Great Society history lesson III

Continuing our look at Great Society: A New History, a book that chronicles the biggest shift since the 1930s in Americans’ relationship to government. (See Great Society history lesson II also.)

The idea of reparations is not a new one…

In 1963 the Urban League’s Whitney M. Young had proposed a Marshall Plan for black Americans, including direct payments to poor families to lift them over the poverty line. Thomas Sowell, a graduate student, was concentrating on his PhD, an essay on the pre-Keynesian economist Jean-Baptiste Say. But Young’s idea irked Sowell so much that he’d written a letter to the New York Times. The reaction to such a Marshall Plan, Sowell wrote, or to any other offer, would be the same from black Americans as it was from whites. “People who have been trying for years to tell others that Negroes are basically no different from anybody else,” Sowell said, “should not themselves lose sight of the fact that Negroes are just like everybody else in wanting something for nothing.”

White people loved higher minimum wages just as much back then as they do now:

Black and white youth unemployment had run about the same until the middle of the 1950s, 8 to 11 percent. But when Congress raised the federal minimum wage by a third in 1956, unemployment rose far higher among black teenagers than among whites, to 25 percent. … the economist Milton Friedman was reaching a conclusion: those who were supposed to benefit from a minimum wage were nearly always actually hurt, as “the intended beneficiaries are not employed at all.” Friedman the following year would slam the minimum wage as “the most anti-Negro law on our statute books.”

Then as now, government handouts ideally are about the same as the median wage:

But the newly generous War on Poverty welfare benefits actually encouraged men not to work, adding to the ranks of unemployed. With the average family welfare check between $ 177 and $ 238 a month, and wages at $ 220, the commission concluded that “the financial incentive to find work may be either negative or non-existent.”

(See “The $600 Unemployment Booster Shot, State by State” (NYT) and “Work Versus Welfare” (CATO, 2013))

Certainly there shouldn’t be a housing shortage in the U.S. at this point…

But the scaling and the speedups were also evident at home, in the new HUD building, and a nationwide building program. For housing, Johnson promised $7.5 billion, more than nine times the poverty program’s annual budget that first year. The American people were, Johnson said, “strong enough to pursue our goals in the rest of the world while still building a Great Society here at home.” In 1966, everything could be, had to be, big. Even before Watts, Washington had made up its collective mind to put its formidable shoulder into a second Great Society drive, housing. Since Watts, that commitment had only hardened. The Administration would supplement, and sometimes steamroller, its flawed program, community action, with construction. Nobody could disapprove of infrastructure improvement, politicians told one another.

And we should have all of the infrastructure that we need too. at least in the cities that Big Government favors:

Johnson laid out his second Great Society in his State of the Union address in January. The president would support construction everywhere. More than $ 2 billion of the funds would go to rebuilding cities. The president would also follow the Reuther plan for Demonstration Cities, “and rebuild completely, on a scale never before attempted, entire central and slum areas.” Working together with private enterprise—this time, Johnson did not emphasize municipal governments—the federal government would rebuild areas of up to 100,000 people. Johnson would add shops, parks, and hospitals around the new housing. In the same speech, the president asked Congress to pass legislation funding rent assistance. Taken together, the results, the president hoped, would be something similar to what his old community action drive had sought: “a flourishing community where our people can come to live the good life.” This whole second project would resemble something like what the United States had done in rebuilding Europe under the Marshall Plan. Eager to make Detroit the star of the new campaign, Reuther rounded up support in Michigan. Reuther wrote to Mayor Cavanagh to encourage him: “Detroit can become an exciting and shining model of a 20th century city in the Great Society.” Reuther promised Cavanagh that they could work together in a new institution, the Detroit Citizens Development Authority.

