Complete Whimsy

First Post on Mises.org: A Closer Look at Income Inequality

So I just got an article accepted to Mises.org title A Closer Look At Income Inequality. Unlike most discussions on this topic, I actually look at age. Check it out!

 

 

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Dubiously Free Trade, Individual v. Collective, Live and Learn

Wealth Inequality in America: A Partial Critique

So I’m a little late on this one, but there is a viral video on wealth inequality in the United States going around that compares what a survey of 5000 Americans said they thought wealth inequality should be and then compared that to what it actually is. Well, as many of you know, wealth inequality is substantially larger than most Americans think it is:

Now I should start off by saying I agree with this video in part. Wealth inequality in the United States is too high and it’s getting worse. While proponents of free markets rarely complain about income inequality directly like say Joseph Stiglitz, they do complain a lot about corporate welfare. Tim Carney’s book, The Big Ripoff, is to me the best rundown on the whole bloated mess. And what would corporate welfare probably lead to… well, more income inequality.

That being said, there are problems that should be highlighted. Some of these problems relate to what is considered wealth but the big one is actually a sort of meta-problem with the way that normal people think about inequality. In other words, what people think inequality should be doesn’t make any sense if they actually think about. Why you ask? Well, let me explain:

1. The Big Missing Variable

The big missing variable when discussing income inequality is increased exponentially in terms of it’s importance when discussing wealth inequality. Indeed, it may be startling to think of how simple a variable this is.

Age.

It seems obvious now that you think about it, doesn’t it.

After all, how much money were you making when you were 25 compared to 45. Probably less than half. But when it comes to wealth, oh lord, it’s not even close. The wealth inequality figures discussed in the video make no attempt to control for age. And as a matter of fact, the gap in wealth between the young and the old has been growing.

According to a Pew study, the net wealth of those over 65 between 1989 and 2009 went from $120,000 to $170,000, a 42% increase. For those younger than 35, their wealth actually decreased from $11,500 to $3500, a 68% decrease. And more importantly, $170,000 is 4850% of $3500!

Now remember that these aren’t the same people being measured over time. Perhaps this has something do with people going to college more and thereby 1) starting their career later and 2) having a lot of student debt to pay off. Thereby they’re worth less when they’re young, but more when they’re old. Or perhaps kids these days just don’t know how to save like they’re folks did.

But when you boil it down, people under the age of 44 only possess 11% of the wealth in the United States. That’s an incredible figure if you think about it. And remember, these people are going to get older. They’re going to pay off their student debts, get that big promotion, pay off their house, inherit their parents wealth, etc.

For example, take this thought experiment; say everyone in the country made the same income, but each decade of life they got a promotion. They start at $20,000/year in their 20’s, then they go to $30,000/year in their 30’s, etc. In addition, they save 5% of their income each year and make no return on their savings. Assuming there are as many people in their 70’s as 20’s (which of course there aren’t, but bear with me), this is what the income and wealth inequality would look like:

Wealth inequality Spreadsheet

Or as the video presents it:

Wealth Inequality Graph

And that’s assuming that everyone is equally talented, that every industry is equally as profitable and that everyone has just as good of saving and investment habits. Furthermore, if I put in just a small return, that chart would be skewed even more. At 3% interest, if the person contributes every month, on their 30th birthday they will be worth $11,627. On their 60th, they will be worth $198,486. In that case the bottom 20% is worth only 2.69% and the top is worth 45.6% of the total. And that acts as if everyone in their 20’s is worth over $10,000 when in reality most are worth next to nothing.

Any serious look at wealth inequality, and income inequality for that matter, has to take age into account.

2. Entitlements

OK, our entitlement systems are a little underwater, but ignore that for a second. Payroll taxes are capped at $113,000, so in some ways it acts as a regressive tax. But then again, it’s not supposed to be a tax, it’s a government mandated insurance scheme.

