Derek Thompson

Voters believe the president has little effect on their local economy, and they do not form their evaluation of the national economy based on surrounding conditions. This finding suggests that people form their opinions of the national economy based on non-local factors, such as the national media.

... but it was one of many factors!

Reuters

"We went into a recession in 2008. People forget why," Rick Santorum told an audience recently. "They thought it was a housing bubble. The housing bubble was caused because of a dramatic spike in energy prices that caused the housing bubble to burst ... People had to pay so much money to air condition and heat their homes or pay for gasoline that they couldn't pay their mortgage."

This sounds stupid to some writers. (Most of these writers were more likely to find Santorum stupid before he made that comment.) But it's not very stupid, at all.

In 2009, economist James Hamilton published a paper that retroactively forecast what an oil shock, like the one we experienced in 2007-08, would do to GDP. And guess what? His model accurately predicated much of the collapse in GDP that resulted from the Great Recession -- as if there had been no housing bubble or financial crisis! The oil spike was that bad.

Still, there was a housing bubble. And there was a financial crisis. How do we account for them and still hold onto the gas story? Here's a one-paragraph theory of the Great Recession that begins with gasoline. Cheap gas ruled in the 1990s. This encouraged families to settle down farther from the cities where they worked. In the 2000s, super-low interest rates, declining lending standards, and an appetite for mortgages on Wall Street (among other factors) further encouraged sprawl and residential development in the 'burbs. As the price of gas went up, families stopped buying homes 30 minutes from the city. For folks shacking up in the exurbs, higher gas bills ate into mortgage money. For companies, higher energy bills shocked productivity. Classic oil-shock + housing development arrested + financial crisis = Great Recession.

There appears to be pretty strong correlation (if not causation) between national gas prices, which accelerated after 2005, and housing starts, which declined after 2005. Here's a graph of gas prices and housing starts indexed in the year 2000 (I've pulled back the lens to 1990).

Santorum's mistake isn't in thinking higher gas prices mattered. Of course energy prices matter. Low energy prices contributed to the housing boom, just as $4 gas probably pricked the housing bubble. But his mistake is in thinking it was the only factor.

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In 2006, the term "App" as we know it did not exist. Today, the App Economy accounts for $20 billion in annual revenue, and it's responsible for about 466,000 jobs in the US, according to a new study, "Where the Jobs Are: The App Economy," which was just released by Technet.

What's an app job, exactly? Atlantic contributor Michael Mandel explained:

The total includes jobs at 'pure' app firms such as Zynga, a San Francisco-based maker of Facebook game apps that went public in December 2011. App Economy employment also includes app-related jobs at large companies such as Electronic Arts, Amazon, and AT&T, as well as app 'infrastructure' jobs at core firms such as Google, Apple, and Facebook. In additional, the App Economy total includes employment spillovers to the rest of the economy.

There are 155,000 pure tech app jobs in the country, Mandel calculated. But companies cannot live by computer engineers alone. As a firm expands, it adds sales and marketing and HR jobs that keep the company humming while the techies are coding. Adding these positions, he puts App Economy workers at 311,000. Multiplier effects bring the total above 400,000. The top city for app economy workers is New York, which accounts for 9% of the app jobs. Another 15% are in San Francisco (8.5%) and San Jose (6.3%).

Is 311,000 jobs a lot? Well, it's bigger than the online journalism industry, or the software publishing sector, Mandel says, producing the following chart:

A third of a million jobs is nothing to scoff at, but it only represents 0.2% of all workers. It certainly leaves a lot of room for growth. Fully 44% of Americans own a smart phone according to polling by Nielsen in December 2011, which is summed up in the infochart below. Among those between 25 and 34, smartphone penetration is 63%, more than twice the share from 2009.

As smartphone penetration rises, app-economy revenue will grow, which will encourage more venture capitalists to back app economy entrepreneurs, which will in turn encourage more entrepreneurs to move into the app economy. All this is to be expected, and it's all good news.

