Friday, February 27, 2009

Making Sense of the Statistics. Not.

Everyone has an opinion on the economy...how we got into this mess, how to get out of it, and whether or not one party or the other is recklessly hell-bent on ruining the country with its ludicrous policies. As for the last one, well, it's a big country, and it takes both Republicans and Democrats working together to really bring it to its knees. I guess we'll be okay, then, because there's no chance of the Republicans ever stooping to work with the Democrats, and the Democrats are too busy in the short term sticking it to the Republicans in revenge for the Republicans doing it to them when they were in power. I have a mental image of President Obama addressing a joint session of Congress and starting his speech with something like, "Now children, play nicely..."

But I digress.

As I've often moaned in this space, part of my problem with making sense of the economy is that I don't know what numbers to trust. Both sides of any economic argument can march out mighty battalions of numbers and percentages and ratios, reinforced by endless divisions of spun history, to "prove" that their side of the argument is totally correct, and you're a brainless moron if you don't see it. What it actually proves is that statistics are like prisoners in damp and lightless dungeons: if you torture them long enough, they'll tell you whatever you want to hear. Which brings me to the intellectual knife fight I've been carrying on with my friend Anonymous over the last few weeks...

It all started back on the 15th of this month when Suzy Q commented on my post "Danger - Political Rant. Keep Back 50 Feet." I had complained that I couldn't understand the Republican reliance on tax cuts as the answer to all economic ills, and Suzy Q offered a link to a document she thought would help me understand. Since Anonymous is always proving his arguments by telling me to "look it up," I decided to do that: I followed Suzy Q's link and found this April 1996 report of the House Joint Economic Committee - The Reagan Tax Cuts: Lessons for Tax Reform. The first thing I noted when I read it (although you have to look to find it) was that it was not a product of the entire "Joint Economic Committee," but rather of its Republican members; thus, it provides the expected glowing review of the efficacy of tax cuts as an economic stimulus measure. The next thing I noticed was that its arguments were buttressed by two references and no footnotes.

Trolling on through the Joint Economic Committee's website, I found another report. This one was titled "Extending the Bush Tax Cuts is the Wrong Way to Stimulate the Economy," and it was dated April 2008. It's cover clearly specified that it was a report by the majority (i.e., Democratic) staff of the committee and, as you might suspect, it takes the exact opposite viewpoint, demonstrating (with two pages of references and a bazillion footnotes) that tax cuts don't work. I'll e-mail you a copy if you want to read it.

So who's right? Even allowing that the two reports were published 12 years apart, there seems to be a radical difference in how the history and the statistics are interpreted. Do tax cuts work or don't they? Is it any wonder that the American people don't know who to trust when they are asked to support a particular philosophical approach to resolving the fiscal crisis?

I guess my hero Will Rogers knew what he was talking about when he said that the income tax has made more liars of the American people than golf has.

And I'm still confused about the economy and unlikely to be unconfused any time soon.

Have a good day. More thoughts tomorrow.

Bilbo

6 comments:

Amanda said...

At least its Friday and tomorrow is Cartoon Saturday. Thats something simple and good to look forward to :)

The Mistress of the Dark said...

My advice when thinking of the economy is not to think of it. You will only hurt your brain and its not worth it.

Twinkie said...

I'm sooo sick of being taxed up the wazooooo on every single freaken thing. My house, sales tax, car tax, cigarette tax, beer tax? what theeeeeeeeeee.
AURGH.
I need an overly taxed ciggy and beer to wash this all down.

Mike said...

I kept waiting for the 'figures don't lie but liars can figure' quote. But it was only alluded to and never quoted.

Wv - photansm - A new religion based on photography.

Jean-Luc Picard said...

se of statistics? Is that possible?

SusieQ said...

Economics is confusing. It confuses me too. And like you I don't know who to trust sometimes.

The link I gave you wasn't the best source of information on the tax cut debate, whether it helps or not. I realized that the report was written by Republican members of that committee and would be slanted. That was lazy of me. I should have given you a more extensive article, one that contained many footnotes for instance. This next one does.

It is from the Cato Institute. I know, I know...those are Libertarians writing that stuff. But it is still good information to know if you are willing to wade through all the charts and diagrams and arguments dispelling the many fables associated with Reaganomics.

Supply- side Tax Cuts and the Truth about the Reagan Economic Record

Another place to go is Wikipedia where you will find both sides of the argument presented. The neutrality of this article is debatable though.
Reaganomics

I hope these links work for you.

I always enjoy reading your blog, but haven't participated except for a few times.