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Wednesday, October 31, 2012

Benghazi vs. the Iraq Invasion and the 9/11 warnings

I honestly don't know the facts about Benghazi -- nobody does yet -- but I will say this.  Even if one could, with hindsight, somehow point to a course of action that might have saved the lives of the four Americans killed at Benghazi (without risking losing significantly more lives), and even if someone could prove (without hindsight) that at the time of the attack, it would have been obvious to any reasonable person that the decisions made were "wrong," this whole thing pales in comparison to the decision to invade Iraq.

Likewise, even if one could prove that a reasonable person would have handled the requests for increased security differently, that pales in comparison to the Bush administration's failure to heed intelligence warnings about 9/11.

And yet somehow, Bush won reelection in 2004.

Iraq:  All the time in the world to make the "right" decision.
Benghazi:  Not so much.

Iraq:  Premeditated decision.
Benghazi:  A spontaneous reaction.

Iraq:   Deliberately ignored or distorted information and intelligence gathered over a period of many months.
Benghazi:  Incomplete and unreliable information on the night of the attack.

Iraq:  Thousands of Americans dead, hundreds of thousands of Iraqis.
Benghazi:  Four Americans, a few of the other guys.

Iraq:  Over a trillion dollars and counting
Benghazi:  Not so much.

Iraq aftermath:  Rampant corruption on US side, billions of dollars disappear, Abu Ghraib scandal, widespread dissatisfaction with US occupation.
Benghazi aftermath:  Not so much

Whatever the Obama Administration's "culpability" for split-second decisions made on the night of  Benghazi, it simply can't compare with the Republican-planned-and-run invasion of Iraq.  The fact is, it's easy to find someone to blame in any organization when something goes wrong.  And yes, the leader always bears "ultimate responsibility."  In the Navy, the Commanding Officer is relieved if the ship runs aground, no matter who was at the helm.  But that's not the way politics works -- just because something went wrong on Obama's watch, you don't just hand over the reigns of power to the next guy asking for it.

Especially when the next guy won't even show you his tax returns.


Tuesday, October 30, 2012

Mad Men and Tax Policy

Just happened to be watching Episode 27 of Mad Men.  In it, Crane questions the point of earning over $40,000, since everything over that amount is taxed at 69%.  And he says its gets even worse -- everything over $70,000 is taxed at 81%.  There's an interruption when Kinsey asks if it's the same if you're married, but I'm pretty sure the answer would have been yes.

Still, from watching the show, I get the distinct feeling that they'd all like to keep earning more and more money.  I don't think they'd mind paying that 69% bite, if the reason they were paying it was because they were making a lofty $40K/year.

$40K in 1962 dollars is about $306K today, per the CPI inflation adjustment calculator (of course, you couldn't buy an iphone back then).

$70K would be about $536K.

How far we've come.  Now we're squabbling about a proposal to increase the tax rate from 33% to 36% for people earning over $250,000 ($32.6K in Mad Men dollars).  There is simply no rational argument for NOT allowing those taxes to go up, if it eases the burden on the genuine middle class.

And of course, the really rich people living off of millions of dollars a year in passive income -- like Mitt Romney -- manage to pay less than 15%.


Sunday, October 28, 2012

Skimmers in the Dairy Business

Today's NYT has a long article about the consolidation of the dairy industry, including how Glenn Engles, Yale Law graduate, former Supreme Court clerk, and CEO of Dean Foods continued to make hundreds of millions of dollars while Dean Foods was going down the toilet.

It's another story about how a CEO can develop a completely undeserved reputation for being some kind of a genius just because everything happens to be going well for his company.  In the good old days, Engles was described as the “cream of the crop,” “head of the herd” and “milkman to the nation,” but by 2011, Wall Street had "soured on the Nation's milkman," and Forbes ranked him among its Worst Bosses for the Buck in 2011 (he averaged $20.4 million a year during a six-year stretch while Dean Foods' stock was declining by 11% a year).

