Society Evidence File

Jun19: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
In City Journal, Kay Hymowitz has written a thought provoking article titled “Alone”, which details how the decline of the family has led not just to an epidemic of loneliness (and its attendant pathologies), but to increasing “kinlessness” in old age.
Hymowitz’ warnings about the implications or rising kinlessness in old age are born out in an academic paper, “Projections of White and Black Older Adults Wiithout Living Kin in the United States, 2015- 2060”, by Verdery and Margolis, who find that, “Close kin provide many important functions as adults age, affecting health, financial well-being, and happiness. Those without kin report higher rates of loneliness and experience elevated risks of chronic illness and nursing facility placement.”

The authors conclude that their “results suggest dramatic growth in the size of the kinless population.”
How Rising Inequality Suppressed US Migration and Hurt Those Left Behind”, by the IMF
“Using bilateral data on migration across US metro areas, we find strong evidence that increasing house price and income inequality has reduced long distance migration, the type most linked to jobs”, leading to worse outcomes for those “left behind.”

“For those migrating uphill, from a less to a more prosperous location, lower mobility is driven by increasing house price inequality, as the disincentives from higher house prices dominate the incentives from higher earnings. By contrast, increasing income inequality drives the fall in downhill migration as the disincentives from lower earnings dominate the incentives from lower house prices.”

Moreover, as Aaron Renn shows in a new column (“The Rust Belt’s Mixed Population Story”), this phenomenon is occurring within regions too, with larger cities gaining talent at the expense of their hinterlands.

A new report from the US Senate Joint Economic Committee explores the social impact of these mobility trends. In “Losing Our Minds: Brain Drain Across the United States”, the JEC finds that, “over the past 50 years, the United States has experienced major shifts in geographic mobility patterns among its highly-educated citizens. Some states today are keeping and receiving a greater share of these adults than they used to, while many others are both hemorrhaging their homegrown talent and failing to attract out-of-staters who are highly educated. This phenomenon has far-reaching implications for our collective social and political life, extending beyond the economic problems for states that lose highly-educated adults…”

“Our report provides evidence that highly-educated adults flowing to dynamic states with major metropolitan areas are, to a significant extent, leaving behind more rural and postindustrial states. This geographic sorting of the nation’s most-educated citizens may be among the factors driving economic stagnation—and declining social capital—in certain areas of the country.”
The Best are None Too Good”: Ranking Transit Agencies” by The Antiplanner
This fascinating research paper compares key operating results across most of the United States local mass transit systems. The results enlightening, but not encouraging.

“The nation’s worst-managed transit systems lose 65 cents for every dollar they spend on operating costs, fill only 42 percent of their seats, carry the average urban resident just 40 round trips per year, use almost as much energy and spew out almost as much greenhouse gases per passenger mile as the average car, carry fewer than 14 percent of low-income workers to work, and lost 4 percent of their customers in the last four years.”

“Oops—excuse me. Those are the numbers for the nation’s five best transit systems outside of New York (which is in a class by itself)”.

“The five worst systems, out of the nation’s fifty largest urban areas, lose 87 cents for every dollar they spend on operating costs, fill under 18 percent of their seats, carry the average urban resident less than four round trips per year, use more energy and spew out more greenhouse gases per passenger mile than the average Chevy Suburban, carry less than 2 percent of low-income workers to work, and lost more than 13 percent of their customers in the last four years.”

These data imply these transit systems will require even larger public subsidies in the years ahead, at a time when state and local budgets are likely to face rising pressures from pension, social safety net, infrastructure and other competing spending demands, while their tax revenues are constrained by a weak economy and the escalating mobility of their income and sales tax bases if marginal rates are raised beyond a tipping point.

For more on this, see Noah Smith’s column on Bloomberg, “New York’s Comeback Might Have Come and Gone”, and the forces that driving a reversal of fortune for a growing number of “superstar cities.”
A new paper on the impact of McMansions shows why social comparison can have a negative impact on your psychological and financial health.

Unfortunately, in today's world social comparison has been supercharged by unprecedented connectivity and powerful social media apps — especially those based on images and video.
In “The McMansion Effect: Top Size Inequality, House Satisfaction and Home Improvement in U.S. Suburbs”, Clement Bellet finds that, “Despite a major upscaling of [the size of] single-family houses since 1980, house satisfaction has remained steady in American suburbs…This can be explained by upward-looking comparisons in the size of neighboring houses…New constructions at the top of the house size distribution lower the satisfaction that neighbors derive from their own house size. Upward-looking comparisons are stronger among people living in larger houses and decrease with the distance from McMansions”…

“Homeowners exposed to the construction of big houses in their neighborhood put lower prices on their home, are more likely to upscale to a bigger house and take up more debt.”
Red, White, And Gray Population Aging, Deaths Of Despair, And The Institutional Stagnation Of America”, by Lyman Stone, published by the American Enterprise Institute
In this provocative paper, Stone begins with an increasingly common observation: “American society is changing. As Americans have gotten older and more settled, our institutions have also become less dynamic. A country that was once typified by a sense that anyone could be or do anything is now hidebound by an increasingly heavy weight of rules and regulations.”

“While this trend toward more regulation and greater constraints on regular life can be seen across all walks of life, [Stone’s] report focuses on five main areas:

(1) Increasing stringency of land use regulations such as zoning,

(2) Greater prevalence of restrictions on work such as occupational licensing,

(3) Unusually high incarceration rates given currently low crime rates,

(4) An education system that forces people to spend more years in school for a higher cost and less value, and

(5) Growing debt and other financial burdens among households and at all levels of government.”

Stone provides evidence to support his claim that, “these trends can all be traced back to policy choices made between the 1940s and 1990s. That is to say, while they disproportionately afflict younger generations such as millennials, they are problems created by baby boomers and their parents.”

He concludes that, “if the United States is to have a 21st century as prosperous as its 20th century, these damaging legacies of the baby-boomer generation must be fixed.”

While Stone’s diagnosis seems right on target, as in the case of so many other similar papers I have read recently, I was less confident about the likelihood his proposed solutions will ever be implemented, dependent as they are on “policymakers mustering the political courage” to do so.
May19: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
RAND released an interesting new report on “News in the Digital Age
Three key takeaways:

First, “Print journalism and reporting on broadcast television have been mostly consistent in tone and style over the last 30 years. But since 2000, there’s been a gradual shift toward more subjective reporting.”

Second, “In stark contrast to the tone of broadcast television news, between 2000 and 2017, cable news featured content that was more subjective, abstract, argumentative, and based on opinion rather than reporting events.”

Third, “Old media is more grounded in traditional reporting. New media tends to lean more subjective. Through 2017 newspapers have remained anchored in traditional reporting techniques. These include strong use of characters, time, descriptive and concrete language, numbers, and retrospective reasoning. But online media outlets tend to deviate from this model, using more conversational language and putting more emphasis on interpersonal interactions and individual perspectives and opinions. Additionally, the tone in online media is often more argumentative and aims to persuade readers.”
A new look at the declining labor share of income in the United States” by Manyika et al from the McKinsey Global Institute
This analysis looks at the industry and firm level drivers of the other side of declining labor share – the rise in capital’s share of income.

“In analyzing the various hypotheses behind the labor share decline across these sectors, we find that a set of supercycle and boom-bust effects appears as the main driver, accounting for one-third of the total decline in labor share since 1998…The commodity supercycle notably increased profits in the mining sector, while the real estate boom temporarily increased capital stocks in the sector and its weight in the total economy…

“The second-most important factor (26 percent of the decline) is rising and faster depreciation, due to higher capital stocks and a shift to intangible assets with shorter life cycles. For example, computer and electronics manufacturing raised the share of assets from intellectual property products in total capital and, with it, depreciation. Pharmaceuticals and chemicals also used more intangible capital and experienced higher depreciation...

