Stagnant Incomes & Job Openings: Leaves In A Swimming Pool by Jared Dillian, Mauldin Economics
My life is pretty awesome. Indescribably great, at times. It wasn’t always this way. (If you want to read about when it was not so great, go here.)
There’s an old saying: My problems are like leaves in a swimming pool. It means that it makes no sense to be angry or upset about the fact that you have leaves in your swimming pool, because… you have a swimming pool! Your life is so great that you have a swimming pool, and you’re upset that you have leaves in it? A little perspective is needed.
So whenever I find myself tied up in knots about this or that problem, I like to think that things could be (and have been) much, much worse.
Are Americans Too Negative?
Sometimes I think we have a problem with perspective. A lot of people in this country like to focus on the negatives—stagnant incomes in lower deciles, for example. But someone with an income in the 20th percentile in the US (about $20K) would be one of the richest people in the world—by a lot.
Sure, many people don’t have jobs, but many people do—and companies can’t hire workers fast enough.
Here’s my favorite chart:
It’s funny—my article “I Heart Capitalism” from about a month ago stirred up all kinds of controversy. (For more controversial topics, check out these short interviews, each only a couple minutes long, that I did on volatility, interest rates, and my highest-conviction trade: shorting Canada.)
If you recall, I talked about how prices of certain goods were collapsing in real terms. People criticized the article, pointing out how the prices of some things, like higher education and health care, are skyrocketing. It brought out all the pessimists.
May I remind people that higher education and health care are two of the most heavily subsidized sectors in America?
In health care and higher education, the free market isn’t allowed to function properly. It’s no wonder prices are so high! The market works just fine when you leave it alone; prices will go down over time.
One of the things I forget as a “Wall Street guy” or a “finance guy” is that people take problems like joblessness, underemployment, and stagnant incomes very seriously, because there is a human cost to them. “Poverty porn” has become a whole new genre of journalism or at least one that hadn’t been popular since the 1930s. We’re bombarded with information on a daily basis about how hard people have it.
So it’s easy to sit back in my air-conditioned office and manipulate my spreadsheets and talk about how, no, actually, our standard of living is much higher than it was 15 years ago, even though it may not seem like it. People don’t like those arguments. They seem insensitive. And maybe I am insensitive, since I haven’t been a working stiff since my Coast Guard days.
But it has gotten to the point where if you are an optimist, you are persona non grata. Don’t tell my friends, but I use Facebook as sort of a social laboratory. I post provocative things and see how people respond. I was posting on Facebook recently about how we are close to curing cancer (it’s actually true—read for yourself), and people were cynical about it! How can you be cynical about curing cancer, saving millions of lives?
There was a piece on Vox recently, with 26 charts showing how the world is getting unimaginably better. The charts showed that poverty and hunger were decreasing, and that our access to leisure time and cheaper food, and our life expectancy were all getting better. I posted that on Facebook. It got a handful of likes. People were trying to figure out what my angle was.
I think human beings naturally have a pessimism bias, but I think it’s gotten out of control.
The problem with pessimism is that it affects people’s politics. If we think that the world sucks and always needs fixing, then we are going to elect really angry, indignant people who are going to try to fix something that may not be broken.
Happiness Is Hard to Find
Parts of the financial markets are overheating. Silicon Valley is stupid. Credit is too tight. If you look hard enough, you can probably find a bubble somewhere.
I remember 1999 like it was yesterday. People were happy. They were deliriously happy. Life could not have been better.
We were at the tippy-top of eight years of uninterrupted economic expansion (really 17 years—the 1991 recession had been quite mild), there were no wars, the Dow hit 10,000, the Nasdaq hit 5,000, everyone was day trading, people were listening to Britney Spears… madness.
It was the closest thing to complete social euphoria I have ever seen.
The stock market has been going up for six years now, and is up 200%. And people are miserable. Just miserable human beings.
Stock market tops are not usually made when people are miserable. I suppose there is a first time for everything. But it seems unlikely.
The Leaves in a Swimming Pool Guy
Editor, The 10th Man
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