Well, throwing in Medicare and Social Security add a little for the rich, but they do add a substantial amount of wealth to the poor in relative terms. How much more wealth would the poor and middle class have if instead of paying into a government program they were mandated to put that money in a health savings account or IRA or something to that effect? Well, it would be quite a bit. This would smooth out the curve a bit. While it makes sense that the author of the study don’t include entitlements since it’s based on when you need it (Medicare) or how long you live (Social Security), conceptually, we need to take them into account.

So let’s take a shot at it. According to Bankrate.com:

… A male average earner who retired at age 65 in 2010 paid out $345,000 in total Social Security and Medicare taxes, but will receive $417,000 in total lifetime benefits ($464,000 for a woman)… In the case of a household with only one wage earner, the taxes paid out were $345,000, but the benefits received by both parties will be $778,000. For two-earner couples where one earned the average wage and the other earned a low wage ($19,400), tax payout was $500,000, but benefits will be $800,000.

OK, that doesn’t sound particularly sustainable, but if that average person is taking out some $400,000 plus in benefits, couldn’t that be thought of as a form of wealth?

3. Individuals vs. Families

In the video, the narrator describes the survey as separating the American population into “groups.” Groups of what? Well he doesn’t say. Luckily the links in the lowbar did. And you guessed it, it’s family wealth, not individual. Once again I have to clarify this ridiculous error. When family sizes vary in shape and size you simply cannot compare them as if they were the same. As Thomas Sowell has noted:

 Households are of different sizes, they vary over time, they vary from one group to another, they vary from one income level to another. So for example, there are 39 million people in the bottom 20% of households, and 64 million in the top 20%. So you’re saying, yes, 24 million additional people do tend to have more money.

Or in other words, the top 20% has almost 60% more people in it than the bottom. Even if there were an equal number of people in the other three “groups” and every individual had the same wealth, the top 20% would have almost 25% of the wealth and the bottom 20% would have barely 15%. When we further take into account that many in the bottom 20% are in prison, single parents, people on welfare, disabled, drug addicts, homeless, etc. it becomes clear that dividing the country into such groups is simplistic at best.

In Other Words…

Now again, even after all that, I do think this is a problem. And I will join liberals in denouncing the major role corporate welfare played in all of this (and I would add, Federal Reserve policy). However, before liberals get too far into their rant about about taxes being too low and regulation being too light, I should note some other possible reasons.

1. Immigration: I believe the impact is relatively small on income inequality (David Card, for example estimates it’s share is only 5% of the increase between 1980 and 2000), I do think it’s effect on wealth inequality is large. Most immigrants, after all, come to the United States relatively poor.

2. Dependency and Welfare: Charles Murray’s new book, Coming Apart, makes the case that the values of the upper class and lower class have diverged, and I do think there’s something to this. Indeed, while in 1960 only 9% of men in the bottom 30% between the ages of 20 and 64 were working. In 2000 it was 30%! In 1996, only 0.286 people in single person households in the lower median worked. It’s hard to increase one’s income, and very hard to increase one’s wealth when you aren’t working. How much has this separation in values played a part? And oh by the way, the decline in marriage probably hasn’t helped either.

3. Technology: I think this is the big one. Charles Murray touches on it a lot as have many others from all across the political spectrum. To use Murray’s example, in the 60’s, someone who was really good at math could become a math teach and make a decent living. Today they could go work for a Quant Fund on Wall Street or maybe for Google and pull seven figures a year. Or take music. Back in the day, musicians wasn’t such a feast or famine gig, because there were no recording devices. So the gigs were how you made a living. Today there’s a bunch of starving artists and a few megastars. And then of course there’s automation and robots and computer algorithms that are making lower end manual labor jobs less necessary, and they’re starting to do a number on service jobs as well.

In other words, the problem is complicated. I do think globalization plays a role (although I think it plays a role in lowering poverty levels around the world too). And of course it should be mentioned too that people have different levels of talent and produce different levels. Those who produce the most should be rewarded. And without some inequality, there’s no incentive, at least no material incentive, to work hard and bring great products and services to the market.

It’s just that inequality is too high. And while that’s still a subjective opinion, I think it rings true for most of us. Just be careful to wade through these statistics before yelling that the sky is falling.

