@TBPInvictus here Though my political leanings should be apparent to anyone who’s read some of the pieces I’ve written over the years, it’s rare for me to write solely on politics sans some inclusion of markets/economics. That’s partially because I’m not much interested in writing solely on politics, and partially because BR pretty much forbids it. That said:…
@TBPInvictus here: I thought I’d put the “Reagan-created-one-million-jobs-in-one-month” lie to bed a long time ago. I’d like to think I was the first to expose it for the lie that it is. (See here, here, and, most notably, here.) Sadly, not so much. Stephen Moore, who apparently may be up for a high profile gig…
Nov. 25 marked Black Friday, which once was considered the beginning of the holiday shopping season, though the start these days is even earlier thanks to endless hype by the retailing industry. News reports today are filled with tales of increased traffic, decreased spending, tremendous discounting. As was widely reported, sales fell because of deep…
The post Tales of Black Friday’s Demise Have Been Greatly Exaggerated… appeared first on The Big Picture.
I keep promising to stop writing about lessons from the election that are applicable to markets, and then I keep finding more examples. So rather than make any promises I cannot keep, let’s just jump right into this. Since Donald Trump’s surprise victory — though it wasn’t a surprise to those of you with the…
@TBPInvictus here: When did America lose interest in reality? There was a time that economic releases from government agencies – Bureau of Labor Statistics, Bureau of Economic Analysis, Census Bureau, Department of Labor, etc., etc. – were deemed reliable. They were reliable because they were derived using credible collection methodologies and statistical analysis by folks…
Now that the political conventions are in full throat and the silly season has started, I thought it might be time for a reminder about reality.
In particular, the use and abuse of statistics, and the many ways people ignore data.
I was reminded of this last week in Missouri at the annual conference of the Missouri Association of Public Employee Retirement Systems (MAPERs), where I gave a presentation on misunderstanding risk. Before my speech, I had been speaking to a lot of current and retired police officers. Given all of the awful headlines news, they were concerned about an increase in violence generally and violence directed at cops specifically. They were quite surprised that while the headlines were screaming one thing, the data were saying something very different. Not only has violent crime been in decline, but the number of police fatalities also has been falling steadily for decades;data reveal that the past eight years has seen record-low numbers of officers killed in action (assaults on officers are down as well).
The drop in murders and violent crime is a national trend. Azi Paybarah, a reporter for Politico, pointed out that New York has had the fewest shootings on record in this year’s first half. The Washington Post noted that “compared to the first half of 1993, near the city’s crime peak, Donald Trump’s hometown has seen a 76.8 percent drop in violent crime and an 83 percent drop in murders.” That is hardly a picture of criminals running amok, at least in New York. (You can see earlier years of police data at New York City’s website; here is the FBI’s Uniform Crime Reports).
Continues at: Soaring Crime, Bad Loans and Misleading Numbers
I spend much of my time shrugging off breathless news events. Ebola (now Zika), employment reports, Federal Reserve rate changes, government shutdowns, peak earnings and so on. Much of what passes for earth-shaking news turns out to be, with the benefit of hindsight, something in between idle gossip and fear-mongering. The genuine, not well-anticipated, actual market-moving news — such as the U.K.’s vote to leave the European Union — is a relatively rare thing.
However, there is a disconcerting trend that has gained strength:agnotology. It’s a term worth knowing, since it is going global. The word was coined by Stanford University professor Robert N. Proctor, who described it as “culturally constructed ignorance, created by special interest groups to create confusion and suppress the truth in a societally important issue.” It is especially useful to sow seeds of doubt in complex scientific issues by publicizing inaccurate or misleading data.
Culturally constructed ignorance played a major role in the Brexit vote, as we shall see after a bit of explanation.
Perhaps the best-known example of agnotology is found in the tobacco industry’s claims for many years that the evidence that smoking cigarettes causes cancer was “not yet in.” The position of the industry and its executives was that the hazards of cigarette smoking were an open question. Of course, this was a huge lie, as the industry had scientific evidence that proved that smoking caused cancer, emphysema, heart and lung disease. As Proctor observed “The tobacco industry is famous for having seen itself as a manufacturer of two different products: tobacco and doubt.”
That doubt, however, allowed cigarette sales to continue for decades before the inescapable truth came to light. And it forestalled broader regulatory oversight by the states and the federal government for years. But the truth can only be held back for so long, and eventually tobacco sales in the U.S. fell off a cliff. But it was too late to save millions of people who became sick and died due to smoking.
Current agnotology campaigns seem to be having similarly desired effects. We see the results in a variety of public-policy issues where one side has manufactured enough doubt through false statements, inflammatory rhetoric and data from dubious sources that they can mislead public opinion in a significant way, at least for a time.
Continues here: Culturally Constructed Ignorance Wins the Day
Americans are renouncing their citizenship in record numbers!
Or so we’ve been told. Lots of partisan reasons have been cited for this, including the silly implication that some Americans are trying to flee from a black, Muslim, Kenyan-born U.S. president. But the truth is these sensationalistic headlines reflect the sort of misleading math and misuse of statistics that I constantly rail against.