Without the gold standard, a democracy will always vote itself into insolvency or hyperinflation, according to Alan Greenspan, 1960s version:

Greenspan wrote that American overspending wasn’t strength or a wartime phenomenon; it was predictable. A welfare state, which was what the United States had become, always overcommitted. “The welfare statists,” Greenspan said, were always “quick to recognize that if they wished to retain power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e. they had to borrow money, by issuing government bonds. . . . Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

Not every Black American meekly agrees with white saviors:

On January 18, 1968, the day after the State of the Union, Mrs. Johnson received a reminder that many Americans could not agree. The First Lady hosted a “Women Do-ers” lunch at the White House, with fifty guests. Among them was the black star Eartha Kitt, whom Americans knew as an actress, singer, activist, and star on Batman, where Kitt played Catwoman. Johnson himself entered mid-lunch to address the group. The president spoke about expanding Social Security. Kitt spoke up, too, speaking not about entitlements, but noting that “because taxes are so heavy, both parents have to work.” Johnson was taken aback, and announced he had just seen through the passage of a Social Security bill that allotted millions for day care. A “non sequitur” was how Kitt characterized Johnson’s reply. Kitt so intimidated the president that he fled the room, saying such questions were “something for women to discuss here.”

When Nixon takes over, the machinery put in place by Johnson hums at an accelerated pace.

Despite the historically low unemployment rate, federal welfare payments were exploding. In one of the first of a number of long, careful memos that Moynihan penned to his future boss, he offered New York City as an example. New York’s welfare payments alone amounted to $ 2 billion, double the once huge-sounding initial budget for the War on Poverty. Nationally, spending for the old welfare system had risen by half in just two years, and spending for the disabled was up by 26 percent in the same period.

The Democrats have to top whatever the Republicans promise:

Rather than going along with Nixon, McGovern, perhaps already thinking of the presidential race in 1972, was readying his own plan, payments of $ 600 per child for all families below the middle class, a program that would cost multiples of the Nixon scheme. Hubert Humphrey, momentarily shocked, noted that the McGovern plan would place close to half of the United States on welfare. A new lobby, social workers, also made its objections known. President Kennedy’s and Moynihan’s Executive Order 10988 long ago had transformed once weak public-sector unions into titans. The American Federation of State, County and Municipal Employees, one of those newly powerful unions, counted thirty thousand social workers among its members. Now social workers rose up in blunt defense: “This legislation threatens to eliminate the jobs of our people,” said the union spokesman.

The book describes the importance of Goldberg v. Kelly, a case that turned handouts into “entitlements” akin to a property right.

How about three weeks to flatten the curve turning into 16 months of restrictions? Is that new?

Pete Peterson had supported the temporary income tax, but when, later, Connally and Nixon advocated keeping the tax in place through the 1972 election year, Peterson was, by his own description, “aghast.” Doubly infuriating was that Nixon broke a promise, by making something he’d labeled “temporary” seemingly permanent. Herb Stein, the most reflective in the group, wrote several essays about Camp David. “Even now, I am amazed to think of how little we looked ahead during that exciting weekend at Camp David when we (the president, really) made those big decisions,” he wrote in 1996. “We were going to freeze wages and prices for ninety days. What would happen after the ninety days? I don’t remember any discussion of that.” As it turned out, Stein noted, some of the freezes lasted more like a thousand days.

As with a lot of history books, this work is interesting for showing the reader how little has changed. Americans still have the same issues, e.g., some people don’t want to work at all and others have a level of skill that is not high enough to command what we would call a “living wage.” The arguments on all sides are more or less the same as today (remember that universal basic income was tried in 1970; see Long-term effects of short-term free cash (guaranteed minimum income experiments)).

Probably the biggest change from the 1960s is immigration. The architects of our welfare state imagined that the U.S. had a fixed supply of uneducated badly housed poor people. The $billions in tax dollars would lift each of those people out of poverty via education and job training, fresh public housing, new infrastructure, etc. After that had been accomplished, there wouldn’t be any more poor people. It didn’t occur to them that 1 million low-skill people, destined to be poor in an economy for which they lacked the job and language skills, would walk across the border each year. Certainly they didn’t imagine that their creation of the welfare state itself would attract low-skill migrants, for whom the welfare state removes all risk of migration (if employers don’t want a migrant or the migrant does not enjoy working, public housing, health care, food stamps, etc. are all there as an alternative to work).