But the real breakthroughs in app innovation will probably come from the unexpected. We're only beginning to scratch the implications of a GPS-powered super-computer in our pocket. One can imagine, for example, a breakthrough innovation in personal-health monitoring, where our smart phones act like a pocket-nurse, periodically checking our vitals, reminding us to exercise and to take our medicine, and alerting doctors when something is wrong. It's this sort of Black Swan breakthrough, where investments in the App Economy feed into investments from the medical and biotech economy, that has the potential to take off in ways that will make today's apps look like they were developed in the stone age of smart phones.

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The story we think we know is that the institution of marriage is crumbling and on the brink of oblivion. The real story is much more complicated.

National Marriage Week USA kicks off today, and for many people, a national booster movement for marriage could not come any sooner. The recession did a number on American matrimony, as you've surely heard. The collapse in marriage rates is cited as one of the most important symptoms -- or is it a cause? -- of economic malaise for the middle class. But the statistics aren't always what they seem, and the reasons behind marriage's so-called decline aren't all negative.

At first blush, the institution of marriage is crumbling. In 1960, 72% of all adults over 18 were married. By 2010, the number fell to 51%. You can fault the increase in divorces that peaked in the 1970s. Or you could just blame the twentysomethings. The share of married adults 18-29 plunged from from 59% in 1960 to 20% in 2010. Twenty percent!

What on earth is going on with these kids? Betsey Stevenson and Justin Wolfers tried to answer that question (among others) in their fantastic 2007 study "Marriage and Divorce: Changes and their Driving Forces." 

Related Story

The Marriage Problem: Why Many Are Choosing Cohabitation Instead

The simplest summary of their findings is: It's really, really complicated. The full answer for the delay and decline of marriage would touch on birth control technology (which extends courtships by reducing the cost of waiting to get married), liberal divorce laws (which creates "churn" in the labor market by increasing divorces and new marriages), and even washing/drying machines (which both eliminate the need for men to marry lower-earning women to do housework and also free up women to work and study).

One important lesson from Stevenson and Wolfers is that, as much as it feels like things are changing very rapidly, a longer view on marriage trends reveals a more boring picture. If you pull back the lens, not to the 1960s but to the 1860s, the marriage rate and the divorce rate stick stubbornly to long-term trend lines.

Marriages-per-thousand people are declining, but slowly, after spiking in the 1940s. Divorces-per-thousand people are rising, but slowly, after spiking in the 1970s. Even in the Great Recession, which theoretically scared couples from investing in matrimony, we've seen "the same rate of decline that existed during the preceding economic boom, the previous bust and both the boom and the bust before that," Wolfers wrote.

The median age of marriage for men and women is rising slowly into the high-20s. But that's not so unique compared to men's historical averages. What is new -- really, really new -- is the rising marriage ages for women.

The education revolution for women -- one of the happiest trends of the 20th century -- carries important implications for the marriage market. First, if women are going to college, more of their 18-22 years will be taken up by history classes rather than husbands. Second, when these women start earning money, fewer need to marry for financial reasons, which means they can afford to put off marriage. Thanks to birth control, a little bit of biotechnology has helped their cause by reducing the costs of being sexually active and single.

THE TWO MARRIAGE TRENDS

The economics of marriage suggest it's like any other investment. Women are more likely to get hitched when they see big potential gains from a union. That explains why the apparently monolithic Decline of Marriage is in fact two polar opposite trends. The first points toward the revitalization of marriage. The second points to decline.

First, for highly-educated or rich women, marriage rates are actually rising. It was once the case that a college degree was the equivalent of punching your spinster card. In the late 1800s, half of all college-educated women never married. But in the last 40 years, marriage rates have increased for the top 10 percent of female earners more than any other group, Michael Greenstone and Adam Looney found in a new report from The Hamilton Project. A 2004 American Community Survey also found college-educated women were 10 percentage points more likely to be currently married than women with less education.

Second, there is a parallel trend that really does look like the crumbling of marriage. Among less-educated and poorer women, marriage is in outright decline. The bottom half of female earners saw their marriage rates decline by 25 percentage points, Greenstone and Looney find and show in the graph above.