“Superstar effects—which see a small proportion of large firms capturing a disproportionately larger share of economic profit than their peers—along with industry consolidation appear to explain about 18 percent of the decline in labor share…
“Capital substitution of labor and automation underpin 12 percent of the labor share decline…[and] globalization and decreased labor bargaining power, which affected the automotive sector among others, account for the remaining 11 percent.”
The Global Increase in Socioeconomic Achievement Gap, 1964 to 2015” by Anna Chmielewski, University of Toronto
“The socioeconomic achievement gap —the disparity in academic achievement between students from high- and low-socioeconomic status (SES) backgrounds—is well-known in the sociology of education. The SES achievement gap has been documented across a wide range of countries. Yet in most countries, we do not know whether the SES achievement gap has been changing over time. This study combines 30 international large-scale assessments over 50 years, representing 100 countries and about 5.8 million students. SES achievement gaps are computed between the 90th and 10th percentiles of three available measures of family SES…

“Results indicate that achievement gaps increased in a majority of sample countries…

The largest increases are observed in countries with rapidly increasing school enrollments, implying that expanding access reveals educational inequality that was previously hidden outside the school system. However, gaps also increased in many countries with consistently high enrollments, suggesting that cognitive skills are an increasingly important dimension of educational stratification worldwide…

“Cognitive skills are increasingly seen as the most important outcome of schooling and replace direct inheritance as the only legitimate source of social stratification. In such a society, all parents may equally recognize the importance of academic skills, but higher-SES families have greater resources and information about how to foster their children’s achievement…

“Growing SES achievement gaps may also have political implications. Although belief in meritocracy is growing in many countries, this belief is strongly socioeconomically graded, particularly in countries with the highest income inequality A growing awareness of increasing SES achievement gaps—coupled with cases of outright fraud, such as the recent U.S. college admissions bribery scandal — may contribute to increased socioeconomic polarization of trust in the legitimacy of educational institutions.”
The Deloitte Global Millennial Survey, 2019
“Notwithstanding current global economic expansion and opportunity, millennials and Generation Z are expressing uneasiness and pessimism—about their careers, their lives in general, and the world around them. They appear to be struggling to find their safe havens, their beacons of trust…Economic and social/political optimism is at record lows. Respondents express a strong lack of faith in traditional societal institutions, including mass media, and are pessimistic about social progress.”
The CDC reported that in 2018, US births fell to the lowest level in 32 years
Albeit with a delay, the USA now appears to be following the sharp decline in the birth rate that has been observed in Europe in recent years. While one can speculate about the reasons for this (most of which are arguably negative indicators about current and expected social and economic conditions), declining birth rates imply lower future economic growth rates, unless immigration and/or productivity increases
The Wealth of Relations” by the US Congress Joint Economic Committee
The Joint Economic Committee of the US Congress has recently, and without much recognition, been pursuing an interesting and potentially important agenda for better understanding and rebuilding social capital as a critical foundation for expanded opportunity and reduced inequality. It is a project that bears watching.

“In more recent decades, researchers and theorists have described another source of wealth: social capital. While not previously unknown to economists, social capital was first comprehensively analyzed by political scientist Robert Putnam. It refers to the aspects of human relationships that may be expected to afford value to their possessors. Relationships inhere in social networks as well as in the institutions that people create together for specific purposes and in which they participate. These institutions are ubiquitous, ranging from families to schools to book clubs to unions to churches to athletic leagues.

“The social capital literature has suffered from inconsistent and imprecise definitions, and like human capital, the social variety presents complex measurement challenges…

“For two years, the Social Capital Project within the Joint Economic Committee (JEC) has documented trends in associational life—what we do together—and its distribution across the country. With this evidentiary base established, the Project now turns to the development of a policy agenda rooted in social capital.

“Specifically, the focus of the Project will be to craft an agenda to expand opportunity by strengthening families, communities, and civil society...

“Just as there is too often a narrow focus on economic outcomes in debates about opportunity, discussions too often emphasize economic or personal barriers. Among political liberals, in particular, “lifting artificial weights” and “clearing paths” mostly mean giving more money to poor, working class, and (increasingly) middle-class people. Hence the calls on the left for guaranteed jobs, a $15 minimum wage, universal child care, universal college, and a universal basic income guarantee.

“In contrast, conservatives have tended to point to personal barriers to opportunity. Different income levels in adulthood, for instance, may be due to unequal economic resources growing up, but they also may be the product of different orientations, preferences, values, and personal strengths and weaknesses. Equalizing incomes will not necessarily change these differences.

However, the conservative perspective is not without its own problems. Conservatives have tended to wield the concept of opportunity defensively, affirming their support for “equality of opportunity” as against the “equality of outcomes” that they accuse liberals of seeking. The distinction is rooted in conservatism’s view of people as mostly the captains of their own ships. Given that we have made great strides as a nation achieving formal political equality, the US is often thought to have realized actual equality of opportunity. If someone fails to realize her own definition of the good life—perhaps as a consequence of problematic orientations, preferences, values, and weaknesses—many conservatives view this failure as a personal shortcoming.

Most conservatives would agree with Martin Luther King Jr. that “a productive and happy life is not something you find, it is something you make.” But we do not navigate our lives in isolation, we make a productive and happy life with other people. Supportive relationships and institutions are instrumental for expanding opportunity. In part, that is because they are instrumental in forming our orientations, preferences, values, and personal strengths and weaknesses.

“That is to say, opportunity depends on social capital—what is available to us from our relationships with family, friends, neighbors, congregants, coworkers, and others. In particular, the people to whom we are born and around whom we live are consequential for our opportunities. “Artificial weights” are not only economic, not only personal, but social as well.”
Apr19: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
The OECD published a new report on “Under Pressure: The Squeezed Middle Class
Based on a broader analysis than many other similar reports, the OECD still reaches familiar conclusions. Across many countries, the costs of housing and education are rising faster than incomes, and employment is increasingly uncertain and under threat from automation.

Moreover, “the middle class is also concerned about their children’s future prospects; the current generation is one of the most educated, and yet has lower chances of achieving the same standard of living as its parents.” All these factors are leading to higher levels of political instability and increasing the appeal of more extreme parties, messages, and candidates.”

The report concludes with a set of policy recommendations that are as familiar (e.g., “improve education and training”) as they are lacking in specifics about how to overcome the substantial obstacles to their successful implementation.
See also, “The Changing Nature of Work”, a major new report by the World Bank
Accelerating Dynamics of Collective Attention” by Lorenz-Spreen et al in Nature Communications
This paper provides new evidence that confirms many people’s lived experience: we face vastly more competition for our limited attention, which we find exhausting. This creates the potential for greater swings in public attention, narratives, beliefs, emotions and behavior over ever shorter periods.

“With news pushed to smart phones in real time and social media reactions spreading across the globe in seconds, the public discussion can appear accelerated and temporally fragmented.

“In longitudinal datasets across various domains, covering multiple decades, we find increasing gradients and shortened periods in the trajectories of how cultural items receive collective attention. Is this the inevitable conclusion of the way information is disseminated and consumed? Our findings support this hypothesis.

"Using a simple mathematical model of topics competing for finite collective attention, we are able to explain the empirical data remarkably well. Our modeling suggests that the accelerating ups and downs of popular content are driven by increasing production and consumption of content, resulting in a more rapid exhaustion of limited attention resources. In the interplay with competition for novelty, this causes growing turnover rates and individual topics receiving shorter intervals of collective attention.”
America’s Upper Middle Class Feeling the Pinch Too”, by Alexandre Tanzi in Bloomberg, 13Apr19
This article highlights another source of heightened political frustration and instability.

“Newly available net worth data from the Federal Reserve suggests that the “left-behind” contagion has spread to all Americans aside from the top 10 percent. While still wealthier overall than most other groups, even the upper-middle class is feeling the pinch of income stagnation. The growth rate of this group’s incomes is lagging behind that of those both lower and higher on the socioeconomic ladder.

“The cost of many products and services the upper middle class buys, from autos to college educations, is outpacing overall inflation. While having access to credit, these households are increasingly tapping into costlier forms of debt”, [especially student loans.]”
Narratives About Technology Induced Job Degradation Then and Now” by Robert Shiller
This fascinating paper puts current concerns over the impact of artificial intelligence and automation into a much longer historical context. As Shiller notes, “Concerns that technological progress degrades job opportunities have been expressed over much of the last two centuries by both professional economists and the general public.

“These concerns can be seen in narratives both in scholarly publications and in the news media. Part of the expressed concern about jobs has been about the potential for increased economic inequality. But another part of the concern has been about a perceived decline in job quality in terms of its effects on monotony vs creativity of work, individual sense of identity, power to act independently, and meaning of life. Public policy should take account of both of these concerns, inequality and job quality.”

For an example of this, see, “How Amazon automatically tracks and fires warehouse workers for ‘productivity’”, by Colin Lecher
The End of Aspiration”, by Joel Kotkin in Quillette
“Since the end of the Second World War, middle- and working-class people across the Western world have sought out—and, more often than not, achieved—their aspirations. These usually included a stable income, a home, a family, and the prospect of a comfortable retirement. However, from Sydney to San Francisco, this aspiration is rapidly fading as a result of a changing economy, soaring land costs, and a regulatory regime, all of which combine to make it increasingly difficult for the new generation to achieve a lifestyle like that enjoyed by their parents…

“Three quarters of American adults today predict their child will not grow up to be better-off than they are, according to Pew. These sentiments are even more pronounced in France, Britain, Spain, Italy, and Germany. In Japan, a remarkable three-quarters of those polled said they believe things will be worse for the next generation…This generational gap between aspiration and disappointment could define our demographic, political, and social future.”
Divided Europe” by Colijn and Konings from ING Bank
“In September 2008, the bankruptcy of Lehman Brothers marked the low point of the financial crisis. Ten years on, the European economy has recovered, but the scars of the crisis are still visible at a regional level. While employment – measured as employed persons - for the European Union is now 2% above the 2008 peak, this is not the case for many local economies. The crisis has had a long-lasting and deep effect on economic activity and on employment, and many regions have only recently begun to recover.

