Ep12 -- The New Abnormal

 Most of us are familiar with the saying, "Those who fail to learn from the past are doomed to repeat it." This is usually attributed to Spanish philosopher George Santayana, who actually said, "Those who cannot remember the past are condemned to repeat it."  I love the fact that when it comes to the most famous saying ever about remembering the past, pretty much everyone misremembers the saying.  

For the purposes of this podcast, there's a version of that saying that showed up in a wonderful cartoon in the New Yorker a bunch of years ago by Mick Stephens.   The cartoon shows a Capitol Hill office with some stuffed shirt politician, and he's meeting with a smiling fat cat lobbyist with the Capitol dome visible through the window behind them.  And the politician is saying:  "Those who ignore history are entitled to repeat it."  

And therein lies the subtext of the Santayana line, which is that the real danger of not remembering the past is that you'll find yourself at the mercy of those who desperately want the past to repeat itself, and who stand to gain greater wealth and power when it does.  What I find most interesting about remembering the past is that it allows us to clearly see where we are now.  If we don't know where we've been, then we can't know how we got here and it makes it much more difficult, if not impossible, to see the best path forward.  So we can't tell how out of whack things may be compared to historical norms, and that allows the folks who feel entitled to repeat history,  to their exclusive benefit, to run rampant over the rest of us.  So this week, I want to compare the present with the past to take a look at some trends that have occurred over the past couple of generations that seem pretty important if you want to understand why things are the way they are, and to change our trajectory, moving forward. Stay tuned.  

I'm Craig Boreth, and this is The Great Ungaslighting  a podcast about how we've all been conned into accepting a human culture that's out of sync with human nature, and how we can fight back and put the kind back into humankind.  

But first, a quick sponsorship announcement:  The Great Ungaslighting is definitely not sponsored by organizations like the Plastics Industry Association.  The PIA believes in recycling.  For the same reason that a 15-year-old believes in Santa Claus because it pays. And they want you to believe that they believe in recycling because even though they've known for decades that only a tiny fraction of the plastic their clients produce would ever be recycled, they just wanted all of us to feel good about ourselves filling those blue plastic bins and believing we were making a difference. And we were making a difference... for their shareholders.  The Plastics Industry Association: Exploiting human nature for power and profit since 1937. 

And we're back.

 The median age in the United States is currently about 39 years old.  That means half the population is above that age and half is below.  In contrast, the median age in Japan is almost 50, while the median age in Niger is only about 15.  That metric really doesn't tell us a whole lot. But when you look at the trend in the United States alone, it gets pretty interesting.  We are currently the oldest we have ever been in this country. In 1980, the median age in the United States was about 30. That means in 40 years, our median age has increased by a third. Almost 10 years.  Now I'm not here to be ageist or make some disparaging generalizations about older folks, except Bill Maher if you were to ask me. But I think it's useful information that our current population is the oldest it has ever been.  It's certainly must contribute to the fact that we've got two geezers running for president.  And today that group of older Americans is dramatically wealthier than younger Americans compared with a few decades ago.  In the late eighties, the median wealth for those in their sixties and seventies in today's dollars was about $160,000 more than people in their twenties and thirties.  Today. That gap is just under $350,000. That's twice as much.  And of course, there have been similar trends over the years with wealth distribution and income distribution across the entire population. For example, between about 1990 and now, the amount of wealth held by the top 10% in this country went from about 35% to about 45%, and the share of income held by the top 1% went from just under 12% to just under 20%.

So these are the kinds of trends that you need to look at to understand what's going on in America today. You can't really just look at the data as it currently is without understanding how much it has changed in recent decades, and it has changed a lot. 

For example, during this campaign year, you're going to hear candidates bloviating about high taxes destroying the motivation for so-called job creators to keep creating jobs and blah, blah, blah. And at the same time, there'll be playing on voters' desire to return to the good old days.  I assume when someone is talking about the good old days, they're talking about the fifties and they were good times for much of America.  Not so good if you were black or a woman, but, well, let's not nitpick.  But let's take a look at what total taxation was in the 1950s and what it is now.  And maybe we'll see our total tax burden now a little bit differently than those politicians might be presenting it. 

This is based on an interactive graphic that was in the New York Times in 2019. So the data's a few years old but still pretty valid and I'll post a link to it and you should really look at the article and scroll through and you can see the graph moving as you go through the decades.  So in 1950, everyone in the bottom 90% paid about 20% of their income in total taxes, federal, state, and local. It jumps up sharply to the top 400 taxpayers who paid 70%. 70% of their total income in taxes.  Now in 1980 the bottom 10% still paid around 20%.  The rest of the bottom 90%  now paid around 30%. So that's a pretty big middle-class tax increase over 30 years.  And from there up to the very top, it is flattened out quite a bit. Most of the top 10% pay between 35 and 45%. And the top 400 taxpayers paid 47%.  That's a nice break from the 70% of 30 years earlier.  But now let's jump to 2018 right after the Trump tax cuts.  The bottom 10% now pays just over 25%, which is an increase from 1980.  The rest of the bottom 90% pay less than the bottom 10% around 25%. A bit of a tax break since 1980.  Now most of the top 10% pay around 25 to 30%. A little bit more than the bottom 90%.  And the top 400 taxpayers now pay the least of anybody, 23% of their total income in taxes.  So for the top 400 taxpayers, they paid 70% in 1950, 47% in 1980, and 23% as of 2018.  Now, if you want to argue that the tax rates were unfair back then and they're finally fair now, that's fine. But you can't really at the same time lament how terrible things have gotten since the good old days and ignore the possibility that this gargantuan shift in tax burdens has had at least something to do with it. 

