Class War in America: the Book
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How Conservatives Lie with Statistics
Regardless of political ideology, the never-ending columnists and talking heads always seem to find data from impeccable sources to support their positions. With the constant barrage of arguments and statistics cascading upon the American public, no wonder people are cynical. Since claim and counter-claim on a given issue appear to be a toss-up, how can anybody judge one way or another?
Therein lies the great harm that well-financed propagandists do to our ability to solve national problems. When they deliberately distort the reality of what is happening in our society, many voters conclude that it is fruitless to make the effort to find out who is telling the truth and, as a result, drop out of the political process.
As people disengage from the political process, right-wing conservatives fill the vacuum and get their favored politicians elected. It’s a vicious cycle. With more conservatives in Congress, they are better able to further propagandize and confuse the public.
Conservatives also get vital help from well-financed think tanks like the American Enterprise Institute, the Heritage Foundation, the Free Congress Foundation, Empower America, the Hudson Institute, and a host of others. In addition, popular conservatives like Rush Limbaugh, Oliver North, and George Will breathe new life into the same old clichés that periodically have gotten us into trouble throughout our history: wealth trickles down, higher taxes on our richest citizens cause joblessness, wealth is not a zero-sum game, government regulations destroy the free market, unions are bad for workers—and on and on.
Just as the tobacco industry delayed the public’s appreciation of the known dangers of tobacco for decades, financial conservatives are doing all they can to delay the public’s appreciation of the disastrous effects of the past 20 years of ClintoReaganomics.
The Distorted Statistics of ClintoReaganomics
Understandably, most right-wing propagandists masquerade as journalists-with-principles and they can be found in virtually all the mainstream media. To demonstrate that fringe-element conservatives have infiltrated so-called moderate publications, this discussion will begin with Marc Levinson’s Newsweek article headlined “Hey, You’re Doing Great.”1
He made a Herculean effort to demonstrate to the public that the 1980s were great for most people, and contended that middle-class Americans were doing better than they think. He claimed that “Three out of five Americans are in households that many experts consider middle class.” But then he offered the most preposterous definition of “middle class” that one is apt to find.
To begin with, he defined middle class as those who were making between $25,000 and $100,000, which amounted to 53.8% of households. That certainly would be close to the percentage one would expect to represent the middle of any statistical distribution.
Problem is, that definition starts above the bottom 40.3% of Americans whose household income was under $25,000. And it says that persons would have had to make over $100,000—and be in the top 5.8% of households—to be above middle class. To give his contentions the aura of credibility, he pointed out that the basic data (but not the definition of middle class) came from the U.S. Census Bureau.
Levinson’s “many experts”—and their tortured definition of middle class—could have come only from the paid hacks at one of America’s right-wing think tanks. As soon as the U.S. Census Bureau releases such data, these unscrupulous mercenaries find ways to redefine them to fit their own political objectives.
So, to Levinson and his right-wing friends, the middle class extends from above the bottom 40.3% of Americans and up to the top 5.8%. With this one quick twist of a definition, they thus eliminated the top half of the bottom 40% of Americans from the middle-class category. With these perversions of data, the statistics for the “average” American look a lot better than the raw data from the Census Bureau would suggest.
Incredibly, Levinson’s definition of “upper middle class” was from the top 12.5% of Americans to the top 5.8%, or from $75,000 to $100,000. This, at a time when the median income for all Americans was just $35,000.
Like the above, the most effective propaganda spins are the absurd conclusions based on accurate data. For another example, consider John Weicher, right-wing propagandist for the Hudson Institute, who demonstrated how to use accurate statistics to support misleading conclusions. Under the head “Getting Richer (At Different Rates),” Weicher admitted that the rich got richer when Reagan was president, but
…so did the middle class and the poor, to about the same extent.…
The surveys (by Federal Reserve Board) show, first of all, a huge increase in the total real wealth of American households (from 1983 to 1989)—to $16.8 trillion in 1989 from $12.7 trillion in 1983. The wealth of the average household rose by about 20%, to $181,000 from $151,000…. Average wealth increased for every type of household except one—single women with children.…
(Table: Married couples with children saw their income go up 33%, from $132,100 to $175,100 between 1983 to 1989. Single women with children saw income decline from $36,200 to $32,200.)
Did the rich get richer and the poor get poorer during the Reagan years? No, or at least not much, if at all. The distribution of wealth hardly changed.2
As soon as unfavorable news (growing income disparity) hits the media, conservative think tanks start damage control—and suddenly, remarkably creative analyses appear in conservative financial publications. This is how you distort data effectively, while telling a literal truth:
§ Use a reputable source: The Federal Reserve Board, the Labor Department or the Census Bureau.
§ Distract the reader with some very favorable news that has nothing to do with the premise: rising average income based on the total income of all persons.
§ Make your conclusions more believable by citing the exception—the lowered median income of single mothers with children (understandably, irresponsible people of low morals).
§ Analyze data in a way that has nothing to do with how the income was distributed between the rich and poor in each category. Sure, average income increased in the categories of total wealth, income of married people, and income of single people—but most of the increase came at the top of the distribution in each category, while income at the bottom of each category decreased or remained the same.
