Brendan Nyhan

Writing at National Review Online, Jerry Bowyer illustrates the painfully stupid and misleading economics writing that Brad DeLong so often documents at the magazine:

Imagine for a moment that you are a financial planner and you are advising a family that makes about $130,000 per year. Their total assets, including a house, stocks, and bonds, add up to about $660,000. They owe roughly $130,000. Over the past three years their assets have been growing in faster increments than their liabilities.

So, should you be worried about these people? Neither would I.

Now, if you were to add 8 zeroes to these numbers, you’d be dealing with an actual family in the real world — the Unites Sates of America. However, the pessimistic and moralistic factions of the right wing are doing a lot of hand wringing about U.S. debt these days, both public and private. So are the if-Bush-is-president-everything-must-be-awful left wingers.

As a recovering financial accountant, this BuzzCharts’ author always feels a little queasy about any report that mentions liabilities but not assets. It’s hard-wired into me to weigh debits against credits.

Thus, when we treat the U.S. as one family, we can create a balance sheet that’s quite admirable: Assets: $66 trillion. Liabilities: $13 trillion. Owner’s Equity (or Net Worth): $53 trillion.

Watching left-wing bloggers and right-wing nail-biters contort this data into bad news is priceless.

To support these meaningless data — what does the combined net worth of all US households and nonprofits mean? — Bowyer offers what might be the most useless bar chart ever created:

Bowyer’s chart has three primary flaws: (1) it combines Bill Gates with homeless people and everyone in between, giving us no sense of how middle class or poor families are doing; (2) it lumps together nonprofits and households; (3) it gives us no sense of how household net worth has changed over time. The first flaw is analogous to President Bush using “average” tax cut statistics that are skewed upward by high-income individuals.

Instead of using Bowyer’s meaningless aggregate data (which you can find here [PDF]), we need to look at change in net worth over time for representative families in different parts of the income distribution — a much better way to assess the state of the US economy. Those data are also available (PDF), and they tell us a much different story.

Here is a chart of changes in median net worth for different portions of the income distribution:

Not surprisingly, net worth is vastly unequal across the income distribution, and has become more so in recent years. And if we zoom in on the bottom sixty percent of the income distribution, we can see that the picture is relatively grim for the 0-20th percentile group as well as the 20th-40th percentile group:

Does Bowyer even understand what’s wrong with his article? And does National Review know what’s wrong with publishing it?

[Disclosure: I went on Bowyer’s radio show a couple of times when I was doing Spinsanity.]

The New York Times that was delivered to my house today included an advertising section titled “Autos: The New Gilded Age of Luxury.” Yes, the Gilded Age, an era of infamous inequality, is being invoked to sell luxury cars.

Here’s an excerpt from the introductory ad copy, which revels in the decadence of today’s ultra-rich:

There are now more than 8 million millionaires in the United States. They don’t wear white tie to dinner and wait for the chauffeur to open the door of their Duesenberg. These active, self-made people don’t want or need the traditional trappings of luxury.

Luxury today means being able to live wherever you want and commute via the Internet. Luxury today means having the time and money to pursue whatever takes your fancy. Luxury today means being secure enough, emotionally and financially, to not worry about what the neighbors think.

This doesn’t mean that symbols don’t matter. When almost anything goes, luxury brands are more important than ever. The expanding market of luxury good sfrom Louis Vitton to Rolex to Mercedes-Benz is clear proof that the right name matters. Always.

But when it comes to luxury vehicles, the old paradigms don’t apply any more. That’s what this section is about: contemporary interpretations of the traditional luxury sedan, plus super SUVs and limited-edition sports cars.

…I predict that 20 years from now, we’ll look back and think this was a special time, a New Gilded Age of Luxury. That doesn’t mean that there won’t be luxury machines in 2025 — luxury is always in style — but rather that there may never again be this selection of superlative machines all in one place at one time, demanding our love and desire.

Yes, it is “a special time.” Consider this figure, which shows how inequality in the US is returning to the highs it reached during the Gilded Age:

And this inequality has political consequences. Consider the GOP’s near-obsession with the estate tax, which affects a handful of ultra-rich families, over the last 10-15 years. For a longer term perspective, I recommend Polarized America by the distinguished political scientists Keith Poole, Howard Rosenthal and Nolan McCarty, which I read part of in manuscript form. The book, which Paul Krugman plugged this week, includes this remarkable picture showing the correlation between polarization and income inequality:

The Times ad is unwittingly correct: this will be remembered as a new Gilded Age.

If you haven’t seen the bizarre clip of Connie Chung’s signoff at the end of the last episode of her MSNBC show with Maury Povich, take a look — it is mesmerizingly bad:

The New York Times tries but fails to explain what the hell she was thinking. (One theory I came up with: It was an experiment to determine whether anyone actually watched her show, given that MSNBC’s weekend ratings are probably within the Nielsen margin of error.)