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Great Society history lesson II

Now that at least 80 million Americans are on what used to be called “welfare” (see “Pandemic Swells Medicaid Enrollment to 80 Million People, a ‘High-Water Mark’”), perhaps it is time to revisit Great Society: A New History which describes the origin of the no-longer-called-welfare program on which nearly 25 percent of Americans now rely. (Previous post: Bitcoin has plenty of runway if we look back to the 1960s and 70s and the Great Society)

What’s the history of the program?

The costs of the previous legislation Johnson had pushed Mills into had already far outrun the projections. Budget officials had predicted that Medicaid, for example, would cost less than $ 400 million in fiscal 1967. Instead it had cost $ 1.1 billion.

Compare to $613 billion in Medicaid spending in 2019 ( which presumably is now closer to $800

Why do Californians love bigger government so much?

The value of the private sector’s relationship with the government seemed especially obvious in the Western state that Americans regarded as the land of the future, California. For many Californians, the government was their job. More active-duty military and civilian Defense Department employees were stationed in California than in any other state. The presence of Pentagon money in California wasn’t merely large, it was overwhelming. 4 In one year, 1959, the Defense Department was awarding more than $ 3 billion in contracts to four aerospace firms in Los Angeles.

The author reminds us of the good old days of computing, before we got everything from Taiwan chip fabs:

In the mid-1950s, GE was a far richer company than IBM. General Electric had the resources necessary to get into computers, the computer fans reckoned, whatever Cordiner said. A clutch of engineers did manage to land a successful contract with the Bank of America for an innovative check sorter, the first computer system for banking applications, a testimony to the gumption of GE professionals and, ironically, to Cordiner’s own culture of department autonomy. California was the home of Bank of America, and also the home of the GE group that won the contract. The machines would serve the Sacramento, Fresno, Los Angeles, and San Diego areas. But California was a state where GE could endure the same troubles with organized labor as it did out East. GE internal reports noted that the company was looking to avoid the Golden State’s “punitive labor legislation.” GE based production of the project’s computer, weight 23,000 pounds, in Phoenix.

Unions can play an important role in expanding government for all:

Building a union that could beat the automakers at the negotiation table sounded like enough work, but Reuther also, early on, decided he wanted more. Reuther was falling in love with Northern Europe’s social democracies, countries where democratic government supplied health care and good schools, and even, Reuther noticed, funded time at worker spas for workers to recover from strenuous labor. It seemed to Reuther there was no reason America could not replicate the Scandinavian model. In the 1940s, Lem Boulware spoke at a graduation at Harvard University, making an early case for Boulwarism. During the same years Reuther gave the commencement address at Howard University, the historically black college in Washington. At Howard, Reuther said that U.S. unions needed to deliver better housing and medical aid to all Americans, not just union members. Otherwise, unions weren’t worth much. “The test of democratic trade unionism in a democratic society,” Reuther said, “is its willingness to lead the fight for the welfare of the whole community.”

The unions did beat the Detroit automakers, of course, but Detroit didn’t end up quite as prosperous as President Lyndon Johnson expected.

It was Detroit in particular that was, Johnson said [in May 1964], “the herald of hope in America. Prosperity in America must begin here in Detroit.” … If labor and industry would stick by his side, the president said, “the sky is the limit, and the sky is bright today.”

In the past, presidents had striven for abundance, Johnson noted. Now the country had abundance. The challenge of the next half century was proving “whether we have the wisdom to use that wealth to enrich and elevate our national life.” Some corners of the country were still poor. The Great Society, therefore, required, as Johnson had said before, an “end to poverty.”

