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Untangling Political Use of Data

posted on in Fiscal Insight

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Poets, priests, and politicians
Have words to thank for their positions
Words that scream for your submission
~ Sting

As one reflects on the endless stream of opposing political ads that have now subsided — thank God — an important truth becomes apparent. People can and do use the same data effectively to affirm vastly different, and often conflicting, messages and implications. To compound the problem, many media outlets echo misleading presentations of data.

My role at the John Locke Foundation is not to defend or attack particular campaigns. However, I do get concerned that campaign seasons heighten distortions that attack free enterprise and classical liberalism.

For example, I’ve noted the problem with the prevalent presentations and comparisons of tax burdens as tax "rates." This places a flat income tax as neutral, even though higher earners pay more, and slants the dialogue in favor of a graduated income tax. How many of you have heard, for example, that Mitt Romney pays a lower tax rate than the average worker?

Mitch Kokai, our communications director, has noted that such claims are incorrect. Even if they were correct, however, in the plain light of day, "to say that a person paying $30,000 is ‘paying more taxes’ than a person paying $3 million" is "a complete misuse of the English language."

The unemployment rate is another black hole of confusion. We hear of how the unemployment rate is down, or unemployment benefit claims are down, so the economy must be improving, of course on account of "stimulus" (insert: deficit) spending. Others challenge the accuracy of the measurement process and point to its still high level historically. Either way, the reported rate does not mean more people are working. They may have dropped out of the labor force or no longer be eligible for benefits.

Consider the employment-to-population ratio — simply the number of people working as a percentage of the population. This provides a more accurate representation of actual working activity and is not subject to the same statistical vulnerabilities. As you can see, it has remained remarkably steady and historically low since the onset of the Great Recession.

You’ve also all heard that "the rich are getting richer" while "the poor are getting poorer." Such claims tend to be loaded with hyperbole and difficult to verify, and they gloss over the complexity associated with black and grey market economies and the distinctions between wealth, income, and consumption. More importantly, though, such claims ignore that people are not inherently rich or poor. Rather, many switch places over time. It reminds me of a great line from Thomas Sowell, an economist with the Hoover Institution at Stanford University.

There was a conversation between two men in New York, and one said to the other, "Someone [is] hit by a car in Manhattan once every twenty minutes." The response was, "He must get awfully tired of that." Check out the eight-minute clip for more gems and, given the data Sowell addresses, all I can say is, you have to laugh to keep from crying.

Similar statistical misrepresentations abound other areas — energy policy in particular, which I covered as a reporter in Louisiana — and they keep the Shadow Government Statistics website in business. However, the linguistic attacks on free enterprise, beyond the data, are even worse. For example, some reporters and commentators have circulated the notion that the freedom to replace workers with new technology (or to hire more productive workers elsewhere) is synonymous with an immoral "greed."

This misleading and sloppy presentation highlights the contempt they have for free enterprise. It brings to mind a rebuttal essay a colleague shared with me recently, an oldie but a goodie on "Capitalism and Greed." It clarifies the way that, within the context of the market, without coerced redistribution, self-interest incentivizes one to serve and generate value for others to enable lucrative exchange.

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  • This month’s Students for Liberty conference in Chapel Hill drew an excellent turnout with notable speakers such David Boaz of the Cato Institute and Fred Smith of the Competitive Enterprise Institute. Click here for a video recap, and you can like the North Carolina Young Americans for Liberty Facebook page here. The UNC-Chapel chapter of YAL organized and hosted the event.
  • The Tax Foundation has published updated state and local tax burden figures from 1977 to 2010 — released on October 23, 2012. North Carolina has the 17th highest burden (34th best of the states) on a percentage of income basis at 9.9 percent. Looking back, North Carolina has been gradually worsening, from being in the better half of the states in the 1970s to closing in on the worst ten in the 2000s. New York, New Jersey, and Connecticut were at the top of the ranking with the heaviest tax burdens.

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Fergus Hodgson (@FergHodgson) is Director of Fiscal Policy Studies at the John Locke Foundation, a Policy Advisor with The Future of Freedom Foundation, and a member of the American Legislative Exchange Council’s Tax and Fiscal Policy Task Force. He… ...

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