“Some regions have not even shown signs of bottoming out, with employment still in decline. Deep scars caused by the crisis are still impacting regional labour markets across Europe. Many regions are still recovering, with the unemployment rate still above the natural rate, according to our estimates.”

“Structural strength or weakness seems to be driven in part by the region’s digital infrastructure, the vulnerability to globalisation, the innovative capacity of the region and the residents’ level of education.

“A large divide between urbanised and younger regions and rural and ageing regions, with the latter in general performing much more poorly. This confirms the view of a split in society between areas that are vulnerable to population outflow and ones with prolonged high structural unemployment and those which are more vibrant and generally profit from large societal trends.

“More redistribution at the European level seems unlikely given the political environment at the moment. With stagnation a possibility for many regions, the appetite for the populist vote, from an economic perspective, at least, could increase.”
The City of Europe’s Future”, by Ben Judah in The American Interest

The author provides a revealing in-depth analysis of Rotterdam.
“Transformed not only by the European Single Market but also by mass migration, Rotterdam is an incubator for populist politics of all persuasions. It has a Muslim mayor, its own Islamist Party, and a statue of the pioneer of modern rightwing nativism, Pim Fortuyn…”

“In the most recent elections, Rotterdam seemed more polarized than ever. Thierry Baudet’s party came first, then Wilder’s party, winning a combined 29 percent. The Green Left came third, with 12 percent, with Denk winning 8 percent and Nida 2 percent of the vote. The traditional centrist parties, with no clear message in the culture war, struggled even in traditional fractured Dutch politics...

“This offers a sobering lesson to those in Britain and America who think populism can be calmed by strong growth, successful investment, and sinking unemployment. Because Rotterdam has all of those features and a prosperity hard to imagine for those who were born there a generation or more ago. Rather, Rotterdam appears to be warning, the great culture war that is emerging in Europe—in every election, in every country—really is about culture assimilation and ethnic change after all. It’s not the economy.”
A new estimate suggests global migration is much higher than we thought”, by Urton-Washington, published by the World Economic Forum
“Researchers have unveiled a new statistical method for estimating migration flows between countries...

“They show that rates of migration—defined as an international move followed by a stay of at least one year—are higher than previously thought, but also relatively stable, fluctuating between 1.1 and 1.3 percent of global population from 1990 to 2015…

“In addition, since 1990 approximately 45 percent of migrants have returned to their home countries, a much higher estimate than other methods…
Mar19: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
Demographic change was in the news in March, with a number of articles reinforcing the message that it is just as important a macro driver as others that are more frequently discussed, like technological and climate change
Writing in The American Interest, Larry Diamond presents an excellent summary of “The Coming Demographic Disruptions.” He notes than in many industrialized countries, fertility rates are now below population replacement rates, with the US, UK, France, Sweden, Canada, and Australia faring somewhat better than many others. The critical problem declining birth rates will create is “that there will be fewer and fewer workers to support rapidly aging populations, while life expectancy continues to lengthen.”

Writing in the Financial Times, Richard Milne reports from Helskini about “Finland Sends a Warning to Europe” about the consequences of this “demographic time bomb.” Milne notes that, “The lesson from Finland may be that trying to make health and elderly care costs sustainable involves the types of political choices few governments are willing to make, raising questions about long-term economic growth and the health of public finances for increasingly cash-strapped governments across Europe…

“It is a painful lesson for the rest of Europe as political fragmentation is increasing across the continent, making government formation in many countries highly difficult and complicating the chances of changing such sensitive policy areas as healthcare.

Diamond notes that one obvious answer to the drag on growth created by rapidly aging societies is to increase immigration, while also acknowledging the many nations’ limited cultural and political capacity to absorb more immigrants. Yet he also notes that rapidly increasing populations in African nations with weak economies is likely to drive even more migrants towards Europe in the future.

Spiegel also takes up this issue in “What to Do About Massive Population Growth”, noting that, “In the next 30 years, the population of the African continent will more than double, from 1.2 billion people today to 2.5 billion. The result will be a population of which 50 percent will be younger than 30 years old and won't have much of a future to look forward to if the continent's economic outlook doesn't change drastically. The threat of conflict over scarce resources, land, food, water and work is very real.”

Spiegel’s conclusion is not optimistic: “There is no clear prescription for countries facing demographic explosion. A decisive factor will be whether governments finally take the demographic challenges seriously and invest in the education and healthcare sectors, in comprehensive sex education campaigns and in family planning programs. At the same time, they will have to create jobs to provide millions of young people with at least a modicum of prosperity. That is much easier said than done, particularly given the incompetent and corrupt regimes in many African countries.”

David Frum tackles the immigration issue from a US perspective in a long and excellent analysis in the Atlantic, despite its unnecessarily inflammatory title: “If Liberals Won’t Enforce Borders, Fascists Will.”

Frum concludes, “Reducing immigration, and selecting immigrants more carefully, will enable the country to more quickly and successfully absorb the people who come here, and to ensure equality of opportunity to both the newly arrived and the long-settled—to restore to Americans the feeling of belonging to one united nation, responsible for the care and flourishing of all its people.”

In "From Managing Decline to Building the Future: Could a Heartland Visa Help Struggling Regions?” Ozimek et al present very detailed county level demographic data, and find that “86% of counties now grow more slowly than the nation as a whole, up from 64% in the 1990s.” Moreover, “population loss is hitting many places with already weak socioeconomic foundations”, and thus perpetuating their economic decline. Their key idea is to reinvigorate these counties via a new “place-based” visa program for skilled entrepreneurial immigrants.
Four new analyses provide further insight into both the current and projected future impact of rapidly improving labor-substituting technologies on society and politics
In Demographics and Automation, Acemoglu and Resptrepo “argue theoretically and document empirically that aging leads to greater (industrial) automation, and in particular, to more intensive use and development of robots. Using US data, we document that robots substitute for middle-aged workers (those between the ages of 21 and 55). We show that demographic change—measured by an increase in the ratio of older to middle-aged workers—is associated with greater adoption of robots and other automation technologies across countries and with more robotics-related activities across US commuting zones.”

“We also provide evidence of more rapid development of automation technologies in countries undergoing greater demographic change. Our directed technological change model predicts that the induced adoption of automation technology should be more pronounced in industries that rely more on middle-aged workers and those that present greater opportunities for automation. Both of these predictions receive support from country-industry variation in the adoption of robots.”

The authors also find that these industries are experiencing faster productivity growth and a greater decline in labor’s share of income relative to other industries.

In a related paper, “Automation Perpetuates the Red-Blue Divide”, Muro et all from Brookings conclude that data “confirms both a stark history of automation in [states won by Donald Trump in 2016] and substantial future exposure to it”, that “points to more job uncertainty and potentially more political disruption.”

In “America at Work”, Walmart (with support from McKinsey) takes a very detailed look at county level data in the United States to gauge their resiliency, and capacity to respond to change, especially increased automation. They define 8 archetypical county types, and identify six types of responses to automation: (1) Creating new jobs; (2) Retraining and upskilling workers; (3) Boosting mobility within labor markets, for example, through greater use of certified competencies; (4) Improving infrastructure to foster economic development; (5) Modernizing social safety net programs; and (6) Improving education, including apprenticeship programs.

Counties are differentiated on the basis of their economic models, exposure to automation risk, and capacity to respond to its impact. The report also notes the many challenges in translating analysis into effective action.

It is also important to recognize the extent of uncertainty in analyses like those noted above.

These are highlighted in another new paper, “Toward Understanding the Impact of Artificial Intelligence on Labor”, by Morgan Frank and an all-star team of co-authors. They find that these critical uncertainties include, “the lack of high-quality data about the nature of work (e.g., the dynamic requirements of occupations), lack of empirically informed models of key micro-level processes (e.g., skill substitution and human–machine complementarity), and insufficient understanding of how cognitive technologies interact with broader economic dynamics.” Forecast accuracy will only improve if and when the barriers described in this paper are overcome.
Digital Abundance and Scarce Genius: Implications for Wages, Interest Rates, and Growth”, by Benzell and Brynjolfsson
The authors as, “Why, if emerging technologies are so impressive, are interest rates so low, wage growth so slow and investment rates so flat? And why is total factor productivity growth so lukewarm?...If digital labor and capital can be reproduced much more cheaply than its traditional forms. But if labor and capital are becoming more abundant, what is constraining growth? We posit a third factor, `genius', that cannot be duplicated by digital technologies...”

“Our model can explain why ordinary labor and ordinary capital haven't captured the gains from digitization, while a few superstars have earned immense fortunes. Their contributions, whether due to genius or luck, are both indispensable and impossible to digitize. This puts them in a position to capture the gains from digitization.”
The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand”, by Acemoglu and Retrepo
“Artificial Intelligence is set to influence every aspect of our lives, not least the way production is organized. AI, as a technology platform, can automate tasks previously performed by labor or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labor can be productively employed. The consequences of this choice have been stagnating labor demand, declining labor share in national income, rising inequality and lower productivity growth.”

