Daily Bread for 7.19.22: Individual and Household Well-Being

Good morning.

Tuesday in Whitewater will be mostly sunny with a high of 89. Sunrise is 5:34 AM and sunset 8:28 PM for 14h 53m 39s of daytime.  The moon is a waning gibbous with 61.5% of its visible disk illuminated.

Whitewater’s Common Council meets at 6:30 PM

On this day in 1903, Maurice Garin wins the first Tour de France.

In small towns across the Midwest (and places far beyond), discussions about development and economic improvement almost always focus on particular projects, and as frequently those are government-subsidized projects. There’s an emphasis on capital projects: what can we build today? The theory: if we build it, they will come. (In W.P. Kinsella’s Shoeless Joe, on which Field of Dreams was based, building is meant to entice a single person: “if you build it, he will come.” No matter, as capital projects to attract others sometimes fail to attract even a single person.) 

Peter Coy’s recent column in the New York Times, on measuring economic inequality, makes plain the emptiness of considerations of mere capital spending. However one thinks about inequality, from left, center, or right, all serious considerations emphasize individual economic well-being: 

Differences in wealth and differences in income are the wrong ways to measure economic inequality, and going by either of them “dramatically overstates” the degree of inequality in the United States, a working paper argues.

The right measure of economic inequality is differences in spending power, says the paper, “U.S. Inequality and Fiscal Progressivity: An Intragenerational Accounting,” which is by the economist Alan Auerbach of the University of California, Berkeley, the economist Laurence Kotlikoff of Boston University and the software developer Darryl Koehler of Economic Security Planning.

Spending power — the amount of goods and services that a person can buy — is what really matters to people because it captures the ability to satisfy their wants and needs, Auerbach, an expert on the economics of public finance, told me. He asked me to imagine bars of gold encased in a radioactive block. If wealth can’t be used, it’s of no value. The same goes for income, he said.

Study after study has shown rising inequality of income and wealth in the United States. An article by the economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman published in 2017 found that the average real income of the top 0.1 percent of the population grew by 298 percent between 1984 and 2014, while the average real income of the bottom half of the population grew just 21 percent.

But spending power gives a different picture. Still bad, but not as bad. The richest 1 percent of 40- to 49-year-olds in the United States own 29.1 percent of their age cohort’s net wealth, but account for only 11.8 percent of their group’s remaining lifetime spending power, the new paper says. The poorest fifth of the 40-somethings own just 0.4 percent of the group’s net wealth but have 6.6 percent of the remaining lifetime spending power, the paper says.

(Emphasis added.) 

These analyses — from whatever part of the economic spectrum — focus on what individuals and families possess, what they have at their disposal, not whether some development man thought that he could play builder with public money.

(Now and forever: venture capital is privately funded; development men, local landlords, and their ilk who want to play at venture capital should use their own money, not public funds. There was never a more dishonest program in Whitewater than the CDA’s capital catalyst program.) 

When a school district — like Whitewater’s — insists that $1.6 million for athletic fields will produce an economic uplift, they cannot offer a single bit of evidence on how this will measurably affect overall individual and household incomes within the district.

That’s what matters. The rest is misdirected discussion in Whitewater, in Wisconsin, in the Midwest, or anywhere else.  

 Birmingham [England] golf course catches fire after extreme temperatures amid heatwave

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1 year ago

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