FAREWELL TO 2018, A NOTABLE AND ARDUOUS YEAR

Please cherish the craziness that we all have within ourselves. ~ Nobukazu Kuriki[1]

Happy New Year! Welcome to 2019, the year of the Pig, according to the Chinese Zodiac. At the turn of this New Year it seems more challenging than ever to maintain an affirmative attitude. Our positivism and empathy quotient have faded from the onslaught of both political and personal anxieties. The media’s implacable focus on what’s unsuitable in this nation and the world makes being an optimista ever more challenging.

I refuse to succumb to such pessimista opinion. As I highlight below, humanity is still improving, despite disparities, tragedies and imperfections. 2018 was, in the largest of pictures, probably the best year ever. The sun does shine on the world as a whole amidst the clouds of misrule, inequity and selfism.

Before delving into our part of the world, the achievements we’ve made globally as well as nationally are as impressive as they are unprecedented.

The year’s single-most key political advancement (I hope) is the Democrats have regained control of the House of Representatives, again under the able leadership of NDP (as Nancy Pelosi now appears to be referred to by the inside-the-Beltway crowd, where initials become names).

Outside of the overly-nasty political realm, 2018 was in many ways the best year yet to be a human living on Earth. The Economist has nicely summarized several of our vital collective accomplishments that unfortunately are not as acknowledged as they should be.

The liberal world of the early 21st century is more prosperous, healthy and peaceful than ever before. For the first time in human history, starvation kills fewer people than obesity; plagues kill fewer people than old age; and violence kills fewer people than accidents. If you think we should go back to some pre-liberal golden age, please name the year in which humankind was in better shape than in the early 21st century. Was it 1918? 1718? 1218?

This summary harkens Franklin Pierce Adams’ apt quote: Nothing is more responsible for the good old days than a bad memory. Average US life expectancy in 2018 was 78.6 years. 1918 celebrated the end of World War I, which killed up to 100 million people worldwide; the Spanish Flu pandemic hit the US (in Kansas); and US troops engaged Yaqui Indian warriors in Arizona, one of the last battles of the American Indian Wars. US life expectancy was 53.5 years. 1719 saw British forces defeat the Scottish Jacobites and their Spanish allies; Daniel Defoe published Robinson Crusoe; Andrew Bradford started the American Weekly Mercury, Pennsylvania's first newspaper. Average life expectancy was 36 years. 1218 Damietta, Egypt fell to the Crusaders after a siege and thereafter St. Francis of Assisi introduced Catholicism into Egypt; the windmill was first introduced to China. Life expectancy in the middle ages was 31.3 years.

Here’s some additional, worthy socio-economic achievements that should be recognized about the recently departed 2018, published in Quartz. Worldwide, the number of people living without electricity fell below 1 billion. Electricity access is essential to health, education, and economic stability and all of those measures also improved in the past year. One of the simplest ways to assess global poverty is to compare the difference between what the average person makes a day, and a predetermined global poverty line. The difference was about $0.25 in 1990, and is now nearing $0.05; every year the poverty gap closes a little more. Meanwhile, literacy rates have progressively climbed for decades, and even a small change can make a huge difference: The 0.23 percentage-point increase from 2015 to 2016 means about 11.5 million more people can read. Global public health continued its steady improvements. World infant mortality declined in 2017 to 29 deaths/1000 live births. In 1990 it was 65 deaths/1000 live births. Global average life expectancy at birth rose to 72.0 years in 2016; in 1990 it was 62.4 years. Over the last 65 years the global literacy rate increased by 4% every 5 years – from 42% in 1960 to 86% in 2015. Although only 12% of the people in the world could read and write in 1820, today the share has reversed, only 17% of the world population remains illiterate.

Global education levels continue to rise. In 1970, 28% of primary-school-age children in the world were not attending school, today this share has decline to 9% -- equivalent to 60 million children not in primary education. Data published this year show that in 2016 there were 99.7 girls enrolled in primary and secondary school for every 100 boys. For comparison, in 1986 that number was 85.1, reflecting an impressive and needed boost to gender-based educational equity.  