Could this have anything to do with K-12 education systems in different nations failing to improve at anywhere near the same pace as automation and AI technologies? Unfortunately, I think so. Given the poor results achieved over the past decade from initiatives intended to substantially improve US K-12 education performance, there is no reason not to expect the trends identified in this report to continue, with increasingly negative social and political consequences.
The OECD’s “Risks that Matter” report summarizes the results of a 2018 survey covering 22,000 people in 21 OECD countries.
Key findings include: (1) “Falling ill and making ends meet are the biggest short-term concerns.”

(2) “When thinking about the longer term, most people list financial security in old age, as well as worrying about their children reaching levels of status and comfort similar to their own.”

(3) “Many people are dissatisfied and disillusioned with social policy. Across countries, large numbers of respondents believe that public benefits and services are hard to reach and many lack confidence in the government’s ability to provide adequate support should they lose their income. Many respondents also express strong feelings of injustice in benefit receipt. They believe they are not receiving the benefits they should get relative to the taxes they pay, and that many others are picking up more than they deserve.”

(4) “People want more from government, with better public health care and pensions the priorities.”

A critical uncertainty is whether government structures, processes, system, and/or staff can be sufficiently changed to meet these expectations.
Looking to the Future, Public Sees an America in Decline on Many Fronts”, by Pew Research
This is not an uplifting report. But it is an important one, as the United States heads into the 2020 presidential election campaign. Pew sums up its findings like this:

“When Americans peer 30 years into the future, they see a country in decline economically, politically and on the world stage. While a narrow majority of the public (56%) say they are at least somewhat optimistic about America’s future, hope gives way to doubt when the focus turns to specific issues…Majorities predict a weaker economy, a growing income divide, a degraded environment, and a broken political system.”

“In the face of these problems and threats, the majority of Americans have little confidence that the federal government and their elected officials are up to meeting the major challenges that lie ahead. More than eight-in-ten say they are worried about the way the government in Washington works, including 49% who are very worried. A similar share worries about the ability of political leaders to solve the nation’s biggest problems, with 48% saying they are very worried about this. And, when asked what impact the federal government will have on finding solutions to the country’s future problems, more say Washington will have a negative impact than a positive one (55% vs. 44%)…”

“Roughly four-in-ten Americans (43%) say they are very worried about the nation’s morals, while another 34% are fairly worried…”

"Only 38% of Americans say the public education system will improve over the next 30 years, while 52% say it will get worse…"

“When Americans predict what the economic circumstances of the average family will be in 2050, they do so with more trepidation than hope. More than four-in-ten (44%) predict that the average family’s standard of living will get worse over the next 30 years, roughly double the share who expect that families will live better in 2050 than they do today. About a third (35%) predict no real change…”

“About three-quarters of all Americans (73%) expect the gap between the rich and the poor to grow over the next 30 years, a view shared by large majorities across major demographic and political groups…”

“When asked what the federal government should do to improve the quality of life for future generations, providing high-quality, affordable health care for all Americans stands out as the most popular policy prescription. Roughly two-thirds (68%) say this should be a top priority for government in the future.”
Feb19: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
America Stopped Building” by Jim Clifton from Gallup
“I'm concerned there's a mistaken understanding of U.S. economic dynamism. The New York Times, The Wall Street Journal, Financial Times, Fox, MSNBC, all the networks -- the Federal Reserve, too -- all say the same thing: The job market is strong and the economy is growing. We're in a recovery. That's only partly true.

As optimistic Americans, we really want to believe this narrative. I want to. But it is hard to square this with the fact that half of Americans are making less than they were 35 years ago in real terms…

Making things worse, the cost of housing, healthcare and education are exploding while paycheck sizes are frozen or even declining.

Many citizens don't buy that the economy is growing. Recently, Gallup found that 56% of Americans say the economy is slowing down -- or worse.”
Are We Long –or Short – on Talent?” McKinsey Quarterly
“Fully 60 percent of global executives in a recent McKinsey survey expect that up to half of their organization’s workforce will need retraining or replacing within five years. An additional 28 percent of executives expect that more than half of their workforce will need retraining or replacing. More than one-third of the survey respondents said their organizations are unprepared to address the skill gaps they anticipate.”
Expanding Economic Opportunity for More Americans”, report of the Economic Strategy Group of the Aspen Institute
This is yet another analysis by a very distinguished bipartisan group that is long on policy recommendations, but short on practical details about how to implement them in order to produce substantial, measurable improvements in the problems they aim to solve.

For example, the report has chapters that recommend expanding both Career and Technical Education and Apprenticeships. Yet as I have found over the last nine years in Colorado, implementing these policies is far more difficult than these authors may realize (see, “ )
Five recent articles and papers provide more insight into the sources of social turmoil and alienation in the United States, and help refine our model of how complex social changes connect technological and economic change to political change.
In “Is Automation Labor-Displacing Productivity Growth, Employment, And the Labor Share?”, Autor and Salomons find that while in the past increased automation augmented labor, increasing productivity and wages, in recent decades it has become more labor displacing, which has put downward pressure on wages.

In his New York Times column, Eduardo Porter takes a micro look at this process as it has unfolded in Phoenix, finding that, “Despite all its shiny new high-tech businesses, the vast majority of new jobs are in workaday service industries, like health care, hospitality, retail and building services, where productivity growth and pay are mediocre…

The 58 most productive industries in Phoenix — where productivity ranges from$210,000 to $30 million per worker — employed only 162,000 people in 2017, 14,000 more than in 2010. Employment in the 58 industries with the lowest productivity, where it tops out at $65,000 per worker, grew 10 times as much over the period, to 673,000.”

Chapman University’s Joel Kotkin has termed this state of affairs, “the new feudalism” (see his report, “California Feudalism: The Squeeze on the Middle Class”).

In “Narratives about Technology-Induced Job Degradation Then and Now” Robert Shiller notes that, “Part of the expressed concern about jobs has been rising inequality. But another part of the concern has been a decline in job quality in terms of its effects on monotony vs creativity of work, individual sense of identity, power to act independently, and of meaning of life…the spell of unemployment [caused by improved technology] may not be the dominant concern. There is also the fear that the resulting eventual job switch will be to a job that is demeaning.”

In “America’s Religion is Work”, Derek Thompson shows why this is fear is likely to be widely prevalent in America today. As he notes, “The decline of traditional faith in America has coincided with an explosion of new atheisms. Some people worship beauty, some worship political identities,and others worship their children. But everybody worships something.

“And workism is among the most potent of the new religions competing for congregants.

“What is workism? It is the belief that work is not only necessary to economic production, but also the centerpiece of one’s identity and life’s purpose… In the past century, the American conception of work has shifted from jobs to careers to callings—from necessity to status to meaning.”

Finally, the impact of these and other social trends is clearly affecting teenagers as well as adults. For example, Pew Research recently reported that 70% of American teens said that anxiety and depression are a major problem for people their age in the community where they live.

It is therefore no surprise that Gallup has found that among people age 18-29, only 45% had a positive view of capitalism in 2018, down from 68% in 2010 (e.g., see “Millennial Socialists Want to Shake Up the Economy and Save the Climate”, in The Economist, 14Feb19)
Jan19: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
Why Do We Retire?” a new whitepaper published by Aegon
Many developed nations face an imminent tsunami of newly retired workers, and pressure on public and private sector pension plans. Aegon aptly notes that too much of the discussion about this upcoming wave has been focused on the financial and government budget issues it raises (e.g., pensions and healthcare expenditures), and not on other issues that are equally important – for example, social connection and loneliness, and the desire of many future retirees to cut back on work, but not wholly abandon it (which would also sharply reduce stress on inadequate pension resources). This paper does a good job of framing the issues many nations will soon have to confront.
By Mollycoddling Our Children, We're Fuelling Mental Illness in Teenagers”, by Haidt and Paresky, calls attention to trends that are likely to affect society for years to come.
The authors note a number of trends that seem sure to affect future political dynamics as todays’ teenagers enter the electorate.

“Rates of anxiety disorders and depression are rising rapidly among teenagers, and US universities can’t hire therapists fast enough to keep up with the demand…We recently co-wrote a book, with Greg Lukianoff, titled The Coddling of the American Mind, about the culture that erupted on American university campuses around 2014, and has spread to some campuses in the UK and Canada. In the book we describe how they began using the language of safety and danger to describe ideas and speakers, and to demand policies based on the premise that some students are fragile (or “vulnerable”). Terms such as “safe space”, “trigger warning” and “microaggression” entered the language. These, we believe, are requests made by a generation that was deprived of the necessary quantity of social immunisations. Students now react with a kind of emotional allergic response (often referred to as being “triggered”) to things that previous generations would have either brushed off or argued against.

