I AM MAD AS HELL
In the 1976 movie entitled NETWORK, fictional news anchor Howard Beale exhorts his viewers: “I want you to get up right now. Go to your windows. Open them and stick your head out and yell – I’m mad as hell and I’m not gonna take this anymore.” That is clearly the sentiment behind the Brexit vote and is probably behind the sentiment in our country to “throw all of the career politicians out!” At least 70% of voters think the country is headed in the wrong direction and that the two most important concerns are: 1) our safety; and 2) the need for our economy to grow (job creation). In recent years, voters have been distracted by abortion and gay rights, but today our safety and our ability to support our families have become paramount.
In 2008, Democrats numbered 49% of our electorate, but now that number stands at 29%. But the Republicans did not gain more voters. Independents have risen to 42% of the electorate and these are the people who are “mad as hell” and they are going to determine the outcome of this election. ANGER IS THE NEW HOPE.
Besides being a three ring circus, this election cycle is of paramount importance. First, it determines who controls the House of Representatives. Second, it will decide who controls the Senate. And third, it likely sets the direction of the Supreme Court for a generation considering three of the justices are 77 years of age, or older.
People are “mad as hell” for a variety of reasons:
- Middle class workers are losing ground in this economy. Jobs are being created, but 49% are in the lowest wage category. Working 2 or 3 jobs has become necessary, which diminishes the quality of life.
- Wages have returned to the level of the 1970s. Prices are not being rolled back. It takes more to support a family, but real wages have moved below sustenance levels.
- Many believe that illegal immigrants are taking jobs away from local workers. The belief is that these folks will accept a lower wage.
- The middle class has a declining share of the wealth. Among major industrialized countries, the USA has the lowest middle class share of wealth at 19.4%.
- Health care has become prohibitively expensive. Drug companies are engaging in unfettered “price gouging.”
- Education has become prohibitively expensive. UVA has a $2.3 billion slush fund, but raises tuition. Most likely, the fund is to provide a means to “go private” so that it can be a member of the “IVY LEAGUE.”
I will leave the safety issues to the experts, but I do not feel as safe as I used to and to say it can never happen here seems to be an invitation.
The economy is problematic. The US economy is growing just slightly above a “recession” pace. As the following chart shows, our GDP (Gross Domestic Product) is growing somewhere in the neighborhood of 1%. The norm for high levels of employment is about 3%. Despite the availability of money at low rates, consumers are paying down debt not increasing it.
We have a similar problem that the Japanese have had for 15 years, a declining and aging population.
The baby boomers are retiring, spending less and are not supporting growth. Consumer spending is by far the largest segment of our GDP at about 70%. With real wages declining, it is difficult to see large increases in in spending. But the millennials are another story. Among adults ages 21 to 45, 35% receive financial support from their parents. Of those, more than two-thirds could not get by without their parents’ help. This is the way boomers are now spending their money.
It appears that economic activity and wage growth are going to remain disappointing for a while. ANGER IS THE NEW HOPE.