It’s also not all pessimista in the US now, despite assertions that our nation is suffering as never before. Key positives of 2018 include the following. US median household income reached a record $61,372 in 2017, up 1.8% from 2016. This marks the third year in a row that median household income has increased. The poverty rate also fell for the third consecutive year. In 2017, the official poverty rate was 12.3%, down from 12.7% in 2016.

A large drop in oil prices provided broad economic benefits in the last half of 2018. Petroleum that cost $107/bbl. in June sold for only $45 by year-end. For consumers, that meant gasoline prices that fell to an average $2.38/gal., compared with their peak of $3.70 in April. All told, the drop in oil prices was equivalent to an annual tax cut of about $750 per American family. The US, using its pioneering fracking technology (that has nasty environmental effects), has become an important global petroleum producer and has directly influenced the drop in world oil prices, much to OPEC’s dismay.
The average price of a residential solar photovoltaic power system is less than one-half its level in 2010. Nearly two million US homes have solar panels installed on their roofs, representing 10 times the solar capacity as in 2010. And for the first time the share of global energy that was produced from renewables passed 10%.

Despite what nightly local news stories portray, the number of reported violent crimes committed in the US has dropped 48% since 1992. The birth rate for American teenagers dropped to 20.3 births per 1000 girls ages 15–19 in 2016 (most recent year), according to the latest fertility data. This teenage pregnancy rate represents a 9% decline from 2015 and a 67% reduction from the modern-day peak in 1991. It’s the lowest teen birth rate since 1940.

The US Labor Department just reported one of the strongest months of job gains in the last decade, with employers adding 312,000 people to payrolls in December. Wages, which had been lagging until recently, showed impressive gains. December’s year-over-year increase was 3.2%, tying October for the biggest surge since 2009. Unemployment inched up to 3.9% from last month’s 3.7%, but remains much below the 4.61% Natural Rate of Unemployment in 4Q2018. For perspective, towards the end of the last recession, the unemployment rate was 10.0%. Real Wages for lower-income workers in the US also increased in 2018. November figures show that the real cash income of hourly workers rose by a 0.8% after adjusting for inflation. This positive result is augmented when cash benefits are added to income. And finally, who could forget that the US men’s curling team won their first Olympic Gold medal last February in South Korea. You don’t remember this impressive athletic feat? [Actually they used their brooms more than their feet as they swept to victory.] Praise be.

But of course it’s not been all sweetness and growth. Casting an infectious economic pall, the media has been offering an increasing number of stories about a possible recession around a future corner. Here are five of the 64.1 million Google results I found from “the coming recession”: “Markets are signaling higher odds for a 2019 recession;” “The next recession is coming…”; “Stocks are nosediving, is a recession coming?”; “The next recession is really going to suck”; and “The next financial calamity is coming.” A recession seems almost certain, doesn’t it? Perhaps not, if you remember that economists and the markets have predicted nine of the past five recessions.

If you’re not concerned about the coming recession, then maybe you’re convinced that some facet of the inequalities of life and commerce described by newspapers, magazines and broadcasters could cloud your prospects. There certainly have been many descriptions of the ever-expanding flavors of inequity the media has been announcing. I start with the two most basic and traditional types of inequality, income and wealth.

Income. A nation’s income inequality has been an issue ever since Corrado Gini first published in 1912 his statistical measure of the distribution of income by decile of population, now known as the Gini Index. The higher the index, the more unequal is the income distribution. The US Gini Index has been slowly increasing for the past three decades. According to the World Bank, the 2016 US Gini index is 41.5, and ranked 58th most unequal of the 160 nations listed. California’s Gini Index (49.9) is the fourth most unequal state; the District of Columbia’s Gini Index is the most unequal.