According to the NYT, the consolidation:


". . . all resulted in a small group of men making enormous sums of money . . . . One business partner of Mr. Hanman [head of the Dairy Farmers of America, a collaborator of Engles's in the consolidation] was paid $100 million by Dean’s predecessor and the D.F.A. for his stake in milk plants; the partner had paid $6.9 million for it two years earlier. A business partner of Mr. Engles was paid more than $80 million for his investment in milk plants; that partner had paid little more than $5 million.

"Mr. Hanman was paid $31.6 million during his seven-year tenure as chief executive, including bonuses for increasing the cooperative’s market share, according to court records.

"As for Mr. Engles, his compensation over the last decade comes to $156 million, according to Equilar, a firm that tracks executive pay."


So we've been paying more for dairy products -- and cows have probably been mistreated all the more -- to subsidize these skimmers' lifestyles.  And the "consolidation" doubtless resulted in lost jobs as well.

And Mitt Romney and Paul Ryan want to cut their taxes?

Again, this cut-taxes-for-the-rich proposal makes zero sense when you consider who the rich actually are, and how they got rich (and how they are getting richer).  Yes, some of them created some jobs along the way, but that's a very small minority.  Nowadays, most of them do it by skimming, at everyone else's expense.

Friday, October 26, 2012

Ariely: More dishonesty means . . . more dishonesty

Still flipping through this book. On pp. 170-77 he finds what seems to be a rather flawed correlation between "creativity" and "dishonesty."  He thinks he is being "creative" by measuring people's creativity in three different ways, but all of them are essentially self-assessments.  Since most people view "creativity" as a positive trait, chances are the people who score highest on this measure of creativity will also be the more dishonest people among his subjects.

Judge for yourself:  He used three different criteria  for determining whether people were creative, all based on responses to a set of questions, many of which were irrelevant (to obscure the purpose of the questioning).  People judged as creative were people most likely to (1) describe themselves as "insightful, inventive, resourceful, unconventional, and so on," (2) report frequent engagement in activities that the testers considered requiring "creativity" (out of a list of 77 activities, including "bowling, skiing, skydiving, painting and writing"); and (3) identify with statements like "I have a lot of creative ideas," "I like to do things in an original way," etc.

If it were that easy to judge "creativity" (or even define it), the world would be a different place.

In the end, he finds that the people who judged themselves "creative" were more likely to "cheat" in experiments where they got extra cash for cheating.

And from this, he believes he's shown a "correlation" between creativity and cheating.  He then goes on to find an actual "link" between creativity and cheating by showing that "intelligence" (as measured by a separate test) is not linked to cheating.

He thinks that more creative people are better able to tell themselves stories that help to rationalize their cheating behavior.

But really, all he showed was a correlation between people describing themselves as creative, and dishonesty.  If the act of self-describing oneself that way was itself dishonest, he's basically shown that "dishonesty" = "dishonesty."  In other words, his "creativity" test itself was probably almost as good a measure of dishonesty as the dot test or the matrix test or whatever test he used to determine actual dishonesty.  (I say almost because there are doubtless some honest creative people who would describe themselves as creative.).

n.b.  I wonder whether he thinks skydiving is an activity that calls for creativity.  My thought it that it would be the exact opposite -- you better not be "original" or "unconventional" when you pack that parachute!

(I also resent the idea that the kind of activities that someone engages in somehow reflect how "creative" that person is.  Your activities depend on a whole range of things that have nothing to do with creativity.)


Jobless but good-looking? Become a Pharma Rep!

Dan Ariely's book The (Honest) Truth About Dishonesty reminded me about this particular form of drug pushing -- using attractive sales-people to push your particular brand -- or composition -- of pharmaceutical to doctors, by whatever means possible.

It's been reported before (including by Stephanie Saul in the New York Times in 2005), but it's worth repeating any chance you get.  It's really quite sophisticated -- the Pharma Company makes sure that the rep is tailored as closely as possible to the doctor's preferences (or fantasies), and reps will "switch[] various accents, personalities, and political affiliations on and off," depending on the doctor (Ariely. p,) 81.  If you're a rep who can become a social friend of the doctor -- so much the better.

