NC Media Watch

A quest for reason and accuracy in letters to the editor, guest editorials and other issues of interest to the citizens of Western Nevada County.

Tuesday, September 06, 2005

Were pessimistic editorial statistics accurate?

The Union Editorial Board, Our working class can only hope for a better year, September 6, 2005
These statistics indicate that the finances of many workers, the backbone of this nation, did not improve in the past year. In addition to the outsourcing of good jobs to the cheapest bidder that is accelerating our shift from an industrial to a service society, workers must worry about the consequences of rising energy costs for the rest of this year and next. The ripple effect of Katrina could well turn into a tidal wave of economic devastation at points far from the Gulf Coast. It would be nice if the working man and woman would have more to celebrate at this time next year. It's difficult, however, to see a source of optimism unless our lawmakers and business leaders adopt a national strategy that includes addressing the concerns of the working class so we can better compete with the booming industrial and high-tech societies of China, India and other nations.

The Union Editorial was on the negative side, just like a New York Times editorial. Power Line looked at the Labor numbers and put them some perspective.

If you believed what you read in newspapers and hear on television, you would think that the Bush administration has been one long period of economic decline. In particular, every time the Census Bureau releases a report, a spate of negative news stories follows. 000 The first question should be, how reliable are the data in the report? The Census Bureau gathers data for the Current Population Survey, the report at issue here, by asking thousands of people across the country to fill out forms stating how much income they received from various sources. Some important sources of income, like fringe benefits paid for by employers and in-kind welfare benefits, are excluded. Beyond that, the accuracy of the data is entirely dependent on the reliability of the people who fill out the forms. And studies have shown that many people, especially those classified as poor, spend considerably larger amounts of money than they say they received as income. In some surveys, the discrepancies have been more than 30%. So measuring changes in income by the one-tenth of one percent would seem to be an example of fictitious precision--the math is correct, but the raw data are dubious.

You can read a more historic and optimistic analysis here, including historical charts and make up your own mind, was The Union editorial too pessimistic?

UPDATE: Bob, a reader comments:
I am sure there are inaccuracies in the data but I am not sure if the correct response is to immediately question the data. When you read "shift from an industrial to a service society" read "losing our manufacturing sector". As you know, I believe this is actually what is happening to our economy. It is my opinion that we can not continue to loose our national influx of funds from exports and at the same time expect our economy to remain ahead of developing countries. The end result must be a decline in our international economic posture and with that, everything else that goes along with it.

I think one reason our true economic health may not be as apparent as it would otherwise be is the increase of funds injected into this country’s economy from refinance of homes across the nation over the past 4 to 5 years. It would be interesting to compare the figures between the cash generated by this refinancing and the GDP. If the ratio approaches the ratio in the decline of the manufacturing generated portion of the GDP then you would have an answer as to why our economy doesn't yet show the effects of the decline in the manufacturing portion of the GDP.
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1 Comments:

Blogger Frederic Christie said...

Russ, the point of the Union commentary, as you so obliquely missed, wasn't macro-economic statistics (which are almost meaningless without context; GDP goes up just as much if poison or cures are produced, as just one example out of dozens I could offer), but how WORKERS are doing. Even the Economist recognizes that the new American growth, far more tepid than China's and slower than before the neo-liberal period (called the "golden age of state capitalism"; note that I did not support this either, but at least it had the benefit of growth rates and higher equity), is very heavily inequal, but also highly immobile. America is acquiring a very thick and powerful caste system that is very hard for most to get out of. Now, the Economist is hardly my kind of rag, but even they can see this coming. The fact is that the American worker has not gained but is stagnating or in fact losing in absolute terms. Minimum wage, now anywhere from 5.25 to 6.75, should be 12-20 dollars an hour, if it tracked productivity. It stopped doing that in the 70s, about the same time as "liberalization" of financial markets occured. We have entered a high inequity, low growth, low wage period, but the media doesn't mention it. Did I forget to mention that this period is a high profit one as well?

Tue Sep 06, 01:02:00 PM PDT  

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