See also Decline of Detroit (Wikipedia): “The population of the city has fallen from a high of 1,850,000 in 1950 to 680,000 in 2015 … Local crime rates are among the highest in the United States … and vast areas of the city are in a state of severe urban decay.” And Detroit bankruptcy (Wikipedia): “The city of Detroit, Michigan, filed for Chapter 9 bankruptcy on July 18, 2013. It is the largest municipal bankruptcy filing in U.S. history by debt, estimated at $18–20 billion…”

The central planners didn’t do a great job after World War II, but we can rely on them today…

Harrington took a frank position on the shame of urban renewal, in which unions had been complicit. After World War II, the unions had joined the federal government in a great plan to rebuild the cities. The bulldozers obliterated the slums, but also evicted entire black communities like Paradise Valley. This was not “urban renewal,” it was “Negro removal,” as the writer James Baldwin said. Two-thirds of the families displaced by urban renewal were black. Harrington argued that when the heavy equipment, whether Dwight Eisenhower’s in the past or new presidents’ in the 1960s, arrived at so-called slum neighborhoods, it crushed untold value. Old slums hadn’t merely been slums; they had been starting points: “there was community, there was aspiration.” New communities did not come to life in the new projects. The projects were cages that became graveyards. Harrington noted that the new housing that supplanted old tenements created “a new type of slum,” which isolated black families in ghettos. Harrington had seen the new type of slum firsthand in his hometown, St. Louis, where black families had been moved out of the Mill Creek areas to one of the largest of the urban renewal public housing projects in the country, Pruitt-Igoe.

Presidents Biden and Harris might be highly successful at transforming the U.S. via legislation:

And Johnson also could count some advantages of his own. First, there was his long record in the Senate, which gave him unparalleled experience as the shepherd of legislation. Roosevelt, a mere governor with a famous name, had had nothing like that. There was also the aching advantage of tragedy: Kennedy’s death would make Congress eager to pass Kennedy’s tax law and Kennedy’s languishing civil rights bill.

What are the parallels to today? Biden was in the Senate for decades and the U.S. is only now beginning to recover from the tragedy of rule by Donald Trump. Another parallel to today:

Moynihan noticed an irony. Whether a program’s beneficiaries were black or white, its planners were white. Blacks were scarcely present in all the work undertaken for the disadvantaged. Indeed, Moynihan later wrote, “at no time did any Negro have any role of any consequence in the drafting of the poverty program.”

The Great Society programs were supposed to get cheaper over time, as Americans realized that it was far better to work than to consume entitlement benefits:

At the August 20 signing ceremony, Johnson took further pains. The president told the public that the Economic Opportunity Act did not represent a “a handout or a dole.” He continued: “We know—we learned long ago—that answer is no answer. The measure before me this morning for signature offers the answer that its title implies. The answer is opportunity.” Spending now would bring savings later. Johnson promised the voters that this law would reduce the costs of “crime, welfare, of health and of police protection.” The act would yield a new era, and “the days of the dole in our country are numbered.” America would remember the 20 percent in poverty, the “forgotten fifth.”

Even today’s haters at the WSJ loved these ideas:

The Wall Street Journal characterized the law as “an opportunity to eradicate poverty, not opiate it.”

(Can we give them credit for prescience regarding opioids?)

Was President Johnson right about increased spending on government handouts cutting the cost of the police? Urban Institute: “From 1977 to 2018, in 2018 inflation-adjusted dollars, state and local government spending on police increased from $43 billion to $119 billion, an increase of 175 percent. Over the same period, real corrections expenditures increased from $18 billion to $81 billion, an increase of 350 percent.”

Ronald Reagan tried to talk Americans out of the idea that the path to salvation started with a much bigger government.

Reagan targeted the Office of Economic Opportunity. “Now do they honestly expect us to believe that if we add $ 1 billion to the $ 45 billion we’re spending . . . do they believe that poverty is suddenly going to disappear by magic?” Reagan also assailed the new camps being built for young workers. Room and board for each young person cost $ 4,700. Harvard tuition at $ 2,700 was less than that. Reagan took his jab at the college, and at Johnson’s misty affection for a humanities education: “I’m not suggesting Harvard is the answer to juvenile delinquency.” … America, Reagan said, was at a key moment—the country must choose whether it was a collectivist nation or a free one. The title of Reagan’s speech was “A Time for Choosing.” In early November the nation chose. It elected Johnson with an overwhelming majority.