I found stats on how much you can make as a Pharma Rep here.  Apparently, starting salaries for newbies are around $60K plus commissions, and after a few short years, you'll be making over $100K base salary.  AND you have a big fat expense account, including use of a company car.  Nice work if you can get it.  

Update August 8, 2015:  And of course, John Oliver did a great job on this issue here.  In the interest of full disclosure, here is a link to someone who criticizes Oliver's work.  He notes that GSK now actually compensates pharma reps based on their technical knowledge, as opposed to their looks/sales numbers.  But I have yet to see an ugly pharma rep.

Thursday, October 25, 2012

Graceful Hands Charity

They've knocked on my door several times over the last few years, and I still don't know what to do about it.  The person is always African American, always smiling, and can show the scars of a difficult life -- a gunshot wound, a teen pregnancy, you name it.  Always a sympathetic person, talking about second chances, self improvement, and the rest -- all stuff I believe in.

But what they are selling is overpriced magazine subscriptions. If I buy the subscriptions, then this nice smiling person in front of me will be able to go to college and realize his or her dreams or whatever.

And if I don't -- then what?  A return to a life of poverty and crime?

I'm being made to feel guilty for not buying something that I don't need.  I end up offering them a few dollars just for themselves; sometimes they take it, sometimes they don't.

A long time ago, I bought an overpriced magazine subscription from an attractive young woman who said she was doing it for some kind of contest.  Her line when I opened the door was something to the effect that I had won a "prize" - her!  That got her into the apartment, and the rest was child's play for her.  But every time I received the magazine thereafter, I felt resentful.

Clearly, I should want to help the Graceful Hands "salespeople" more than that woman way back then.  But my problem is that I feel like I am being ripped off.  I know the "salesperson" gets a commission (or the chance to win a prize of some sort), but where does the rest of the money go?  Is somebody getting rich off of this?

Graceful Hands is a 501(c)(3) organization, which sounds good, but the problem is that you just don't know how much the executives are paying themselves.

The organizers of Graceful Hands are listed on the website, and they seem like respectable people.  One is a mayor, another is a lawyer.  [Update May 13, 2015 -- I haven't checked the site for a long time, but just checked today and I see this link is broken.  And rummaging around the site, I was unable to find the names of anyone in management.  That seems pretty fishy to me.  I'm not going to change anything in this original post, even though some of it might not match the current site.  Feel free to check out their site yourself:  http://www.gracefulhands.org/]


But here's something from the website that bothers me:

"We provide assistance to a developing independent workforce in the areas of: housing, clothing, food, training supplies, counseling. Looking for work? We also refer job-seekers to our on-the-job direct sales training partners."

So who are these "direct sales training partners"?  Presumably it's they and NOT necessarily Graceful Hands, that make the extra money from the subscription sales.  Graceful Hands just lends out its semi-respectable name, and the "training partners" sweep in the cash, that was intended to go to a charity (a fraction of which, admittedly, goes to the person with the gunshot wound at my door).

Graceful Hands does not seem to get reported as a scam on any kind of a regular basis.  Here's one report, and it also includes a response from Graceful Hands itself., as well as a comment from a consumer who wished she'd bought a subscription.  [update May 15, 2015:  This link still works, and it indicates that at that time, the website indicated that Graceful Hands's founder was Maurice McClain.  If you google him today, you'll find that he has done the same thing under different names -- Urban Development Solutions, Ultimate Unity -- in the past.  Here are some more complaints, as well as responses from those entities]


You be the judge.  I welcome any response from Graceful Hands itself in this space.



UPDATE October 27, 2013:  Today's WashingtonPost has a sad discussion of non-profit scams -- how there are nearly 1000 documented cases of trusted employees stealing significant amounts of money -- usually $250,000 or more (the dollar amount reporting requirement; it can also be 5% of assets/receipts) -- since 2008.  I did not find "Graceful Hands" among those listed, so this isn't necessarily a knock on them.  But it's another example of a lot of people thinking that they are entitled to skim a profit for themselves off of donations meant to help others.


