About the economy

Starting around 1980, economic growth began to concentrate more in some communities than in others, and even whole regions began to diverge. Over the next four decades, it was the wealthy places that saw virtually all increases in household income, new jobs and new businesses. Many of the others saw no growth at all.

  Politico

And it's no coincidence that this started under Ronald Reagan, that paragon of ideal Republican virtue even Democrats like to praise. Reagonomics. Trickle down. And speaking of Democrat praise for GOP presidents, George W Bush has virtually become a saint as people try to convince Trump supporters that things were actually decent with Bush in the Oval Office in a decidedly vain attempt to shame them for Trump.

To come up with solutions that both Republicans and Democrats can embrace, The Agenda convened a working group of 14 top-level thinkers, decision-makers and experts from around the country. The discussion, held under Chatham House rules to promote candor, identified several tools federal policymakers can use to promote opportunity in places that need it—everything from credential reform to benefits portability to fixing the sewers. Read about those and more in our eight-page working group report, “The Geography of Opportunity,” which we’re also publishing as a downloadable PDF.

[A] singular focus on income misses a larger and more intractable problem that drives economic instability and social distress: wealth inequality. While income measures the cash flow into a household, which mostly flows right back out to pay the bills, wealth includes so much more: savings, equity in businesses, stock ownership, equity in real estate, bonds and other property, such as land. And while income inequality is staggering and growing, wealth inequality in America is even worse, by orders of magnitude. According to recent data by inequality scholars Thomas Piketty, Emmaneul Saez and Gabriel Zucman, a stunning 75 percent of household wealth and 97 percent of capital income—the kind of income generated by wealth, such as dividends, interest and capital gains—is concentrated in the top 10 percent of American households. According to another study, nearly half of American households couldn’t come up with $400 in an emergency to meet an unexpected expense, while a tiny slice of the population controls trillions of dollars in assets.

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While sufficient income allows a household to meet near-term needs, wealth allows a household to build resilience and plan for the future—to weather the loss of a job or a major illness or other disruption in income, to seek higher education, to save for a home, to start a business, to simply take a vacation, to retire.

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The benefits are not just economic. Recent research by Jung Kim of Rutgers University has shown that one form of wealth, an ownership stake in the company where one works, together with engagement in the company, actually makes people better citizens. They are more likely to actively participate in political activity, vote in elections, attend civic meetings and sign petitions—exactly what the founders predicted.

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THE FIRST FEDERAL policies to promote a broad middle class were based on land and were promulgated at a time when most citizens were engaged in agriculture for a living. More recent policies have focused on home ownership, which is a critical store of wealth for many American families. But home ownership is more than just a wealth-building tool: Owning a home has important benefits for personal and family stability.

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While some people on both the left and the right believe that we should ameliorate the growing inequality in our economy with a universal basic income, we suggest that American values might be more aligned with policies that promote earning and owning.

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Here are three practical policy options that could help more working Americans build wealth.

Reward businesses that offer profit and equity shares.

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Incentivize retirees to sell businesses to employees. [...] Iowa provides a successful state-level example of such a policy. A few years ago, former Governor Terry Branstad worked with Democrats and Republicans to pass legislation that reduced the state’s corporate income taxes for retiring business owners when they sold to the employees and managers through an employee share ownership plan.

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Promote public-private citizens trusts. These trusts, similar to the Alaska Permanent Fund that now pays annual dividends to every Alaska citizen, could be established in every state. These trusts would acquire income-producing assets and use the income stream from these assets to pay a dividend to citizens of that state. In contrast to Alaska’s fund, the trusts could establish universal asset accounts for every citizen. Like Alaska’s fund, they could pay significant dividends that would function as a “second income” for citizens and help build their wealth.

  Politico

For generations, homeownership has been a toehold on the ladder up for middle-class Americans, helping them build nest eggs and prepare for retirement. Now, an epic housing shortage has collided with the largest cohort of young adults in the country’s history. That has sent prices into the stratosphere and put homebuying out of reach for many, especially in job centers.

The perverse result: Only affluent first-time buyers are able to capitalize on the wealth-building tool of homeownership.

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The problem threatens to get worse as interest rates rise and construction lags demand, especially for starter homes. Many, if not most, millennials are being priced out of homeownership, especially near job centers like Washington. (The announcement of a new Amazon headquarters near Sara and Dan’s neighborhood is likely to put houses there even further out of reach for most.)

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THE YAWNING GAP between home equity haves and have-nots has been widening since at least 2012, when national house prices hit rock bottom. Since then, wages have risen 17 percent, while median home prices are up 76 percent, according to ATTOM Data Solutions, a real estate data provider. In job centers, millions of millennials can only dream of something their parents took for granted.

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Houses in sought-after markets like Washington’s inner suburbs—and Boston, San Francisco and New York—do appreciate, and as assets they survived the housing crisis quite well. It’s houses in less-prosperous areas, like rural communities and smaller cities, that have taken a hit as investments. The difference is yet another force driving asset inequality.

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And last year’s GOP tax plan made urban homeownership more expensive by capping federal tax breaks for people who pay local property taxes.

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In one small sign of progress, Housing and Urban Development Secretary Ben Carson has has joined the YIMBY ranks and has launched an assault on restrictive land-use ordinances with a proposal to link federal housing funds to local building codes that drive up construction costs.

  Politico

Who knew? Trump antics hog the news cycle for the entire world.

As America grapples with widening inequality and deepening political polarization, a group of wonks in Washington is quietly embarking on a new national experiment to rehabilitate the country’s most distressed regions. Tucked into the 2017 Republican tax law, Opportunity Zones, as the program is called, offer huge tax incentives for financiers who invest in downtrodden communities.

The promising idea has one potentially huge flaw, however: As the Treasury Department finalizes the program’s rules in preparation for its launch in 2019, researchers and economists are increasingly worried that the agency is leaving out critical requirements to track the law’s effects—and as a result, we may never know if Opportunity Zones actually work.

  Politico

How convenient.

Earlier versions of the idea have been tried, with an unproven track record. The Opportunity Zones provision was originally drafted with a requirement for the Treasury Department to provide detailed information on the distressed regions and the impact of investments, but that dropped out when the tax bill was finalized. And when the Treasury Department released its proposed rules for the program last month, it didn’t require investors to disclose much detailed information.

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Federal programs often pass Congress without any evidence they work, in part because it’s so difficult to collect data on the impact of broad policies. But Opportunity Zones are a trackable scheme, operating in the data-rich field of finance, where investments and returns are all carefully measured by the financial players involved. It appears, however, they won’t need to report those results to Washington.

How very, very Trumpian. Just do it and say it works.

 ...but hey, do what you want...you will anyway.