There is evidence that social and economic sorting in America creates clusters of people who match up by education, salary, and politics. As a result, perhaps poor or under-educated women are more likely to be matched with poor or less-educated men who offer a worse return on the marriage investment.

"Marriage has become the fault line dividing America's classes," Charles Murray writes in his newly book on the state of white America, Coming Apart. In a Wall Street Journal column based on the book, Murray compared those living in the country's educated white-collar world ("Belmont") and less-educated blue-collar world  ("Fishtown"). The divergence between Belmont and Fishtown begins at the alter, he argued:

In 1960, extremely high proportions of whites in both Belmont and Fishtown were married--94% in Belmont and 84% in Fishtown. In the 1970s, those percentages declined about equally in both places. Then came the great divergence. In Belmont, marriage stabilized during the mid-1980s, standing at 83% in 2010. In Fishtown, however, marriage continued to slide; as of 2010, a minority (just 48%) were married. The gap in marriage between Belmont and Fishtown grew to 35 percentage points, from just 10.

MEN AND MARRIAGE

If Pride and Prejudice were written today, it might begin, "It is a truth universally acknowledged, that a single man in possession of a good fortune is practically an endangered species." In the last two years, this magazine has published two cover stories -- on the End of Men and the rise of the Single Lady -- that posited that "a marriage regime based on men's overwhelming economic dominance may be passing into extinction."

Marriage Extinction Watch is on high alert in the poorer segments of the country. In 2007, among women without a high-school diploma, just 43 percent were married. One reason was that the men they're mostly likely to marry are faring so poorly. The wages for all prime-age men have fallen by 40% in the last 40 years, after you account for the fifth of these men who have dropped out of the labor force. As the Hamilton Project reported last week, falling male earnings track closely to declining marriage rates. "At the bottom 25th percentile of earnings ... half of men are married, compared with 86 percent in 1970," Greenstone and Looney write.

We cannot know why millions of couples who might have been tying the knot 40 years ago aren't doing so today. Cohabitation is a factor. Divorce is a factor. But so is economics.

It might help to think of the marriage marketplace as, well, a marketplace. Historically, men and women have gone to the market to marry for the same reason that employers go the market to hire. They are looking to hook up with a productive "partner." As women are likely to seek partners in their income class, poorer women are more likely to be surrounded by men with low and falling fortunes, and more have chosen to forgo a union that could become a financial drain.

'TIL DEATH: A SILVER LINING?

If twentysomethings are responsible for inspiring "end of marriage" talk, let's praise seniors for keeping the institution alive by staying alive. As the graph above shows, today's Americans aged 60 and higher are as likely to be married as any other generation before them at that age. In fact, those over 65 are now more likely to be married as those in their 20s -- a moment that is unique in history. Adults are living longer, having fewer children, divorcing at a higher rate, and finding new partners, Stevenson and Wolfers write.

The graph above is a deceptively simple picture that says a lot about how the institution of marriage has changed in the last 130 years. First, it shows how unusually early twentysomethings married around 1960. This suggests that comparisons to that generation imply an exaggerated collapse. Second it shows that, at every age up to 60, today's Americans are less likely to be hitched than any generation before them. Third, it suggests that seniors are marrying close to their age. The shrinking gap between the ages of husbands and wives that helps to explain why couples are more likely to sort within their income group. Finally, it implies that even with rising divorces, the market for re-marriages is strong.

If somebody tells you nobody your age is getting married anymore, the optimistic rejoinder is: Just wait. Marriage isn't dead. It's just changed, and running a few years behind schedule.

Oh sure, $3.5 million sounds like a high price to pay for the privilege of airing a 30-second bar joke. But hold your shock at the sticker price of a Super Bowl spot. If anything, blame NBC for not charging more. Super Bowl ads are almost certainly too cheap.

Let's talk philosophy before we get to the math. The purpose of any ad is to get the attention of people with money. U.S. advertising is a $600 billion ploy to distract you from your life and get your eyes and ears focused on a brand or product. Every day, the typical American is exposed to up to 600 advertisements on televisions, buses, streets, and browsers.