As the Times noted, Gawker did the best job of putting the clip in historical context:

Humorist Dave Barry once described Richard Nixon’s resignation statement as “a semicoherent speech about his mother that may well rank as the single most embarrassing moment in American history.” Watching this clip of Connie Chung “singing” farewell to her audience leads us to believe that the 37th president can finally rest in peace.

For those who are interested, here are a few places where this blog and Spinsanity have been cited recently.

Cathy Young cited Spinsanity’s criticism of Ann Coulter in a Boston Globe op-ed yesterday:

Even O’Reilly has tempered his criticism by saying that, unlike left-wing satirist Al Franken, “Coulter doesn’t lie.” Yet the website spinsanity.org, equally tough on prevaricators whether on the left or right, has documented a number of egregious distortions and misstatements in Coulter’s earlier books, “Treason” and “Slander.”

Eugene Volokh cited Spinsanity’s critique of Slate’s “Bushisms” feature in an article on Slate:

[I]f, for instance, you think you’ve nailed President Bush in an error, link to the whole speech, so people can see the context. That way, when you’re mocking Bush for saying, “I’m honored to shake the hand of a brave Iraqi citizen who had his hand cut off by Saddam Hussein,” readers can easily go to the full quote, and see that it says

I’m honored to shake the hand of a brave Iraqi citizen who had his hand cut off by Saddam Hussein. … I appreciate Joe Agris, the doctor who helped put these hands on these men. … These men had hands restored because of the generosity and love of an American citizen …

Bush was shaking the prosthetic hands of people whose real hands had been cut off by Hussein. In context, there’s nothing risible about his statement (as Spinsanity also noted; for similar examples, see here, here, and here).

Because of this, I think the Bushisms column shouldn’t have run this statement. But I realize that others may disagree. That’s why, rather than the impossible first-best world of “always quote accurate sources, and in context,” I prefer the second-best world in which writers try their hardest to be accurate, but also provide the sources so readers can judge for themselves.

And my post on Hispanic immigration to Iowa was picked up by Washington Monthly’s Kevin Drum, the Wall Street Journal Online’s Border Lines column, and The Hotline’s Blogometer column.

Look out Barney!

A three-year-old in St. Paul had a birthday party with a Jim Lehrer theme. Here’s the cake:

They also had Lehrer birthday hats:

Just imagine the merchandising possibilities…

Last week, I excoriated Cokie Roberts for dismissing concern about immigration in Iowa’s first Congressional district by saying that “it’s this very white area that doesn’t really have any immigrants.”

As I wrote, the district is actually in about the 25th percentile among House districts nationwide in terms of the number of foreign born citizens, and Iowa as a state saw the 10th fastest growth in the number of foreign born citizens during the 1990s.

My friend and research collaborator Jason Reifler has passed on a really cool graph that fleshes out just how dramatically the demographics of Iowa have changed. The graph, which was developed by Paul Voss at the University of Wisconsin’s Applied Population Lab, shows how the state’s Hispanic population has spiked around major meatpacking facilities in Iowa:

Given that many of the Latinos taking the dangerous, grueling jobs in meatpacking facilities are likely to be undocumented immigrants, it’s not surprising that Iowans are concerned about the issue of illegal immigration. Some of this may be xenophobia; some may be serious concern about policy; but in any case, Roberts, an alleged NPR “analyst,” should understand how Iowa has changed before pontificating about its politics.

Update 6/15 3:38 PM EST: I corrected the graph’s title per dm’s comment below. As far as the comment about the magnitude of changes in population, the Hispanic population of Iowa grew by 156 percent between 1990 and 2000, increasing by almost 50,000 people (PDF). So those spikes matter. Unfortunately, I don’t have the scale — I didn’t create the graph.

How sad has our discourse become?

On Monday, Karl Rove used an unfortunate military metaphor to attack John Kerry and John Murtha, a Vietnam veteran and a former Marine colonel, respectively:

Rove told a New Hampshire audience Monday night that Democratic critics of the Iraq war such as John Kerry and John Murtha, both combat veterans, “give the green light to go to war, but when it gets tough, they fall back of that party’s old platform of cutting and running. They may be with you for the first few bullets but they won’t be there for the last tough battles.”

Kerry spokesperson David Wade retaliated by calling Karl Rove fat:

Sen. John Kerry’s spokesman, David Wade … yesterday snarled at White House adviser Karl Rove for accusing Kerry and fellow Vietnam vet Rep. John Murtha of “cutting and running” from the war.

“The closest Karl Rove ever came to combat was these last months spent worrying his cellmates might rough him up in prison,” said Wade. “This porcine political operative can’t cut and run from the truth any longer. When it came to Iraq, this administration chose to cut and run from sound intelligence and good diplomacy. … In November, Americans will cut and run from this Republican Congress.”

God bless America.