“It’s not the kids’ fault. In the UK, as in the US, parents became much more fearful in the 1980s and 1990s as cable TV and later the internet exposed everyone, more and more, to those rare occurrences of brutal crimes and freak accidents that, as we report in our book, now occur less and less. Outdoor play and independent mobility went down; screen time and adult-supervised activities went up…

“Mental health statistics in the US and UK tell the same awful story: kids born after 1994 – now known as “iGen” or “Gen-Z” – are suffering from much higher rates of anxiety disorders and depression than did the previous generation (millennials), born between 1982 and 1994.

“The upward trends for depression among teenage boys and girls are happening in the UK too. Yearly measures of major depression are not available in the UK, but the NHS reports extensive mental health statistics for England from 2004 and 2017 that allow us to make a direct comparison for the same time period. Using a stricter criterion, which finds lower overall rates, the pattern is similar: up slightly for boys, nearly double for girls.

“This alarming rise does not just reflect an increase in teenagers’ willingness to talk about mental health; it is showing up in their behaviour too, particularly in the rising rates at which teenage girls are admitted to hospital for deliberately harming themselves, mostly by intentionally cutting themselves. Large studies In the US and UK using data through to 2014 show sharply rising curves in the years after 2009, with increases of more than 60% in both countries. A 2017 Guardian study of more recent NHS data found a 68% rise in hospital admissions for selfharm by English teenage girls, over the previous decade.

“Even more tragically, we also see this trend in the rate of teenage suicide, which is rising for both sexes in the US and the UK. The suicide rate is up 34% for teenage boys in the US (in 2016, compared with the average rate from 2006-2010). For girls, it is up an astonishing 82%. In the UK, the corresponding increase for teenage boys through to 2017 is 17%, while the increase for girls is 46%. Nobody knows for certain why recent years have seen so much more of a change for girls than boys, but the leading explanation is the arrival of smartphones and social media.

“Girls use social media more than boys, and they seem to be more affected by the chronic social comparison, focus on physical appearance, awareness of being left out, and social or relational aggression that social media facilitates”.
Universal Basic Income: Debate and Impact Assessment” by Francese and Prady of the IMF
The rapid improvement of automation and artificial intelligence technologies, along with stagnant K12 education results, has increased interest in the consequences of a future scenario in which the number of employed people sharply falls, and/or income inequality significantly worsens. One solution that has been proposed is a “universal basic income” provided by the government and financed with higher taxes. This new IMF paper breaks new ground with its rigorous analytical approach to the impact of different approaches to structuring a UBI program – e.g., high/low progressivity, and high/low coverage of the population.

While this paper makes no policy recommendations, it does an excellent job of framing the issues surrounding a concept that may become a much more popular topic of conversation in the years ahead.
Demographia 2019 Housing Affordability Survey
The inability to purchase a home of one’s own is an important source of underlying social frustration. While this is drive by economic factors (and before that technological change), growing frustration eventually finds expression in politics. These data are therefore of more than passing importance for what they may portend for politics in the future.

As Wendell Cox writes on, the survey “rates middle-income housing affordability using the “Median Multiple,” which is the median house price divided by the median household income” Ratios of 3.0 and under are deemed affordable, while those of 5.1 and over are “severely unaffordable”.

“There are 9 affordable major housing markets, all in the United States. There are 29 severely unaffordable major housing markets, including all in Australia (5) and New Zealand (1) …Thirteen of the major markets in the United States are severely unaffordable (out of 55), seven in the United Kingdom (out of 21 major markets) and two out of Canada’s six.”

“The most affordable major housing markets are in the United States, with a moderately unaffordable Median Multiple of 3.9, followed by Canada (4.3) and Singapore (4.6). Ireland and the United Kingdom both have Median Multiples of 4.8. The major markets of Australia (6.9), New Zealand (9.0) and Hong Kong (20.9) are severely unaffordable.”
Why the Housing Ladder Doesn’t Exist Anymore” by Thomas Hale, Financial Times 15Jan19
This excellent article shows why the traditional assumption that one should start out by buying a small property and then trade-up over time to larger ones may be fatally flawed in today’s economy. If this is the case, once many of the people who believed in this approach discover that their dreams have been dashed, it seems likely to add to the current level of social frustration and anger directed towards elites.
What The Next 20 Years Will Mean For Jobs – And How To Prepare”, by Stephane Kasriel for the World Economic Forum
This forecast of a future economic scenario has important implications for future social and political developments. Some highlights: “The majority of the workforce will freelance by 2027 (see, “Freelancing in America 2017”)… Fast technological change means that the people operating constantly evolving machines need to learn new skills – quickly. Our current education system adapts to change too slowly and operates too ineffectively for this new world… Our tax, healthcare, unemployment insurance and pension systems were all created for the industrial era, and they won’t serve anyone in the future if we can’t make significant reforms.”

Unfortunately, there is little evidence that the political system is coming to terms with these changes and the social uncertainty, fear, and frustration they are creating in the middle class. To cite but one example: in a world where employment is more uncertain than ever, a single payer government program that separates health insurance from employment seems eminently logical – but it is already the target of multiple attacks in the United States.
Beyond Gentrification” by Joel Kotkin and Wendell Cox for he Center for Opportunity Urbanism
The authors highlight how the gentrification process in many cities has led to social frustration and, as we have seen (e.g., in the Brexit and US presidential votes in 2016) political consequences. And there are no signs these trends are reversing.

“We found that, in most cities, unbalanced urban growth has exacerbated class divisions, while doing little to address the decline of middle class households…Cities are battling for high-tech jobs, sometimes offering lavish inducements, but few poor inner-city residents are likely to work as coders for Amazon or Google… Little effort is being made to encourage the creation of sustainable middle-income jobs in industrial, warehouse, and business service firms, which once sustained communities outside the urban “glamour zone…Cities need a new urban development paradigm that goes beyond the current focus on tourism, media, and tech, which creates many high and low-end jobs but few in the middle.”
How Real is Systematic Racism Today?” by John Staddon is a James B. Duke Professor of Psychology and Professor of Biology, Emeritus, at Duke University
In a world where systematic racism in increasingly claimed to be the cause of many social ills, this paper provides a rigorous analysis of this issue. For that alone, it is well worth a read. The author concludes: “the charge of systemic discrimination deflects attention from the proximal causes, endogenous as well as exogenous, of the racial disparities that led to its invention. Disparities—racial, ethnic, or gender-based—are not proof of anything. Disparities raise questions about their cause. Absent further information, a racial disparity does not favor one answer over others. To say, as some academic critics have, that “When I See Racial Disparities, I See Racism” is simply wrong…

“The beauty of ‘systemic racism’ is its air of permanence. It is here forever, and its victims must be compensated in perpetuity. It has become the elusive and inexpugnable cause of all the ills of people of color. And it provides an endless supply of ammunition for those whose careers depend on the persistence of racism. It has become a cause of racial division rather than part of the cure. It should be abandoned.”
What You Do At Work Matters: New Lenses On Labour” by Mealy et al
The authors create a new way of categorizing jobs by the activities performed. They then use network science to relate clusters of job activities to each other, to assess the ease of moving across occupations, which is a critical issue as the replacement of labor by automation, AI and other technologies accelerates.

Critically, “they find strongly segregated clustering of high and low risk occupations…Such divisions in labour not only reiterate current concerns about the distributional consequences of automation, but also highlight potential challenges for workers seeking to transition into jobs with lower automation risk.”

This points to more intense social and political conflicts if more creative policy solutions are not created and effectively implemented.
Why Big Brother Doesn’t Bother Most Chinese” by Adam Minter, on Bloomberg
This is an extremely disturbing article, and therefore likely an important one. The author writes, “Chinese have already embraced a whole range of private and government systems that gather, aggregate and distribute records of digital and offline behavior. Depicted outside of China as a creepy digital panopticon, this network of so-called social-credit systems is seen within China as a means to generate something the country sorely lacks: trust. For that, perpetual surveillance and the loss of privacy are a small price to pay.”

To be sure, in the past research has found that China is a society relatively low in trust; as in other nations with similar levels of trust, this has historically led to a preference for family groups as the dominant form of business organization. Yet for this same reason, the social credit system seems to be acceptable to many people. With measures of interpersonal trust trending downward in many western nations, developments in China have potentially worrisome implications for future developments in other nations.
Released in conjunction with the World Economic Forum, the latest Edelman Trust Barometer evidences continuing disillusion among publics around the world that is increasing the attractiveness of more extreme political views.
Across a range of countries, only 20% believe the system is working for them. In most developed countries, a majority of the population does not believe they will be better off in five years. Across both developed and developing nations, media is now trusted less than business and government.
Feel the Fear” by John Hagel on Edge Perspectives
Hagel writes, perceptively I think, that “fear is becoming pervasive and increasingly intense around the world…Why is that happening? There are certainly many reasons, but my research suggests that we are in the early stages of a Big Shift that is generating mounting performance pressure on all of us. No matter what our credentials and track record in the past, the pressure is mounting to get even better faster in the future. It’s totally natural that we would feel fear in that kind of world, especially if we were taught that getting the right degrees and pursuing the right jobs would ensure our success.