How could you possibly focus on an ad every two minutes? You couldn't, possibly. Most ads pass through our awareness like radio waves. Still more are fractured across an awfully decentralized media environment. Fifteen years ago, if Toyota wanted to get the attention of a Washington Post reader, it could buy a page in the A1 section and consider its work done. Today, there's the Post, the morning paper Express, the website, the iPad app, the smart phone app, and so on.

Compared with this confusing ad climate, imagine a television event. Imagine that more than 100 million Americans are watching at the same time. Imagine that instead of trying to avoid ads, tens of millions of these viewers actually look forward to watching slickly produced marketing segments. Imagine that after this 100-million-person event, where your advertisement is watched with hushed reverence, most of those people will go to work on Monday to do something totally bizarre. They will talk about advertisements! Now ask yourself how much would you pay to buy a slice of this veritable Super Bowl of advertising.

The answer, apparently, is $3.5 million.

***

When it comes to targeted advertising, the Super Bowl is in a league of its own. The top two television events in history were the last two Super Bowl games, with the last one netting 111 million watchers. Every year, between 40 and 50 percent of TV households are tuned into the big game, and that certainly undersells the size of the audience, since Super Bowl parties gather around a single TV. An audience of more than 100 million people not only watching, but also focusing on advertisements together, at the same time, is something utterly unique in a fractured media environment.

In 2008, "American Idol" ads went for as much as $800,000 per spot in a season whose biggest rating was around 30 million. The 2011 Super Bowl audience is expected to be between three- and four-times bigger. If you multiply the per-viewer cost of an "Idol" ad to approximate the Super Bowl price, you'd expect tonight's ads to fetch between $2.4 million and $3.2 million.

But Super Bowl ads are a different beast because they attract attention outside their 30-second window. They also receive millions of clicks on YouTube because they're emblazoned with the honor of being a Super Bowl ad. There is an entire cottage industry of ad criticism dedicated to showing, analyzing, and ranking these ads, which draws even more focused attention to their message. This is, well, free advertising for advertisements that is worth millions of dollars. Volkswagen claimed that it reaped more than $100 million in free publicity for its adorable ad featuring a little boy dressed at Darth Vader, Jordan Weissmann wrote this year.

Since 2001, the cost of a Super Bowl commercial has grown twice as fast as the game's audience -- 59% to 28%, as Weissmann wrote. But over the same period, total disposable personal income has grown by more than 50% and the invention of YouTube multiplies viewing opportunities by a factor of, well, millions. Today, Super Bowl ads are 58% more memorable than a typical TV spot.

"Selling the Super Bowl is like an auction, except the auctioneer sets one price that applies to pretty much everyone," Stephen Dubner wrote. What would happen if the gated model were replaced by an open auction? A full understanding of the advantages of Super Bowl advertising would almost certainly result in an even higher price for 30 seconds of your undivided attention and many more minutes of your conversation.

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He lives and works in New York City, which all but guarantees a high tax rate. Nearly all of his income is earned income and thus fully taxable at top rates. (He said that's not always the case, but given the recent dire condition of real estate, in 2010 he had few capital gains and his carried interest didn't yield any income.) Unlike me, he can't make any itemized deductions, which means his adjusted gross income exceeds $1 million, the level at which New York State eliminates all itemized deductions, except for 50 percent of the value of charitable contributions. Mr. Ross said he gave 11 percent of his adjusted gross income to charity.

That means Mr. Ross can't deduct any interest expense on the money he borrows to finance his real estate investments, which is substantial, nor can he deduct any other expenses or other itemized deductions except for part of his charitable contributions. This means he pays an enormous amount in state and local taxes. Since those are among the deductions that are disallowed when computing the federal alternative minimum tax, Mr. Ross is in turn especially hard hit by the A.M.T.

Because Mr. Ross has so many deductions, his tax as a percentage of adjusted gross income, as opposed to taxable income, is 20 percent, which is much lower than mine. Still, all those deductions, such as interest expense, are money out of Mr. Ross's pocket, which is why he has had to draw on his savings to pay his taxes.