We had faith then and have faith now!

To be continued…

More: Read Great Society: A New History

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Steeped in the religion of homo economicus, American central planners underestimated the number of satisficers?

Recent text message from a friend:

[wife] is pissed at government for extending unemployment. Our nanny won’t work until September because she is being paid to not work.

Many of the Americans collecting unemployment checks (often more spending power than what is obtainable from a median job; see nytimes) are happy to work in exchange for untraceable cash that won’t jeopardize their continued revenue stream from Uncle Joe. They’re examples of Homo economicus from Econ 101, in other words. They put some value on leisure time, but it wasn’t such a high value that it kept them from entering the workforce some years ago. If their value of leisure time hasn’t changed, they should be happy to exchange time for cash money that government computer systems won’t see.

The above-cited nanny, however, did not make the working parents the expected offer to continue her efforts in exchange for cash rather than the previous stream of checks followed by a 1099. Instead, she said that she had “enough” to meet her needs and was not interested in work at all (presumably there was some cash price per hour that would have changed her mind, but she didn’t come up with a quote).

The central planners in Washington, D.C. presumably had some idea of how the enhanced/extended unemployment benefits would change the American workforce, but I wonder if there are way more people sitting on the beach than planned due to an overreliance on the Homo economicus assumption and an underestimate of the number of satisficers like our friends’ nanny. If there are a lot of working-age people who aren’t especially materialistic, it might be easier to shrink the American workforce than economists imagine.

Numbers from the Bureau of Labor Statistics (we seem to have reached a “new normal” a year ago):


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Nobody wants to work, tinted window edition

I was chatting with a guy who runs an automotive tint film service with three employees. “I can’t hire anyone right now,” he says. What would someone expect to earn? “A high school graduate will make about $60,000 in the first year and $100,000 per year after three years,” he replied.

(Note that, at least with a family of 4, a household earning $100,000 per year is eligible for welfare (subsidized housing, subsidized health insurance) here in Massachusetts. So, technically, $100,000 per year is a poverty wage.)

Why does he need to hire people? If high school grads work their way up to $100,000 per year don’t they stay at the job indefinitely? “After a year or two,” he replied, “they lose their initiative. They don’t want to work on weekends. They don’t want to get up early. They don’t want to drive a long distance to a customer. They don’t have the commitment of a business owner. It was bad before the $600/week and now it is terrible.”

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Nobody wants to work, coastal North Carolina edition

If you’re a devoted reader you might recall 20-hour Bonanza flight over the North Pole, in which I discuss a plan to fly to Beaufort, North Carolina with some sea turtles.

The good news for those who #FollowScience, in which the latest edition is that the vaccinated need not wear masks, is that nobody down there was wearing a mask. Not at the airport (contrary to Uncle Joe’s orders?), not government workers at a state park, not museum workers, not restaurant workers, not retail store clerks, not shoppers in retail stores, etc.

The better news for those who like to relax is that, apparently, nobody in North Carolina feels compelled to toil at a soul-destroying job. Restaurants are closed on certain days and/or telling customers to keep in mind that they’re short-staffed. A sampling:

A few days before Pride Month officially began, but the Turner Street Market sandwich shop is already “Proud to Celebrate Diversity”:

How is a sign like this supposed to work at a counter-serve sandwich shop? How would an employee be able to tell what kind of sexual activity is of interest to a customer ordering a sandwich? Is it for situations where a customer says “I need an extra shot of espresso because I was in a four-way last night with three partners with three different gender IDs and all of the sex really wore me out”?

As long as we’re talking about nominally sexual relationships…. “Marriage is a Workshop where the husband works and the wife shops”:

(Thanks to North Carolina family law, this division of labor can be extended indefinitely even after one spouse decides to terminate the marriage.)

How about identity politics, which we are told is new? This sign about the “first Jewish member of N.C. legislature, 1808”, in front of a waterfront house, dates from 2012:

(Zillow says that his descendants won’t be able to live here unless each one has roughly $2 million to spend on a house.)