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Live and Learn

The Darwin Economy

Who had a better grasp on economic activity: Adam Smith or Charles Darwin? It is an intriguing question which Robert H. Frank, professor of economics at Cornell University, tackles in his book The Darwin Economy: Liberty, Competition, and the Common Good. Frank challenges aspects of the Smithian neo-classical framework and advocates for better, more effective government; not necessarily less government.

The book is not a hit piece on Smith. Any trained and honest economist will tell you that harnessing the power of a marketplace is one of the key stories of human civilization. Pursuing self-interests in a market economy, where there is rule of law and contracts enforced, has given way to an explosion of material wealth and quality of life over the last 200 years. Rather, Frank differentiates between relative and absolute economic activity.

Liberals (which I’m not labeling Frank) often make the critique that conservative thinking pushes ends over policy objectives. That is, the ideology of smaller government trumps all and there is no clear vision of what government should do. In contrast, the left does not necessarily care about the size of government, per se, just that it meets policy objectives. Whatever size the government shakes out at is an afterthought if it provides the public services we desire.

Now, I don’t know a lot of anarchists who believe there is no role for government. Most of the country believes the government should do something. The question is what. Their initiatives have been expanding for decades and much of the country has disdain for their performance (in fact, Congress has lower approval ratings than porn, polygamy, the BP oil spill, and the country’s “Communist tendencies”).

The power of markets is immense, and almost paradoxically, the pursuit of self-interests in a free market produces unbelievably great results for all. For the most part. Markets are the principal reason we’ve had this incredible burst in material wealth over the last 200 years. But markets do not always produce best results for the common good, as Frank puts it. Neo-classical economic models are pretty good at noting these exceptions to the rule, looking at monopoly power, generally non-competitive environments, assymetric information, prinical-agent issues, externalities, and public goods. We’ve empowered the government to step in and address these instances where markets do not produce best results. Unfortunately, in a crony capitalistic world, big government and big business are in bed with each other. Big business buys off politicians and welcomes regulation for any number of reasons, including to keep competitors from entering the market or reducing risk of a bank’s debtors and insurers in the financial sector.

I’m not sure how surprised we should be that individuals in the marketplace look after their self-interests, including individual firms. That’s called human nature. It would be nice if there was no lobbying and companies refrained from buying off politicians, quid pro quos, etc., but it shouldn’t shock us. The politicians on the other hand are there for one reason: to represent the interests of the people. They have no other function. Except that they’re human, too, with the same incentives to look after themselves and their cronies. They should be refusing the overtures of the lobbyists, but, they like money, power and the sweet symphony of saying “yes” to people. The companies and the lobbyists are looking after themselves, which is what they’re supposed to do (and expected to do). The politicians, the moment they stop representing the people, have breached their entire function of existence in government. This is why I will always put more blame on the politicians for being bought than the companies doing the buying. All the politicians have to do is turn it down, which if in the best interests of the people, is their job. Of course this is an idealized world which is why we have separation of power and checks and balances.

More generally, we expect the federal government to handle the military, homeland security, utilities, roads, and bridges. Hundreds of thousands of pages of regulations have been put on the books. Funny thing, though, is the federal government hasn’t even secured our own ports and borders. We’ll spend trillions on the War on Terror abroad, yet we won’t even make it difficult on terrorists entering this country.

Needless to say, government-corporate collusion has made the idea of government as the solution to market failures a more difficult case to make. The more we ask our government to do, the less they do well. Which is why I say they take care of the basics first before we talk about further expansion to meet the “common good.” Secure the ports and borders; stop devaluing the currency; quit making life difficult for entrepreneurs and start-ups (yes, that means simplifying the tax code and reducing liability for employers, among other things).

As for Frank, it is worth reading his thoughts on relative vs. absolute consumption and trying to make sense of it for yourself. Take any good or service, say health care. Would you rather have better health care than the guy treated before you, or the best absolute level of health care available? Clearly, if the guy before you had lackluster care, getting better treatment than him may not be saying much. I’d like to have the best care available to me. Relative care doesn’t factor into my decision. Frank uses the example of bidding for more expensive houses in better neighborhoods in order to enroll your children in the best schools. If you wanted to give your children the best public education, your hand was forced to live in more expensive homes. After a decade or two of home appreciation, more families were overextending themselves to “keep up with the Jones'” . . . for the “right” reasons, both as parents and for the social good. It’s an interesting argument which is probably partially true for some.