UPDATE March 16, 2015:  Based on various comments below, it appears that the company "Mailbox Media, 3820 W. Happy Valley Rd, Glendale AZ" is also involved in this "enterprise."  I'll also add that last summer, I was visited by someone from an organization called "Entrepreneurial Sales," which was following the identical business model as Graceful Hands.  Another similar outfit seems to be "Fresh Start Opportunities" (see http://www.komonews.com/news/consumer/51330712.html).


If anyone can shed any further light on "Entrepreneurial Sales," "Mailbox Media", or "Fresh Start Opportunities," I'd appreciate it. [Update May 13, 2015 -- we can add Urban Development Solutions and Ultimate Unity to this list]

Update August 6, 2015:  A commenter named Matthew (see below), has provided some very useful information, including this writeup in the Atlantic from a few months ago.  It sounds like there are a lot of these organizations out there, and they really are exploiting their "salepeople."  http://www.theatlantic.com/business/archive/2015/04/trapped-into-selling-magazines-door-to-door/388601/.  Here's a quote from the article, which matches the experience of every single commenter below, and provides additional information:

"Young came armed with an official certificate stating her company’s mission. According to the paper, Certified Management Incorporated was dedicated to helping youth and other troubled souls get off the streets by giving them the opportunity to sell subscriptions door-to-door for points while the company provided room, board, and food. The workers get placed on “crews”—teams of four to 12 people—and travel across the country, canvassing neighborhoods. At each door, they tell residents their personal stories—which generally include a litany of poverty-driven hardships and the need to support a family—and then try to sell them magazine subscriptions for a staggering $75 to $150 apiece. After a week or two, the crew moves on to another city.
"Young said she was working to send money home to her two daughters, aged 5 and 7, and she hoped to make it back in time for her littlest one’s birthday in the coming months. This was her first stint on a crew, and she was hopeful for the future. If all went well and she earned 20,000 points, she could move up to junior manager. After a 12-hour shift, she told me she’d earned 13 points. “If I can get sales on my resume and get a reference, I might be able to get my babies out of the projects,” she said.
"But Young was hundreds of miles from home, and she worried that if she failed to deliver, she wouldn’t earn enough to make it back to her kids. “If you sell too low or you’re a troublemaker, they’ll leave you,” she said. “And I ain’t got nothing.”
"Young is one of tens of thousands of people working for door-to-door magazine crews, and the fear of being left behind is nearly universal. “I’ve been working on crews for three years, and I’ve been abandoned 11 times,” said Stephanie Dobbs, a mother of three who worked with another company, Young People Working, LLC, until being stranded in Cloverdale, Indiana, last month. “But I keep going back. I’ve got to do something to support my kids, and this is fast, easy cash if you’re a good seller.”
 So "Certified Management Incorporated" and "Young People Working, LLC" are other such companies, just like Graceful Hands, Mailbox Media, Fresh Start Opportunities, and Entrepreneurial Sales.  Other such organizations mentioned in the piece are "Ultimate Unity" and "Urban Development Solutions."

Based on this reporting, it sounds like the "salespeople" are the biggest victims here.

Update August 8, 2015:  Some more links from Matthew -- all worth watching/reading, if you have the time.  Warning -- they might just make you angry enough about the "mag crew" industry to want to do something about it.

http://mobile.nytimes.com/2007/02/21/us/21magcrew.html?pagewanted=all&referrer=&_r=0 (another eye opening article about the whole magazine crew scam and how the salespeople are victims)
https://youtu.be/pmgUs1E63-0 (a professionally-done take on mag crews with multiple story lines)
http://www.magazinesalescrews.com/ (scary stories about mag crews)

https://youtu.be/3C5d0zX_rZU (mag crew Christmas – they may look like college kids, but these are the people you are giving your money to)
https://youtu.be/nRm6R7_3YyI (a mag crew fail, featuring one of the guys in the Christmas video; you'll see the "pitch" is just a white version of the pitch that got you to this site)
https://youtu.be/-w7fObNWzMI (a vlog by a couple of recently-fired “salesmen” – a bit rambling, but interesting) 
https://m.facebook.com/NewportBuzz/photos/a.204497299569636.53611.201985873154112/1012520625433962/?type=1&source=48&refid=12&__tn__=E (indicating that they are currently in NJ)

