Issue of the week: Deciphering Trump’s Treasury pick
President Trump’s supporters cheered his inaugural pledge “to make sure they share in the nation’s riches,” but his nominee for treasury secretary isn’t exactly a populist hero, said Suzanne McGee in The Guardian (U.K.). Steven Mnuchin, a Goldman Sachs alumnus and hedge fund manager with a net worth of as much as $500 million, is apparently so wealthy he forgot to disclose $100 million in assets ahead of his Senate confirmation hearing last week. Mnuchin also omitted the fact that he once led an offshore investment fund based in the Cayman Islands, a well-known tax haven. The revelations set the stage for a tense hearing, in which Democratic lawmakers raked Mnuchin over the coals for his leadership of California bank OneWest in the years after the financial crisis. The bank foreclosed on more than 36,000 homeowners during Mnuchin’s tenure— including, famously, a 90-year-old woman who made a 27-cent payment error. Mnuchin has “a solid working knowledge of business and finance,” but is he really the kind of person Trump supporters had in mind to run the nation’s financial system?
Trump’s economic team shows just how much the balance of power has shifted from Main Street to Wall Street, said Steven Pearlstein in The Washington Post. Gary Cohn, a former options trader who rose to second-in-command at Goldman Sachs, is the new director of the National Economic Council, which advises the president on economic policy matters. Legendary investor Carl Icahn, whose fortune is estimated at $20 billion, will also advise Trump on regulatory reform. Make no mistake: “These are smart, shrewd risk takers who know how to work the system and have a knack for buying low and selling high and driving hard bargains along the way.” But Trump is simply replacing the Washington political elite he railed against “with the equally out-of-touch financial elites of Wall Street.”
These are anything but your typical financiers, said Jessica Pressler in New York magazine. Most of Wall Street wrote off Trump, but what sets Mnuchin and his cohorts apart is that they “saw in the improbable candidate the opportunity for the deal of a lifetime.” Backing Trump’s White House run was a bet with little risk and a lot of potential upside—and now they are reaping the rewards. Mnuchin himself is described by colleagues as something of a “cipher,” and not particularly political. His policy positions don’t exactly jibe with Republican orthodoxy, said Larry Light in CBSNews.com. In his Senate testimony, Mnuchin expressed support for the Volcker Rule, which prohibits banks from using their own accounts for risky investments and is despised by many in the GOP, and broke ranks with Trump by saying he supports a strong U.S. dollar. (Trump recently told The Wall Street Journal that the greenback is “too strong” and is hurting U.S. firms.) Mnuchin also rejects a Republican-backed plan to end government control of housing giants Fannie Mae and Freddie Mac. He may be a Washington outsider, but the putative treasury secretary appears to have what Beltway insiders prize most: “flexibility and nimbleness in his views.”
Retail’s past is its future
Nobody should be surprised by the collapse of department stores, said Virginia Postrel. Even 30 years ago, it was clear “the days of leisurely housewives roaming department store aisles were surely over.” With women entering the workforce in large numbers, customers began shifting toward smaller stores with more focused inventories, or shopping from home via catalogs. By 1982, the average American household received 40 catalogs a year, “a number that skyrocketed over the next decade.” Already used to shopping from home in this way, “many consumers were primed for e-commerce.” For department stores to thrive again, they may have to dig deep into their past. At the turn of the 20th century, stores featured attractions like tearooms, playgrounds, and nurseries, and hosted events like concerts, fashion shows, and classes. That spells an opportunity for the retailers of today. Increasingly, “consumers are choosing experiences over stuff.” Shopping center vacancies have actually fallen since 2008, with restaurants and food halls becoming anchor tenants. Bed, Bath & Beyond recently unveiled a new store format in Brooklyn that features a restaurant, cooking classes, and a hair-blowout bar. “For retailers and their landlords, the future lies in giving customers a place to socialize and learn.”
The myth of the dying middle class
Politicians on both sides of the aisle agree: “The American middle class is disappearing,” said Ben Shapiro. Whether it’s Sen. Bernie Sanders or President Trump, the message is the same. The average American worker is being squeezed out for the benefit of those at the top. But what if they’re wrong? On closer examination, “the American middle class has been doing just fine.” In 1967, for example, 33.7 percent of American households earned between $50,000 and $100,000. That number (adjusting for inflation) fell to 28.5 percent by 2014, but not because the middle class is stagnating. “It turns out that everybody just got wealthier.” Today, nearly 25 percent of Americans earn more than $100,000 a year, up from about 8 percent in 1967. “That’s not a collapsing middle class. That’s a growing upper-middle class.” But even so, income “is a poor indicator of economic wealth.” Looking at what people actually consume, Americans “live far better now than they did in 1980.” We have nicer products, enjoy affordable new technologies, and live in bigger houses. Yet many Americans seem to believe they have it much rougher than they used to. Perhaps the real problem is “politicians constantly drilling into Americans that they’re being screwed by the guy at the top, and that only government can fix that problem.”