Frank also uses Darwinian examples in nature where competition within species leads to undesirable genetic evolution. He uses the analogy of the difference between running speed and antler size in the gazelle, and the resulting natural selection. The gazelle would like to outrun the cheetah, so “being faster conferred advantages for both the individual and the species.” The gazelle’s antlers, however, are used to fight off other male gazelles for the most desirable female partners and to protect their offspring. This leads to an evolutionary arms race to have bigger antlers which consumes resources that could have been used to fend off disease or some other more efficient usage. Says Frank: “life is more miserable for bull elk as a group.”

The antlers could be the 4,000 square foot house in this metaphor. Luxury items become a drag on the efficient use of scarce resources at some point. I find Frank’s relative consumption ideas and evolutionary metaphors as being, at best, pretty limited. As Slate puts it:

Natural selection sees no difference between running speed and antler size: All evolution is positional. When one gazelle got faster, the slower ones got eaten (a point Frank relegates to a footnote). And when gazelles got fast, so did cheetahs. Cheetahs and gazelles would all be better off if they’d stayed slow, because running fast uses energy you might “better” invest in offspring, and legs that are built for speed are more prone to fracture. The lissome cheetah, meanwhile, is bullied and often killed by bigger carnivores such as lions.

As it relates to income inequality (which Frank feels is a major problem), I’m not sure how Steve Jobs’ $8.3 billion net worth makes me worse off. In relative terms, I should be pretty pissed off. But money only represents a store of value. Profits, when made from voluntary transactions, simply represent the value to society of providing products and services at a low enough price that enough people want. If the market is free, there is competition, and there is no rent-seeking, profits simply represent value to society approaching the direction of an optimum use of scarce resources. The process is ongoing and the optimum may never be reached, but competition and information gleaned through prices keep us headed in the right direction. Think of the number of people using Apple, Inc. creations around the world. $8.3 billion is but a fraction of Jobs’ contribution to society.

Photo Credits: VanityFair.com, Amazon.com

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Occupy Wall Street: What Does It All Mean?

The Occupy Wall Street (OWS) movement has captured the nation’s attention. Liberals are generally accepting it as a totally organic, grassroots effort that is completely justified. After all, rich financiers on Wall Street are entirely to blame — cough, cough — for the economic predicament we find ourselves in today. Conservatives are generally calling the movement contrived, misguided, and incoherent. As usual, neither viewpoint broadcast out on the 24-hour news cycle is wholly true.

People have every reason to be upset right now. Particularly the unemployed. If Occupy Wall Street represents anything, it is that something is woefully wrong with our system. The devil is always in the details, though. When it comes to our system, the problems are many, and the problems are difficult to understand. Many of the protesters that I’ve seen interviewed offer only vague accounts of what is wrong with this country, and most importantly, no solutions. My feeling is that most of them need to educate themselves on how we got into this predicament. That is, except Chris Savvinidis. He is extremely informed on the real ills of this country:

The first problem with the OWS movement is that the message is muddled. Everyone on the scene seems to have different ideas of what is wrong. They need a coherent, unified message, and solutions. Simply knowing in general that something isn’t right isn’t going to get it done. Especially if you’re going to camp out on the streets for more than three weeks. Articulate a message and offer solutions, organize protests for a single day at a time, and go home to sleep in your bed. Occupy Wall Street needs to get off the streets and turn this into a political movement if they have any hope of influencing change. The core differences between the Tea Party and OWS is that they didn’t disrupt high traffic throughways for weeks at a time, had a simple, unified message and solutions, and turned their beliefs into a political movement. The Tea Party also was as organic as movements come, while OWS has clearly documented labor unions playing a major role in mobilizing some of these people.

