Thread by @Trinhnomics

The best way to see America's future is to look at increasingly stressed, depressed, and lonely Americans. They used to be fit, happy, and confident. Fast forward to 2020, they're more angry, less healthy & increasingly irrational.

The center has collapsed & fringe rising. Why?

https://twitter.com/joshchin/status/1315794918749552640

Hard to point to the reason why but I reckon it has to do with the distribution of wealth & erosion of fundamental American values in the past several decades -the destruction of small businesses, rise of large corporations, esp tech & rise of costs of living & limited mobility.

Chart below is nominal GDP (look at California and how it dwarfs everyone else). We have four states > 1trn in nominal GDP and 8> 0.5trn in GDP. Coastal = tend to be benefiting from US globalization, "fly-over" states less.

Let's look at this taking into account population.

GDP per capita nominally per state. I highlighted the >60k per year, which are basically coastal states & inner states pretty less well off.

What does that tell you when GDP per capita of DC is 188.8k, center of politics & power when Americans have less?

Another fact about DC: the most unequal place in America. While the bureaucrats, politicians & technocrats that work there get paid big bucks doing "policy", the other DC people are pretty poor.

So? Whatever policy they come up in DC, leaves behind Americans, esp red ones below.

Just because California GDP per capita is awesome doesn't mean it is not unequal & Californians aren't impoverished. Just a state-level aggregate of nominal GDP/capita not taking into account costs of living.

CA poverty =17.8%
Only 1/3 Californians can afford median housing.

So what has happened to America? First, inequality is not something you can completely fix but clearly here something is wrong when the most rich GDP per capita place, DC, at 189k usurps the rest of the country. What has Congress done for us other than fighting for more power?

Ask the average American that watches TV & stares at their phone all day long clicking on more adverts to buy stuff they don't need & get a ton of debt & behaving irrationally w/ their finance and relationships, do they know how to take back power to change this?

No, distracted.

There's nothing on that debate between Biden & Trump or Pelosi vs Mitch talking that actually'll help change the very thing that creates this decline of fundamental American values of self determination. When we have a collapse of small businesses & tech getting stronger, we lose

Why? Most current tech models are just margin compression of the real economy by getting ur attention etc to sell advertising that basically is taking margins from real business. And they're good at it but margins squeezed.

But tech companies don't hire a lot of Americans.

But before the takeover of tech, whether Amazon, Google or Facebook, we got key trends that created what we have today. Are you ready? These are all policies championed by people in Washington DC & we call it the DC consensus:

Globalization or offshoring of manufacturing jobs.

Arguments are made by economists that assume free mobility of labor & capital. In reality, labor is NOT GLOBALLY MOBILE. Capital can be once you argue for recipient economies to LIBERALIZE & your own economy to do so.

Capitalists can take advantage of commoditization but not u.

The commodization of global supply chain occurred in the 1990s and accelerated in the 2000s & up to the GFC driven by:
*Lower costs of communication & transport thanks to technology
*Policy driven by DC to allow large American corporations to take advantage of arbitrage globally.

Unbeknownst to the average American sitting esp in traditional manufacturing centers, their ability to BARGAIN weakened as unions were weakened & industries being shipped OFFSHORED thanks to NAFTA, WTO etc arguing for LIBERALIZATION OF TRADE & INVESTMENT.

Corps get cheaper costs

The argument here is that when companies go offshore & their supply chain more efficient & costs GO DOWN THEN EVERYONE WINS!Consumers get CHEAPER GOODS & assuming that labor is flexible they move to other specialization. Consumers do get cheaper merchandise but labor not flexible

First, UNSKILLED labor isn't that flexible because by nature it's unskilled. So when u ship stable manufacturing job abroad that offered stable wages + benefits + a sense of purpose, these people are WITHOUT THOSE THINGS.

Do they move to California where services proliferate?

The coastal cities that benefit from globalization (cheap labor from Mexico + cheap costs of goods + excelling in services) love this whole LIBERALIZATION & GLOBALIZATION mantra.

If only 30% of Californians can afford median house price, mobility is low for non-coastal people.

Meaning, hurdle for labor mobility is high. And frankly speaking, if you are low-skill, u're not gonna be able to compete in a high-skill state like California state where only 1/3 of the people can afford housing there anyway. Already crowded! Quality housing + edu supply low!

Anyway, so those that got left behind got left behind. And who cares about them anyway as the media is owned by coastal cities w/ urban values of globalization & liberalization & why can't the middle accept? Those are good things! Offshoring etc!

Another trend happens after too

After offshoring production, American firms got GLOBAL! Don't just make money onshore but a lot offshore & American brands penetrate globally. Able to efficiently manage supply chain to even bypass middle man. EXPAND & change American culture. Walmart etc destroying small shops.

So small town USA got first destroyed by offshoring & secondly smaller shops that survive on dwindling income & customers further outcompeted by ONE-STOP SHOP mega stores like Walmart & Target & Home Depot etc.

They're more efficient & costs lower & hence out compete & dominate.

These places employ people but mostly part-time workers having w/ limited benefits. Fine, these are unskilled work anyway.

But zooming out:
*People that used to produce real stuff no longer have jobs, wages, benefits & purpose
*People used to know their neighbors/shop owners
So?

So we are DESTROYING THE FABRIC OF OUR COMMUNITY & become the commodity in which we COMMODITIZE through the process of our organization of production.

You can see this w/ the rise of obesity in the USA for example: Americans became sadder & more unfit.

42.4% obese from 30.5%

We basically ate more unhealthy food, doing less physical exercise, and consume more recreational DRUGS & committing more suicides.

Those are the statistics. And guess what? These are young people, not the elderly. Their future is BLEAK.

Coupled with these trends of commodization of our lives to become more isolated from our fundamental values, which is to be social & have a community, a sense of purpose & frankly shared values, we got the following trends: Low rates thanks to GFC to increase inequality + Tech.

Using monetary policy to solve the structural issues in America = increasing access to those w/ access to cheap capital & inflating assets & creating higher barriers to labor & upward mobility. We got tech that adds to this as it monetizes on our attention through emotion & rage.

Covid-19 is a great example of this where the policymakers once more do what they have done over the past decades:

*Create policy that disfavor the working class & small businesses
*Favor large firms + tech

= acceleration of American decline by punishing the average American.

Policies being debated by politicians by both the Left & Right & the elites (media companies) have LITTLE TO DO WITH THE ILLS OF THE AVERAGE AMERICAN, as in working and middle class, & more to do with the capturing of POWER IN DC.

Listen to what they say & issues they focus on.

In so far as we don't protect our fundamental rights to privacy, individual freedom & believe & protect the things that truly make us happy & healthy as a nation, we are on a terminal decline.

Decline has nothing to do w/ China but our leaders & our awareness of what matters.

China just exploits the system & doing whatever it can, using its own way or even using the existing system for its own gain for its own people/power. Our decline is on us.

Unless we care about all of us & stop spending time generating hate for attention/profit, we're doomed.

If u think I'm too bearish, look around u. Look at the young Americans we have today that are feeble emotionally, fragile financially (read my pinned tweet on our finance) & rather depressed (higher incidence of mortality & depression).

U don't want people w/ nothing to lose.

We want a society where young people are optimistic, caring about the future, excited to become adults, take more responsibility in our community, & have an increasingly share of the pie so that they have something to protect v destroying the system that is not broken but flawed.

We should:

Create an economy that generates more jobs that allow people to have decent wages, benefits & purpose.

Housing that an honest wage can afford that require more supply of housing.

Education that focuses on rational thinking such as science & math & financial literacy