Let’s look at the claim to see if a little context and some data can help explain this purported exodus.
First, like all good misleading political tropes, it starts with a kernel of truth. In recent years, more Americans have voluntarily given up their passports than the year before. The regular spasm of news about Americans fleeing the U.S. is courtesy of the Federal Register’sQuarterly Publication of Individuals, Who Have Chosen to Expatriate.
The reason for the increase isn’t because of who now is or might become president, but something much more mundane: Annoying paperwork. The U.S. is one of only two countries in the world — the other is tiny Eritrea — that taxes people based on citizenship, rather than residency. This means overseas Americans must file two tax returns — one to their nation of residence, and one to the U.S.
This is due to the Foreign Account Tax Compliance Act (FATCA), 2010 legislation that was created to detect, discourage and penalize offshore tax evasion by U.S. citizens, including those living abroad. The Washington Post reports that “The law requires foreign banks to report whether their clients are U.S. citizens. The penalty for not complying is stiff: a 30 percent withholding from the proceeds of the bank’s financial transactions in the United States. That has caused plenty of consternation among foreign firms, some of which have reportedly closed accounts belonging to Americans as a result.”
The BBC notes that as a result, “ordinary Americans abroad are being denied access to basic banking facilities; banks would rather refuse US citizens’ custom than run the risk of hefty penalties.”
Continues at: Americans Are Not Racing to Get Out of the U.S.
In July 2012, Kansas Governor Sam Brownback penned an op-ed titled “Tax Cuts Needed to Grow Economy” in the Wichita Eagle. This was to be an experiment in supply side, trickle down economics; Kansas was to be the petri dish:
“Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy. It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business. It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments.”
So, four years later, how’s it going? Well, it’s going so poorly – Kansas is such a shit show – that as of June 8, the state’s Department of Revenue had failed to even post the previous month’s woeful numbers, which are usually up by the second of the month:
Response to an inquiry, which did include a press release, was that “it looks like the release did not upload.” Really? Did the fact that this was one of if not THE worst press release about the dreadfully abysmal Kansas economy have anything to do with the no one “remembering” to upload it? (BR: Maybe Brownback is hiring people from the Christie administration).
But wait, there’s more! The numbers have been so bad, Kansas has been failing so miserably, that Governor Brownback wants answers! From the release:
Governor Brownback tasked Budget Director Shawn Sullivan with implementing a full, independent review with outside experts to evaluate current procedures related to revenue estimating and budgeting. The review will evaluate the existing consensus revenue estimating process to determine why it fails to provide accurate estimates for budgeting purposes, make recommendations for improving the quality of fiscal notes, and analyze existing tax policies.
Brownback seems unable to accept the possibility that his policies are an epic failure. Rather than even consider that his tax policies are “sub-optimal’ for economic growth, the Governor looks first at the procedures being used to provide estimates.
A classic case of Cognitive Dissonance writ large.
Its been four years since the Brownback plan was signed into law. The rest of the country has recovered all of the jobs lost to the great recession, and then some, creating over 10,000,000 jobs, with employment now above the pre-crisis peak. Meanwhile, over the same period, Kansas rose modestly at first and stalled out well over one year ago:
Maybe it’s not that the”procedures related to revenue estimating budgeting” suck, but instead, it’s the thoroughly debunked trickle down economics that Brownback is so enamored of that have failed.
Final thought, via the Eagle:
“Large company layoffs and struggles in the aviation, oil and agricultural industries point to an overall sluggish economy which contributed to lower-than-expected revenue receipts,” Jordan said in a statement. “This is a trend reflected throughout the region.”
Scott Drenkard, director of state projects for the Washington-based Tax Foundation, a think tank that studies tax policy, disputed that explanation.”
By now, we have become almost used to a steady stream of inaccurate statements from the presumptive Republican presidential nominee. Most are not worth correcting. However, Donald Trump’s recent comments on the federal government’s unemployment data, so reminiscent of those made a few years ago by former General Electric chief Jack Welch, deserve a rejoinder. (He called today’s report that employers added just 38,000 jobs “terrible” — but only if you ignore the 35,000 striking Verizon workers. Still, 73,000 new jobs is pretty meh.)
The New York Post’s John Crudele last week interviewed Trump, who said he thinks the jobless rate is close to 20 percent and not the roughly 5 percent reported by the Labor Department. And, of course, Crudele reported, anyone who buys the 5 percent figure is a “dummy,” according to Trump.
This, in a nutshell, is typical of the usual economic conspiracy theories we have discussed in the past; it is obvious political bias corrupting economic analysis. It plays upon people’s recent post-traumatic stress from the financial crisis first and exploits their anxiety about the future. It also reveals deep ignorance about how employment data is assembled.
Like much demagoguery, it oversimplifies. This much is true: The employment data is complex. The average layperson with little or no economic background is likely to find it confusing.
Continues at: Trump Finds Cooking in the Unemployment Numbers
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