While a crowd should typically be good for local businesses, it appears that some businesses are being hurt by the prolonged occupation of the streets. After all, hundreds of unemployed folks who haven’t showered are setting up tents and tarps throughout the street, leaving a littered mess behind them. The crowd is obviously inciting chaos and blocking normal business traffic (plus resulting police barricades). Public bathrooms have been abused in some instances and many people are relieving themselves in the streets. While some cheap food producers may be benefiting, something tells me this movement is having an adverse effect on many businesses.

It sounds like the rationale for this disruption is that the many trillions of dollars the financial crisis took out of the economy far overshadows the impact on local business from this protest. Breaking up the demonstrations is equivalent to protecting the broken system, they might say. But again, what solutions are going to come out of camping in the streets?

From what I can gather, the protesters are against what they call income inequality in this country, corporate greed, and corporatism. The only offered solution I can gather, outside of the rare folks like Chris Savvinidis, is they would like greater income redistribution then we already have. So, basically, having the government confiscate more money from the wealthy, and hand it to them in the form of tax breaks and entitlements. Increased government spending almost always means an ever-growing federal government, which makes all of our voices smaller. I believe abusive levels of taxation is immoral and akin to stealing, so it’s hard for me to say all my problems would be solved if only a mediating party (the government) would steal more from rich people. What is abusive? You must look at total taxation when you have this discussion i.e. local, state, and federal taxes combined. When you’re getting hit above forty or fifty percent of your income, it’s reasonable to say that you’re approaching abusive levels.

A real shared sacrifice would be a flat tax. Tax policy is yet another aspect of our system that can be confusing, and I believe it needs wholesale changes. Herman Cain’s 9-9-9 Plan would scrap the entire tax code, offer a flat income tax for individuals and business, and do away with the payroll tax which working Americans get hit with. As I’ve argued with the FairTax, even if it turns out not to be revenue neutral (bring in the same amount of tax revenue to government), it would force real cuts that are needed, as opposed to the “cuts” we get which amount to nothing more than a reduction in the growth rate of government spending. Scrapping the tax code would put a dent in the lobbyist culture in Washington, where corporations and special interest groups pay for special favors with little interest to the people considered. If Americans were smart, they’d vote for someone who had the greatest chance of making significant structural changes in the federal government and to the system. Naturally, no one fits this bill more than Ron Paul. Without real change, corporatism, the unaccountable Fed, and printing money out of thin air will only continue regardless of which party occupies the White House or Congress.

There is plenty to dislike about Big Finance in this country. Being against the bailouts and general corporatism is a common bond between the Tea Party and OWS. If the financial crisis tees you off, you’d better start with Fannie Mae, Freddie Mac, and the Community Reinvestment Act. It seems to me that if you wanted to stop corporatism, you’d be protesting in Washington, DC in front of the White House.

Photo Credit: andrewshiue

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Lies, Damned Lies and Statistics: A Primer

Pac Man

Next in Lies, Damned Lies and Statistics Series: Part 2: Income Stagnation

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In my younger days I used to take every statistic I heard for granted. They were simply divine facts showered upon me by some metaphysical, knowledge fountain of truth. The idea that statistics are somehow infallible is almost ingrained in all of us from an early age. They relay a fact, and you can’t argue with a fact, can you?

Statistics are everywhere, from polling to science to sports to economics. They make up one leg in any sound, logical argument. The other two components are a theory and at least one example. All three of these are important, yet all three can, and often are, faulty or manipulated. The last two we know can be incorrect, the first is trickier.

Let’s start with theory. By definition, since multiple theories can describe the same phenomena, they can not all be correct. Keynesian economics and Austrian economics both describe how an economy functions; either one can be correct or they could both be wrong, but they both cannot be right. Therefore, we know to look for logical fallacies and alternative explanations to undermine each theory’s conclusions.