Wealth. A nation’s wealth is usually more unequally distributed than income; the US is no exception. Wealth is the cumulative net worth of a person (or nation), the total value of a person’s assets (like homes, automobiles, personal valuables, businesses, savings, and investments) minus their liabilities (like loans, mortgages). Income is the amount of money that a person (or nation) receives in return for their services, sale of goods, or profit from investments during a particular period of time, say one year.

The share of our nation’s total wealth owned by the top 1% of the US population was 37.24% in 2014. In contrast, the top 1% accounted for 17.99% of gross income in 2014. By 2017, the richest 1% owned 40% of US wealth; the top 20% (folks who earn $115,000/yr or more) accounted for 90% of US wealth. The distribution of wealth in the US, like many nations, has grown more unequal since the mid-1980s.

Liberal/Progressive Democrats have made increasingly strident proclamations that the current income and wealth inequalities must be seriously remedied. Over time, reducing income and wealth inequality may increase the nation’s overall economic growth mostly because people in the middle-class and below spend a higher percentage of their income on goods and services than higher-income folks.

Progressives vow to significantly reduce economic inequality, which will require two sets of federal and state policies that are politically fraught. First, income and other taxes will need to be increased. Second, government redistribution programs will need to be expanded and/or created. Progressives strongly favor increases in welfare (e.g., food stamps), public social services, universal health care, free college, higher federal minimum wage, payoff student debt, improve infrastructure and enlarge social security. With luck, decent design, fortuitous timing and effective implementation such programs could reduce inequality over time. After Congress and the presidency are led by Democrats in 2020, such expansive redistribution programs might be politically possible.

Income and wealth redistribution requires more active government that administers more taxes and fees and expands more programs that provide services to less fortunate folks. An October 2018 national Gallup poll found that 50% of Americans say the government is doing too much, 44% say the government should do more, with 7% undecided.

Such programs are very expensive to implement. Progressive politicians rarely mention how much such redistributive programs will cost, because it could lead to electoral downfall. Relatively few voters would agree to have their taxes increased as much as these programs would require under some of the PAYGO rules that the Democratic House just passed.

Remember the fate of Washington State’s two propositions to impose a state-based carbon tax to mitigate climate change and environmental inequality? Both went down to defeat, the latest this past November. Large electoral thrashings also occurred several years ago in Colorado and Vermont, Bernie’s home state, regarding implementing state-wide Medicare for All (M4A). The legislatures couldn’t find the money except through higher taxes, and voters didn’t want to pay more taxes. California’s M4A ideas were shelved last year after initial cost estimates were calculated.

Progressives imply or explicitly state such programs would simply require increased taxes on just the rich, meaning the 1%. That’s fake news. Tax increases limited to the “rich” will be entirely insufficient to fund these programs. Liberal media sources estimate such redistributive programs could cost $42.5 trillion (T) during the next decade. Conservative estimates are much larger. There are not enough rich people and even their pockets aren’t deep enough to pay for all such programs.

To put this $42.5T in perspective, the federal government is projected to collect $44T in total tax revenues from all sources over the next decade. The 2017 Republican Tax Cuts and Jobs Act, understandably and universally decried by Democrats as irresponsible (and by House Speaker Nancy Pelosi as “Armageddon”), will cost less than $2 trillion over the decade. Thus, if these redistributive programs are implemented, they will need increased taxes from many middle-class income-earners as well as all the rich.

Other interesting and sometimes peculiar forms of inequality cited by the media include the following.

The environmental inequity of wildfires. This story mentions the 2015 Napa, CA fire that displaced scores of “poorer folks who never re-occupied their places.” Consequently “fire produces gentrification,” so even Mother Nature is pushing a localized Gini Index higher. Oh my.

Another story theorizes that data-driven medicine can worsen inequality in society. The author says that data-driven medicine will help people, but its “technological advances threaten to make a crushingly unequal system more so.” She hypothesizes that data-driven, technology-based medicine’s “knowledge gaps” between socio-economic groups will lead to better access for “privileged” groups and worse for “poor” groups. Should medical Luddites unite against more sophisticated medical databases and assessment? Perhaps.