I understand that all of these tax figures and percentiles and things like that are difficult to get your head around and really understand what it all means. We have a sense and we're told that there is great income and wealth inequality in this country right now, unparalleled since the Gilded Age of the late 19th and early 20th centuries.  But it would be helpful to really get a sense of how much things have shifted in recent decades and how much money is really involved. In 2020  the Rand Corporation published a report that asked the question: what would today's world look like if the income distributions from the 1970s had held steady and hadn't changed and shifted to what they are today.  They looked at the period from 1975 to 2018  and found that if those income distributions had held steady, the bottom 90% of Americans would have in their pockets an additional 47 trillion dollars. That's trillion with a T.  

They calculated that the difference in 2018 alone would have been $2.5 trillion. 

That's enough to pay every working American almost $14,000 a year every year. Median income in the country would have more than doubled.  Now five more years have gone by since then, so we're looking at  $60 trillion. If income distributions had remained the same as they were in the mid-1970s the bottom 90% of Americans would be splitting up 60 trillion dollars. 

 Another way to experience the abnormality of our normal world is to look at elements that seem so deeply ingrained in the way we do things and look at where they came from, what their origins were and you begin to see in certain instances a vast disparity between why these things were created and why their continuation is justified today.  So for example, homeowners who have a mortgage on their house can deduct up to a certain level the interest on their mortgage debt payments from their income taxes each year. And if you ask people, well, why do we have this mortgage interest deduction? 

It seems like you know, welfare for people who already own a house and are already doing quite well. Let's see, well, it came from a time when, you know, we were really trying to encourage home ownership and it helps people get into their houses without mentioning the fact that there's no good evidence to show that it's ever done that. 

But if you look at the origins of it, it was started in the early 20th century due to basically laziness on the part of tax collectors. At the time there were countless small proprietors doing business and it was difficult to tease apart what elements of their home might have been used for business and what elements were not. So for expediency's sake or due to laziness, they just decided to throw that mortgage interest deduction in there.  And just give you the whole thing rather than go to trouble of trying to parse out a certain proportion that went along with your work.  And another example is the popularity nationwide of employer-sponsored healthcare programs. Which is the norm, right? 

It's hugely important to have that. I mean, how many people rely on their employers to get health insurance? And if you think about it, why do we do that?  If you were designing a system from scratch from nothing why would you tie it to your employer? It really doesn't make any sense.  Well, the origins of our system come from, first, The Great Depression.  During the great depression, obviously, people were suffering financially and they could never cobble together enough money to pay for healthcare all at once. So hospitals began to figure out a way to extract money from people bit by bit over months through health insurance programs and be able to cushion their bottom line a little bit.  And then came World War II.  Labor was scarce because so many men were in Europe, fighting the war. There was rationing and price controls. So if you couldn't raise prices, you couldn't raise salaries. So in order to attract potential employees, employers began to offer health insurance as a benefit to attract the scarce workers that were available during the war. Now clearly none of those things really apply today. But we have the same system. We have private health insurance and for the vast majority of people, it's tied to their jobs.  And it's an inefficient system. But it's normal. It's what we're used to. 

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  All this is to say that our world today feels normal. Right? It's the world we know, it's the water that we fish live in to go back to that David Foster Wallace anecdote in his graduation speech. But when you start to think about how things could be, based on how things actually were. Not just some utopian fever dream about magically, how great things could be. But how things actually were.  You begin to realize that just because things feel normal that doesn't make them right or optimal or fair. 

So what's the takeaway for this week?  I think it's just to remind yourself that if things feel out of whack, that's because in many ways they are.  And even if you can't feel it, the impact of America being the oldest it's ever been and being as unequal as we were during The Gilded Age,  and for 90% of Americans to not have the $60 trillion they could so easily have had.  All of these things, add up to create a reality that could easily have been very different.  And it goes back to that David Graber quote that I've mentioned a few times: "The ultimate hidden truth of the world is that it is something that we make and could just as easily make differently."  

But it's also essential to educate yourself on the details of where we started from and how we got here.  Especially with politicians lamenting about the state of affairs and offering solutions.  If they don't offer any historical context or worse yet, suggest an incorrect historical context, you probably shouldn't follow them down the path they want to go.  By the way, remember that famous quote about failing to remember the past that I started out with.  Well, there's another one you've probably heard:  "History does not repeat itself, but it often rhymes."  That quote is attributed to Mark Twain, but guess what? He never said it. What he did say, in a book that he co-wrote with Charles Dudley Warner called The Gilded Age: A Tale of T-Day, and it seems particularly relevant for us today as we begin to wade through an endless torrent of political bullshit between now and November.  He wrote,  "History never repeats itself but the kaleidoscopic combinations of the pictured present often seem to be constructed out of the broken fragments of antique legends."

Whoa, right? I mean, I can certainly think of some antique legends that have been constructed to look like reality in our world today. 

Well, that's it for this week. Until next time. Be kind to yourself, cut each other, some slack,  and if you absolutely have to drive, drive nice honk twice,  and use your damn turn signal.