Who Will Tell Us the Truth?

When a large number of people are convinced that certain incorrect facts are true, it is not in the interest of politicians or advertisers to try to talk them out of it. If many people thought the sky was green, Congress would likely pass a resolution praising the greenness of the sky in an effort to garner support. 

When the food industry learns that many people believe that gluten has negative effects, they begin printing labels touting the lack of gluten in their products or take the gluten out while raising the price. They will reinforce errors for votes or sales with no interest in education, while the myths are spread and supported by the news media and social media contacts.

I have written many times before about misunderstandings around the health benefits of dietary supplements, the dangers of GMOs and an irrational fear of everything from power lines to nuclear power plants. All these misconceptions have a cult-like following. 

Likewise, as crime statistics continue to improve, the news media’s search for more and more isolated incidents to report with breathless anxiety leads people to the opposite conclusion. Fear sells. (This is very apparent from the coverage of the coronavirus where they search out and report as typical, anecdotal examples of flaws in the system then ask the President what he is doing to quell the anxiety and comfort the fearful.)

Now here are a few more examples where commonly held beliefs are inconsistent with the facts. 

The first is a campaign trail mantra: the rich are getting richer while the poor get poorer. This is clearly not the case. Income is tracked in quintiles, five groupings from lowest to highest. Between 1979 and 2015, real income for all quintiles has increased. 

The Congressional Budget Office reported that, adjusted for inflation, taxes, welfare payments and Social Security, the income of the bottom 1/5 rose by 79%, while the top 1/5 rose by 103% and the middle 3/5 by 46%. There may be more inequality, but the poor are not getting poorer. Furthermore, research shows that the population in each of those segments is less stable than most believe. Individuals freely move up and down, so some of the formerly poor are much better off.

The second case has led to draconian laws in every state ruining the lives of individuals and their families, sometimes with threats of violence and death from incensed vigilantes. Laws require every sex offender to be named on the same registry regardless of the seriousness of their offense. 

The idea is to protect the public, especially children, from these monsters who are likely to strike again without notice. But reliable research shows that people who commit sex crimes are very unlikely to repeat. And a study in New York showed that 95% of those arrested were first offenders – who would not have been on a registry in the first place. 

Finally, is vaping is as bad as smoking? Johns Hopkins says that it’s less harmful than smoking but not completely safe. Most cases of lung injury (EVALI) “appear to predominantly affect people who modify their vaping devices or use black market modified e-liquids.”

The CDC opinion is that “E-cigarettes have the potential to benefit adult smokers who are not pregnant if used as a complete substitute for regular cigarettes....”

The majority of cases of EVALI are strongly associated with Vitamin E acetate added to THC. Vitamin E acetate has not been found in the lung fluid of people that do not have EVALI. 

 Although it’s not legal to sell e-cigarettes to minors since August 2016, and the federal government has just banned flavored e-cigarettes to try to discourage kids from getting hooked, kids have always been able to get cigarettes. Despite new laws, the country is stressing over a teen vaping epidemic. The result of these bans will likely increase EVALI cases as adults and kids that still want the flavors will be shopping on the black market where the real danger comes from. Meanwhile, everyone feels virtuous about leading the fight against another vice and protecting our kids.

It is so easy for people to get extremely upset about invisible threats, e.g., diseases and radiation or threats to our children like abductions or school shootings or rape culture on campus or differences that play to our sense of social justice. When this kind of artificial hysteria takes hold, no one stops to ask: what is the real danger; where did they get the numbers; who conducted the study; was there a study at all or did someone make it up to support their own agenda, job security or beliefs? 

The government reacts with stupid, purely symbolic actions like banning plastic straws. Advertisers print labels or adjust products to meet a demand generated by information with no scientific backing. Myths and misinformation distract from solving real problems. All for lack of critical thinking.

What is Income Inequality?

What is the opposite of income inequality? It certainly can’t be absolute equality of income. Without being more specific, how can the term mean anything?

For years we have heard about goals like clean water and clean air. The US has been moving in the right directions. According to the EPA, “Since 1970, implementation of the Clean Air Act and technological advances from American Innovators have dramatically improved air quality in the U.S.  Cleaner air provides important public health benefits.” Follow the link to find a graph of nine measured pollutants, excluding CO2. It shows a downward trend since 1990 for all, excluding unusual events like dust storms and wildfires. Overall, pollutants have dropped significantly despite the fact that “Americans drove more miles and population and energy use increased.”