Examples are important, but they can be just as misleading. In fact, sometimes they are all but useless. One recalls Al Gore showing a picture of an elderly lady in a 2000 presidential debate and describing how she was struggling financially, thus the need to put social security in the much maligned “lock box.” One has to ask whether this case really representative of the other 300 million some Americans. Healthcare reform proponents give examples of patients who were turned down for care and later died or suffered debilitating illnesses. Healthcare reform opponents discuss cases where rationed care caused patients to die waiting in line. Examples can prove just about anything (or more appropriately, just about nothing). Take the example of one very particular person and even the state lottery may seem like a wise investment. Usually, examples are meant to do little more than put a human face to the problem at hand; tug at the heartstrings, so to speak. Most people are affected by these sorts of examples, but most people can also see what’s going on when they step back from the issue.

Statistics are often seen as infallible, though. Unfortunately, the truth is statistics are often very difficult to gather and compute in a methodologically sound way. Furthermore, there are a host of reasons a particular group may want to fudge these numbers. If anything, I hope this series will shine some light on how statistics can be flawed, and perhaps raise some healthy skepticism.

For example, I remember local commercials being run, back when I was a young lad, which said several thousand people in my community go hungry every night. That sounded horrible and made me want to donate money to help feed them. According to Thomas Sowell, however, the statistic was “…determined [by] how many people were officially eligible for food stamps then subtracting those who in fact received food stamps.” (1) The absurdity of this methodology need not be elaborated on, but I’m going to do so anyways. I was recently unemployed and therefore eligible for food stamps. I guess I was going hungry every night without even knowing it! And this is how these things commonly go. Regardless of the motives, if you can find, or create a statistic, especially a shocking one, you have added a lot of substance to your argument. And if the subject of this statistic is sensitive, all the better. Who, after all, is going to criticize you for trying to feed starving people?

It’s not just that many statistics are derived from faulty methodology, like the previous example, often the conclusions a statistic supposedly reveals are drenched with logical fallacies. Common ones here include post hoc ergo propter hoc (since event b followed event a, event a caused event b). Or in a similar vein, assuming correlation equals causation. For example, life expectancies have gone up rapidly in the last century, which coincides with global warming. Thereby, global warming increases life expectancies. This one is obviously wrong, however, in other cases people will use statistics to come to just as egregiously incorrect conclusions; the only difference is they “sound” right.

Legal Immigration into United States (notice lows between New Deal in 1930's and 1980) (6)

Legal Immigration into United States (notice lows between New Deal in 1930's and 1980) (4)

With any correlative relationship, it is critical to look for what statisticians call the ‘lurking variable.’ In other words, an alternative explanation for whatever outcome took place. Take the fact that income inequality has increased in the United States since 1980 (there is actually some dissent to this view among economists, (2) and income stagnation is a statistical myth, to be discussed in the next entry of this series). Obviously, the increased inequality was caused by Ronald Reagan, the Washington Consensus and other politician’s decisions to liberalize the economy. Paul Krugman and Noam Chomsky have certainly said so.

Was it really though? Immigration policies were also loosened drastically in the 1960’s, causing many more unskilled laborers to enter the country thereby depressing labor markets, especially at the lower end of the spectrum. Many more women entered the workforce as well. Given that men and women will usually marry people who are of similar education and income potential: i.e. typically an affluent man marries an affluent woman, a poor man marries a poor woman. When you put two high earners together (say $50,000/year) and two low earners (say $20,000), income inequality increases in real terms (the combined income is now $100,000 to $40,000 or the difference increases from $30,000 to $60,000), although percentage wise, it stays the same. (3)

Technological changes can bring this about as well. Musicians used to have a fairly safe profession. There were gigs all over the place. Then some asshole invented a way to record music and all of a sudden the celebrity culture was born. On the one hand you have Beyoncé and Justin Timberlake making tens of millions of dollars. On the other, you have some down-and-out garage band trying to sell CDs they burned at home, after a concert they played in some hole-in-the-wall bar on a Friday night to a bunch of disinterested yuppies. Innovation and technology are great, but they can create inequality, and we’ve had plenty of innovation in the last century. (5)

Finally, the degree to which our economy has been liberalized has been greatly exaggerated (see here and here). Government spending is actually higher as a percentage of GDP now than it was in 1979, (6) significantly undermining Krugman’s and Chomsky’s conclusion. But alas, a discussion on income inequality deserves another article entirely. The point here is that there are a multitude of factors that can influence any given statistic, poll result, trend or Gaussian bell curve. Even when the explanatory variable appears to describe what the statistic appears to show, be careful… Be very careful.

