Coyote Blog

There are lies, damn lies and then there are statistics!

One of the most ridiculous things that the Left does is continue to report the stagnant income of the "lowest 20%" or whatever level of poverty they are trying to decry.

Notice one thing, they report "income" that is narrowly defined as earned income. The real fact is that since 1970 the real CONSUMPTION of the lowest income groups has increased significatnly.

For example, in 1970 the lowest quintile income group had a reported real ($2002) income of $8719 as compared to the same statistic in 2002 of $8,316. All of the leftist are screaming that for the poor people income has declined by 4.6%.

However, comparing reported household consumption of the same groups showed that from 1970 to 2002 that their real CONSUPMTION increased from $12,166 to $19,061. The 56% increase in household consupmtion is explained by the fact that income measures ignore all of the benefits that these lower income groups receive from the government.

This is the reason that despite stagnant or declining incomes the poor are much more materially better off than ever before, and the fact is that most of it comes from the benevolence of the American tax payer. And for that, the Left responds how???

And, lest we forget, we currently (2006 data) have 43 million people not paying any income taxes at all…

This post is fairly typical of the kind of delusion denial commonly found in this blog. I've debunked it before, and here's a link to the full debunk: http://www.pkarchive.org/economy/therich.html. Read it and get back to me.

The technical term for idea that the rich have been suffering is "bullshit."

The truth is that for the last 30 years (since Reagan), real wages have remained relatively flat while, for example, the top 0.01% of income receivers (can you really "earn" by clipping bond coupons?) have received a 497% raise.

Put another way: U.S. workers have been measurably more productive, but the fruits of those productivity increases for the last 30 years have gone largely to the very tippy top of the elite and wealthy.

Posters here believe that the press reporting this is left-leaning, but can't find a single daily paper in the U.S. with, for example, a labor section of similar size to the business section, if it exists at all. Yeah, the media is lefty all right...

And the poor rich people, carrying so much of the tax burden while 43 million don't pay income tax, seem to have forgotten that between the tax increases foisted off on the general population by Reagan and Bush 41 (Reagan alone signed eight such tax increases), that those 43 million are now paying four times as much in the doubly regressive FICA (social security) taxes.

This meme that the rich have been suffering would be laughable if it weren't so widespread. Personally, I chalk it up to mental illness (not that I'm so sane and superior). Or the kind of junkie logic that lets posters here continue to believe that we must all kowtow to their petroleum addiction.

Think of this as an intervention.

Are you seriously lumping 90% of people together to comprise that 4.6% increase? I suspect that the folks between, say, 70% and 90% are still, relatively speaking,considered higher wage earners.

How much of this 4.6% can be attributed to them? How much to the 50% to 70% grouping. And finally, whats left when you split out any groupings below the 50% middle? Does it at some point below 50%, in fact, go negative?

Care to break this out so we can see what the bottom 50% come away with? After all, they do represent half of all wage earners!

Sorry, but this is a very questionable use of statistics. It makes me wonder about the honesty, if not capacity, of the author.

PS, I'm a middle of the road guy politically, and have voted both Republican and Democrat in the past-just FYI.

Jody, do me a favor, and read the link cited in the original post rather than quibbling. Leave the quibbling to me!...8^)

From Wikipedia: Bullshit: "Most commonly, it describes tautological, incorrect, misleading, or false language and statements.... Bullshit is commonly used to describe what often occurs in situations where truth and accuracy are far less important than the ability to achieve a suitable response in the audience, often needed in politics, religion or advertising. In many cases, such a response helps to gain popularity or favor."

That's not a straw man, that's a definition that accurately describes the original post. The "suitable responses" it attempts to elicit are the faux indignation about how the rich people are suffering at the poor's expense, and the sense of entitlement synonymous with insufferable arrogance. In light of the real situation -- poor people might have minor gains, but the rich have had huge ones -- these responses amount to straining at a gnat while swallowing a camel, my whited sepulchres.

And when real wages rise by 5% vs. 497% for the top 0.01% of incomes, then the words "relatively flat" accurately describe 5%. I leave it to you to look up the word "relatively."

See Real Wages Fail to Match a Rise in Productivity from August 2006 for more specifics. One excerpt: "The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity — the amount that an average worker produces in an hour and the basic wellspring of a nation’s living standards — has risen steadily over the same period."

For the graph, see here.