“This mounting performance pressure isn’t just about economic pressure and the ability to earn a living. It takes many different forms, including an accelerating pace of change where things we could rely on in our lives – values, norms, practices, etc. - suddenly are no longer there. But, it’s not just mounting performance pressure that’s driving the fear. There’s also a growing realization that our institutions are not equipped to help us respond to the mounting performance pressure. In fact, there’s a sense that our institutions are making us even more vulnerable to that growing pressure. That’s one of the key reasons that trust in all our institutions is rapidly eroding globally.”

At some point, the mounting feeling of fear that Hagel so well captures, and the inability of our institutions to successfully address its root causes, will inevitably produce even more changes in the political environment than we have already seen.
Dec18: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
Three recent papers highlight the important changes underway in the United States’ population dynamics.
In “US population growth hits 80-year low, capping off a year of demographic stagnation”, William Frey from Brookings notes that falling fertility and rising death rates as the population ages have sharply reduced population growth. He also notes how rates of geographic mobility are at record low levels. Both of these trends reduce economic growth potential.

In “Declining Fertility in America”, Lyman Stone from the American Enterprise Institute begins by highlighting research that shows Americans want more children than they are actually having. Stone then identifies and analyzes the obstacles to higher fertility rates, including heavy student debt burdens, rising housing costs, expensive childcare costs. He concludes that, “Young families today face a sufficiently wide range of challenges to childbearing, and policy responses are likely to be sufficiently anemic, that a major recovery in fertility seems unlikely. Rather, fertility will likely remain below the historic average until the next recession, when it will plummet even lower.”

Finally, in “Economic Uncertainty and Fertility Cycles”, Chabe-Ferret and Gobbi “find that economic uncertainty has a large and robust negative effect on fertility.”
Stagnant population growth, aging, and declining fertility, naturally lead to discussion of immigration as an obvious solution to the demographic drag on economic growth (the other one being the path Japan has pursued, higher productivity growth).
According to the Pew and Ipsos MORI survey data cited in Remi Adekoya’s article “Anxiety About Immigration is a Global Issue”, it is not just developed western nations that are struggling with this issue (which will only get worse if climate change and/or economic and political crises boost the number of migrants in the years ahead).

Yet to varying degrees, concerns about immigration may be based on beliefs that are both widespread and mistaken. An excellent example of this is found in Janan Ganesh’s column on “America’s Future is Asian, Not Hispanic” (Financial Times, 19Dec18), who notes, “You would not guess from the present acrimony that more people have immigrated to the US from Asia than from Latin America in every year since 2010.”
Inequality And Visibility Of Wealth In Experimental Social Networks”, by Nishi et al

In essence, the authors of this important paper have used advanced network analysis and simulation methods to find that Thorsten Veblen’s warnings about the dangers of inequality combined with conspicuous consumption were right on target. They conclude that making wealth inequality visible reduces social connectivity and cooperation between people with differing levels of wealth. At the aggregate level, this reduces the society’s overall level of wealth.

Supporters of progressive consumption taxes will be embolden by this research.
Three interesting new articles all focus on the decline of religion in America, and the different paths people are taking in the search for sources of transcendent meaning.
In “America’s New Religions”, Andrew Sullivan asks what happens when religion is removed as a source of ultimate meaning, and concludes that too many people are turning to illiberal politics to fill the resulting void. He notes that, “We have the cult of Trump on the right, a demigod who, among his worshippers, can do no wrong…and we have the cult of social justice on the left, a religion whose followers show the same zeal as any born-again Evangelical. They are filling the void that Christianity once owned, without any of the wisdom and culture and restraint that Christianity once provided.”

In “From Astrology to Cult Politics—the Many Ways We Try (and Fail) to Replace Religion”, Clay Routledge begins by noting that, “the degree to which humans perceive their lives as meaningful correlates reliably with observable measures of psychological and physical health. A sense of meaning also helps people mobilize toward the pursuit of their goals (persistence), and serves to protect them from the negative effects of stress and trauma (resilience). In short, people who view their lives as full of meaning are more likely to thrive than those who don’t.”

While Sullivan sees more people turning to illiberal politics for meaning, Routledge notes that the “decline of traditional religion has been accompanied by a rise in a diverse range of supernatural, paranormal and related beliefs”, including “transhumanism, whose adherents dream of transcending mortality through medicine and bioengineering.”

Finally, in their new report “Where Americans Find Meaning in Life”, Pew Research reports that when Americans were asked what provides them with a sense of meaning, 69% said family, 34% said career, 23% money, 20% spirituality and faith, 19% friends, and 19% activities and hobbies. When asked to name the single most important source of meaning in their lives, 40% said family, and 20% said their religious faith. The two next highest replies were “caring for pets” at 6%, and being outdoors, at 5%.
Finally, two articles this month were both widely read, and seemed to capture something important about the current state of our society.
In “The West at an Impasse” (New York Times 19Dec18), Ross Douthat claims that, “when meritocracy loses credibility and legitimacy, the result is a political impasse. The official elite becomes too arrogant and self‑deceiving and unpopular to govern effectively, but the populist alternative is… disorganized, ill‑led, susceptible to snake‑oil salesmen and vulnerable to manipulation by factions within the upper class.” He notes that, “different versions of this impasse exist in Britain, France, and the United States.” As he sums it up, we are confronted today with “a governing class that has vaulting self‑confidence and dwindling credibility, locked in stalemate with populist movements that are easily grifted upon and offer more grievances than plans.”

One of the most compelling (and painful) portraits of the anxieties and fears confronting middle and upper middle class Americans today is Austin Murphy’s “I Used to Write for Sports Illustrated. Now I Deliver Packages for Amazon” (Atlantic Monthly, 25Dec18). It did not surprise me at all that this was one of the most read articles in the Atlantic, which is a left of center publication.
Nov18: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
How to Save Globalization” by Scheve and Slaughter, in Foreign Affairs
“In a series of recent studies we conducted in communities across the United States, we heard the same sentiments from a range of respondents in a variety of circumstances: anxiety and anger about globalization and change that was not related to income alone but more broadly concerned whether Americans can still secure meaningful roles in their families and communities…

“But because the problem goes beyond income inequality, the usual policy solutions are inadequate. It is not enough simply to redistribute income to financially compensate the losers from globalization. Addressing the backlash requires giving all Americans the tools they need to carve out the sense of security and purpose they have lost amid change. That can happen only if the United States completely transforms the way it invests in and builds human capital.”

Unfortunately, defining specific policy changes to implement this strategy, and then successfully implementing them (and overcoming the dogged defense of the status quo by many interest groups, like K12 school districts and higher education institutions) is the hard part…
Strategies for Left Behind Places”, by Hendrickson et al, published by Brookings
Clearly, the policy community in the United States is focused on, and struggling with, how to meet the economic and social challenges that in 2016 gave rise to the Trump presidency.

The 2016 election revealed a dramatic gap between two Americas—one based in large, diverse, thriving metropolitan regions; the other found in more homogeneous small towns and rural areas struggling under the weight of economic stagnation and social decline.”

“This gap between two American geographies came as a shock to many observers….the lion’s share of growth in the last decade has been concentrated—with relatively few exceptions—in a small cohort of urban hubs while the rest of the country has drifted or lost ground…”

“Public policy has done little to halt or even mitigate this trend. Indeed, taken as a whole, the policies of recent decades have almost certainly exacerbated it…Now, the political impacts of these sins of omission and commission are clear.”

“As the country has pulled apart economically is also pulling apart politically…Political parties that once brought voters together across regional lines now focus their appeal on the particular interests and outlook of a single kind of region. In the United States and throughout the West, parties with their principal support in metropolitan areas do battle with parties based in less densely populated areas. …Making matters even worse, these political divisions mirror widening differences between diverse, liberal, internationally minded cities and more homogenous, conservative, and locally focused small towns and rural areas, spawning a new culture war.”

“The crystallization of these dueling political identities has shaken the liberal democratic order in the United States and beyond. Throughout the West, parties representing those who feel that they have lost out stand opposed to parties representing those who have benefitted from the economic and cultural changes of recent decades.”
Work, Skills, Community: Restoring Opportunity for the Working Class”, by Opportunity America, cosponsored by the American Enterprise Institute and the Brookings Institution
Opportunity America is an important joint effort by the United States leading center left and center right Think Tanks to better understand and devise policy solution for better addressing the worsening inequality that has arguably been a critical root cause of many of the nation’s social and political conflicts.

Looking back, it’s clear that we as a nation should have seen the problem coming: the symptoms were stark and alarming.”

