I'm an optimist. I usually focus on all the progress the world has made during our lifetime. The end of the Cold War. The spread of literacy. The decrease in poverty. The decrease in racial and sexual discrimination. The increase in life expectancy. Advancements in science and medicine.
But sometimes, just sometimes, you see the other side of the coin.
The other day I ran across a post on Reddit, a social media outlet targeted toward Millennials, in connection with a spike in certain stocks on Wall Street. I don't know if you paid attention -- but smaller companies like Gamestop were bid up by a group of individuals from social media, and the phenomenon was billed as a kind of revolt against Wall Street. The situation quickly passed. It was just a media-hyped fad. But I think a significant Millennial sentiment was captured by an ER doctor who wrote an open letter to Wall Street:
When I was a resident physician in Detroit, Obama was president. During his presidency the quality of life of the predominantly African Americans in Detroit did not improve. Despite Obamacare, I saw little improvement in the health outcomes of the patients I worked with. I saw continued proliferation of illicit drugs, overdoses, and gang violence. YOU have left these people behind.
I spent the last several years working in a small town in the Midwest, when Trump was president. During his presidency the quality of life of the predominantly white Americans also did not improve, and have in fact worsened. I saw continued proliferation of illicit drugs, overdoses, and suicides. These patients I care for are also people YOU have left behind.
With the pandemic I have seen those who are already at the brink of financial solvency lose their jobs and I see lines outside food banks. I see the health outcomes of my patients decline as they forego preventive care. I, on the other hand, kept my job, got a raise, and saw the value of my 401K rise as the economy crashed around me. Going to work every day is a constant and stark reminder of the brokenness and disparity of the economic system and my sheer powerlessness to change it. I realize now that it is not political. It is YOU.
This brought home to me the reality that I have not suffered at all financially from the pandemic. My Social Security deposit arrives on time. My IRA balance has only gone up. And since I'm spending less, I actually have more money in the bank -- even though my wife and I sent extra contributions to various charities during December.
Do I feel guilty that the pandemic hasn't impacted me as negatively as others -- that my IRA keeps going up as so many other people are suffering? No, I don't. Do I feel lucky? Yes, I do.
There's a lot of irony is this "revolt." First, it didn't come from the poor and disadvantaged. It came from middle-class people who had the time and money to speculate in the stock market. Also, there was a tinge of nostalgia about the whole thing. The Reddit crowd didn't bid up shares of Apple or Amazon. They plowed into Gamestop, AMC theaters, Blackberry, Nokia and other struggling companies that were popular back in the 1990s. The Millennials must think that things were better back then when they were growing up. But don't we all think that to some extent?
Was this physician right to blame Wall Street for all these problems? Maybe . . . but Wall Street was just as big and powerful in the '90s as it is now. Is it the political system? Is it big tech? Or should he blame his complacent, self-satisfied Baby Boomer parents?
Beyond the blame, what can we do that neither Obama nor Trump could do repair our economic system? To help lift the despair felt by so many that leads to taking illicit drugs and committing suicide? To give people more opportunity . . . and perhaps even more importantly to rekindle the feeling that the future is brighter than the past?
27 comments:
I have mixed feelings about Wall Street. I watched that whole Gamestop rise play out with a mix of curiosity, queasiness, & “attaboy” for the folks on Reddit—until I learned the one leading the revolt was worth 47 million dollars already. His “sticking it to the man”... give me a break. Buddy, when you’ve made that much on Wall Street, good for you—but you ARE the man. Still, I thought these hedge fund managers had nothing to boo-hoo about. They are MAKING MONEY on a company’s sure failure. If you can figure out a way to get rich on that scheme, then you deserve to lose to someone else’s scheme, as long as it’s legal.
I feel like a hypocrite saying any of this though, I’m very grateful for Wall St, I ER’d (early retired) 5 years ago, with very little knowledge of investing beyond the basics and it paid off. I don’t feel lucky though. I spent most of my working years packing my lunch and driving the same car for 15 years and living on a budget to have 15% of my pay put into a retirement account, and 10% into a personal portfolio. I wasn’t born with a silver spoon in my mouth either, I came from a pretty poor family. I paid for my own schooling and worked my butt off while going. I didn’t get any lucky breaks. Gee I’m just rambling here, but it’s a thought provoking topic to be sure...