How about the turtles, you might reasonably ask… We picked them up from KGHG (Marshfield, MA) in a NOAA-supervised operation at 7 am. The fuel stop was at climate change activist Bill Gates’s Signature Flight Support in Atlantic City (amazing hospitality from Stacy Suazo, the general manager). The corporate overlords enforce a moderate degree of coronapanic here. In case the CDC is wrong about COVID-19 not being spread via surface contamination, a sign on the fridge that formerly held water bottles for customers to grab with their filthy virus-covered paws:

Once we arrived at Beaufort (KMRH), the turtles were rushed into a waiting van and we drove 20 minutes to Fort Macon State Park. In Florida, it is illegal for ordinary folks to touch sea turtles. In North Carolina, however, we were able to get some training from the experts and then carry our passengers from a ranger’s pickup truck into the surf.

(Note my passion for all things LGBTQIA+: the T-shirt is from Tony Packo’s, the stated favorite restaurant of M*A*S*H’s Corporal Maxwell Klinger, who was seeking to be discharged from the Army as a consequence of gender dysphoria (evidenced by Corporal Klinger’s wearing of dresses).)

Some more images from the beach:


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Is inflation already at 15-30 percent if we hold delivery time constant?

The government assures us that the U.S. inflation rate is 3 percent. Part of the magic of this statistic is that the actual cost of buying a house was removed from the basket of stuff that an American might purchase. So if houses have zoomed up by 50 percent that has no effect on the headline inflation number. The government postulates a hypothetical world in which every American is a renter, despite the fact that renting in the U.S. is not a substitute for owning a house (e.g., if you want a single family home with windows on all four sides you’re probably not renting from a big commercial landlord and therefore you’re always at risk of being kicked out if the owner wants to use the house, sell the house, etc.).

I wonder if another way to defraud the public is to look at prices without looking at delivery time. A new Cirrus SR20, for example, can be purchased for $500,000. That’s an inflation rate of 3.7 percent per year from 2005 when the airplane was $280,000. But the delivery time used to be at most 2-3 months after placing an order. Today it is 15 months. If you wanted to buy out someone else’s order and get a Cirrus within 2-3 months you’d likely have to pay $600,000.

Have the Apple AirPods and want to complete the Total Douchebag Package with a Tesla 3? Your luxury dog kennel is 8-12 weeks away, up from 0-3 weeks. Yes, the price is somewhat higher, but a market-clearing price for a Tesla to be delivered in 0-3 weeks would be substantially more.

Want to waste money on the water instead of on land or in the air? Line up! “New boats the latest item hit by a shortage during the COVID-19 pandemic”: Chad Chaney drove from Forney to Lewisville with his daughter just to check out a new boat similar to one he ordered back in January and still won’t get for a few more months. (Friends who own older boats say that the values for used boats are up 30 percent compared to two years ago.)

Since we’re stuck at home with no car, no boat, and no airplane, maybe we can play games on a new PC with an awesome graphics card. If we order an Alienware R12 today it will show up “with express delivery” on August 6 (a two-month wait for a device that is supposed to get better and cheaper every couple of months):

If we can’t play games on the computer for two months, maybe we can play games on a tennis court. The local tennis shop says that most balls are on back-order until August. The owner predicted immediate defeat for the U.S. if we ever were to go to war with the Chinese.

As part of our escape from Maskachusetts to the Florida Free State, a contractor is fixing up our already-sold house (condition of the P&S that we do the work we would have done if we had put the house on the market). Most of his materials estimates are turning out to be inaccurate if he wants to see the part, e.g., a picture window, this summer. We are paying 50 percent more for windows and other components, and, of course, 3X for lumber. (see “Sticker shock: Lumber prices up by more than 350 percent”) His costs for unskilled labor are 40 percent higher. Where he previously paid $18 per hour he is now paying $25 per hour to compete with Joe Biden and Charlie Baker. That’s if he can find someone. “Everyone who is worth hiring already has a job,” he says, “and the only people left refuse to work W-2 because they don’t want to lose their benefits. I’m too big to pay cash.” He says that he understands why $25 is the new minimum: “Nobody can live on $18 per hour anymore.” (The Massachusetts and U.S. governments agree; a family of 4 has to earn more than $100,000 per year to become ineligible for health insurance subsidies and over $130,000 to become ineligible for subsidized housing in our suburb.)