Update August 23, 2016.  Here is a screenshot from the Graceful Hands website today:




I don't remember seeing this before, so I don't know when it went up.  I actually think it's mostly truthful -- they are partnering with for-profit businesses and they do provide their sales-force all those things.  But if you think it through, what they are basically doing is getting YOU (the person who answers the door and buys the subscription) to pay THEIR expenses of giving the "salesperson" a "job", and then THEY (and their for-profit partners) pocket the rest, and you are left with a worthless magazine subscription.  It's sort of circular -- they had the great idea of taking inner city people and sending them out to affluent neighborhoods to play upon liberal guilt by selling overpriced magazine subscriptions, and the more money they bring in from it, the more of these inner city people they will be able to help.  So if you did buy from them, I think it's fair to say that you did contribute to helping the people in the sales force, and you shouldn't feel too bad about it.  It's just like donating to a charity with a ridiculously high overhead ratio.

And maybe it's even a little bit better, because -- as everyone who has commented attests -- the sales people are uniformly polite and are very good at presenting themselves. 

If doing this "work" has given them those skills, perhaps they will be able to use them to get "real" jobs in the future. 

And who knows how much money you have saved society in the long run -- if the salespeople didn't have these jobs, perhaps they would have been out committing crimes, which can cost society a lot more, in terms of the costs to the victim, and the ultimate burden on our prison system.  It's just unfortunate that the government does not have "work" programs that provide these kinds of opportunities.

I'm not trying to argue FOR giving them as much money as you can, I'm just trying to provide some consolation for those of you reading this who have already given.




Dan Ariely and the Truth About Dishonesty

Dan Ariely seems to have the perfect life -- gets paid to think up clever psychology experiments to test people's reactions to certain situations, and then writes popular books about his findings.  So any criticism here is probably just envy on my part.  Having said that, I find the tone of his books a bit annoying, although that doesn't stop me from flipping through them from time to time.  Again, it's probably the envy thing.

Was flipping through his most recent book, "The (Honest) Truth About Dishonesty," which seems to be filled with examples of how "normal" people will "cheat" here and there to get a little extra money.  E.g. elderly volunteers will steal money from a gift shop.  And experimental subjects will lie on how well they performed on an exercise, in order to get a little extra cash from the experimenters, little realizing that that was the whole point of the exercise.  

It turns out that on average, people who do the "matrix" task -- looking at 20 squares like this:




and spotting the pair of numbers that adds up to 10.0 (in this case the 4.81 and 5.19) -- will over-report their ability to spot the sums by about two matrices for a five-minute test, in order to earn an extra dollar (at 50 cents per matrix).

The effect is worse if you've just given them a "depleting task" -- like writing a paragraph without the letter "e", or stating the colors of a series of color-words written in a different color ink (e.g. "red").  If you're "depleted", you'll cheat more.

The researchers seem to translate that into meaning that if you're tired, you'll "cheat" in a non-dishonest sense; e.g. you'll cheat on your diet, you'll procrastinate on your work, etc.  In other words, they've taken an interesting finding about dishonesty and converted it into an extremely mundane observation.  I didn't need that particular experiment to tell me that I am more likely to succumb to temptation (i.e. break a diet, procrastinate) when I'm tired, when it would require too much exertion (of will) to resist.  

I'm not really sure what the result of the experiment shows, but I tend to think it's something different.  It has to do with what the subjects thought they had "earned."  I can readily see that if I had undergone a frustrating task and then had an opportunity to make a little more money on a different task, I might fudge a bit more, on the theory that I somehow "deserved" the extra cash to make up for the trouble I'd gone through in the depletion task.  