One additional argument: If we become a nation of really rich people, and really poor people, there's a chance that the rich people won't have the information it takes to guide our civilization to survive. Jared Diamond's "Collapse: How Societies Choose to Fail or Succeed" documents how such income disparities led to the collapse of the civilizations (the Norse in Greenland, who refused to adopt Inuit technology, for example).

Yosh: 1) I said "Strawman" because no one is making the argument that "the rich have been suffering". Since you were so kind to link to the wiki BS entry for me, here's the wiki entry for strawman.

2) A 5% real gain in 5 years is flat according to you. Ok. Don't be surprised when others disagree. Especially while you're effectively proving Warren's second point. (That the Left will claim decline because of an increasing gap between top and bottom while missing the fact that all improved.)

3) Speaking of which, did you understand the first point of the post?

Kevin Drum says that McCain is wrong that we're living the best of times and insists that the average Joe is worse off. To prove this, he cited a chart that showed that *everyone* is better off, thereby effectively disproving his own point.

So Drum's obliviousness to the fact that his data contradicted his own argument was just awe-inspiring - a characteristic also exhibited by many of his commenters as several insisted that despite the 5% gain, the effects were swamped by inflation (The title of the chart says "adjusted for inflation".)

Now it is reasonable to wonder how that 4.6% gain was spread out among the bottom 90% as unbeholden asked. It would also be reasonable (as I noted in Drum's comments) to wonder if the more recent inflation and slower growth has reduced or eliminated these gains. To determine that, a different set of data would be needed which would mean much more work than simply noting that Drum pulled a boner.

Migration between brackets, in both directions, renders any information gleaned from this chart invalid, to the point where it could appear to show just the opposite of what is actually happening.

Any given bracket at time t + x is comprised of different individuals than it was at time t, and, at any given time t + x, the number of individuals in any bracket has changed from time t. The basic assumption of the chart is flawed, as the comparisons are apples to oranges.

For instance, if the bottom ten percent of the people in the top bracket get "downsized" or otherwise lose income, and so move to a lower bracket, the average income for that high bracket will increase dramatically, even if the incomes of those remaining in the bracket have not changed at all, or even possibly decreased. Similarly, if the the top ten percent of the lower bracket move into a higher one, the aggregate income in that bottom bracket will drop dramatically.

There is no useful information to be had from this chart. Even the observation of a universal increase is fallacious. It could theoretically be consistent with a downward migration from all brackets to the next lower one, and from the bottom bracket to unemployment.

Of course, it's perfect for socialists, since they only see classes and not individuals. It's handy lie used to support their more fundamental lies.

I tried putting the links in the previous post in standard HTML, but they don't work.
Posted by: Yoshidad

Gosh, I wonder why…….?

"The economic ethical term for Yoshalist's posts is 'horseshit.'"

There. I fixed it for you.

Never -- ever -- engage a moron like that on utilitarian premises.

I've been in the bottom 5% and the top 5%, I've been poor but never wealthy. Income is not equal to wealth.

My wife and I received $300 earned income tax credit in 1978 (but it went to pay FICA since I was considered self employed at that time) and paid the high of $48,789 in Federal taxes (does NOT include state, local, property, sales, excise, FICA, medicare) in 2005. We drop $35,000 in income from 1999 to 2000 and doubled our income from 2003 to 2004 (our federal income tax tripled.) We drop $31,000 from 04 to 05 and then dropped again by $98,000 from 05 to 06. In 34 years we average 16.1% of income in federal taxes.

I've worked for $1.00 per hour made $8 for the day and worked for $100 per hour as a independent contractor with no benefits.

Income is not wealth.

Income and wealth are not the same. Ted Kennedy only has his senator salary < $200K per year but he is a wealthy man.

People also fall out of the top income all the time. Look at many professional athletes, who once were multi millionaires but now are broke. Ed McMann house when into foreclosure until Donald Trump bought it and lease it back to him. Fortunes are made and lost all the time.

I've moved in and out of different income groups all my life.

When my daughter and son-in-law started out they was in the bottom 10% but as they graduated from college they moved up into the top 15%

My son and wife are just starting out and they are in the bottom also, but I predict they will move up also.

My Mother and Father never made it to the top but they worked hard, saved and now with my dad gone my mother has moved into the bottom again from an income point of view. However, she is more than OK, no home payment, she sold the house to me and I pay her every month and she lives in the house, she has saving, cars, furniture and everything she needs, but here income is low but not her wealth.

It's too bad everyone can't be rich.

Compared to the rest of the world, all Americans are rich.