All the pollution levels dropped below a line labeled “Most Recent National Standard” as of five years ago. Note that there is a standard that defines an acceptable level of particles in the air. Totally pure air is not a practical or realistic goal.

Similarly, the 1974 Safe Drinking Water Act “resulted in major changes in the way drinking water is managed and treated in the United States, and it achieved substantial measurable benefits in risk reduction and public health protection.”

On a side note, these facts do not seem to sway Americans influenced by media reports designed to stimulate concerns about hypothetical risks related to drinking water. A survey from 4 years ago showed that 56% of Americans “were concerned or very concerned about their tap water, 77% were regular users of bottled water, and 43% used some type of home treatment device.” The water industry and regulators have their work cut out for them figuring out how to promote acceptance and confidence in public drinking water supplies “and to maintain the public’s support for needed improvements.”

Once again there are measurable standards. Customers of public water systems receive a report from their water utility every year showing how the water supply measures up to various standards. Again, absolute purity is unachievable.

The same is true for lakes and rivers. “Human health ambient water quality criteria represent specific levels of chemicals or conditions in a water body that are not expected to cause adverse effects to human health.” 

Applying this to income inequality leaves critical thinkers puzzled.

The news media emphasizes stories about the shrinking middle class. “A graph from Reason, however, shows that about 50 years ago, 53 percent of people were middle-income, making between $35,000 and $100,000 per year. Although that statistic has since fallen to 42 percent, the reason [behind the change] is that many people moved into upper-income brackets. The share making more than $100,000 rose from 8 percent to almost 28 percent. (These numbers are inflation-adjusted.)” It’s shrinking, but not in the direction the news media and politicians imply.

Stories about income inequality don’t mention this information. Instead they attempt to stir up envy toward the super-rich, at least some of the super-rich. Notice that the emphasis is always on bankers, CEOs and hedge fund managers, not on sports stars, celebrities, Internet influencers or software developers. We are supposed to be irate that some people are rich, undeserving jerks, but others deserve wealth because they entertain us. Often the people who report these stories are rich themselves.

Furthermore, the evidence that income inequality negatively effects economic growth or social mobility is based on correlation, and, as every student of statistics knows, correlation does not mean causation. Whether or not income inequality is a drag on economic growth remains debatable.

But beyond that, it makes no sense to get upset about income inequality until it is defined and a goal it set. Anything that can’t be measured can’t be said to improve (or get worse). With no goal, there is no definition of victory. (This can also be said about so many other vaguely defined points of contention such as diversity, sustainability, and social justice.)

Food For Thought

Considering consistency by the news media: CBS This Morning has a regular series, "What’s Working," which investigates innovations in America that seem to be paying off. On one particular episode a few weeks ago they went to the University of Vermont to highlight a program to discourage the use of drugs and alcohol and move students toward more healthy activities.

Near the end of the piece the professor who designed the program explained that the brains of college students are not yet fully developed. "You couldn't come up with a worse age to send someone to college than when they're 18.” The reporter feeds back the notion, “The brains are not done developing at 18?” He responds, “Not even close.” 

This was not the only report emphasizing the immaturity of college students, and is not confined to CBS, with some saying the brain is not done developing until the early twenties. Some sources put the age of a fully developed frontal cortex closer to 25. Such statements have been fairly common when discussing various crimes and indiscreet tweets. Then why were these same reporters so excited just ten months ago about the apparent wisdom of a group of high school students lecturing the country on gun policy?

Considering income inequality: If we didn’t have rich people, there would be no designer goods. Nobody would be able to show off for their friends by buying the cheap knock-offs.

Considering trusting medical information based only on endorsements: Bloodletting was a common practice among doctors for thousands of years up to about one hundred years ago. Today bloodletting has been shown to be ineffective and mostly harmful. (A controlled variation is used today only in the treatment of a few very rare diseases.)

Since there would have been no opportunity for controlled experiments, the only way it could have continued to be practiced for so long would be through endorsements and by doctors hyping their own successes. “Marie-Antoinette, for instance, seemed to benefit from a healthy dose of bloodletting while giving birth to her first child, Marie-Thérèse, in 1778” – an endorsement from the Queen! 

Doesn’t this same practice of celebrity and friends’ endorsements and doctors hyping their own successes sound like anything we might see on TV or read on the Internet today for any number of miracle cures?