He also misunderstands an example he gives on pp. 252-53 about a maid who was stealing meat out of the freezer every few days.  The employer's solution was to tell the maid she suspected someone else of stealing the meat, and then to give the maid a key.  Miraculously, the stealing stops.  

Ariely gives a number of reasons why he thinks it stopped -- (1) the maid had slowly become dishonest over time (finding it easier and easier to steal each subsequent piece of meat), and this gave her the opportunity to "reset" her honesty level; (2) by trusting the maid with the key, the employer managed to change the maid's view toward stealing and thereby established a social norm of honesty in the household; and/or (3) because a key was now needed, stealing was more deliberate, intentional, and harder to self-justify.

Ariely has two phDs and yet these are the best he could come up with.

What's the real answer?  Obviously, once you've given the maid the key, that removes all of the other people as suspects.  If meat goes missing, it was obviously the maid.  I wonder if anyone read this book before it was published?!


Wednesday, October 17, 2012

Statistics in the Debate -- Masking a Lot with the 60% Remark

Romney's team clearly taught him just how to handle the "tax breaks for the rich" issue, and unfortunately, Obama's team didn't prepare him to call Romney out in a convincing way.

Romney acts like he isn't cutting taxes for the rich at all.  Maybe he isn't, but he is keeping intact tax breaks and tax cuts initiated by George W. Bush, that Obama hasn't been able to persuade the Republican Congress to get rid of.  When Romney points out how much the deficit has increased under Obama, why doesn't Obama mention that part of the reason is the tax cuts that the Republicans refuse to budge on?

Romney also says that the rich will continue to pay 60% of the nation's taxes.  The are two problems with this:

1.  At least once he said the 60% in a way that might have made it sound like that was the tax RATE on the rich.  People who follow the issues knew what Romney was saying, but people who don't follow them all that closely -- undecided independents -- may well have heard that and thought that the tax rate was 60%.  I'm not sure what the right response was for Obama; perhaps it would have been best to mention again what their tax rate really is.

2.    More importantly, an easy response would have been:  This is an example of the problem -- he wants to keep taxes on the rich at the same rate, even while the rich are the only people in this economy getting richer.     From Steven Rattner's March 25, 2012 NYT Op-Ed (which cites statistics derived by French economists Thomas Piketty and Emmanuel Saez from American tax returns):


"In 2010, as the nation continued to recover from the recession, a dizzying 93 percent of the additional income created in the country that year, compared to 2009 — $288 billion — went to the top 1 percent of taxpayers, those with at least $352,000 in income. That delivered an average single-year pay increase of 11.6 percent to each of these households.

"Still more astonishing was the extent to which the super rich got rich faster than the merely rich. In 2010, 37 percent of these additional earnings went to just the top 0.01 percent, a teaspoon-size collection of about 15,000 households with average incomes of $23.8 million. These fortunate few saw their incomes rise by 21.5 percent."

So even though the rich and the super-rich are getting richer and richer, Romney wants them to pay the same share of taxes that they've been paying.  How does that make sense?  If the income of the rich is rising faster than that of the middle and lower classes, and yet the overall tax burden of the rich is kept constant, then that translates to a tax CUT for the rich.  That's simple math.

And as I've explained numerous times before, the vast majority of the rich are not job creators -- they are skimmers.

The below charts, from the IRS via the National Tax Payer's Union, show the percent of taxes paid by different income percentiles from 1999-2009.  We can see from this that Romney's 60% is the percentage of all Federal Taxes that are paid by the top 5% of earners -- i.e. those with Adjusted Gross Income greater than $154,643.  Again, as reported by Rattner, AGI for the rich went up in 2010.



Who Pays Income Taxes and How Much?