It is with that spirit that I will delve into an array of statistics many of us simply take for granted. Have incomes stagnated over the past 30 years? Do all fiat currencies hyperinflate? What is the real death toll in Iraq? Is the gap between the number of women and men going to college a major problem? Do women really earn only 75 cents on the dollar for the exact same work as a man? Should Roger Maris have had an asterisk next to his name for his record-breaking 61 home runs in 1961 (since broken multiple times, albeit with an assist from HGH)?

There are plenty of other statistics out there begging to be undermined. And feel free to email me if there’s a questionable one you’d like my two cents on. The point here is not to say that all forms of argument are flawed or that we can’t really know anything. This is not literary deconstruction applied to statistics.* The point is to emphasize that like theories and examples, statistics are fallible, very fallible indeed.

Mark Twain, as he so often did, put it best: “There are three kinds of lies; lies, damn lies and statistics.”**

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Lies, Damned Lies and Statistics Series

Part 1: A Primer
Part 2: Income Stagnaton
Part 3: All Fiat Currencies Fail
Part 4: Iraq War Casualties
Part 5: Female-Male College Gap
Part 6: Male-Female Wage Gap
Part 7: Roger Maris’ Asterisk
Part 8: Women Do All the Work but Men Keep All the Money
Part 9: The BMI
Part 10: A College Degree is Worth One Million Dollars

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* Deconstructionists basically go through a document or argument and then try to play it against itself to prove it is actually self-contradictory. They do this in some inane attempt to prove that reality is a social construct and there is no such thing as truth or logic. Ironically, using logic to prove there is no logic is just kinda, sorta begging the question (hey, perhaps they’re using some sort of postmodern mysticism to prove there’s no logic).

Deconstructionists are typically leftists. They often reinterpret old texts to fit some political agenda. Deconstructionists can discover that a late 18th century book on basic economics is actually a series of logical contradictions designed to oppress the poor at the behest of bourgeoisie. Or a mid-19th century book on the science of botany is actually a social construct designed to keep women pregnant, barefoot and in the kitchen. Of course, we could then just deconstruct the deconstructions to prove that these leftist interpretations are actually a social construct. Then we could deconstruct the deconstructions of deconstructions to discover that the discovery that the leftist interpretations are social constructs is also nothing more than a social construct, reductio ad absurdum. In summary, deconstructionism is itself self-contradictory and is little more than uppity, elitist, intellectual nonsense.

**OK, British Prime Minister Benjamin Disraeli was the first to say this. But nobody cares who he is, so we’ll just go with Mark Twain.

(1) Thomas Sowell, The Vision of the Annointed, Pg. 45-46, Basic Books, Copyright 1995
(2) One dissenter to this view is Alan Reynolds of the Cato Institute. See Alan Reynolds, “Has U.S. Income Inequality Really Increased, Cato Policy Analysis no. 586, January 8, 2007, Cato Institute, http://www.cato.org/pub_display.php?pub_id=6880
(3) For a longer discussion on alternative causes for growing income inequality, see Brink Lindsey, “Nostalgianomics: Liberal economists pine for days no liberal should want revisit,” Reason Magazine, June 2009, http://www.reason.com/news/show/133222.html
(4) Annual Flow Report, March 2009, Office of Immigration Statistics, Department of Homeland Security, http://topforeignstocks.com/wp/wp-content/uploads/2009/08/gc-growth.JPG
(5) For a discussion on how technology can increase inequality, see Nassim Nicholas Taleb, The Black Swan, specifically pg 26-37, Random House Publishing Group, Copyright 2007
(6) Christopher Chantrill, “US Government Spending as a Percent of GDP,” US Government Spending.com, Retrieved 8/14/09, http://www.usgovernmentspending.com/index.php

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