Inequality is made worse by K-12 schools’ long summer vacations. This story fixes its attention on the impact of schools’ long-vacation-induced “summer learning loss” that is apparently not shared equally among students. In the US, children from low-income families fall farther behind in reading during the summer than peers from richer families with more access to books, museum trips, and camps. The author puzzlingly suggests that “in an era of longer lives, we should have longer, slower careers with more frequent breaks instead of short, intense careers that end abruptly in long (and costly) retirements. And in an era of lifelong learning, perhaps the school year should be changed to a year-round model.” Curiously, she doesn’t specifically suggest eliminating the multi-week Hanukkah/Solstice/Christmas/Kwanzaa vacation. And I’m not sure what a “longer, slower career” might be. From my own experiences at the local high school, teachers and staff, not to mention operators of and counselors at full-season summer camps, and possibly parents would take strong exception to her “year-round school” recommendation. This story is consistent with the sense that pretty much everything can cause increased inequality. So of course, long school vacations add to inequality.

Corporate cannabis is squandering legal weed’s promise of a more equitable society. This story laments the passing of a popular but hazy dream of better, “more equitable” times for small growers when weed is legalized. The author states that after legalization, large well-funded cannabis growers make it nearly impossible for smaller independent growers to compete with lower prices. I must have missed this particular weed mantra; that once legalized, society will become more equitable. The well-established and large black market for marijuana in California seems to be doing OK, despite legalization.

“The icon for cannabis is going to become the Marlboro Man,” Lynda Hopkins, a Sonoma County supervisor who took a lead in licensing marijuana businesses, said referring to the symbol of the tobacco industry, to which critics often compare the legalized cannabis business. “In California we’ve done what we always do — regulate, regulate, regulate, which ultimately gives significant advantage to large companies with significant economies of scale.” Legalization has been liberating for big players but for hundreds of smaller producers the paperwork alone has been enough to put them out of business; or more likely, stay in the black market’s sizeable business. A cannabis producer must submit applications to as many as five state agencies, including obtaining a certificate to ensure they are able to use a scale.

In California, Canada and every other place where recreational marijuana has been legalized, the numerous, encompassing rules, regulations and taxes favor growers and distributors who have big-time resources. The utopian dreams of small-time, mom and pop (maybe even former hippie) growers succeeding in a legalized and thus more equitable world are just that, dreams gone up in smoke.

Library fees are eliminated because they’re inequitable. Yup, the Berkeley Public Library has stopped charging late fees for overdue teen and adult books, DVDs, CDs, and magazines in an effort to make the library “more egalitarian.” The Library’s justification apparently linked disproportionate overdue fee charges to library card holders in 3 lower-income ZIP codes in Berkeley. The Library and city concluded that such fees were a “barrier to use [of the Libraries].” Before the change, if you owed overdue fees, you couldn’t check out other books.

This story illustrates the bizarre lengths my fine city will go to in using inequality as a spurious rationale for policy changes. What this will do for the already-circumcised Library budget is pretty clear. The elimination of library late fee revenues will require Berkeley taxpayers to more heavily subsidize the Library’s operations. My jaundiced view is that the Library employed this politically-correct but perverse link to “inequality” to reduce the cost of borrowing books to zero even when one doesn’t return them on time (or ever, now). More to the point, the new no-fee policy is most likely due to the Library’s desperate attempt to get more folks to actually use its services. In this Age of Google and Amazon, far fewer students and other folks ask reference librarians to help them learn the causes of the War of 1812, or actually use the library’s books. There may not be a free lunch, but in Berkeley there are “free” books. We’re now bound forever in library egalitarianism.

Onward towards a satisfying and more equitable 2019.

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[1] Mr. Kuriki was a Japanese mountaineer who, starting in 2009, attempted to climb Mt. Everest. He never summited. He died during his eighth attempt last spring. He made an art of hardship and spoke of breaking down “the barrier of negativity.”