No perp walks for Cabinet officials this week, but there was one story (not linked here…) about a former reality show contestant attempting to storm the private residence of the White House in a fit of pique. Now that’s compelling TV, folks. Ratings gotta be through the roof.
Maybe it’s not as exciting, but this week, a voting district analysis of Doug Jones’ successful Senate race, a story about the largest US retailer’s largesse, a look at some of the unintended consequences of the proposed tax legislation, and a profile of the USTR, Robert Lighthizer, caught our eye on the domestic front. Overseas, we are hopeful that May’s Tory government will collapse so we won’t be subjected to as many photos of Boris Johnson. Brits, who are likely in wholehearted agreement about wanting to see less of Boris, are starting to see their economic lives worsen. If you ask me, they ain’t seen nothin’ yet…
Here is a curated list of important stories outside the main headlines that caught our attention this week.
How the Tide Turned Against Roy Moore in Alabama (NY Times, 5-minute read). The big political news of the week was, of course the Democratic candidate, Doug Jones’ squeak-by win of the special election to fill Attorney General Jeff Session’s vacated Senate seat. This article has a voting district-level analysis of what changed from fall 2016, when Trump won Alabama’s electoral college votes by a wide margin. The short story is that turnout was higher for both Republicans and Democrats in this election and that write-in votes — likely in protest of the Republican candidate — were high. Jones won all the big cities by a convincing margin — including Mobile and Huntsville, which both had voted for Trump in 2016 — with a 31% increase in turnout since the state’s 2014 gubernatorial election.
Git along little dogie. (AP Photo/Brynn Anderson)
Walmart Will Let Its 1.4 Million Workers Take Their Pay Before Payday (NY Times, 5-minute read). In economics, there is something known as the “free rider” problem. A free rider is an actor who generates utility from a public good without paying for it. Walmart pays a lot in taxes, so its example is not a perfect case of a free rider, but there is ample evidence that all US taxpayers subsidize Walmart’s low pay rates. For low-wage employees, one of the ways to make it from paycheck to paycheck is to take out a payday loan, most of which carry interest rates that are, by any definition of the word, usurious. While not solving the free rider problem, Walmart management has decided to roll out a program called Even, which allows employees to withdraw money due to them for previously-worked hours before payday. This will reduce some suffering by limiting employees’ needs for payday loans, and at least that is a welcome improvement.
How may I help you?
Tory rebels inflict Brexit defeat on Theresa May (FT.com, 5-minute read). Theresa May is having almost as tough a time as Donald Trump is these days. A small group of legislators from her Conservative Party (the “Tories”) voted with opposition lawmakers to force any proposed Brexit settlement to be voted on by the House of Commons before it was officially approved. This takes away some of May’s negotiating flexibility and makes the Brexit negotiations — the “easy” parts of which have already taken more time and political capital to work out than originally expected — that much more tricky for May. I don’t have a dog in this fight, but I do hope that May’s government falls soon, just so I don’t have to look at photographs of Boris Johnson (May’s Foreign Minister) quite as often…
Not May’s best photo, nor Johnson’s worst
UK households under most financial strain in 5 years (FT.com, 5-minute read). Guess what, my lovely British cousins: it will only get worse. Protectionism and nationalism is not a good look, and these policies retard economic growth rather than spurring it. Cheers!
“Please, Sir. May I have another?”
A US tax plan for economic nationalism (FT.com 5-minute read). I am not a tax expert, so take what I’m about to say with a grain of salt. The present tax plan is an abominable piece of legislation that, if passed, will create negative, unintended (?) consequences that will plague the United States for years. The law was hastily written, shoddily constructed, and — if these authors are right — vindictive. The Financial Times article points out that pieces of the bill are written in such a way to drive real economic activity overseas and to make international supply chains less efficient and attractive. The most likely result is greater unemployment (from activity moving overseas) and higher inflation (due to more costly goods). Stagflation is a word that we may be hearing again soon.
Keep playing your violin, Emperor. We’ll have the fire out soon.
Trump trade tsar wields power over WTO destiny (FT.com, 5-minute read). The U.S. does have a trade problem. The middle class has been hollowed out and wages have not risen on an inflation adjusted basis since the mid-1980s. The reasons for this are phenomenally complex, but, in my mind, have their roots in America’s lack of selectivity and intentionality in considering educational and industrial policy. Corporations do what is best for their shareholders, but their actions often have negative consequences to other stakeholders (e.g., municipalities, school districts, and communities). Over time, and almost as if sleepwalking, the US has effectively enacted a policy to reduce the economic stability of a huge swath of its citizenry, while providing a balm of improved material living standards through the easy availability of cheap, imported goods. The US Trade Representative, Robert Lighthizer, believes that the best way to right the ship is not by rethinking educational or industrial policy, but by halting the supply of cheap, imported goods. His vision of economic nationalism is, in my view, a huge step back for the US and the world — mirroring the shortsightedness of protectionist politicians in the 1930s.
The most powerful man you’ve never heard of