Considering the cancer conspiracy: Did you know that doctors, Big Pharma and the FDA are working together to suppress cancer research for fear that discovery of a cure will put them out of business? They also try to undermine real cures provided by alternative medicine. Many Americans do believe this conspiracy theory. Wired reported on a video that came out last July on the Internet about a miracle cancer cure derived from moss and available online. It “quickly racked up millions of views.” The video used the usual lure of “what the pharmaceutical companies don’t want you to know.”

The problem was the video was intentionally faked for the purpose of education, “teaching people to be skeptical of videos exactly like this one.” Do the same people who endorse this cancer-conspiracy myth also believe that firefighters want more fires and do not promote the use of smoke alarms and the practice of fire safety? Do they think dentists don’t want you to brush and floss? All this is equally hard to believe.

It doesn’t take much research (and critical thinking) to find obvious distortions and contradictions in the news and social media. As always the bad information flies around the world at lightning speed, while the truth struggles to catch up (often just in time to be slapped down by committed advocates or enterprising charlatans).

Let's Not Become Victims

Last Tuesday was the celebration (?) of women not being paid as much as men.  It seems odd that people would go out of their way to make themselves feel bad, but that’s the way it is.  Maybe taking on the status of victimhood draws sympathy or gives one a chance to express pent up anger and resentment, but it doesn’t really do anything to solve the problem.  What’s worse was the blatant exaggeration to make the point – 20% indeed!

But that’s what politicians were telling us last summer and for many years, and there is no reason to change the story now.  CBS proudly reported:  “The gender pay gap is a well documented phenomenon” according to a new study by an organization called Glassdoor.  The lead was that a survey of half a million people in America revealed that a woman earn 76 cents for every dollar a man earns.  But they then added, the “statistic may be slightly misleading, in that it doesn't compare men and women on an apples-to-apples basis, such as comparing women with similar levels of education and experience with men in the same situation.”  Later in the article this apples-to-apples comparison yields a real difference of 5.4%.  Another source using similar calculations had come up with about 1% less.

In a different article they elaborate on this:  “Yet even when controlled for those factors and other issues (such as employers and job titles), women earn more than 5 percent less than men.”  So where does the 20% number come from, except from an attempt to purposely make the gap look a lot worse by using an invalid comparison?  Apparently trying to soften this discrepancy, they argue:  “Male preschool and kindergarten teachers earn $16.33 per hour, compared with $14.42 per hour for their female counterparts.”  Instead of providing further evidence for a deliberate gap, this should strike us as odd.  Don’t almost all kindergarten teachers belong to a union that negotiates wages for schoolteachers?  I’m sure their contracts don’t say, “Just pay the guys a little more.”  As an attempted example of a valid comparison, this statistic is incredible.

Yet people continue to make these false claims about the size of the gap, despite the ease of finding information like this from Forbes to clearly explain the misconceptions, both from faulty calculations and from poor understanding of the situation.  “President John F. Kennedy signed the Equal Pay Act in 1963, making sex-based discrimination in pay illegal.”  We don’t need more laws; we need better enforcement.  The government is quick to point out to a business owner when there are fewer than the required number of handicap parking spaces, but for nine presidential administrations this wage-gap problem persists.

Of course advertisers have been jumping on the bandwagon to promote the falsehood.  Several businesses showed support by offering a 20% discount for women on the wage-gap “holiday” last week.  Some say those businesses are doing this to “try to raise awareness” about the unfairness.  Get real! – They are not trying to raise awareness; they are trying to sell stuff and to develop a base of loyal customers.

Now it’s not right that any woman with the same background and experience should be paid less than any man for doing exactly the same job.  Until the 4% or 5% becomes zero the problem is not solved.  (Nor would it be right if positions were reversed.)  However, it’s also not right to intentionally mislead women by exaggerating the size of the problem as a ploy to gain support for political or commercial gain.

The World's Richest

Last time I gave a very short summary of the principles of economic understanding.  Often personal and governmental decisions arising from good intentions lead to disruption and unintended consequences, whereas economic understanding would help us to anticipate and avoid these very natural outcomes.

One important omission from last week was the idea that the “economic pie” is getting bigger.  As the economy grows everyone is better off.  It is not the case that if I get more you must get less.  It's not a zero-sum game where having winners means some must be losers.  This is not obvious to young people because progress takes time.  

Eighty years ago only about half the households in the US had a radio and flush toilet.  Only about 60% had a car and 70% had electric lights.  About 60 years ago televisions came on the scene, and in another ten years color TV.  It wasn’t until about 40 years ago that home air conditioning began to spread.  Microwave ovens and home video recorders were brand new.  Regular use of personal computers in home and office came about in the last 25 years.  Cell phones and smart phones followed.  Today we take all this for granted, but we can afford to have the lifestyle we have due to a growing economy.