First, my apologies to Jody. Warren does not say that the rich are suffering -- my bad for attempting to use sarcasm and shorthand. He actually says, in effect, that everyone is enjoying the "higher pie" of economic benefits, so why are these poor people such whiners? After all, the poor are living far better than even medieval aristocracy. What is their problem? And sure, some people might be poor, but that is only temporary, but that income mobility takes care of everyone in the long run, at least *before* they die.

Make no mistake. This is part of a long-running attempt by the truly reactionary right to paint all this income kerfuffle as a tempest in a teapot. Again, this is the complete debunk of this meme.

This debunks the myth of income mobility. An excerpt:

"The other day I found myself reading a leftist rag that made outrageous claims about America. It said that we are becoming a society in which the poor tend to stay poor, no matter how hard they work; in which sons are much more likely to inherit the socioeconomic status of their father than they were a generation ago.

"The name of the leftist rag? Business Week, which published an article titled "Waking Up From the American Dream." The article summarizes recent research showing that social mobility in the United States (which was never as high as legend had it) has declined considerably over the past few decades. If you put that research together with other research that shows a drastic increase in income and wealth inequality, you reach an uncomfortable conclusion: America looks more and more like a class-ridden society. "

..."According to estimates by the economists Thomas Piketty and Emmanuel Saez--confirmed by data from the Congressional Budget Office--between 1973 and 2000 the average real income of the bottom 90 percent of American taxpayers actually fell by 7 percent. Meanwhile, the income of the top 1 percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent. (Those numbers exclude capital gains, so they're not an artifact of the stock-market bubble.) The distribution of income in the United States has gone right back to Gilded Age levels of inequality.

"Never mind, say the apologists, who churn out papers with titles like that of a 2001 Heritage Foundation piece, "Income Mobility and the Fallacy of Class-Warfare Arguments." America, they say, isn't a caste society--people with high incomes this year may have low incomes next year and vice versa, and the route to wealth is open to all. That's where those commies at Business Week come in: As they point out (and as economists and sociologists have been pointing out for some time), America actually is more of a caste society than we like to think. And the caste lines have lately become a lot more rigid. "

Yoshi's logic is circular. As evidence "debunking" the idea that income mobility invalidates the kind data presented in the chart, he cites an article that uses that same form of data.

To the extent that mobility is diminishing, an hypothesis that no one here has made a serious effort to prove or disprove, history tells us that the single greatest factor likely to cause it is government interference in the economy. Those programs to help the poor do help the poor to become marginally better off, at the expense of tending to keep them among the poorest bracket of income earners. Taxes, while disproportionally paid directly by the highest earners, tends to disproportionally hamper the efforts of the poor to better themselves. And entitlement programs, unions, minimum wage, business regulation, and the like all hurt almost exclusively the mobility of poor and lower middle classes.

Income mobility, at least by anecdotal evidence partly supported by official statistics, is still quite high in this country, especially when compared to most other countries. The greatest threat to that is the socialist's vicious and barely masked attempts to keep poor people "in their place", that place being one of desperation, depravity, disillusionment, disenfranchisement, and jealousy. In other words, the perfect constituency to support the socialist's naked grabs for power they try to claim they need as the solutions for problems they deliberately caused.

Mesa Econoguy cites census data that demonstrates rising incomes. What he omits mentioning is the word "real" in that phrase "real income." If you correct for inflation, then Piketty, Saez, and CBO figures show no such income rise, as Krugman notes above. Posted by: Yoshidad | Aug 16, 2008 9:52:36 AM

From the Census data I cite:

Income in current and 2006 CPI-U-RS adjusted dollars

The income numbers do correct for inflation using an index which probably overstates inflation by about 1.2% per year for the last 10 years. They don’t include employer contributions to healthcare or retirement, which understates total income.

Learn how to read, idiot.

Those programs to help the poor do help the poor to become marginally better off, at the expense of tending to keep them among the poorest bracket of income earners. Taxes, while disproportionally paid directly by the highest earners, tends to disproportionally hamper the efforts of the poor to better themselves.

Which is why the "poor" in Sweden are pretty well-off, but also why there's almost no social mobility in Sweden whatsoever, with the exception of those lucky enough to have great talent in the entertainment or athletic fields - in other words, those whose income leaps, rather than builds incrementally. There's no incremental mobility in Sweden.

Foxmarks says "Each person is in charge of his own income mobility."

Yep, I know rich people who were born on third base, but want to act like they hit a triple. But let's not bullshit each other, shall we? When it comes to economic status, and even personal health, there's an awful lot of luck in this. I'm not saying "don't try," BTW, just "Let's avoid the pride that cometh before a fall."