Michael Novak, right-wing hatchet man for the American Enterprise Institute, also demonstrated how conservatives can creatively report statistics. He asked the question, “Middle-class ‘meltdown’?,” and made the erroneous contention that “The simplest way to test the thesis that the middle class declined in the 1980s is to check what happened to median income.”3
Novak used Census Bureau data to claim that
…real incomes of every class of Americans went up during the 1980s.…
As Reagan took over in 1981, the median income for American households was $26,251, as measured by the Census Bureau in 1989 inflation-adjusted dollars. By the same measure, the median income in 1989 was $2,655 higher, or $28,906.…
Each of the four lowest fifth (of families) showed higher income in 1988 than in 1980. The top limit of the lowest fifth jumped (in constant 1988 dollars) from $14,767 to $15,102; of the second lowest, from $24,966 to $26,182; of the third, from $35,361 to $38,500; and of the fourth, from $49,580 to $55,906.4
Although a median statistic tells you what happened at the exact middle of a category, it tells you absolutely nothing about what happened at each end. The shrinking of the middle class consisted of the middle-class-rich getting richer, and the middle-class-poor getting poorer—with the median increasing slightly. Novak’s data are not only irrelevant, they totally distort the reality of the issue being discussed.
Notice that Novak then selected the rising top limit of each distribution to expand his point. In each category, the bottom limit undoubtedly remained the same or went down, but we can’t tell because Novak chose to keep that data to himself.
Also note that the increase in income for the highest of our lowest paid workers “jumped” only $335. That’s just a bit more than 2% over an eight-year period!
On the other hand, the increase for the next-to-the-top income category, from $49,580 to $55,906, was a much more substantial $6,326, almost 13%. Novak chose not to report the change in incomes of the top fifth of income earners—the real champions in the earnings race. Now, why would he do that? As everyone now knows, that increase was very impressive indeed.
The Reality of ClintoReaganomic Statistics
In 1994, Business Week compared the incomes of rich and poor in a way that actually added to our understanding of the economics of the ’80s. The article, “Inequality,” demonstrated how income inequality becomes obvious when you actually compare top earners with bottom earners, instead of just looking at distorted averages or medians:
…import competition and the decline of unions have left families in the bottom quarter—whose breadwinners often dropped out or stopped after high school and earn less than $22,000—stranded in low-wage limbo.
This has led to the widest rich-poor gap since the Census Bureau began keeping track in 1947: Top-fifth families now rake in 44.6% of U.S. income, vs. 4.4% for the bottom fifth. As recently as 1980, the top got 41.6%, the bottom 5.1%.
Even as a good education has become the litmus test in the job market, moreover, the widening wage chasm has made it harder for lower-income people to get to college. Kids from the top quarter have had no problem: 76% earn bachelor’s degrees today, vs. 31% in 1980. But less than 4% of those in bottom-quarter families now finish college, vs. 6% then.5
By the time of this article, the growing disparity in income and wealth between rich and poor had become an obvious and accepted reality. Prior to that, and all during the 1980s, conservative commentators did everything they could to delay this understanding by the American public:
§ Although inequality began expanding in the late 1970s, it exploded in the 1980s, and it has been expanding ever since.
§ Again, a conservative financial publication cited unmanaged world trade and the decline of unions as major causes of the income decline of American workers.
§ The rich-poor gap has been growing and is the biggest since the Census Bureau began keeping track of it. This was an unvarnished, no smoke, no mirrors, presentation of Census Bureau data.
§ Between 1980 and 1992, the number of children in the top quarter who got bachelor’s degrees more than doubled, from 31% to 76%. In the bottom quarter, the number went down by a third from 6% to 4%. This is a truly meaningful way to compare the effects of income disparity between top and bottom.
Three years after the Business Week article, there were some indications that the growing economy might still cause wages to go up. Indeed, for an almost optimistic report in 1997, look at how The Wall Street Journal described its interpretation of “how the economic expansion is indeed filtering down to the average consumer’s pocketbook.” Under the upbeat headline “Household Income Rose Again in 1996,” the subhead told the real story: “Poverty Rate, Income Inequality Were About the Same.” Its understated conclusion put things into proper perspective, as far as the working poor and the middle class were concerned:
The Census Bureau’s annual poverty and income report also showed that the number of Americans living in poverty last year was about the same as in 1995 and that income inequality didn’t shift for the better.… So why didn’t the poverty rate improve, despite the increase in median earnings? Because the wealthiest Americans grabbed most of the income gains. Average income for the poorest 20% of the population slid 1.8% in 1996, while average earnings for the wealthiest 20% climbed 2.2%.…
Indeed, Americans didn’t divide the fruits of prosperity any better last year than in 1995. The wealthiest 20% of Americans were raking in nearly half of all household income, about the same as in 1995. That is nowhere near sharing the pot equally, but it is better than in previous years, when the rich grabbed increasingly larger shares at the expense of the poor and middle class.6
This headline and subhead demonstrate the chronic two-faced nature of conservative economics: average incomes keep going up, but, surprise, poverty and income inequality stay the same or get worse:
§ The nature of the statistics that financial conservatives like to brag about continued from the late 1970s to 1997: Median incomes kept going up.
