Thursday, March 5, 2015

Our Right to Free Speech Allows 'Spin,' Puffery and Even Telling Lies ... The Truth about Stagnant Incomes in America ... More on the Myth of Middle Class Economics

Our U.S. Constitution guarantees to all of its citizens the right of free speech. That fundamental guarantee contained in the Bill of Rights to very much applies to what politicians and sales people say as well.

For the most part, of course, free speech is a great thing. But we have to qualify things and say 'for the most part' because the guarantee of free speech doesn't obligate the speaker to even try to tell the truth. In fact, many of our free speakers can and often do 'interpret' things in their own special way to make their arguments sound more convincing. Most politicians do that all the time, as do salesmen and other self interested individuals.

So in America, it's a world of caveat emptor, aka let the buyer beware, for We the People as politicians and sales people work hard to solicit our votes and hard earned money. And while the free speech guarantee doesn't extend to such things as yelling fire in a crowded theater merely to incite panic, we are otherwise pretty much allowed to engage in 'spin, ''puffery' and even outright lying to argue for our preferred outcomes. But occasionally this free speech stuff goes too far -- way too far.

In that regard, The Mumbo-Jumbo of 'Middle-Class Economics' tells one such story about middle class income stagnation in America. Are we to believe that the typical American has experienced no increased income or buying power since 1968? On its face, that's a ridiculous statement. Nevertheless, as further evidence of the truism that while 'figures don't lie, liars often figure,' let's see what our nation's chief class warfare proponents and world class obfuscators have to say about it:

"In the “Economic Report of the President” released on Feb. 19, the White House’s Council of Economic Advisers defines “middle class economics” primarily by the average income of the bottom 90%. “Average income for the bottom 90 percent of households,” according to the ERP, “functions as a decent proxy for the median household’s income growth.”

This is absurd: The average income for the bottom 90% is not a decent proxy for the median nor even a decent measure of household income. . . . But this dodgy number does serve as the basis for CEA Chairman Jason Furman ’s assertion . . . that the U.S. has suffered a “40-year stagnation in incomes for the middle class and those working to get into the middle class.”

The measure has become popular on the left. Sen. Elizabeth Warren (D., Mass.) recently asked an AFL-CIO conference, “Since 1980, guess how much of the growth in income the [bottom] 90% got? Nothing. None. Zero.”. . .

Amazingly, these same statistics also show there has been no increase for the “bottom” 90% since 1968. Measured in 2013 dollars, average income of the bottom 90% was supposedly $32,730 in 1968, $32,887 in 1980, $35,326 in 2007 and $32,341 in 2013.

This is totally inconsistent with the data the Bureau of Economic Analysis uses to calculate GDP. For example, real personal consumption per person has tripled since 1968 and doubled since 1980, according to the BEA. Are all those shopping malls, big box stores, car dealers and restaurants catering to only the top 10%? The question answers itself.

Instead of the White House concoction, consider the Congressional Budget Office estimates of actual median household income. Measured in 2013 dollars, after-tax median income rose briskly from $46,998 in 1983 to $70,393 in 2008 but remained below that 2008 peak in 2011....

Both CBO and Census estimates show only six years of middle-class stagnation, not 40....

People often form strong opinions on the basis of weak statistics, but this “bottom 90%” fable may be the worst example yet. The Economic Report of the President’s description of “middle-class economics” rests on a far-fetched claim that middle incomes have stagnated for four decades rather than from 2008-13—most of these years during the Obama presidency."

Summing Up

Although there are countless distortions in 'arranging' the various numbers used to make the case that the average American's income hasn't grown in the past half century (such as taxes, entitlements, benefits, median vs. average earnings and so forth), the real facts placed in proper context tell a much different story than the one being 'sold.'

In other words, what we see isn't what's being sold. We're being told not to believe our 'lying eyes.'

Income stagnation in America, while very real, is in fact a quite recent phenomenon and not of decades long duration.

To repeat, real personal consumption has tripled since 1968 and doubled since 1980.

But the White House wants us to believe that median, average, or individual purchasing power hasn't increased since 1968. And that's a lie.

The very real problems we have today result from a stagnation of our economy and individual earnings the past several years and not the past several decades. And those problems won't ever be solved by more government control and intervention.

Do you ever wonder why the White House and its allied band of numerically oriented 'progressive' political cherry pickers choose not to see what's easily seeable? Neither do I.

That's my take.

Thanks. Bob.

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