There's a Polish riddle about this: Q: How do you make a woman into a lady? A: Start with the grandmother.
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Meanwhile...Stop the presses! I made a mistake! Mesa econoguy is correct, his figures for median wage were adjusted for inflation. His figures were not, however, about the bottom 90% of taxpayers, which is what the previous income immobility argument brought up here: "According to estimates by the economists Thomas Piketty and Emmanuel Saez--confirmed by data from the Congressional Budget Office--between 1973 and 2000 the average real income of the bottom 90 percent of American taxpayers actually fell by 7 percent." Mesa Econoguy cites the bottom 100%, not the bottom 90%. Gosh, someone should learn to read!

Incidentally, Mesa Econoguy, the way to correct someone else, at least in civilized society is *not* "Learn how to read, idiot." (Sheesh! not even an exclamation point!) It's "you are mistaken." Let's disagree without being disagreeable, shall we?

In any case, without the income of that top 10% the median wage would be falling.

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Kyle Bennett believes my argument is "circular" because "To the extent that mobility is diminishing, an hypothesis that no one here has made a serious effort to prove or disprove, history tells us that the single greatest factor likely to cause it is government interference in the economy."

Yoshidad says: I won't deny that government policy is important, but where's your proof that the "single greatest factor" in diminishing economic mobility is government interference. I thought we had 30 years of Reagan-ites de-regulating everything under the sun. When will government interference be lowered enough to detect a rise in income mobility? This contention doesn't pass the sniff test.

And it sure looks to me like the point of the Business Week article was exactly to *prove* diminishing income mobility. And that has been diminishing even during the supposedly effective Reaganite de-regulations. Mr. Bennett: Are you reading something else?

Mr. Bennett's statement also assumes that government only "interferes" with the economy. Is making farm-to-market roads or printing money interfering? How about making a secondary market for mortgages or student loans? Or is that "helping" rather than "interfering." The constant meme on this blog is that government can do no right. Should we have privately minted money? Or what about the Centers for Disease control... shut it down? (IMHO, a better question is this: Did the government miss opportunities to actively help the economy?)

...Don't get me wrong, I don't believe government is perfect, either.

Mr. Bennett continues: "Those programs to help the poor do help the poor to become marginally better off, at the expense of tending to keep them among the poorest bracket of income earners." How do we know this? Silence...

And does the lack of social safety net cost more than it saves? For example, are the junkies doing $10,000 worth of damage by stealing copper from the school's boiler to get $70 for a fix really "kept in their place" by government programs, or the lack thereof? Is that even relevant? (And who's most focused on class envy, the junkies or the rich folks writing in Coyoteblog?)

Bennett says: "Income mobility, at least by anecdotal evidence partly supported by official statistics, is still quite high in this country, especially when compared to most other countries."

This contention is not supported by the facts. For example, this 2006 article says: "Although the United States occupies a middle ground in international comparisons of occupational mobility, its ranking in terms of income mobility is lower. Both the United States and Great Britain have significantly less economic mobility than Canada, Finland, Sweden, Norway, and possibly Germany; and the United States may be a less economically mobile society than Great Britain.45 "

Ouch! Less mobile than the notoriously class-bound Blighty! Double ouch! So "middling," not "quite high" is how to characterize U.S. economic mobility. Notice, BTW, that the Scandinavian socialists beat the U.S. in terms of economic mobility. Sad when you learn you've believed a lie, no?

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Solar lad is unhappy that I call the folks who predicted Clinton's tax raise would be a disaster "voodoo" economists. Pointless? Really? So did we have an economic meltdown during the Clinton years as they predicted? Face it, the prognostication that higher taxes alone would sabotage the economy were false. Period.

As for job creation, and why I left out Carter: Here is the full story about job creation, covering the Republican side too. Although the news for Carter was not all sunny, an excerpt debunks Solar Lad's claim, at least about job creation: "Government statistics do indeed show that the economy lost 1.5 million jobs in Mr. Bush's [the current president's] years in office. Those same measures would also rank Jimmy Carter as one of the most successful presidents."

Solar lad posts again: "there's almost no social mobility in Sweden whatsoever" .. contradicted by the article above which shows economic mobility in Sweden is actually higher than in the U.S.

....

Again, my young right-wingers, the points you make are noble in effort, but lacking in substance. I suggest that you consult reality, rather than ideology, and then perhaps our exchange will be mutually profitable.