§ But there was no change in income inequality.
§ In fact, as of 1997, the poorest 20% were worse off than for the year before—by 1.8%—again.
§ Talk about “redistribution of wealth.” Usually it’s Republicans complaining that Democrats want to transfer wealth from rich to poor. Obviously, that hasn’t been a problem for the past 25 years, in which the rich have been grabbing wealth from the poor and middle class.
Two years later, in September, 1999, the trend was continuing. Business Week asked the question, “The economy is booming, profits are soaring—so why isn’t everyone riding high?” Under the head, “The Prosperity Gap,” it distinguished between the “new economy” and the “old economy”:
If you stay at a job in an Old Economy industry, you are destined to become relatively poorer and poorer in a richer and richer society…. Compared with 1988, real wages are down by 4.5% in Old Economy industries….
Indeed, based on current trends, the wage gap between New Economy and Old Economy workers seems likely to widen for years to come….
The latest data show wage increases actually decelerating across much of the economy, outside the New Economy industries.7
Of course, workers in the “Old Economy” industries are the ones described in Part 1 of this book—the ones that conservatives sold out to investors. Workers in the “New Economy” are in industries that are still growing and that haven’t yet been hit by the kind of ruthless competition that has been forced on Old Economy workers. (But their day is coming.)
Business Week wasn’t covering any new ground here, except to update the income and wealth disparity problem, and to clarify the segments of the society that are most affected. Similar articles were being published regularly in the mainstream press.
When articles like this come out, it triggers an automatic response from the right-wing cranks in charge of damage control. Edwin Rubenstein (research director of the Hudson Institute) was remarkably open about his desire to reduce any feelings of guilt in the readers of Forbes. In his article, “Inequality,” he went through incredible gyrations to demonstrate that it really wasn’t a problem that anyone should feel guilty about:
There it was in the Oct. 1 Wall Street Journal: A chart demonstrating that income inequality has been rising in the U.S. The chart said that the highest quintile (which it defined as a fifth of the population) commands 49.2% of the nation’s household income, compared with 3.6% for the lowest quintile….
Taken raw, the income statistics could certainly induce guilt among readers of the Journal or of Forbes, since they tend to fall in the high-quintile group….8
Rubenstein went on to make the most absurd rationalizations about why “the raw income numbers exaggerate inequality”:
These selective interpretations of facts are literally true, but they are used to confuse the issue of income disparity—to the point where the readers of Forbes can feel justified in dismissing more down-to-earth interpretations of contradictory facts.
Again, outright lies are relatively rare in our most respected mainstream conservative publications. It’s the deliberate misinterpretation of reality that is the culprit. This is why the public needs to be forewarned that Republicans always try to cut the funding of our best sources of objective financial information, under the pretense of “getting government out of our lives.”
In 1996, Scientific American alerted the American public that the Republican Congress wanted our government to be, as the headline stated, “Flying Blind”:
In an era when Congress may ask schoolchildren to skip lunch to help balance the budget, it sounds eminently reasonable that bureaucrats at arcane federal agencies such as the Bureau of Economic Analysis (BEA) or the Bureau of Labor Statistics (BLS) should share in the general pain.
The same logic might lead a skipper trying to lighten an overburdened ship in the middle of the ocean to jettison sextant, chronometer and compass. Economists worry that, without social science data to measure their effects there may be no way to tell whether the various policy experiments now being enacted are succeeding or failing.
The status of U.S. economic statistics is already “precarious,” says Alan B. Krueger of Princeton University. He notes that the BLS has reduced the size of its statistical samples (thus compromising accuracy) and dropped many kinds of data entirely. Even such seemingly basic information as manufacturing turnover—the rate at which people quit factory jobs and companies hire replacements—is no longer available.…
If proposed House and Senate budget cuts go through, international price, wage and productivity comparisons will have to be scrapped, forcing U.S. policymakers to rely on dead reckoning when they try to compare domestic workers with their European or Asian counterparts.9
The Bureau of Economic Analysis and the Bureau of Labor Statistics are two of our best sources of objective, comprehensive in-formation about what is going on in our economy. So why do the Republicans in Congress want to cut their funding?
Simple. Less accurate economic and labor data would cut the workload of conservative think tanks. They wouldn’t have to go through such hypocritical gyrations to explain away the bad news about the failures of their economic experiments on working Americans.
For example, “manufacturing turnover,” and “international price, wage and productivity comparisons,” among other basic data, are embarrassing and hard to explain away for those who claim that the rising economic tide will lift all boats.
When “dead reckoning” is all the public has to go on, the highly financed marketing of special interest distortions-of-reality holds sway over unavailable facts and common sense. And when money is more persuasive than reason, conservative think tanks and their politicians win more elections.
Now, check out how Republicans can be exceptionally creative when they talk about taxes.
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