Wow, a very powerful post and you asked some very good questions. Like you, my wife and I are retired and also are actually saving money by not traveling as much as we were.
I certainly have no answers but I agree that things are not improving for the poor in this country and I don't believe for black people. I'm hoping that some of the changes that Mr. Biden is proposing will help both groups but, I have to admit, I doubt it. The Black Lives Matter movement brought out some very subtle racial prejudices that I had no idea were there. And I doubt if knocking down a couple of Confederate statues will fix much. Of course I'm an old white guy so maybe it will. Personally I think that trying to re-mold history into something you like better is a mistake.
Thanks for a very interesting post.
There are no easy answers. Like you, we upped our donations to charities this year. We set up a (small) donor-advised fund a few years back with Fidelity and added to it. Although it is invested conservatively, it kept making money this year. We added to it, and we also gave more of it away as it increased in value. It feels good to help, even if it is in a small way.
I'm one of those who strongly bieves that Wall Street should not be the primary indicator of economic health. Much of the working middle class has struggled during wall street boom years and in order to increase investors bottom. The Gig economy and lack of traditional benefits are I a direct result of catering to investors before the general economy. My family has suffered during Covid and I anticipate it taking a few years before many members will be on an even keel. And I do think that has been much to our benefit. When my fixed and limited income is the most reliable we have a problem. Personally my goal is to increase charitable giving and invest whenever possible in small local businesses and their employees.
I am feeling Blessed not guilty. I retired July 2019. I've made more in my IRAs than my salary. Do I love Wall Street? No. I dislike that it "appears" to be what makes the financial world go 'round. Yet, it is the reason I retired at age 58.
I would love to see everyone support small local business, local artists, local industry. If the local industry grows, more young people might be motivated to start small businesses-but they need us to do it.
We have supported a local CSA that was on 1.5 acres for at least 23 years. Advance to 2018 and they bought 30 acres about 35m out of town. They are growing leaps and bounds and have diversified with a commercial kitchen, hard ciders, kitchen products, a kitchen share, spring share, winter share, flower share, ice cream share in summer.....they are creative. Every employee earns a living wage of $15/hour. This includes themselves. They hire a local chef to prepare mid-day meal for the team during the growing season. As well, she/he is given the venue to host prepaid dining experiences and an evening of entertainment hiring a local band.
A decent home can be purchased out there for under $300k still. Their employees are getting great skills/education too for their own small businesses if desired.
One example of a great local enterprise.
I don't know what the answers are to the big problems we have in our country. I do know my older brother's theory on entrepreneurial business. About 20 years ago I asked why he was moving and going so big. He said there comes a point where you cannot afford not to grow. 20years down the road, I would venture to guess this was the only method of tax avoidance. I won't get into the arguments we used to have about income taxes. He sold/retired last year. I can't wait to hear him bitch about his tax rate for 2021 ;-) Welcome to the real world brother.
I will throw out a few suggestions for consideration.
Start with basic needs and see if the system will correct itself.
Universal healthcare. We apparently are not even ready to have this conversation nationally. When it does come all hell will break loose due to 16% of our economy being tied to healthcare. We must address this issue. Every other developed country has done it long ago.
Education. Just fixing the basic K-12 education system would do wonders in addressing job access inequality. If charter schools are part of the answer then their prices must be the same as credits given for leaving the public system. They must also include transportation to and from school. No leaving the disadvantaged behind in a crumbling public system.
Support the $15 minimum wage. Also tie it to inflation. We may not visit this issue for another 20 years. Through out my entire working life the naysayers have always said increasing the minimum wage will lead to job losses. Guess what? It never happened. Increased incomes for the lowest earners will all flow directly back into the economy. If the price of a burger goes up 25 cents I think we can afford it.
Support increased unions and apprenticeship training. In some countries you can graduate from high school with a certification as an electrician, plumber etc. Yes unions will have a tendency to become overbearing and greedy with time. Perhaps they will be a foil to corporations that are already at that point.
Put in draconian penalties for companies that decide to leave this country for lower taxes. We are the largest consumer nation in the world. If you want to leave and then sell your goods back into this country there should be substantial tariffs for any service or product you sell here.
Wall Street and the investor class needs significant reform. I would leave that for later and work on the basics first.
Can I leave a second comment? I nominate Fred for President 2024. Everything he said makes so much sense.