Facebook is ultra-productive because, like Google, its business model turns consumers into productive workers

Reuters

Facebook's IPO filing, which analysts expect will value the company at $75 billion at least, inspired Atlantic tech associate editor Rebecca Rosen to compare Facebook's market cap-per-employee ratio to other tech companies.

Facebook "wins" in a blowout. With 3,000 employees, its value-per-worker figure is heads and shoulders above most large companies, including Apple and Google.

The story Rosen is telling is that tech companies have learned to create incredible production from a few workers. You can see this as a revolution in productivity, a devolution in employment, or both. Fifty years ago, the four most valuable U.S. companies employed an average of 430,000 people with an average market cap of $180 billion. Pretty good! But in 2010, the four largest U.S. companies employed a quarter of the people and had twice the average market cap. Software is eating the world, and its also eating a lot of the world's jobs.

But Rosen's graph tells another story: These huge tech companies are similarly productive, but they're as different from each other as AT&T is different from Berkshire Hathaway.

Apple makes the vast majority of its money from hardware. Amazon is a retail company. It won't even disclose what share of its $17 billion in revenue comes from hardware (i.e.: Kindle sales). Meanwhile, Facebook makes practically no money from hardware or retail. Like Google, it makes more than 90 percent of its revenue from advertising. (How many ads to you see on Apple.com? How many ads do you see on Amazon?)

Before Facebook, Apple was the world's greatest genius of squeezing profit per worker. Some of that has to do with the fact that Apple's workers really are creative geniuses who have designed products of great value to the world's customers. The other part is that Apple has mastered "supply chain productivity," which allows it to sell its products at a huge mark-up while spending very little on shipping and assembling parts.

That sort of supply chain management has practically nothing to do with Facebook's value. Facebook's business plan is much simpler. Get as many active users as possible, collect and disaggregate their data, and show them ads that they're likely to respond to. Facebook "has built the most amazing vehicle for the appropriation of surplus value that the world has ever known," as Matt Yglesias puts it.

Seen that way, Facebook's workforce isn't just 3,000 employees, but also 835 million users, who create information that is valuable to advertisers, and therefore valuable to Facebook (see the chart below, from The Economist). The same way our very interaction with a Google search is used to improve the algorithm and sell lucrative ads, our data on Facebook is used to enrich the site ... and sell lucrative ads. This makes Facebook less like a typical company, and more like, yes, a typical country. A country makes money by levying a tax on its citizens. Now, you don't pay a literal tax to see information on Facebook. But when you step back and consider the business model -- I am allowing Facebook to sell my information, disaggregated, in exchange for money -- it's not hard to see this implicit fee as a kind of invisible tax we all pay to use the site.

The productivity revolution in the U.S. economy is one of my favorite topics, but the attention around the IPO of Facebook emphasizes how productivity in the tech industry comes in very different forms. What makes Facebook efficient (from a market-cap-to-worker ratio standpoint) has nothing to do with what makes Apple efficient. Facebook is ultra-productive because, like Google, its business model turns consumers into productive workers.

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As we had anticipated, overall consumer price inflation moderated considerably over the course of 2011. In the first half of the year, a surge in the prices of gasoline and food--along with some pass-through of these higher prices to other goods and services--had pushed consumer inflation higher. Around the same time, supply disruptions associated with the disaster in Japan put upward pressure on motor vehicle prices. As expected, however, the impetus from these influences faded in the second half of the year, leading inflation to decline from an annual rate of about 3-1/2 percent in the first half of 2011 to about 1-1/2 percent in the second half--close to its average pace in the preceding two years. In an environment of well-anchored inflation expectations, more-stable commodity prices, and substantial slack in labor and product markets, we expect inflation to remain subdued.

A scrapbook of trivia about the soon-to-be-public company

"Effective January 1, 2013, Mr. Zuckerberg's annual base salary will be reduced to $1."

"The loss of Mark Zuckerberg, Sheryl K. Sandberg, or other key personnel could harm our business."

"Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate."

"In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue."

"If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected."

"The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on."

Predictable threat: People find a better product. Surprising weakness: Zynga accounts for one out of eight dollars of revenue for the (potentially $100 billion!) company.

Reuters

Facebook's blockbuster IPO filing includes 50 risks the company perceives to its business and public offering. Here are ten of the most interesting and important threats to the company that could be worth $100 billion, with quotes from Facebook's own S-1 document.

1) People stop using Facebook: Well, this one is obvious. "A decrease in user retention, growth, or engagement could render Facebook less attractive to developers and advertisers, which may have a material and adverse impact on our revenue, business, financial condition, and results of operations," Facebook states. Although annual revenue grew 154% between 2009/2010 and 88% between 2010/2011, it relied on user growth that will eventually have to slow due to higher market penetration rates, which is economic-speak for "we're running out of people."

2) Advertisers run away: Again, that's a straightforward concern. But the S-1 doc has some interesting stats, including: "In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue." Facebook finished 2011 with net income of $1 billion. That's impressive for a private company, but Facebook is valued by some at $100 billion. That number suggests many investors have big dreams for the company's ad potential.

3) Facebook runs out of ideas for monetizing the Facebook platform: In their own words: "We currently monetize the Facebook Platform in several ways, including ads on pages generated by apps on Facebook, direct advertising on Facebook purchased by Platform developers to drive traffic to their apps and websites, and fees from our Platform developers' use of our Payments infrastructure to sell virtual and digital goods to users. Apps built by developers of social games, particularly Zynga, are currently responsible for substantially all of our revenue derived from Payments."

4) Foreign "Facebooks" eat Facebook's lunch overseas: With 800 million users, Facebook considers itself one of the largest "nations" in the world. But one size doesn't fit all in social media. Various countries have different leading search engines and social apps that adhere tot the peculiar contours of the local culture. Those cultural differences don't seem to have stopped Facebook's growth, but if foreign social media networks create new features that mesh with large populations and resist acquisition by Facebook, Zuckerberg will have competition. From Facebook:  "We compete ... with other, largely regional, social networks that have strong positions in particular countries, including Cyworld in Korea, Mixi in Japan, Orkut (owned by Google) in Brazil and India, and vKontakte in Russia. We would also face competition from companies in China such as Renren, Sina, and Tencent in the event that we are able to access the market in China in the future."

5) Google eats Facebook's lunch: Facebook's biggest threat probably isn't some foreign network like Cyworld that you haven't heard of. It's probably the tech company you've heard of the most: Google. It already dominates search, has hundreds of millions of people signed up on a social media network, and owns a big slice of the smart phone market: "Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate including: by integrating competing social networking platforms or features into products they control such as search engines, web browsers, or mobile device operating systems; by making acquisitions; or by making access to Facebook more difficult."

6) Facebook loses a top lieutenant or hires too many people: "We cannot assure you that we will effectively manage our growth," the IPO states, noting that its workers have grown from from 2,127 at the end of 2010 to 3,200 on December 31, 2011. The document also notes that the departure of COO Sheryl Sandberg could hurt the company's momentum. Sandberg's value to the company is made apparent in her salary: $31 million last year.

7) Facebook's reputation suffers: Facebook's history of privacy concerns is nearly as long as the history of Facebook. After all, this is a company whose business model relies on collecting and selling disaggregated user data to advertisers. Zuckerberg is aware of the risk this poses to both to users and advertisers: "Maintaining and enhancing our brand will depend largely on our ability to continue to provide useful, reliable, trustworthy, and innovative products, which we may not do successfully. We may introduce new products or terms of service that users do not like, which may negatively affect our brand. Additionally, the actions of our Platform developers may affect our brand if users do not have a positive experience using third-party apps and websites integrated with Facebook."

8) Governments pose a problem. Facebook is an international business operating out of countries with varying and fluctuating politics and concepts of privacy and online rights (just look at SOPA). That makes it vulnerable, not only to tax laws, but also to complex regulations evolving simultaneously in more than 100 countries around the world. Changes to such laws "could result in claims, changes to our business practices, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business," Facebook claimed.