Tapped’s Ezra Klein, who is usually sharp, offers a seriously misguided argument in favor of increasing the minimum wage:

[W]hile reasonable people can disagree on the impact of minimum wage laws, it’s time they stopped. William Niskanen, in arguing against a federal boost to the wage, trots out the same old canards about wage increases decimating jobs. And yes, if you jack the wage up to $16 an hour, jobs will be lost. But up to $7 over a period of years? The evidence doesn’t back him up. And, luckily, it’s so easy to check that you folks can play along at home. Just crosscheck this list of state minimum wage laws with this rundown of state unemployment rates…

[A]ny attempt to correlate minimum wage increases with joblessness falls on its face. When Clinton raised the wage in the mid-‘90s, low income employment skyrocketed. Some catastrophe. And we can take this as far back as folks want. Check this graph, showing the real value of the minimum wage (now at a historical low). Its peak was 1968. The unemployment rate in ‘68? A brilliantly low 3.5 percent.

Unfortunately, correlation does not imply causation. The fact that some states have high minimum wages and low unemployment and others have the reverse does not prove that the minimum wage has no effect on employment. It’s perfectly plausible that states with robust labor markets tend to increase their minimum wages. Afterward, they still have low unemployment, but it might have been even lower had there been no minimum wage. And unemployment might be even worse in states with low minimum wages and high joblesseness. The same argument applies to the point that the minimum wage’s real value was highest in 1968, when unemployment was low. It might have been even lower without a minimum wage. We just don’t know.

To properly assess the effect of changes in the minimum wage, you need an “all others things equal” situation — essentially, a natural experiment. The canonical evidence supporting Klein’s position is a David Card/Alan Krueger study of the restaurant industry in the labor market comprising Philadelphia and southern New Jersey. They found a minimum wage increase in New Jersey had no effect on employment relative to Pennsylvania, which did not increase its minimum wage.

However, such findings are controversial among economists. For instance, Paul Krugman writes that “most of [Card and Krueger’s] colleagues are unconvinced; the centrist view is probably that minimum wages ‘do,’ in fact, reduce employment, but that the effects are small and swamped by other forces.”

I think Krugman’s view is probably right. But in any case, if we’re going to have a serious debate about the minimum wage, we need to be talking about these types of studies, not correlations between minimum wages and unemployment.

The brilliant New Republic writer Jonathan Chait has spent years torturing conservatives (and himself) by compiling and analyzing the contradictions between conservative ideology and factual evidence. Unlike center-left opinion journalists, which generally bow toward Brookings-style empirical analysis, conservative intellectuals have been resolutely anti-empiricist in supporting supply-side economists (which economists shun), missile defense (questioned by physicists), and the like.

Indeed, you can generally track the fortunes of empiricism on the right by reading Chait’s writing over the last decade, and the news has generally not been good (as All the President’s Spin also concludes). But there have been a few encouraging signs recently — consider three incidents Chait has documented:

1) He claimed in 2003 that the prescription drug bill was skewed to the interests of business. National Review’s David Frum mocked Chait at the time, but on May 1 of this year, Frum conceded that “Republicans worked a lot harder to ensure that the prescription drug benefit relieved businesses of the burden of their past prescription drug promises than to protect taxpayers.”

2) Chait argued last year that conservatives support smaller government as an end in itself, rather than as a means to achieve some policy goal. As a result, he claims, conservative policy beliefs are therefore less susceptible to empirical disconfirmation than those of liberals, who don’t support big government as a goal, but as a means to achieve various empirically measured policy goals. National Review’s Jonah Goldberg freaked out at the time, but then made a similar point in a May 25 post on the National Review blog.

3) Chait praised three conservatives for making falsifiable predictions about liberal media bias and then admitting that they all failed to come true, though none of them reconsidered their theories.

All of these are at least somewhat encouraging, right? But then I read Chait’s latest article in TNR, which perfectly documents how right-wingers excommunicate conservative leaders once they become unpopular, as they are doing now to President Bush. No matter what the evidence indicates, the leaders’ failure is attributed to their insufficient fidelity to the conservative program. As Chait sums it up, “[t]he liberal author Rick Pearlstein once said of the right’s mindset, ‘Conservatism never fails. It is only failed.’ Bush has failed. Therefore, he cannot be a conservative.” This kind of “analysis,” which liberals frequently engage in as well, is essentially theological. Every political failure is attributed to compromise, moderation, or other signs of impurity.

So now I’m depressed again. Can’t we all just be one reality-based community?

If you missed it, NPR’s “Fresh Air with Terry Gross” featured a fascinating interview yesterday with Sharon Weinberger, the editor-in-chief of Defense Technology International, about her new book Imaginary Weapons. Her description of the way that the Bush administration has shunned scientific peer review in the defense research and procurement process is disturbingly similar to Chris Mooney’s analysis of the rest of the administration’s science policy in The Republican War on Science. As Josh Marshall wrote back in 2003, it’s our first postmodern presidency…