Wednesday, November 19, 2014

How to Distort Anything

Everybody is jumping up and down about the stream of videos on which Jonathan Gruber, the “Obamacare Architect,” is caught saying that Americans are stupid, and other words to that effect.  What they seem to be missing is that this attitude is nothing unique.  Do an internet search using the words “Americans are stupid,” and you’ll be amazed at how many matches pop up.

Now, that’s pretty bad.  What’s worse, however, is when people distort things in other ways, such as saying things in ways that give the wrong impression, answering questions in ways that don’t answer the question, use of straw man arguments, insertion of non sequiturs, or even going outside the parameters of the issue or the question entirely.

We’ve mentioned several times on this blog the way some people have of attacking “the rich” or anyone else who excites their considerable ire, i.e., who dares to disagree with them, or any other reason, including they’re ugly and their mothers dress them funny.  That is, to make an accusation and then demand that their chosen target(s) prove him-, her, or themselves not guilty of whatever heinous offense they have allegedly committed.

Did you catch the trick there?

They make accusations, shift the burden of proof from the accuser, to the accused, then sit back and smirk at their own cleverness.

Or, take this instance from last week’s Wall Street Journal.  In an op-ed piece by Phil Gramm and Michael Solon, “How to Distort Income Inequality” (11/12/14, A15), the authors declared,

“Rich people don’t ‘take’ a large share of national income, they ‘bring’ it.  The beauty of our system is that everybody benefits from the value they bring.

“Yes, income is 24% less equally distributed here than in the average of the other 34 member countries of the OECD.  But OECD figures show that U.S. per capita GDP is 42% higher, household wealth is 210% higher and median disposable income is 42% higher.  How many Americans would give up 42% of their income to see the rich get less?”

Did you catch the trick there?

Oh, not the disproved assumption garnered from a misreading of Adam Smith’s Wealth of Nations, i.e., the idea that the rich benefit society by hiring the poor to meet their needs, so that wealth ends up as equitably distributed as if ownership of capital had been widely distributed.  No, the rich today can satisfy virtually any want by employing technology, not human labor, so the wealth stays concentrated.

That’s not what we’re talking about here, though.  It’s the deceptive shift from collectivism to individualism and back again.  By focusing on per capita — average — GDP and household wealth (net or gross, by the way?  It makes a difference. . . .) we get a very distorted figure.  A few incredibly rich individuals with a great deal of wealth can badly distort that average figure.  For example —

Let’s say you have a country, Wealthia, with ten people, and total GDP of $1 million.  What’s the per capita GDP?  Why, $100,000, of course.

“Zowie!” you say.  At first glance, everybody in that country is almost twice as rich — in per capita terms — as the average American in 2013, when per capita U.S. GDP was $53,143.

Uh, huh.  That’s until you find out that Wealthia’s population consists of one guy who gets $1 million every year from leasing his oil field, the country’s sole resource, and does his shopping down the street in the neighboring country, Poorovia.  The other nine inhabitants of Wealthia have nothing.  The only way they even survive is to sneak across the border into Poorovia every day to beg for food and clothing from the Poorovians.

What’s the solution?  Gramm and Solon could — and do — deny that there’s even a problem.  Jean-Paul Marat, French revolutionary and champion of the poor, would say the other nine citizens of Wealthia have the right to kill and eat the oil field owner.  People who think that “social justice” and “socialism” are the same thing would say the oil field owner must have gotten his or her ownership in a criminal manner.

Rather than go through all the justifications for doing nothing or for stealing, we’ll cut to the chase.  Wealthia should form a Citizens Land Bank to purchase the oil field at a fair price, issue everyone a single no-cost non-transferable lifetime voting fully participating share, and start paying out dividends after using, say, half the annual profits to service the debt.  Once the oil field is paid for, all the citizens of Wealthia will have an actual — not just a per capita — share of GDP of $100,000.


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