9) Zynga goes away: This might have been the most interesting paragraph of the Facebook IPO: "In 2011, Zynga accounted for approximately 12% of our revenue, which amount was comprised of revenue derived from payments processing fees related to Zynga's sales of virtual goods and from direct advertising purchased by Zynga. Additionally, Zynga's apps generate a significant number of pages on which we display ads from other advertisers. If the use of Zynga games on our Platform declines, if Zynga launches games on or migrates games to competing platforms, or if we fail to maintain good relations with Zynga, we may lose Zynga as a significant Platform developer and our financial results may be adversely affected."

10) Technology is fickle!: Computer companies aren't like car companies. Dynasties come and go in months or years, rather than decades, and one year's darling is rarely the next decade's dominator. Compare the fortunes of Apple (hot, then dead, then the world's biggest company) and Microsoft (the world's biggest company, then static, then, maybe, hot again). Or just check on up Groupon's recent history.

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Facebook's S-1 filing for its upcoming IPO went up online this afternoon, revealing that the company's revenue grew from $1.9 billion to $3.7 billion in the last year. That's a far cry from the $382,000 the company made in 2004, the year Mark Zuckerberg founded the company under the name thefacebook.com.

Cleverly, here is the history of the company, presented as a Facebook timeline, which is the site's new architecture for organizing personal pages chronologically. See the infographic larger on page 43 here.

Imagine an alternate reality where the first term of President Barack Obama coincided with one of the greatest periods of government austerity in recent memory. Imagine total government spending under his watch had the steepest annual decline in three decades. Imagine total government employees fell by the fastest rate in more than 60 years. Imagine that in his last two years, federal spending and federal employment grew by the slowest annual rate since the 1950s.

Total government spending has fallen by the sharpest rate since the 1970s. It is now at 2008 levels and declining.

"The real collapse of spending has been at the level of state and local public services and investments,"  Hersh said. "Even as the economy grew 4.2% since the start of the Obama administration, state and local spending contracted 5.2%." Here's the graph he shared with The Atlantic. The plunging green line tracks change in nondefense state and local spending since Obama took office.

What's the matter with shrinking government? Nothing at all, you might say. State and local governments are expensive and inefficient, and those workers might be put to better use making things rather than regulating things. Fair enough. But with interest rates now at historical lows, it's a little surprising that we're choosing this moment to not borrow more money from eager investors to spare total government from its own sharp knives and make downpayments on things we know we need, like roads and broadband. President Obama isn't fully responsible for this era of premature and self-inflicted austerity. He's the president of the United States, not the states, themselves. But, for better or worse, it's his record now. Who would have guessed?

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Romney's comment isn't a gaffe so much as an artless description of his tax policy. He's more concerned about cutting taxes for middle class investors than he is for keeping taxes low on the poorest Americans.

Reuters

After his impressive victory in the Florida GOP primary, Mitt Romney told CNN anchor Soledad O'Brien, "I'm not concerned about the very poor. We have a safety net there. If it needs a repair, I'll fix it."

He continued: "I'm not concerned about the very rich. I'm concerned about the very heart of America, the 90-95 percent of Americans who right now are struggling."

When O'Brien suggested that "lots of very poor Americans" would find that comment odd, he continued, "You can focus on the very poor, that's not my focus. The middle income Americans, they're the folks that are really struggling right now and they need someone that can help get this economy going for them." The CNN video of part of the interview is also embedded at the bottom of this post.

Democrats are squealing in delight that the fabulously rich GOP frontrunner has ostensibly admitted, eyes facing a live camera, that he doesn't care about the poor. The line is tailor-made to be taken out of context, but if you read closely, Romney is absolutely not saying he has no regard for the very poor. He's saying he believes that the safety net we have is sufficient to protect them.

