The Coming Collapse of the Middle Class – A Lecture by Elizabeth Warren
Want to know why the middle class is disappearing despite families now having two people in the work force instead of one? Here is Elizabeth Warren discussing in an hour-long lecture at Berkeley. She is the author of The Two Income Trap.
The only thing I really take issue with is the fact the savings rate is horribly misleading for the reasons I explained in this blog over at About.com. For example, all of the money Warren Buffett has in shares of Berkshire Hathaway, which is nearly $60,000,000,000 never counted as “savings” on his part because it came from capital gains. Likewise, certain retirement contributions, which are now standard, aren’t included. In fact, if Buffett were to spend $10 billion, it would cause the savings rate to be negative if he were the only citizen in an economy because the $60 billion was never counted in the “plus” column. That isn’t economic reality, it is government accounting.
Warren makes great, valid points, which is why I think she she chair the consumer protection agency. To a finance geek like me, lectures like this are the equivalent of a night at the Playboy mansion.
Update: This post was restored on 05/14/2019 as part of a project that involved releasing selected posts from the private archives. It is difficult for me to overstate how disappointed I am that Elizabeth Warren, who has subsequently become a United States Senator, has gone from a fair-minded, even-handed academic discussing deep policy matters to someone I see, at times, as little better than a demagogue who proposes policies that are not only blatantly unconstitutional but that would result in massive incentive distortion and even greater problems down the road. The fact that she has had to move so far to the left in order to gather support within the Democratic party is, in my opinion, a further example of how the two party system in this country is fundamentally broken. The person in this video is someone I would have supported. Where did she go? Politics changes people. Most people, anyway. Not always. Exceptions exist. They are rare. I suppose the nicest thing I can say is that even her recent legislative initiatives are far less insane than the economic illiteracy that was the Bernie Sanders 2016 Presidential run, the policy proposals for which I analyzed here.
Reader Comments (3)
Comments are presented chronologically, with replies indented beneath the comments to which they respond.
Mark Bright
November 23, 2014
Hmm, I find it interesting that posts like these receive little attention when these are the posts people would do well to enlighten themselves with! Just watched the video. Excellent points. Excellent post.
However I would like to point out your relative bias with your last sentence. Are you assuming then that a majority of your readers are straight males, presumably under the age of 40? I love looking at that rotating world accompanied with "Thanks! You've been marked on the map!", but do you have information on demographics related to gender and/or sexual preferences? Is this at all possible?
I read somewhere buried in one of your posts/comments that your blog receives the most amount of attention when you post about non-finance/economic related things (by the way, my mom poured obsessively over your Cinnabon recipe!)
Joshua Kennon
November 23, 2014
Replying to Mark Bright
I'm never certain which posts will get a lot of comments, and which posts won't. Sometimes, the most popular posts by page views have a smaller number of comments, making it even more interesting!
Re: Your questions. I'll try to answer them or get to the heart of what you're asking as directly, and quickly, as possible:
1. No, it's not an assumption.
2. Yes, it's possible to know these things. (Though the site's capabilities aren't at a comparable level of sophistication, marketing analytics are powerful enough these days that a retail store like Target, for example, can predict when a woman is pregnant before she, herself, knows based solely on changes in her shopping behavior. The same goes for online sites. When you shop on eBay or search for something with Google, they know a whole lot more about you than your sexual orientation.)
3. Yes, I know the breakdowns.
4. Yes, a large percentage of the site's readers are young, well educated, high-income, straight males living in the United States.
5. No, I haven't shared all of the information publicly, though I have given an analysis of gender in the past, which is the same post I talk about the Cinnabon recipe you mention. The gender divide has been lessening over time but even now, 71 out of 100 readers are male.
6. Even with the information asymmetry, you could have been fairly certain it's not my own personal bias projecting itself in assuming everyone is straight given that I am gay and married to the first boy I ever dated as a teenager.
Just curious, if you don't mind: Why do you ask?
Mark Bright
November 24, 2014
Replying to Joshua Kennon
Wow. That assumption article just floored me... Aside from all of your mental model posts, do you have any articles that immediately come to mind that I should read as well?
Thank you for clarifying your points. That second point about marketing analytics is... absolutely terrifying to me. I don't even want to think about how many online companies and corporations "know me" better than I may know myself. (I saw on one of your comments that the unchecked rise of AI makes you uncomfortable as well. Do you really think it is possible for man to create a fully-functioning, fully capable self-thinking entity? Do you think it will happen in our lifetime? On a completely different tangent, what do you make of the rise of BitCoin, and would you ever consider using it either personally or with your businesses? Why or why not? Sorry for all the questions...)
I don't even think you understand how much I admire you, your life story, and the way you can clarify seemingly impossible-to-grasp subjects for those much less educated than the average reader like me. (I graduated high school with a 3.0 and wasted all of my parents' money going to a college I hated and eventually dropped out of. Yes... I know how stupid that decision was.)
Having just recently discovered this blog in conjunction with the Mr Money Mustache blog, I can't believe I have spent my entire life consuming, living care-free, and acting with a sense of entitlement on such a granidose scale.
I have no background in finance, economics, or business but the way you are able to effectively introduce concepts about these matters causes me to lose track of time, and before I know it, its almost 3 in the morning. The two books I have asked my family for Christmas include your "The Complete Idiots Guide to Investing" and "Poor Charlies Almanack" because of how often you reference Charlie Munger on this site. I know I will not become an overnight stock market wizard. In fact, I don't plan on investing for a long time. I am so relieved I have found this site at the age of 20, and not say, 25 or 30. This gives me much more time to save and compound my money so that I can retire comfortably.
Err... I have a lot more I could say and ask but I was just thrilled with a response, and I know you have much more important things to tend to. Thank you!
P.S. Do you reccomend that I pick up a copy of Fable 2? My Xbox 360 is one of my few sources of entertainment.