Tax Year 2009 
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$343,927
36.73
Top 5%
$154,643
58.66
Top 10%
$112,124
70.47
Top 25%
$66,193
87.30
Top 50%
$32,396
97.75
Bottom 50%
<$32,396
2.25
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
Tax Year 2008
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$380,354
38.02
Top 5%
$159,619
58.72
Top 10%
$113,799
69.94
Top 25%
$67,280
86.34
Top 50%
$33,048
97.30
Bottom 50%
<$33,048
2.7
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
Tax Year 2007
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$410,096
40.42
Top 5%
$160,041
60.63
Top 10%
$113,018
71.22
Top 25%
$66,532
86.59
Top 50%
$32,879
97.11
Bottom 50%
<$32,879
2.89
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
Tax Year 2006
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$388,806
39.89
Top 5%
$153,542
60.14
Top 10%
$108,904
70.79
Top 25%
$64,702
86.27
Top 50%
$31,987
97.01
Bottom 50%
<$31,987
2.99
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
For Tax Year 2005
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$364,657
39.38
Top 5%
$145,283
59.67
Top 10%
$103,912
70.30
Top 25%
$62,068
85.99
Top 50%
$30,881
96.93
Bottom 50%
<$30,881
3.07
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
For Tax Year 2004
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$328,049
36.89
Top 5%
$137,056
57.13
Top 10%
$99,112
68.19
Top 25%
$60,041
84.86
Top 50%
$30,122
96.70
Bottom 50%
<$30,122
3.30
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2003
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$295,495
34.27
Top 5%
$130,080
54.36
Top 10%
$94,891
65.84
Top 25%
$57,343
83.88
Top 50%
$29,019
96.54
Bottom 50%
<$29,019
3.46
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2002
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$285,424
33.71
Top 5%
$126,525
53.80
Top 10%
$92,663
65.73
Top 25%
$56,401
83.90
Top 50%
$28,654
96.50
Bottom 50%
<$28,654
3.50
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2001 
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$292,913
33.89
Top 5%
$127,904
53.25
Top 10%
$92,754
64.89
Top 25%
$56,085
82.90
Top 50%
$28,528
96.03
Bottom 50%
<$28,528
3.97
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 2000
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$313,469
37.42
Top 5%
$128,336
56.47
Top 10%
$92,144
67.33
Top 25%
$55,225
84.01
Top 50%
$27,682
96.09
Bottom 50%
<$27,682
3.91
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
 For Tax Year 1999
Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid
Top 1%
$293,415
36.18
Top 5%
$120,846
55.45
Top 10%
$87,682
66.45
Top 25%
$52,965
83.54
Top 50%
$26,415
96.00
Bottom 50%
<$26,415
4.00
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

Saturday, October 13, 2012

Romney's Battleground Strategy -- Tanks and Submarines


It's pretty clear to me that Romney's "increase military spending" plank was just some pollster's brilliant idea.  It makes no sense in the context of the rest of the Republican frugality-first (except when it comes to handouts to Paris Hilton) agenda.  In fact, it all came together for me the day after the Biden-Ryan showdown, when I heard Buddy Somebody (probably Roemer) introduce the "comeback team" to an Ohio crowd.  He hammered Joe Biden for saying that we don't need any more M-1 tanks.  And where are M-1 tanks made?  OHIO!

No explanation of why we might need M-1 tanks.  Who cares -- we're in Ohio!

Romney also recently announced that he wants to up Navy ship production from 11 per year to 15 per year, and that the increase will include 3 submarines.  Who builds the subs?  It will be Newport News Shipbuilding in Newport News, VIRGINIA and General Dynamics Electric Boat in Groton, CONNECTICUT.

So, by pushing for more military spending, and in particular for the building of more M-1 tanks and submarines, the Republican ticket is pandering not just to members of the military, but also to citizens of a critical battleground states (yes, even Connecticut is a battleground state now).

Don't get me wrong, I'm sure the Obama-Biden pollsters have got their boys making all the right promises to all the right demographics, and I'm sure they've figured out specific ways to appeal to Ohio voters.  But you have to admit that the Republican plan is a bit cynical -- after everything they've said against government spending as a catalyst for job growth, it's a bit rich for them now to be advocating just that -- in battleground states.

Thursday, October 11, 2012

Small Business and the Vice Presidential Debate

Apparently the Democratic debate preparation team isn't reading this blog.  As I already explained in connection with the presidential debate, the Republican mantra about not wanting to raise taxes on small businesses because small businesses provide 2/3 of the jobs in America is a big fat red herring.  