The poor today have appliances that a few generations ago were limited to the rich or that no one had because they were not invented yet.  The latest information I found were 2011 Census estimates of the percentage of poor households in the US that owned the following:  clothes washer and dryer (65%), refrigerator (98%), microwave (93%) air conditioner (83%), television (96%), video recorder/DVD (83%), computer (58%), cell phone (81%).  Those numbers are higher today, and it all came about through innovation, increased productivity and a growing economy, not because someone else had to settle for less.

 But Oxfam International sees it differently.  Using the tag line: “The power of people against poverty,” their focus seems not to be on eradicating poverty directly, but on the size of the gap between the world’s haves and have-nots.  In the news this week, a press release against income inequality lists the eight richest men in the world whose combined wealth equals that of the poorest 50% of the world.  Oxfam has been releasing this type of information each year before the World Economic Forum in Davos, a private conference for the world’s richest people, apparently trying to embarrass and shame them into supporting the cause.  (Note that just 1% of the people in the bottom 50% of the world are from North America.  And using their measurement criteria, new college graduates who owe more money than they have could be counted among the world’s poor.)

If we took everything away from these eight and distributed to the 7.4 billion people in the world, each of us would get $57.70.   The following year we would get considerably less from the next eight or ten or twenty.  It doesn’t work that way.

Some of the people listed are Bill Gates, who sold software to billions; Jeff Bezos, who lets us shop for almost anything on Amazon; Warren Buffet and Mark Zuckerberg.  None of these people forced us to give them our money.  We could have used inferior software, not shopped from home and never joined Facebook.  But many people chose to support them.  That’s how they got to be the richest people in the world, by inventing something we wanted, that added value to our lives and that we were willing to buy.  Gates and Buffet have set up charitable organizations.  Amazon has just announced plans to add 100,000 jobs in the US over the next 18 months. 

Now that we have freely given them our money and the growth of their companies has provided a huge number of jobs, Oxfam thinks they should feel guilty and the government should punish them with higher taxes.  Doesn’t confiscating someone’s money through threat of force constitute punishment?  (Should we limit the number of twitter followers anyone can have so we all have an equal chance to get our message out?  Wouldn’t that be fairer, too?)

Economic growth doesn’t work that way, and the key to ending poverty is through economic growth, not artificially shuffling around a fixed amount of money.

Where Do Those Numbers Come From?

You hear it all the time from politicians and news anchors:  97% of scientists agree on climate change; women are paid 79% of what a man is paid for the same job; and the rich are getting richer while the poor get poorer.  But where do these numbers come from?

I found more information about the first number in a Forbes article written by Alex Epstein.  Now Epstein is the author of A Moral Case for Fossil Fuels, so he definitely is not unbiased.  But he says that a 2013 paper by John Cook and others “found that over 97 percent [of papers he surveyed] endorsed the view that the Earth is warming up and human emissions of greenhouse gases are the main cause.”

To begin with the 97% refers to papers reviewed, not to scientists or even to all papers on the subject.  To get to 97% Cook developed three categories.  The first, “explicit endorsement with quantification,” refers to papers stating that at least half the problem is attributed to human activity.  This appears to be a small number of the papers.  The second category, “explicit endorsement without quantification,” includes papers that did not specify how much of the problem was due to human activity.  In the final category, “implicit endorsement,” are papers that only imply but do not state outright that some of the global warning is man-made.  Add all these categories up to get 97% of papers reviewed.  The only papers excluded were those that explicitly denied any man-made factor.

Epstein goes on to quote some of the authors of the reviewed papers who say Cook’s interpretation is not representative of their views.  So the source of this number gives no evidence that 97% of scientists agree and makes no mention that warming will be catastrophic, a thought the politicians and media automatically assume.  Finally, a reading of the paper itself shows that its stated purpose was to influence public opinion.

The pay issue is an easy one if you think it through.  The 79% number is probably accurate, but unfortunately meaningless.  It compares the pay of all women working full time to that of all men working full time.  It does not compare women in the same job to men in the same job.  In comparing the whole population, it doesn’t distinguish between the type of job, time on the job, or other factors (other than discrimination) that may affect pay level.  A more statistically accurate number is around 95.5%, which is still not acceptable but much closer to the truth.  And in some careers women earn more than men.  But even the department of labor publishes this bogus percentage as an argument for equal pay.