For the move itself, we found that the storage container-based moving companies had 2-4-week wait times for a container to be delivered.

Why don’t retailers just raise prices to market-clearing levels? My guess is that there is an expectation that shortages will ease and the market-clearing price will fall. Retailers don’t want consumers to remember them for “price-gouging”.

Readers: What items have you tried to buy lately and found that there were long lead times?

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Government cheese is better than European PDO cheese

From the Wine and Cheese Cask of Somerville, Massachusetts, purveyors since 1970 of imported Protected Geographical Status cheeses:

After 51 years of continuous operation, the cheese counter is closed about half the time that the store is open (they also sell alcohol, which doesn’t need to be cut to size). In other words, for the first time in 51 years, government cheese has become irresistible to the shop mice.

(The shop did not have to close during Peak Coronapanic here in Maskachusetts because alcohol, like marijuana, is “essential” under our governor’s 68 orders so far.)

Note that it is possible to get cheese here even when the counter is closed. A selection of the full inventory is available as pre-packaged grab and go items.


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We are very short staffed and no one wants a job right now

“Biden and Republicans Spar Over Unemployment as Job Gains Disappoint” (NYT):

The president said he saw no measurable evidence that a $300 federal boost in unemployment benefits was hurting the labor market, amid criticism from conservatives and business groups.

From a Mexican restaurant in Asheville, North Carolina (Biltmore Village, actually) last month. The sign on the door: “We are very short staffed and no one wants a job right now. … ITS THE NEW PANDEMIC! Most of us are working doubles everyday.. PLEASE BE KIND to the ones that did show up for their job today!!”

Is it better elsewhere in the nation? A friend owns a multi-state chain of restaurants. April 30, 2021 email from him:

It’s impossible to hire people right now. The people that want jobs and want to work have them. Everyone else is happy to collect unemployment, which, apparently, can still pay you damn close to what you were making pre pandemic. We post applications and get piles of responses. None show for interview. Turns out you have to approve you ‘applied’ not ‘interviewed to keep the checks flowing.

Anecdotally, it has been difficult to get Ubers and drivers say that their peers have quit to collect unemployment, welfare, etc. Uber XL pays enough to compete with Uncle Joe and therefore it is usually easier and quicker to get an Uber XL (minivan or pavement-melting SUV). We used Uber around Atlanta in mid-April and it was often slow to get any kind of ride, but 10 minutes faster to get an XL than a regular UberX. Example from a downtown location where, pre-coronapanic, you’d expect a regular Uber to be available in 2 minutes, not 12:

We’re currently fixing up a house in order to sell it. There are a lot of tradespeople happy to work, but only if paid in cash. They say that they don’t want to upset their unemployment benefits.

The New York Times did an analysis of the $600/week supplemental dole a year ago (“Workers in more than half of states will receive, on average, more in unemployment benefits than their normal salaries”):

Now that the supplemental dole has been cut to $300 per week, in theory working should pay a little more than not working. In practice, though, the American collecting unemployment can do some work for cash and end up with a higher spending power. Also, not working might be a lot more fun than working, depending on the job. Maybe at $300/week plus the standard unemployment check the overall lifestyle is better even if spending power is a little lower. If the unemployed person’s slightly lower reportable income results in lower prices for means-tested housing and means-tested health insurance, spending power might actually be higher.

What does the Bureau of Labor Statistics have to say? Americans have been increasingly averse to work starting in 2009 (see also Book Review: The Redistribution Recession):


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Why not tiered real estate commissions?

