In this issue, Trump takes on Congress, globalism vs nationalism, pitting the old against the young, poverty and brain development, and ETFs go biblical.
This week President Donald Trump addressed a joint session of Congress for the first time:
For too long, we've watched our middle class shrink as we've exported our jobs and wealth to foreign countries...Since my election, Ford, Fiat-Chrysler, General Motors, Sprint, Softbank, Lockheed, Intel, Walmart, and many others, have announced that they will invest billions of dollars in the United States and will create tens of thousands of new American jobs.
Trump described his 2016 win as fueled by a "quiet rebellion" of people who wants the government to "put its own citizens first." But on the other side is a loud movement that has been described as the "silenced majority." In the Nation, John Nichols looks at an upcoming protest in Mississippi hoping to put the spotlight on unsafe working conditions and workers rights at a local auto plant:
“There is a war on workers in America today, and we must stand up and fight back against companies that are willing to sacrifice the rights and safety of their workers to turn a profit,” says Joseph Geevarghese of Good Jobs Defenders, who objected to the used of federal dollars to aid multinational corporations that depress rather than raise wages. “When those companies are receiving billions in taxpayer dollars to operate, the federal government should intervene to guarantee good jobs, living wages, and worker rights from companies we as taxpayers are subsidizing.”
You might be interested in this TED talk Chris Anderson and historian Yuval Noah Harari on globalism vs nationalism:
I think what we are seeing is the immediate human reaction: if something doesn't work, let's go back. And you see it all over the world, that people, almost nobody in the political system today, has any future-oriented vision of where humankind is going. Almost everywhere, you see retrograde vision: "Let's make America great again," like it was great — I don't know — in the '50s, in the '80s, sometime, let's go back there...Work is gone, a traditional way of life has gone, and it's no wonder that people are furious about that. And in general, they have blamed globalism, global elites, for doing this to them without asking their permission, and that seems like a legitimate complaint.
But what I hear you saying is that — so a key question is: What is the real cause of job loss, both now and going forward? To the extent that it's about globalism, then the right response, yes, is to shut down borders and keep people out and change trade agreements and so forth. But you're saying, I think, that actually the bigger cause of job loss is not going to be that at all. It's going to originate in technological questions, and we have no chance of solving that unless we operate as a connected world.
The Atlantic's Alana Semuels is back with a look at research on the factory decline and the marriageability of men:
A trade shock in which one sector saw major job losses increased the share of children living in poverty by 13 percent. It also increased the share of children living in single-parent-headed or grandparent-headed households...It’s more evidence that there was something special about manufacturing in America in the middle of the 20th century, because the sector provided good-paying jobs for people without a college education. Those jobs allowed people a comfortable lifestyle, and when they vanish, families changed. “It does appear that places where manufacturing is prevalent, it’s kind of a fulcrum, a cornerstone of a way of life where men have relatively stable, modestly high earnings and women are more likely to be married to them,” Autor said.
In a separate piece Semuels also looks at why corporate efficiency comes at the expense of people. You also may be interested to know that the solar industry now provides twice as many jobs as the coal industry, reports Adele Peters in Fast Company:
While 40 coal plants were retired in the U.S. in 2016, and no new coal plants were built, the solar industry broke records for new installations, with 14,000 megawatts of new installed power. Many of the jobs came from constructing massive solar plants like the Springbok Solar Farm, which is being built on a site that sprawls over 12 miles in the Mojave Desert...The solar industry is more labor intensive than other types of energy. Even though it still represents only a tiny fraction of energy production overall—less than 2%—it already has more workers than natural gas, coal, wind, and nuclear.
Meanwhile, the stock market continues to do well but NPR notes the rally is mostly a boon for the wealthy:
[N]early all of the stock ownership in the U.S. is concentrated among the richest. According to Wolff's data, the top 20 percent of Americans owned 92 percent of the stocks in 2013.
Put another way: Eighty percent of Americans together owned just 8 percent of all stocks...
More than one-third of Americans working full time have no access through their employers to either pensions or retirement investment accounts like 401(k)s, according to the Pew Charitable Trusts. Many national-level politicians occupy a world where stock ownership is a fact of life. But that's not true for many of the people they represent.
To be fair, non-stock owners could see a potential upside to the improving stock market through what's known as the "wealth effect." The basic idea is that when the stock market improves, wealthier folks feel better about their finances and therefore spend more. That spending drives more economic growth and can help people up and down the income spectrum.
Former Fortune editor, Dan Primack writes an open letter to TIME Inc to protest corporate restructuring that comes at the expense of the editors, writers and other staff:
The new plan basically guarantees bonuses and extends severance to top executives if they get fired after a change of control. Not to editors of the company's nearly two dozen titles, nor to any of their reporters, researchers or assistants. Also out of luck are salespeople, designers, technologists, back-office administrators, security guards or anyone else who spends most of their waking hours in the service of Time Inc...Perhaps I'm just a cock-eyed capitalist, but shouldn't top executives need to prove their worth just like those with smaller paychecks? If a new owner decides that someone VP or above isn't pulling their weight, then that's how the cookie crumbles. They'd hardly be the first people to lose their jobs at Time Inc. in 2017.