Although I do not fully understand the economics of nations I understand even less how I can change the situation. Fred’s thoughts
are worth pursuing but there is still a layer of society (and always will be) which is unconcerned with the well being of have nots so long as the haves increase their share.
I am too old, too tired, too unable to make a difference in spite of my years working in International trade unions (no, I am not a commie). I am old enough to believe that things never will change, human nature being what it is.
Yeah, Fred, thanks for your interesting and constructive response. The only problem is: your comment makes my original blog post look kind of weak!
On just one point of this discussion... I am a descendant of a confederate soldier and long time resident of a former CSA state. The complaint about "re-molding history" familiar as it is, does not impress or convince me. It seems appropriate that we never forget the experience of secession and rebellion to defend slavery and the 650,000 dead from that treason, so we need to ensure our history books and museums include comprehensive and accurate depictions of what that was truly about. "State's rights?" Only to keep people in chains. On the other hand, I am unconvinced that our democracy is enhanced, our history is preserved or our "better angels" are best served by retaining the many glorious statues, paintings, songs, names of military bases or naval ships that exalt those who took up arms against the Union to defend the peculiar institution that kept so many, all born in America, in slavery.
Fred gave an excellent run down.
It is dreadful that a wealthy country has so much poverty and no universal health care. And the economy is measured by Wall Street and not the minimum wage and quality of life of the poorest.
Nobody can live on hope alone or feeling that one stroke of luck could see them on easy street - i.e. the "American dream". Manna for the masses.
XO
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As long as social programs scare the heck out of certain Americans, we are going to be in this situation where the Wall Street folks do well and those at the bottom still struggle.
I never was lucky with stocks. Maybe, I should have invested in mutual funds. Too late now. Meanwhile, we live within our means.
I also would like to say thank you to Fred for that thoughtful comment. You have touched a real nerve, Tom, with this post. After having watched "The Divided States of America" with Fareed Zakaria last night, I am still thinking about what I've learned.
Something needs a significant course correction. Our government is in peril and our very planet is in peril and these days two sides can't agree on much of anything -- even that advocating murder is wrong.
Many thought-provoking comments. Thanks Tom for starting discussion on such timely & difficult (unsolvable?)issues.
On education, I recently served on a charter school board and our schools did indeed perform better than the local public school. But problems still exist: while you will improve the lives of some children who are fortunate to leave failing schools (perhaps because of motivated parents), the ones left behind may be worse off. Plus the teachers unions remain strongly opposed to charter schools and vouchers because public money in their view is taken away from them. No solution in sight here.
On health care, it will be many years before things get better. The vested health care industry/lobby is just too powerful. One reason some other countries like those in Europe and Scandinavia have good government run systems is because they don't spend much on defense/military.
I think the jury is still out on the effects of a $15 minimum wage. For the meantime, maybe we should let States and localities do the experimenting.
Definitely agree with Fred that we should invest money in job training & apprenticeships. Lots of money being spent in post-high school education with little pay-off and lots of debt.
Regarding Wall Street, I Can only say that our financial system is so embedded in capitalism that it will rock along for the foreseeable future.
Agree with many commenters that it is extremely important to support charitable causes/organizations and local businesses. Now more than ever.
You are indeed an optimist, Tom.
To borrow some words from Pat S's opening lines, I would say America is a land of difficult, Unsolvable Issues. You don't seriously expect the pandemic to change that.
Tom, and FRED! You two have nailed it. Are you willing to run for office, Fred? Count me in as a vote for you.
Hi Tom! I agree that you raise some interesting points. Like I'm sure you do here on your blog, I'm occasionally getting comments from millennials who blast me and all "boomers" for the messes in the world but like you they never get posted. From what i can tell, Reddit is a hotbed for many of those same thoughts so i'm not surprised at what you found there about the wall street surge. However, I'm not a fan of wall street either. so much of its success is built on illusion and I thought the entire surge and recent "game play" was a perfect illustration of that. So many of the popular stocks don't have any income, they are rising based on greed and speculation. Yet so many people judge the economy of our country on THAT? From what I can tell, far too many people jump on that bandwagon of greed and speculation and then are easily exploited by a market that is unreliable and potentially manipulated. As so many other commenters have pointed out, there are so many more issues in our country to be addressed. Like usual, we need to sit back and see where this new administration takes things. I'm still optimistic... ~Kathy
I know I shouldn't get political, but one party since the 1980s has kept the lid on initiatives that would help lift folks ups, and keep those in the middle class from falling out. Universal health care...quality education...a livable working wage...affordable housing.
