, forest and climate change, information and broadcasting tweeted that citizens should “start your day with music.” (NPR)
- India’s Soundtrack of Hate, With a Pop Sheen (NYT, $)
The Hong Kong Shot Heard Round the World
- Hong Kong has been suffering through months of pro-democracy protests and violent clashes with police that have thrown the Chinese territory into its worst political crisis in decades.
- On Monday, the violence reached another level as a demonstrator was shot at point blank range by a police officer, and a man who had been scolding rowdy protesters was doused with a flammable liquid and set on fire.
- Tensions had been building for days following the death of a student who fell from a parking garage amid demonstrations. While thousands have been injured since the protests began in June, this was the first reported death.
- The city’s embattled chief executive Carrie Lam said the mayhem could “take Hong Kong to the road of ruin.” She added that protesters were engaging in “wishful thinking” if they thought violence would pressure the government into making concessions. (NYT)
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A “50/50” Split of Wealth
- Data from the Federal Reserve shows that, thanks in part to a decade of huge returns in the stock market, the top 1 percent of American households now control more than half the equity in US public and private companies.
- The very richest Americans had assets of about $35.4 trillion in the second quarter, just shy of the $36.9 trillion held by the tens of millions of people who make up the 50th percentile to the 90th percentile of Americans that constitute the middle and upper-middle classes.
- Americans in 90th to 99th percentiles, the well-to-do, but not the super rich, still control the biggest share of wealth, with $42.6 trillion in assets. Contrastingly, the bottom 50 percent of American households have 35.7 percent of liabilities and just 6.1 percent of the assets. In 2017, the top 1 percent of taxpayers had incomes starting at $515,371. (Bloomberg)
- Billionaires fear Warren and Sanders – but they should fear us all (Guardian)
- As Bloomberg’s New York Prospered, Inequality Flourished Too (NYT, $)
- Can America Ever Rebuild Its Neighborhoods and Communities? (Techcrunch)
Underwater Car (Loans)
- Car buyers who owe more for their ride than the vehicle is worth are said to have negative equity, or be underwater. According to the car shopping site Edmunds, 19 percent of people who traded in their cars to buy new ones a decade ago had negative equity.
- Five years ago, that number was 28 percent. In the first nine months of 2019, some 33 percent of buyers were underwater. Rising car prices have exacerbated an affordability gap that is increasingly getting filled with auto debt.
- Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can last seven years or longer. Borrowers with negative equity at the time of purchase are routinely charged higher interest rates and higher monthly payments. These types of transactions are often encouraged by dealerships, who roll the old debt into a new loan, and can make more money arranging financing than just selling cars. (WSJ)
- ‘I’m Going to Lose Everything’: A Farm Family Struggles to Recover After Rising Debt Pushes Husband to Suicide (WaPo, $)
Trumpistan
- We read all 2,677 pages of impeachment inquiry testimony released to date. Here’s what’s clear. (CNN)
- No Charitable Thought for Donald Trump: Assessed $2 million after admitting his foundation was his piggy bank, the president shows he always comes first. (NYT, $)
- Trump’s Frantic Fight for Immunity: As public impeachment hearings begin, Trump’s Presidency is still defined by his belief that he cannot be held to account. (New Yorker, $)
- New accounts depict White House struggling to contain damage from Trump chaos (CNN)
- Nikki Haley’s Audacious Bet: The former South Carolina governor’s new book is a gamble that the future of the Republican Party looks a lot like Trump. (Atlantic, $)
Enter Sandman’s Detox Cycle
- In a paper recently published in the journal, Science, Laura Lewis and her team of sleep researchers at Boston University showed how our bodies clear toxins out of our brains while we sleep.
- Lewis’ work investigated non-REM sleep, that deep phase which generally happens earlier in the night and which has already been associated with memory retention. A similar and groundbreaking 2013 study on mice showed that while the rodents slept, toxins like beta amyloid, which can contribute to Alzheimer’s disease, got swept away.
- Lewis’ study was able to show that toxins were being cleared away in humans via the brain’s electrical activity sending slow waves of cerebrospinal fluid to wash over the brain during non-REM sleep.
- Maiken Nedergaard, the leader of the 2013 study which first discovered how sleep can clear out toxins in mice said Lewis’ paper was “fantastic.” “It’s telling you sleep is not just to relax. Sleep is actually a very distinct function.” The findings could open new avenues for treating and preventing neurodegenerative diseases like Alzheimer’s. (Wired)