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(This article originally appeared in The Wanderer and is reprinted with permission. To subscribe call 651-224-5733.)
We must assume that it is a tactic that works. Why else would political candidates rattle off the numbers — good or bad — about the GDP, unemployment and average wage increases in their speeches?
This is an issue that matters for Catholics. We are obliged to work for social justice, for economic policies that serve the commonweal, not just the corporate bottom line. We know that. But who is more likely to put those policies in place? John Kerry or George W. Bush? We need more than platitudes about “caring for the little guy” to make up our minds. George Orwell used to speak of “pious frauds.” There are such things. Performance counts. Results matter. We need economic data to judge these things. We must be alert to the possibility that we are being conned when the data is trotted out.
John Kerry’s advisors must be telling him that there are voters who respond favorably to his stump speeches about the current administration presiding over an economy that is the “worst since the Depression.” That has been the reaction of the AFL-CIO leadership, at any rate. They tell us that Bush presidency has “had the worst jobs record since Herbert Hoover.” In turn, the Bush re-election ads focus on the economic growth of the past six months to make their case that his economic plan has worked, as if the poor economic performance of the first two years of his presidency does not matter.
Who is telling the truth? This is where things get sticky. It is not always easy to tell. Our antennae should go up whenever we see a politician or corporate executive pointing to a chart to make claims about “rising corporate profits” or “dramatic decreases in unemployment.” We must not forget that a mathematical average can mislead as easily as it can instruct. You can illustrate that by asking sports fans which brothers had the highest average number of homeruns over their major league baseball careers. Unless they have heard this trick question before, most knowledgeable fans will guess the DiMaggios or the Alous, brothers who had long and successful baseball careers.
But they would be wrong. The answer is the Aaron brothers. Henry Aaron had 755. His brother Tommy had 1, during his very brief stay in the major leagues. That makes an average of 378. The Alous and Dimaggios were far more accomplished homerun hitters, but their average homerun totals do not match that number. If you looked at the mathematical average for homeruns in isolation, you would conclude that the Aarons were power hittters. That is not the case. Henry was a slugger; Tommy an also-ran.
Similarly, if a corporate executive boasts that profits increased 100% during his time in charge of the company, while a rival CEO increased profits at his company by only 20%, he very well could be engaging in smoke-and-mirrors. For example, what if gross corporate profits at his company were a penny last year, and they went up to two cents this year? And if the CEO he is comparing himself to ran a company whose profits rose from $100 million to $120 million. Comparing these companies on the basis of the average increase in profits alone would tell you little.
The problem is that none of us really knows how the “economy” is doing. We know if we are doing well personally in our own economic lives, if our family members have good jobs, if our neighbors seem to be living well. No matter how we try, it is difficult to get the big picture, even for professional economists. That is why the economists read the data so differently. Does anyone doubt, for example, that the economists associated with the Clinton presidency, who pop on the nightly talk shows to make the point that the “Bush economy” is a mess, even though the GDP is up and unemployment rates are down, would be singing a different song if Bill Clinton were still in office?
On June 19th, The Wall Street Journal offered us a classic example of how data can be worked for political purposes. It would do us well to keep it in mind as we proceed through this presidential campaign season. In May, we found out that the economy is now producing jobs at a record pace. The response of the Kerry team? Campaign spokesperson Allison Dobson did not deny the accuracy of the reports. She couldn’t. Facts are facts. Instead, she offered that they were mostly lousy jobs, and that “jobs are scarce and those lucky enough to have one are making $1,500 less each year.” AFL-CIO President John Sweeney joined the chorus, adding, “We’re not creating good, family-supporting jobs with benefits,” and that “working women have been hit hard by the crisis, with 2.3% less women employed in April 2004 compared with March 2001.”
The Wall Street Journal examined Dobson’s figures. It turns out that the Kerry campaign is using the years 2000-02 as the source of the $1,500 figure: “These statistics are 18 months out of date.” Moreover, “they do not show, as Ms. Dobson claimed, a decline in an average worker’s income. Rather, it was the median household income that suffered a $1,462 decline. That figure not only includes those unlucky enough to have lost a job, it also reflects a 1.5% drop in the average household size.” This is an important point. The average family income could be down because the average family contains fewer workers in recent years. Which means one could easily argue that median household income has declined because so many unmarried children are now able to go out on their own with the money from they are earning from the new jobs created in the last year or so.
Would that be true? I have no idea. But neither does the Kerry campaign team. They ignored the 1.5% decrease in household size in order to make their point about declining household incomes. They were looking for a sound bite, not the truth.
What of the Kerry campaign’s charge that there is a “wage deficit” of $1,500 per household? The Wall Street Journal charges that this figure was contrived by the Democrats, by “extrapolating forward from the bubble years of the late 1990s,” that is by making the boom years of the late 1990s their baseline. By this logic a baseball pitcher could be said to have had a bad year last year when he led the league with 22 wins, because he won 25 games the year before.
The Wall Street Journal concludes: “Over the last six months some 665,000 new jobs…were created in the higher paying service industries, such as financial and information services…these fields boast average salaries of $17.34 an hour, compared to $15.20 in manufacturing….The idea that women are falling behind is even easier to dismiss. The AFL-CIO committed a simple math error, misplacing a decimal point by one place. Using the figures the union gave for the last three years, the number of women employed fell just 0.23%, not 2.3%… The current 4.8% unemployment rate for women is significantly lower than the national average of 5.6%. Nobody can blame the Kerry partisans for pushing the ‘bad jobs’ gambit — you have to play the hand you are dealt. However, the Bush administration should be happy to engage in this debate, since it is one it can win on the merits.”
We will see about that. The judges of this debate will be the voters in this fall’s election. It will be interesting to see whether the Democrats will carry the day by focusing on the economy in the first two years of the Bush presidency, or the Republicans by stressing the last year and a half. But keep up your left. In election years economists working for the major political parties can be more like snake-oil salesmen than social scientists.