Still, for all the attention of the past two years, it isn’t clear that anyone, left or right, understands working-class America. Who makes up the working class today? What exactly is it that ails them? Why, unlike in so many other parts of America, do their fortunes seem to be declining rather than improving? And what can government—state or federal government— do to remedy the collapse in blue-collar communities?”

The authors’ definition of “working class” is: people with at least a high school diploma but less than a four-year college degree living in households between the 20th and 50th income percentiles—roughly $30,000 to $69,000 a year for a household with two adults and one child.”

The report notes that, “We as a nation can and must renew the social contract that once bound us—the promise that if you worked hard and played by the rules, you could get ahead…That promise is no longer true for much of the working class, and we must restore it.”

The report concludes with a long list of policy initiatives that would not worsen the current US federal budget deficit
“Male Earnings, Marriageable Men, And Nonmarital Fertility: Evidence From The Fracking Boom” , by Kearney and Wilson

“There has been a well-documented retreat from marriage among less educated individuals in the U.S. and non-marital childbearing has become the norm among young mothers and mothers with low levels of education. One hypothesis is that the declining economic position of men in these populations is at least partially responsible for these trends. That leads to the reverse hypothesis that an increase in potential earnings of less-educated men would correspondingly lead to an increase in marriage and a reduction in non-marital births.”

“To investigate this possibility, we empirically exploit the positive economic shock associated with localized “fracking booms” throughout the U.S. in recent decades. We confirm that these localized fracking booms led to increased wages for non-college-educated men…Analysis reveals that in response to local-area fracking production, both marital and non-marital births increase and there is no evidence of an increase in marriage rates. The pattern of results is consistent with positive income effects on births, but no associated increase in marriage.”

In sum, it’s not just the economy. Social values have also changed, perhaps permanently.
How Britain Can Heal Its Ailing Social; Care System”, by Camilla Cavendish in the Financial Times, 10Nov18
A critical question as populations age is the relationship between, and funding of, not just medical and hospital care, but also what is known as “social care”, including assisted living and skilled nursing facilities, and services that enable elderly people to remain in their own homes. When the latter fail, the result is usually an increase in hospitalizations, which reduces the number of beds available for acute care patients.

Every rich country is grappling with how to look after a growing number of elderly people with increasingly complex conditions. It’s no coincidence that two of the nations that are aging most rapidly — Germany and Japan— have pioneered the most comprehensive responses Germany’s mandatory long-term care insurance system was introduced in 1995, when its care system looked about as frayed as England’s does now. The scheme was crafted to ensure that everyone got something, no one got something for nothing and everyone put something in. Workers pay a compulsory levy. Employers contribute half; and the retired pay in full. The government did a deal with voters: you pay more in, but you get more out. The burden is shared and the risk is pooled…”

“Japan introduced a similar system in 2000…The German and Japanese systems are not perfect. Some Germans gripe about care staff but they like the option of using the fund to pay their own relatives to provide care. In Japan, people feel strongly that they don’t want to rely on the state if they can possibly help it and they do worry that the taxes to maintain the fund keep rising as the population ages. But they enjoy the security.”

“No one in those two countries is living with the crippling uncertainty or the sense of unfairness that haunts us here [in the UK].” Or in the US...
Are Millennials Different?” by Kurz et al from the Federal Reserve Bank of New York

History shows that it is rarely the working class that drives disruptive political change; rather the risk of such change peaks at times when the middle class finds its reality far below its expectations.

For some time there have been questions about the extent to which this applies to Millennials, with some claims that they have different desires that previous generations – e.g., regarding a preference for renting city apartments versus owning homes in a suburb. This study dispels some of those beliefs, and makes clear that many aspiring middle class millennials have found their consumption desires frustrated. This further suggests that his frustration will inevitably find political expression, for example in stronger support for progressive and populist solutions, and in particular to growing calls for a national solution to the problem of high health care cost in the United States.

The authors note that, “relative to members of earlier generations, millennials are more racially diverse, more educated, and more likely to have deferred marriage; these comparisons are continuations of longer-run trends in the population. Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth. For debt, millennials hold levels similar to those of Generation X and more than those of the baby boomers. Conditional on their age and other factors [including, critically, their higher levels of student debt], millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.”
Liberal Parents, Radical Children”, by David Brooks, New York Times, 26Nov18
“When I meet someone who runs an organization in a blue state, I often ask: Do you have a generation gap where you work? The answer — whether the person leads a college, a nonprofit, a tech company, an entertainment company or a publication — is generally the same: Yes, and it’s massive.”

“The managers at these places, who are generally 35 and above, are liberals. They vote Democratic and cheer on all the proper causes of the left. But some of the people under 35 are not liberals, but rather are militant progressives. The older people in the organization often have nicknames for the younger set: the Resistance, Al Jazeera, the revolutionaries. The young militants are the ones who stage the protests if someone does something deemed wrong…”

“On the left, the big difference is over meliorism. The older liberals are appalled by President Trump, alarmed by global warming, disgusted by widening income inequality, and so on, but are more likely to believe the structures of society are basically sound. You can make change by voting for the right candidates and passing the right laws. You can change individual minds through education and debate.”

“The militants are more likely to believe that the system itself is rotten and needs to be torn down. We live in a rape culture, with systemic racism and systems of oppression inextricably tied to our institutions. We live in a capitalist society, a neoliberal system of exploitation. A person’s ideology is determined by his or her status in the power structure.”

“Two great belief systems are clashing here. The older liberals tend to be individualistic and meritocratic. A citizen’s job is to be activist, compassionate and egalitarian. Boomers generally think they earned their success through effort and talent.”

“The younger militants tend to have been influenced by the cultural Marxism that is now the lingua franca in the elite academy. Group identity is what matters. Society is a clash of oppressed and oppressor groups. People who are successful usually got that way through some form of group privilege and a legacy of oppression…”

“I guess the final irony is this: Liberal educated boomers have hogged the spotlight since Woodstock. But now events are driven by the oldsters who fuel Trump and the young wokesters who drive the left. The boomer finally got the top jobs, but feel weak and beleaguered.”
The Opportunity Atlas Mapping the Childhood Roots of Social Mobility”, by Chetty et al
“Economic mobility varies dramatically across the US. This paper introduces a new interactive mapping tool that traces the roots of outcomes such as poverty and incarceration back to the neighbourhoods in which children grew up. Among the insights the data reveal are that children who grow up a few miles apart in families with comparable incomes have very different life outcomes, and that moving in early childhood to a neighbourhood with better outcomes can increase a child’s income by several thousands of dollars later in life.”

The website tool can be found here:
What explains America’s mysterious baby bust?”, in The Economist, 24Nov18
Japan and more recently Europe have been experiencing dropping fertility rates for years. American was long thought to be immune to this decline. However, three years of data have now raised serious questions about that belief.“

America’s total fertility rate, which can be thought of as the number of children the average woman will bear, has fallen from 2.12 to 1.77. It is now almost exactly the same as England’s rate, and well below that of France.”

The Economist also notes falls in fertility rates among Hispanics and city dwellers as key drivers of national level results.

This has serious consequences. For any given level of target economic growth, a lower domestic birthrate means that either higher immigration or higher productivity growth will be required to achieve it.
Oct18: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
“Be Afraid? Yes, But Don’t Overdo It” by Adam Garfinkle in The American Interest 29Oct18
Garfinkle provides a succinct summary of seven important sources of rising individual and group uncertainty and fear that are driving other social and political phenomena:

“A technology tsunami that is arguably unprecedented in nature and scope” that is “producing an accelerating cascade of eruptive discontinuities in social life affecting work and the economy more broadly, family structures, and political life.”

“Our politics have grown polarized and shrill, our military wins battles but not wars, and our political elites – of both major parties – have consistently made promises that fell short.”

“Terrorism has rattled us, starting with 9/11 but continuing through lesser forms of murder and mayhem ever since.”

“Broken families produce insecure children; kids who feel emotionally betrayed by those who are supposed to love and protect them often grow into insecure adults, replicating insecurity by often failing to form secure loving bonds.”

“Mean World Syndrome – research has demonstrated that people who watch a lot of commercial television and Hollywood shock flicks come to believe that violence, perversion, and plain evil are as plentiful in real life as they are in mass entertainment fiction.”

“There has been, arguably, too much immigration too fast into the United States to assimilate in a culture whose swoon in collective self-confidence has made local elites feel guilty about demanding assimilation.”

“Finally, since fear is ubiquitous, every civilization has devised ways to manage it. That has typically been accomplished in the context of religious culture. Dangers are easier to cope with when they are seen as something other than completely random and meaningless, when they are integrated into a shared narrative that makes a certain kind of emotional sense. When traditional religious templates erode, as they have in most Western societies in recent times, the frameworks that control the psycho-social impact of fear erode with them. They have been replaced, in a manner of speaking, with the pseudo-religion of the therapeutic, whose obsession with absolute security has only served to make nearly everyone more anxious, not less.”
Well-Being in Metrics and Policy” by Graham, et al
The paper reviews cumulative research findings on the correlates of self-reported well-being.