As for Wall Street, the big banks (and other financial institutions) are not now and were never the friend of the little guy.
I think one of the basic issues in our society today is that the average guy/gal feels lost, a cog in a huge bureaucratic machine.
I'm grateful for my Social Security and Medicare as well but see my landlord, who is a friend from high school who is not getting paid rent from some of her properties because her tenants have been impacted by the pandemic. And others who are afraid to go to the doctor because their insurance isn't great.
We, too, are better off now than before the pandemic because of our investments. It is extremely unfair. We did have the opportunity to help one of our children start a business, which is now rolling along. At 41, he will now be able to afford healthcare.
I am not motivated by money or power, but by peace of mind and the ability to learn and grow. I feel profoundly lucky and blessed.
Fred's comment was extremely well-thought out and perceptive. I too am retired, and with a pension. (rare these days) I collect my late husband's social security and live in a paid off home. My medical insurance is expensive since I'm still under 65, but I generally feel very lucky. Was it always that way? There were many lean years along the way, juggling kids and their expensive activities. I made some excellent financial decisions as a beginning teacher in my 20s and now have a comfortable retirement. Not many people can afford to make those choices now.
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Unfortunately, in the past 40-50 years, we've seen a change in how the working class is compensated in comparison to the executives. In the 1960s it used to be a difference of 20 to 1. Now it's about 250 to 1. When there is talk of raising the minimum wage to 15/hour, extremely rich people point out that the cost of goods will rise because that's where the money has to come from...never by reducing their already ridiculously high salary. And that is why the poor continue to be extremely poor and the rich continue to be ridiculously rich.
What a great post, Tom! And wow, Fred, that was a good list of ways to start taking care of the people in this country who've had a rough time. I would add the "Robin Hood tax" on gains made by stocks traded. Every other purchase is taxed -- why not the stock market?
I loved Nicholas Kristoff's book called Tightrope, about the people he grew up with in the rural West, many of whom are now dead, in jail, or addicted -- or just barely holding on and very poor. It's more positive than Hillbilly Elegy, with solutions (like Fred's!) offered in every chapter.
"The Gig economy and lack of traditional benefits are I a direct result of catering to investors before the general economy" The gig economy, lack of benefits, is due in part to deliberate actions by Presidents & a majority of Congress starting in the 1980's. Ronald Reagan was known as a union buster. Regardless of what people think about unions (that they're 'corrupt' as if there is is zero corruption in corporations, in local, state & federal gov't. If you are interested in corruption, find the website (a gov't website) that lists all the litigation against Medicare & Medicaid fraud. By far the largest $ amount of fraud is done by MDs, pharmacists, etc. Millions of dollars.
So corruption exists in the US. Unions are the only way I'm aware of, other then workers starting worker co-operative business (has been done in the US, and elsewhere in the world), for employees to equalize bargaining power with CEOs, majority share holders. In the UK, I believe there's law prohibiting CEOs from also being chairperson of Boards in publicly held corporations. That is certainly not true in the US, although periodically shareholders (minority) try to get a corporation to pass such a rule.
Obama did nothing to make it easier for workers to unionize, while he was better then Terrump (such a low bar), he was pretty much GOP-lite, along w/dealing w/a parts of Congress that were as hostile to him as they were to Clinton. Years of tax cuts (again, starting with the Reagan administration) and the bloated funding of the Defense dpt (lots of fraud) while enlisted members may need to apply for SNAP benefits & veterans at least where I live, still wait months for an appointment w/a MD. Our infrastructure crumbles, public health facilities/department have been underfunded for years. But hey, the wealthy keep getting those tax cuts.
Gamestop was about making money and squeezing some of the short holders, often hedge funds. My feeling is, if it's sauce for the gander (hedge funds) it's sauce for the goose. Don't like it happening, they maybe it's time to regulate the stock market more tightly--and not just in a way that protect hedge funds. Or private equity funds. The latter do quite a lot damage, buy companies, load them up w/debt, sell them. The businesses may go under. That started in the 1980s' with leveraged buyouts.
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