From this blog in 2005:

People who sell $1 million condos often complain that paying a 6 percent standard (read “fixed by collusion” among realtors) commission is too much ($60,000 for what might only be a few days of work). Economists who have studied the real estate market, however, find that in some ways the commission is too low because realtors don’t work very hard to sell clients’ houses compared to their personal houses. In other words they sell a customer’s house relatively cheap so that it will sell quickly rather than work for many weeks to get the best price and 6% of the extra.

Why haven’t we seen anyone propose a commission structure that says the realtor gets a 25% commission… but only on the amount above the assessed value of the property? Your typical $1 million NY or Boston apartment is assessed at maybe $850,000 and could be sold for that price with almost no effort in a few days so the commission paid on such a sale shouldn’t be more than $1000. If a realtor could sell the place for $1.2 million via clever marketing, however, she should be entitled to a fat commission.

In the intervening 16 years, various Internet services have made it easier for owners to sell their own houses. We can assume that realtors add value, since most people still do hire realtors, but they’re adding value on top of an easy-to-establish base, e.g., 10 percent below the Zillow Zestimate. Presumably a “for sale by owner” (free) listing on Zillow could easily sell a house at 90 percent of its Zestimate. (5 minutes of marketing effort!) If so, the structure that would align sellers’ interests with agents’ interest is a commission that was 0 percent of the first 90 percent of expected value and 15-25 percent of the sales proceeds above that.

How can it still be case that an agent who does a terrible job, selling a house for 95 percent of its value, gets paid almost as much as an agent who does a superb job, selling a house for 115 percent of its value?

This is the kind of question I am pondering as we declutter and pack up for Jupiter, Florida!

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Mint a $5 Covid coin showing Jon Brower Minnoch?

I’m wondering if it is time to make a $5 coin suitable for tipping essential workers. The U.S. has a history going back to 1795 with $5 coins; just over 100 years ago, a $5 coin had a quarter ounce of gold in it, which today would be worth $430. The $5 coin wouldn’t blow away if left on the outdoor restaurant tables that are now mandatory. It could also be left on a front step for an Amazon delivery contractor.

What to put on the new coin? With Americans fatter than ever thanks to coronapanic shutdowns (see “How Much Weight Did We Gain During Lockdowns? 2 Pounds a Month, Study Hints” (NYT)), how about Jon Brower Minnoch, an American who was literally great, for the obverse? At 1,400 lbs., Minnoch was the heaviest human ever recorded.

That leaves the reverse. Our greatest scientist (Dr. Fauci) is the obvious choice, but an 1866 law prevents the living from taking up space on U.S. currency. Perhaps a scene of struggle for racial equity. Here’s a recent quarter design:

The U.S. government says the Tuskegee Airmen “fought two wars” (one of which was against racism). (This is the opposite of what Charles McGee said at Oshkosh back in 2019; asked “What was it like to be black in 1940 when segregation prevailed?” he answered “I went to high school in the North and we didn’t have segregation.”)

How about a series with scenes of a modern-day hero? The double-masked soldier for social justice sits at a desk eating Doritos. After looking both ways to make sure nobody is within 100′, the N95-masked hero takes a break from Zoom to add a #StopAsianHate sign in among the rainbow flag, BLM banner, and “In this house we believe…” sign in his/her/zir/their yard. The concerned citizen updates his/her/zir/their Facebook profile picture from #StopAsianHate (a week for this cause is enough) back to #StayHomeSaveLives. He/she/ze/they rolls up his/her/zir/their sleeve to accept the sacrament of investigational non-FDA approved vaccine. As in A Rake’s Progress, the story ends in tragedy. Our Mask and Shutdown Karen, now fully vaccinated, decides to attend a rally demanding justice for the BIPOC and stands closer than 6′ from his/her/zir/their brothers/sisters/binary-resisters in arms. The final scene for the reverse shows the felled-by-a-variant social justice warrior dying in the ICU, attended by a BIPOC physician and BIPOC nurse, an immigrant via the DREAM Act.

Separately, another potential advantage for the $5 coin is that if the $trillions of additional government spending generate inflation, it will be the right denomination for purchasing a drink from a vending machine (already at $3 at the Atlanta Zoo, April 2021; see photo below).


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