Let's have a cartoon:
Speaking of Trump's agenda and Congress, a draft of the repeal and replace plan for the Affordable Care Act show a proposal would be tough on the poor, reports Politico's Paul Demko:
In place of the Obamacare subsidies, the House bill starting in 2020 would give tax credits — based on age instead of income. For a person under age 30, the credit would be $2,000. That amount would double for beneficiaries over the age of 60, according to the proposal. A related document notes that HHS Secretary Tom Price wants the subsidies to be slightly less generous for most age groups.
The Republican plan would also eliminate Obamacare’s Medicaid expansion in 2020. States could still cover those people if they chose but they’d get a lot less federal money to do so. And instead of the current open-ended federal entitlement, states would get capped payments to states based on the number of Medicaid enrollees.
You might also be interested in how this article in Pacific Magazine that looks at why rural hospitals are turning away women in labor. In the Atlantic, Ronald Brownstein looks at Trump's budget proposal and how it might shift resources from the young to the old:
As the nation went through this very rapid demographic change the question has been would older white Americans would essentially withdraw from the public sphere and not fund a new generation who did not look like their kids,” said Simon Rosenberg, president of NDN, a Democratic advocacy group...
In the long run, the older white population needs more of the younger non-white population to obtain the skills to reach the middle-class––and pay the payroll taxes that support the federal retirement programs on which those graying whites depend: as I’ve argued before, there is no financial security for the gray without economic opportunity for the brown. But neither party has effectively made that case to the public, and attitudes about federal spending generally divide along generational and racial lines. Most older whites now oppose an activist government––with the prominent exception of the retirement programs that benefit them.
Over at Brookings, former Secretary of Education Arne Duncan says investments in education equity will improve the economy:
The persistent lack of access to world-class educational resources and technology in far too many communities is at the heart of this issue. This inequality breeds more than just subpar test scores. It snowballs to create economic immobility, stranding people without the training necessary to earn well-paying jobs. As the job landscape evolves–STEM jobs are growing 70 percent faster than non-STEM jobs–we need to create opportunities for people to develop 21st-century skills and level the playing field for all demographics...
As people have been pushed to the margins of society, it has become more difficult to climb the economic ladder. Providing opportunity in the form of skills development will encourage economic mobility, strengthen families, keep good jobs in America, bolster our democracy, and replace the deep fear felt across the nation with hope. It’s our collective responsibility to help close the technology skills gap and empower our students and professionals to become the creators and problem-solvers we need to fuel the U.S. economy in today’s technology-driven world.
Scientific American looks at recent research on how poverty affects child brain development:
To demonstrate the physical effects of poverty on the brain, we must examine the organ itself. To this end, Noble’s lab scanned the brains of about 1,100 children and adolescents, and found clear structural differences based on family income. And remarkably, their results showed that those children falling on the poorer end of the lowest income bracket suffer exponentially severe losses in brain development.
Well, who is surprised by this? Issues like poor nutrition, toxic environments and stress are bound to have an affect. The ongoing issue with the water of Flint, MI is good example, as CNN reported earlier this year:
[F]amilies like the Walters are still living with the effects of lead poisoning every day.
The two Walters boys are suffering short term and long term effects from lead exposure, their mother said. Some of the effects are visible. But the boys also suffer developmental issues as well. According to Walters, the boys struggle with a form of memory loss.
"They knew their colors and numbers and their ABCs, and they're being retaught all these things now because of what's happened."
It's not just the physical and developmental effects the family faces. There's a large psychological toll as well. And the medical repercussions come on top of the everyday hassle of the water crisis. The Walters family still relies solely on bottled water for everything -- drinking, cooking, and bathing. Walters says her family uses 10 cases -- that's 240 bottles -- a day.
The state of Michigan recently said it would end water subsidies for Flint since the water is "testing within acceptable levels" but residents already pay the highest rates in the nation. "A survey of the 500 largest water systems in the country, conducted last year, found that on average, Flint residents paid about $864 a year for water service, nearly double the national average and about 3½ times as much as Detroiters pay," reports the Detroit Free Press.
Screened public equity funds are growing but some folks are asking how much of a good thing is this. In the New York Times, Liz Moyer looks at two new funds focused on "biblical responsibility":
The funds explicitly say in their regulatory filing that they will avoid buying shares in companies that have “any degree of participation in activities that do not align with biblical values,” including what they call the lesbian, gay, bisexual and transgender “lifestyle.”
The approach is squarely at odds with that of nearly all of corporate America.
In Bloomberg, Gary Ritholtz also offers caution of moving in this direction:
The problem is how many companies have already adapted to Obergefell v. Hodges, the landmark U.S. Supreme Court case that found same-sex couples were guaranteed the fundamental right to marry. Changes in companies’ policies have been swift: "Ninety-two percent of the Fortune 500 companies now include ‘sexual orientation’ in their nondiscrimination policies and 82 percent include ‘gender identity,’” according to the New York Times. Indeed, more than half of Fortune 500 companies now offer “transgender-inclusive health care benefits, including for surgical procedures.”
Eliminating that many potential investments for reasons that have precisely zero to do with valuation, potential risks or future returns sets quite a high hurdle. Virtue investing -- omitting “vice” stocks -- typically removes a small percentage of names from consideration. The Inspire corporate LGBT lifestyle screen is of an entirely different magnitude.