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POLITICS AND ,e conomi

July 30, 2017


I am a believer in statistics. Their use tells us what we need to know about the real world and not one we have fashioned for political or other such purposes. They comprise models which have themselves been tested for accuracy and have not been found lacking as they tell us the brutal truth about what it is we are testing, assuming our choice of model fits the data. The dictionary defines statistics as “the science of collecting and interpreting numerical data.” The problem I will discuss in this essay is not the collection of data, which is settled in how we go about it, but rather interpretation of such findings.

My now deceased wife who when pursuing her doctorate used to tell the story about her statistics professor who began his first lecture with the following observation: “Statistics show that one in eight billion passengers on airplanes carry a bomb, so I always carry one when flying to lessen the risk.” This bit of humor broke the tension always attendant to first lectures but also demonstrated the truism that you can do whatever you wish to do with the data.

For instance, and as we will see later, Thomas Piketty’s great book, the culmination of massive research and careful statistical treatment entitled Capital in the Twenty-First Century, was dismissed by the likes of Rush Limbaugh, that eminent radio economist who spews forth brilliant analyses of Piketty’s and others’ statistical efforts to suit his many biases. Limbaugh neglects to tell us that Piketty at age 22 already had his doctorate in economics and was lecturing at an Ivy League University (MIT) while, incidentally, I at age 22 was a junior in college pursuing an undergraduate degree in economics. Piketty’s book is rarely out of my sight and is on my table as I am typing this. Its numbers and interpretation of such numbers are unarguable, especially by such a yahoo as Limbaugh with his mindless blather.

More broadly speaking, just what does GDP (gross domestic product), ”economic growth” and other such language mean? We know the numbers, but how are they to be interpreted, and by whom? The business press and Wall Street have their own fish to fry and the resources to see to it that their interpretation of contemporary data is made known to the public (aka propaganda to suit their profit-seeking motives). Hard left operatives, on the other hand, dismiss such Wall Street propaganda and tell us a different story on how we are to interpret the data. Personally, I reject both such right and left takes on our economic performance or lack thereof. In my opinion, their prejudices preclude fair and reasonable conclusions to be drawn from the evidence (data).

As my followers know, I interpret such data with a certain admitted bias of my own, i.e., the bias of just how interpretation of the data affects working people who are currently struggling with the cancer of wage inequality. My bias is a sieve through which all such interpretations must pass in order to be relevant to my version of the reality of an economy which vastly overpays the rentiers and financiers and vastly underpays the workers. Given such definitions, GDP and other statistical measures showing economic growth are relatively immaterial unless they result in a fair distribution of the economy’s income among producers as well as financiers and others involved in our economy.

Socialism? No. Fair Play. The only socialism visible at this stage is corporate socialism via a compliant Congress whose members decry “out of control spending” while “spending” hundreds of billions of dollars on tax cuts and running up our deficit on behalf of their campaign-contributing corporate and banking friends, and then complaining of the “runaway deficit,” all of which tells us that their interpretation of the data is biased in favor of higher and higher profits and has no connection with any honest and objective interpretation of the data. Corporate America gets the money and we get the bill.

Given such a milieu as concocted by the greedy and backed up by such as the Wall Street Journal and the irresponsible chatter of Rush Limbaugh, we plod along with an underperforming economy, tepid demand and economic growth due to wage inequality, millions of bankruptcies and other signs and signals that recession is only an inch away, and are clearly victims of misinterpretation of the data.

Per Stanley Greenberg in his book, America Ascendant, who quotes Limbaugh in his trashing of Piketty’s magnificent contribution to economics as follows: “Some French socialist, Marxist, communist economist has published a book, and the left in this country is having an orgasm over it. He’s a wuss who has arrived to support President Obama’s push against inequality, as if there’s some sin in income inequality in capitalism, and therefore there is a moral sin in the United States of America.” Further, Limbaugh says that “To the extent that there is any concentration of wealth taking place in this country, it is not by capitalism but by government!”

Piketty, of course, is a brilliant economic historian and is neither communist nor socialist. He is an academic in search of truth. He does not interpret his data to call for revolution or civil disorder; he rather makes his points and then writes that the democratic process will determine the outcome. Even Limbaugh does not attack his findings; he attacks the man and doesn’t really and directly interpret Piketty’s data to support his own prejudices, hence my earlier suggestion of his biased blather.

Piketty does write that if the growing inequality is left unaddressed it could be politically disruptive. James Pethokoukis of AEI and The National Review writes that Piketty makes a powerful case that “private capital accumulation inevitably leads to the concentration of wealth into ever-fewer hands, and now Marxism’s fundamental truth is reasserting itself with a vengeance, a reality borne out in both Piketty’s own meticulously gathered data and in business pages replete with stories of skyrocketing wealth for the 0.001 percent and decades of flat wages for everyone else.” It appears Marx was right about the facts but wrong about how to remedy the situation. Communism won’t work – never did, never will.

So how do we interpret the data that 0.001 percent are accumulating capital at an accelerating rate while the rest of us are stuck in “decades of flat wages for everyone else?” Since when in a democracy is 0.001 of the population favored over 0.999 of the population in matters of policy? My interpretation of such data is that we have to end flat wages “for everyone else” not via a “free market economics” ruse which will only prolong the agony but rather to elect those who will see to it that everyone involved in this economy and not just the paper shufflers, financiers and rentiers have a fair share of the economy’s income, and if Limbaugh wants to frame that view as socialistic, he can add to his blather. I frame it as fair play and, incidentally, if such policies were to be adopted, then such statistical measures as economic growth and GDP would have real meaning in an unleashed economy fed by booming demand, among other good and lasting results of such adoption.

It is not enough to make the economic pie larger if only one sector of the economy prospers as a result. If we are to have meaningful statistical data relating to economic performance free of propaganda from the status quo, we must first assure ourselves that there is sufficient demand in the marketplace to prove that our interpretation of the data is correct and for the benefit of the 0.999 in addition to the 0.001. That can only happen with the end of wage inequality, so let’s get on with it.     GERALD       E




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