There are probably plenty of people who agree with Romney. After all, the safety net has been a century-long project of the federal government, from Social Security to food stamps to 99-week unemployment benefits. Since the Great Recession assistance to the very poor has increased tremendously, preventing poverty from rising above 16%. As Jordan Weissmann reported for us, total safety-net spending -- which includes state and federal Medicaid, food stamps, unemployment benefits, and private assistance such as mortgage loan write-downs and credit card discharges -- grew by 50 percent between 2007 and 2010, from $10,000 per needy adult, to $15,000. In 2010, half of households took government benefits, the largest share in U.S. history.

So, Romney's right. The social safety net does a lot. But does it do enough? 

To begin to answer that question, it's worth pointing out that today's social safety net isn't tomorrow's social safety net. The 99-week unemployment benefits will end as employment grows, and they should. Expanded income security measures will fall away as we whittle down domestic spending under the Budget Control Act of 2011 (the debt ceiling deal) and other laws. Republicans want to pare it back even further with cuts to Medicare, Medicaid, and domestic spending.

This is what austerity does. It forces us to make tough choices about who wins and who loses. Mitt Romney has made his choice. His tax plan is basically today's tax policy with more support for businesses and investors, and less for the poor. First, he makes investment income tax free for the middle class. Second, he cuts corporate income taxes. Third, he repeals the estate tax. And fourth, he does not extend the tax cuts created by the 2009 stimulus bill, which Obama has proposed keeping. Romney's tax proposal would "raise taxes for households in the bottom two quintiles, relative to what they're paying this year," wrote Roberton Williams of the Tax Policy Center, even as it cuts taxes for middle class investors.

In light of this, Romney's comment isn't a gaffe so much as an artless description of his tax policy. He's more concerned about cutting taxes for middle class investors and businesses than he is for keeping tax rates low for lower-income Americans. You and I might have different ideas about whether that's the right direction for our tax policy. But I hope we can agree that this isn't the kind of thing you want advertised with gaffes about "not being concerned" about the very poor.

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Whenever I write about tax policy, I'm asked how I would address our ridiculous tax code. The short answer is that I would lower the rates, shave the tax expenditures, and raise revenue, starting at the top. My chief beef with Romney is that he's not interested in more revenue, but he also thinks 2011 taxes are too low for millions of lower-income families.

Economists prefer to see elections through the prism of economics. Long before the Clinton campaign took up the slogan "It's the economy, stupid," they were saying the same thing, if more politely. In keeping with that theme, here's a fact to keep in the back of your mind tonight as you watch GOP primary results from the Sunshine State: Florida has the highest rate of long-term unemployment in the nation, as CNN reported today. Nationwide, 42.5% of the jobless have been out of work for more than half a year. In Florida, it's a majority of 53%.

What's the matter with Florida? Start with with the housing bubble. Florida has one of the nation's highest foreclosure rates, and housing prices have dropped by as much as 40% in some metro areas. The ripple effect has devastated the broader real estate industry and trapped families in depreciating homes and hopeless economic conditions.

But it's not just the housing. It's the people, stupid. Florida is old. The four large metro areas with the highest share of seniors are all in Florida. That matters because age correlates strongly with long-term unemployment. As the Pew fiscal analysis explained, 45% of the unemployed people over the age of 55 have been out of work for more than a year. For workers between 20-35, that extra-long-term unemployment rate is under 30%. Sure, many of the seniors in Florida are straight-up retired and out of the labor market. But others are still looking for work and stuck in a labor market that won't have them.

At every age group, long-term unemployment makes up a larger portion of total joblessness. Although younger workers are less likely to have a job, it's also the case that workers are less likely to find another job easily.

This is correlation, and causation might flow the other way. Perhaps older people are more likely to live in states, such as those in the Sun Belt, that were more likely to suffer from housing busts and deeper unemployment. It's also possible that older workers are more expensive. Since most of the jobs added since the recession have been either very cheap or for the highly educated, the market for older non-college graduates has dried up.

Either way, long-term unemployment is perhaps the singular tragedy of the Great Recession, and nowhere is it more acute that in Florida. Expect the exit polls to scream economic angst, and as the race moves to Nevada (another housing bust state) expect lots of promises for the old and jobless.