The midterm elections delivered a sweeping Democratic win, but the economic messages were more complicated than a party-line endorsement. We look at the backlash against data centers and the tradeoffs between the digital services we use and the development we want nearby. California’s rejected billionaire tax leads us into a debate about wealth, mobility, and whether a one-time tax would stay that way. We also ask why strong economic indicators can coexist with households feeling squeezed by housing and energy costs.

In this episode, we talk about:

Affordability, gas prices, and the economic frustration behind the Democratic sweep.
Why voters pushed back on data centers despite relying on the services they support.
Local development tradeoffs: noise, electricity demand, construction jobs, and tax revenue.
California’s billionaire tax and the difference between supporting a goal and supporting its design.
Why economic growth and rising investment accounts don’t necessarily translate into feeling better about the economy.

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This Week’s Drinks 🍻

Jadrian has made it to the end of the Sam Adams variety pack he bought a few months ago with a Blackberry Witbier. Something new must be coming next time. Matt steps outside his usual IPA routine for Shock Top Belgian White after finding a 15-pack for $6.99. At that price, the real question is whether buying only one pack was a mistake.

We also catch up on Jadrian’s stressful promotion dossier and Matt’s upcoming student travel to Ireland and London, where a future recording might involve an actual pub.

Name That Stat 📊

Election season comes with a lot of ads, which total up to a very large bill. Matt’s stat looks at the total cost of the midterm campaigns. Jadrian contributed a data point from the Bureau of Labor Statistics on labor share of income, which turned out to be the lowest reading in the BLS series going back to 1947.

Show Notes

The midterm election results gave us plenty to talk about, but we kept coming back to affordability. The Democratic sweep was impressive, but understanding what voters want to see changed is more interesting. We start with our reactions to the results, but then consider what relief might actually look like over the next few months. Gas prices were a recurring theme, but suspending the federal gas tax is the only real recommendation we’ve seen so far. How much of a difference would this relatively small reduction actually make to households already frustrated by the cost of living?

Data centers offered one of the clearest examples of that frustration turning into opposition to development. We saw widespread pushback against data centers, but what, exactly, are people objecting to? Noise and the appearance of a large facility raise different economic questions from higher electricity prices caused by increased demand. The complaints aren’t all that dissimilar to previous fights over warehouses and energy development. People value the services these facilities provide while often wanting the facilities somewhere else.

We’re skeptical of treating every promised job as a permanent addition to the local economy, but those facilities do support the searches, online services, and nearly instant podcast playback we’ve come to expect. Some argue there are benefits to the local tax revenues, but then many of these sites receive tax breaks. Perhaps a future episode can include someone who knows the industry and its tax arrangements better than we do.

Next, we turn to California’s proposed billionaire wealth tax and the incentives created by its design. Perhaps an estate tax would be a more familiar way to pursue the underlying goal. Supporting higher contributions from wealthy households doesn’t settle the question of which tax would work best.

And that leaves us with a disconnect that makes economic conversations so challenging. Growth, household income, and investment returns can paint an encouraging picture while the bills people face still feel painful. Slower inflation doesn’t bring prices back to where they were, and housing and energy are difficult expenses to avoid. That brings us back to the political lesson running through the conversation: telling people the economy is doing well doesn’t necessarily answer their concerns about what it costs to live in it.

What local cost or economic issue do you think best explains the election results where you live? Leave a comment and tell us what you’re seeing. We’d love to compare the national conversation with what’s happening in your community.

Pop Culture Corner 🍿

Matt suggested people don’t get nearly as upset about golf courses as they do about data centers, but Jadrian has a television counterexample ready. A nearby golf course development frustrates Abbott’s teachers with power outages, traffic, and concerns about neighborhood change. We’re not familiar with examples of externalities for data centers, but the teachers at Abbott Elementary articulate the ways people dealing with the disruption aren’t necessarily the people choosing or benefiting from the project.

Sometimes the obvious song is the right song. After our wealth tax conversation, Matt turns to an anthem about imagining life with a much bigger bank account. That also gives us an opening to negotiate a considerably smaller voluntary contribution from any billionaires listening. We’re flexible on the percentage.

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The Economics of the Midterms