This Time article, written by a woman, gives good reasons for calling the 79% statistic a myth, but does not offer a more correct figure.

Finally we get to the earnings and wealth of the Top 1%, the rich who keep getting richer.  Well it’s true, the rich do continue to get richer, but the actual people in that category tends to change over time.  But I did wondered exactly how rich are they.  Do they have enough money to support all the programs that everyone wants to bill them for through higher taxes?

This should be an easy calculation – find out what percent of wealth they have and multiply by the total wealth in the US, a number probably available from census figures.  As it turns out, it is not so easy.  I looked up the percent of wealth held by the 1% in several different sources and found that it was almost 40% in April 2000, 35.4% as of 2010, 35% in 2007, but also 42% in 2007 (from another source), 40% in October 2011, and also 40% in 1995.  Where do these numbers come from?  They can't all be right.  Who do you trust?

It is also interesting that to be in the top 1% by income, you must earn more than about $470,000 per year.  So that evil top 1% by income, who are not paying their fair share, includes everyone playing in the NBA and all but the minimum salaried rookies in the NFL and top golfers and your favorite movie and TV stars, not just hedge fund managers and bankers on Wall Street.

With a little critical thinking, it turns out that numbers everyone throws around so confidently have problems.  And, by the way, the poor are not getting poorer.  According to a Congressional Budget Office report, the growth in average real after-tax household income for the bottom quintile of wage earners from 1979 to 2007 was about 18 percent, not a lot, but not poorer either.  ("Real" means inflation-adjusted.)

Richest 1% Own Nearly Half of World’s Wealth

This news headline from last week was designed to elicit negative reactions.  The gap between the rich and the poor continues to grow, not only in the US but in the majority of countries.  "In the last thirty years seven out of 10 people have been living in countries where economic inequality has increased," and we don’t have the political will to curb the growth.

Wow.  This situation sounds very serious.  Who are these cheats and swindlers?  Where did their money come from?  Why are they getting richer while the rest of us are not?  It’s not fair!

To answer these questions, at least for the US, I went to the Forbes list of the richest 400 people in the country.  This helpful reference tells how much they have and the source of their wealth.  

Starting with the top 10 we find Bill Gates.  He’s rich because we all like our computers and most of us use MS products to run them.  We make choices.  Next is Warren Buffet, who made money investing in companies that sell us things either directly or indirectly.  Both are famous for their charitable efforts and don’t seem to be bad or greedy people.  Next is Larry Ellison, also in software (Oracle).  Then come the Koch brothers who have a private company, which means they took all the risk with their own investment and were successful.  They are also identified as “mega-donors.”  The next four are members of the Walton family.  If you resent the fact that they are rich or think it’s unfair, stop shopping at Wal-Mart.  They made their money selling you things you wanted at bargain prices while providing jobs for over 2.2 million.  Some may disagree about the quality of the jobs, but their employees have the option to quit just as their customers have the option to shop elsewhere.  Michael Bloomberg rounds out the top 10.  He also started a company, has given away almost $3 billion and is so "evil and unpopular" that he was elected Mayor of New York City.

The next page shows a similar group:  Jeff Bezos of Amazon, two founders of Google, and three members of the Mars family – the candy company.  If we resent their wealth we can stop shopping on line, stop eating M&Ms and use a different search engine.  Everyone knows how Mark Zuckerberg became number 20.

Down the rest of the list are those who made their money through hedge funds, investments and real estate, but they didn’t make much money off the little guys.  We also run into Jerry Jones at 164 (Dallas Cowboys), Charles Schwab at 88, George Lucas at 109, Oprah at 184 tied with Robert Kraft (NE Patriots).  The list of sources of wealth includes familiar names like Nike, Menards, SC Johnson, Campbell Soup and Little Caesar’s Pizza.

These people did not make their money by lying or cheating or ripping people off.  Most of them made it by working hard to give us what we wanted at a price we were willing to pay.  Some of it we didn’t even need, like $200 sneakers, but we were willing to stand in line or even fight our way to the front of the line to get it. 

Sure, there might be some crooks and scoundrels and some people who are making a lot more than they deserve to be paid.  Sure, there may be some unfairness or misalignment of priorities, but nobody seems to be concerned about that when cheering for the quarterback making $50 million or the golfer making $78 million.  Most of these people got their money from us, and we happily parted with it.  It didn't fall from trees.