September 2, 2006

good debunking...

David R. Henderson takes apart two articles (WaPo, NYT) whose numbers were deliberately selected and crafted to give a false impression of the state of the US economy, to help liberals retain their hate-America worldview against the cold winds of reality. In other words, lying with statistics...

...The basic message Greenhouse and Leonhardt deliver is that "wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's." That is literally correct, according to the federal government's measures. But it's also misleading, for two main reasons, in order of importance.

First, as marginal tax rates have increased for most people except the highest-income people, due mainly to rising Medicare and Social Security tax rates over the last 40 years, employers have paid a higher and higher percent of compensation in the form of untaxed benefits. So a more-relevant measure is not wages and salaries but total employee compensation. ...

- - - - - - - -

...The Washington Post's "Devaluing Labor" by Harold Meyerson, credulously quotes the New York Times piece to buttress his case. And what is Meyerson's case? He hearkens back an America from 1947 to 1973 when "More Americans bought homes and new cars and sent their kids to college than ever before" and writes, "That America is as dead as a dodo." He doesn't present data to make his case, which is understandable because the America of today is even in better economic shape than the America of his golden era. Let's take his own criteria -- home ownership, car ownership, and the percent of the population with college degrees. In focusing on these data, I'm assuming that Meyerson cares about whether Americans own homes, own cars, and have college degrees, not whether they bought houses, bought cars, and went to college last year..

Take home ownership. In the first quarter of 1965, the first date I could find quickly, 62.9 percent of American households owned their homes. That was during Meyerson's golden era. In the second quarter of this year, the "dead middle-class era," it was 68.7 percent, an all-time high. Cars? What's relevant, as with homeownership, is the percent of the population that owns cars. And this has boomed. In 1970, presumably near the peak of Meyerson's golden era, there were 108.4 million vehicles registered in the United States; by 2003, this had soared to 231.4 million, an increase of 113.5 percent, while the population had risen by only 42.4 percent.....(Thaks to Orrin)

It is to be hoped that lefties will believe the poppycock in the two articles, and base their election plans on it. How's this for a catchy slogan: "Worst economy since Herbert Hoover!"

Another item.

...So what did happen to corporate profits? They rose, from 7.8 percent of GDP to 12.1 percent of GDP. That is a large increase, and percentage-wise it's huge. So why didn't Greenhouse and Leonhardt report this number? I think it's because they didn't want their readers thinking that only 12 cents out of every GDP dollar went to profits...

There's a much-cherished illusion among leftists and the ignorant that big business rakes in huge profits while the workers get crumbs. If you know anything at all about business you know this is twaddle. For most businesses, employee compensation is by far the biggest cost.

Posted by John Weidner at September 2, 2006 9:11 AM
Weblog by John Weidner