Findings about China were particularly interesting: “China is perhaps the most successful example of rapid growth and poverty reduction in modern history. GDP per capita increased fourfold between 1990 and 2005, and life expectancy increased from 67 to 73.5 years. Yet life satisfaction fell dramatically, and suicide increased, reaching one of the highest rates in the world. The unhappiest cohorts were educated workers in the private sector, who benefited from the growing economy but suffered from long working hours and lack of sleep and leisure time.”

This is yet another indicator of underlying domestic fragility in China.
“Associations between screen time and lower psychological well-being among children and adolescents: Evidence from a population-based study”, by Twenge and Campbell
This indicator confirms other research that has reached similar conclusions. However, this research is based on a larger sample set than previous studies.

“After 1 hour/day of use, more hours of daily screen time were associated with lower psychological wellbeing, including less curiosity, lower self-control, more distractibility, more difficulty making friends, less emotional stability, being more difficult to care for, and inability to finish tasks. Among 14- to 17-year-olds, high users of screens (7+ h/day vs. low users of 1 h/day) were more than twice as likely to ever have been diagnosed with depression, ever diagnosed with anxiety, treated by a mental health professional (RR 2.22, CI 1.62, 3.03) or have taken medication for a psychological or behavioral issue in the last 12 months.

“Moderate use of screens (4 h/day) was also associated with lower psychological well-being.”

“Non-users and low users of screens generally did not differ in well-being. Associations between screen time and lower psychological well-being were larger among adolescents than younger children.”

Going forward, the individual and social consequences of intensive personal technology use seem poised to become a much more contentious issue.
California Feudalism: The Squeeze on the Middle Class” by Kotkin and Toplansky from the Center for Demographics and Policy at Chapman University
Kotkin and Toplansky have provided a very thought provoking analysis of the consequences of a particular mix of progressive policies in California.

“California has now taken on an increasingly feudal cast, with a small but growing group of the ultra-rich, a diminishing middle class, and a large, rising segment of the population that is in or near poverty. Indeed, amidst some of the greatest accumulations of wealth in history, California has emerged as a leader in poverty, particularly among its minority and immigrant populations and throughout its interior…

“Yet our state leaders, and too many of our business and civic leaders, are convinced that California, far from being something of a cautionary tale, offers a great “role model” for the rest of the country. The state’s drift towards an ever more unequal, feudalized society, characterized by concentrated property ownership, persistent poverty levels, and demographic stagnation does not seem to concern our Sacramento leadership.”

The authors describe how this situation has developed in California, and what could alter its present course.
The Genetics of University Success” by Smith-Woolley et al, in Scientific Reports, 18Oct18

See also, “What Does Genetic Research Tell Us About Equal Opportunity and Meritocracy?” by Robert Plomin in Quillette on 15Oct18

These studies are further indicators of the rapidly accumulating evidence that the impact of genetics on a wide range of life outcomes is significantly larger than previously thought. In the short term, these findings are very much at odds with both conservative and progressive ideologies, and are thus almost certain to be a source of rising conflict. Over the medium term, these genetic findings will also have substantial policy implications in many areas, not the least of which are education, health, and risk management.

“The difference in earnings between high school and university graduates is estimated at $1 million over the course of the lifetime. However, the difference in earnings varies by the type of university attended, as well as achievement at university.”

“Furthermore, the benefits associated with obtaining a university education extend beyond earnings, to include better health and wellbeing, higher rates of employment and even increased life expectancy.”

“Despite this, little is known about the causes and correlates of differences in university-level outcomes, including entrance into university, achievement at university and the quality of university attended. University success, which includes enrolment in and achievement at university, as well as quality of the university, have all been linked to later earnings, health and wellbeing. However, little is known about the causes and correlates of differences in university-level outcomes. Capitalizing on both quantitative and molecular genetic data, we perform the first genetically sensitive investigation of university success with a UK-representative sample of 3,000 genotyped individuals and 3,000 twin pairs.”

“Twin analyses indicate substantial additive genetic influence on university entrance exam achievement (57%), university enrolment (51%), university quality (57%) and university achievement (46%). We find that environmental effects tend to be non-shared, although the shared environment is substantial for university enrolment. Furthermore, using multivariate twin analysis, we show moderate to high genetic correlations between university success variables (0.27–0.76). Analyses using DNA alone also support genetic influence on university success. Indeed, a genome-wide polygenic score, derived from a 2016 genome-wide association study of years of education, predicts up to 5% of the variance in each university success variable”.
“These findings suggest young adults select and modify their educational experiences in part based on their genetic propensities and highlight the potential for DNA-based predictions of real-world outcomes, which will continue to increase in predictive power.”
Beyond Four Walls: A New Era of Life at Home” by Ikea
This report is another indicator of the extent of the social transformation underway in many societies, and in particular suggests further erosion of the family and home as fundamental social units.

“When we talk about what makes a home, we talk about four dimensions that are shared by everyone: space, place, relationships, and things. Five core emotional needs are connected with the home: privacy, security, comfort, ownership, and belonging. Belonging is the need least satisfied by our residential homes. Today, one in three people around the world say there are places they feel more at home than where they live.”
Sep18: New Social Information: Indicators and Surprises
Why Is This Information Valuable?
Experimental Evidence for Tipping Points in Social Convention” by Centola et al.

The authors study “an artificial system of social conventions in which human subjects interact to establish a new coordination equilibrium. The findings provide direct empirical demonstration
of the existence of a tipping point in the dynamics of changing social conventions.

When minority groups reached the critical mass—that is, the critical group size for initiating social change—they were consistently able to overturn the established behavior…Our theoretical predictions for the size of the critical mass were determined by two parameters: individual memory length (M) and population size (N)…When participants have shorter memories, the size of the critical mass is smaller. Even under the assumption
that people have very long memories, the predicted critical mass size remains well below 50% of the population,
indicating that critical mass dynamics may be possible even in systems with long histories.

Variations in population size were explored computationally were not found to significantly affect the predicted critical mass size.

Over all trials, populations with a critical mass equal to or greater than 25% of the population were significantly more likely to overturn the dominant convention than populations with a committed minority below 25%.”
This paper helps to refine our mental model the drivers of sharp changes in sentiment, expectations, and other forms of conventional wisdom in a range of areas, from economics to social values to politics.

An interesting question to ponder is whether the current environment of information overload, constant stimulation, and incessant demands for our limited attention has effectively shortened our memories, and thus reduced the percentage of people in a population who can trigger substantial change.
How Persistent are the Effects of Sentiment Shocks?” by Benhabib et al from the Federal Reserve Bank of San Francisco.
The economic effects of negative sentiment shocks can persist for up to five years.
What to Do About Africa’s Dangerous Baby Boom” in the Economist.
“THE 21st century, in one way at least, will be African. In 1990 sub-Saharan Africa accounted for 16% of the world’s births. Because African birth rates are so much higher than elsewhere, the proportion has risen to 27% and is expected to hit 37% in 2050. About a decade later, more babies will be born in sub-Saharan Africa than in the whole of Asia, including India and China. These projections by the UN, if correct, are astounding (see article). There is good reason for the world to worry about Africa’s baby boom…The real problem is that too many babies sap economic development and make it harder to lift Africans out of poverty. In the world as a whole, the dependency ratio —the share of people under the age of 20 or older than 64, who are provided for by working-age people—stands at 74:100. In sub-Saharan Africa it is a staggering 129:100.

In stark contrast with most of the world, notably Asia, the number of extremely poor Africans is rising, in part because the highest birth rates are in the poorest parts of the continent.

This has clear implications for future economic migrant flows, and potentially for the emergence of more failed states in Africa, and thus refugee flows.
Workers with Low levels of Education Still Haven’t Recovered for the Great Recession”, by the Brookings Institution

Why Lots of Americans are Sour on the Economy” by Noah Smith, on Bloomberg
Clear implications for the potential social and political implications of another severe economic downturn, such as increased polarization and susceptibility to more extreme political solutions.

Applies to more countries than just the US – e.g., Jeremy Corbyn in the UK, and the rise of more extreme parties on the continent, which is matched by the lack of strong policy prescriptions and attractive political leaders in the center.

Smith notes that many members of the middle and upper middle class are increasingly frustrated, which magnifies the potential for social, political, and economic change.
The Collapse of Civilizations” by Malcolm Wiener, published by the Belfer Center at Harvard’s Kennedy School
The author reviews the historical record and finds five recurring (and often interrelated) causes of civilizational collapse: (1) major episodes of climate change; (2) crisis-induced mass migrations; (3) pandemics; (4) dramatic advances in methods of warfare and transport; and (5) lack of societal resilience and the madness, incompetence, and ignorance of rulers.