The point is that Republicans are against raising taxes on ANYONE who makes over a million dollars a year.  Yes, some of those people happen to be small business owners, but many, many of them are not -- they are just rich people, mostly skimmers.  

In other words, they've found some arguably sympathetic individuals within the 1% and 0.1% that they are trying to funnel money to, and those individuals become their poster children.  Obama and Biden are right that small business owners include Donald Trump and hedge funds, but that still misses the bigger point -- the Republicans are trying to cut taxes for Paris Hilton too.



Wednesday, October 10, 2012

Pineapple Price Gouging

Pineapples are consistently overpriced at brand-name supermarket chains.  In the DC area, you are extremely lucky if you can find them at $2 at a mainstream market (that's their price at Shoppers this week); usually they are in the $4 range.  But go to an ethnic supermarket (e.g. H Market) and you'll find that they are at that price year round.

Tuesday, October 9, 2012

yes, but video piracy?

From today's Washington Post, on the death of ultra-violent drug lord Heriberto "The Executioner" Lazcano:

"An especially cruel, paramilitary cartel, the Zetas operate a diversified portfolio that includes not just drug trafficking but also extortion, kidnapping, video piracy and the theft of billions of dollars in oil and gas from Mexico’s state petroleum company." (emphasis added)

So this "especially cruel" organization's heinous crimes include include not just murder, drugs, kidnapping, extortion, billion dollar theft, but also video piracy.  Horrors.

(I think the Entertainment Industry needs to come up with different names for different "tiers" of pirates.  I assume, given that it made this list, that these people were "pirating videos" on a pretty large scale and that it genuinely ate into industry sales.  But still, given that the vast majority of college students have engaged in what the industry calls "piracy" at one time or another, it just seems wrong to keep using that name for all actors, large and small.)

Monday, October 8, 2012

Who won? Who knows?

Ok, I'm going to have to say it.  Yes, in hindsight, and with the help of EVERYONE in the media saying Romney won the debate -- and with even Obama admitting that he made a poor showing --  I can see why people are saying Romney won the debate.  But are we really sure that's what those polled were thinking when they watched the debate, or is that just the position they ended up imputing to themselves after the relentless Romney-won-the-debate drumbeat from the media?  The latest Pew poll says that:

2/3 of all registered voters think Romney won

20 percent think Obama won

72 percent of independents think Romney won

78 percent of independents who watched the debate think Romney won.

I happened to be watching on the HuffingtonPost channel.  The post-debate commentators were not exactly world-class pundits -- and they were extremely young, and couldn't help themselves from talking about drinking games that one could play during the debate -- but clearly had some journalism experience.  Yet none of them seemed to sense, in the immediate aftermath, that Romney had won as "big" as everyone now thinks he did.  In fact, I don't think any of them called the debate for either side -- their unanimous view seemed to be that the whole thing was a "snoozefest."  I remember the woman saying something like "I'm a wonk, and even I was bored by all the numbers they were throwing around."  In other words, while these may have been average journalists, they were certainly better informed than the "average" voter.  So did "average" voters really think Romney "won" the debate at the time?  Who knows?

I was watching too, and I wasn't really sure.  Yes, Romney was ruder to the moderator, and therefore got to say more of what he wanted to say, even when he wasn't really supposed to.  But you'd LOSE a high school debate by default if you did that.  And from what I could gather, his plan is to pay for the tax cut to the rich by stopping funding for public television.  It turns out that public broadcasting only gets $430 million.  If Romney's tax cuts really will amount to $5 trillion, that $430 million is less than 0.001 percent of what he needs to help out his rich buddies (and himself).  It's also a trivial amount compared to the hundreds of billions Romney wants to pump into the defense budget.

Yes I was a bit embarrassed by Barack's performance.  Romney came out with a whole new game plan, and Obama did not think well on his feet.  He kept repeating the $5 trillion, without explaining how radically the "new" Romney was departing from the "old" one.  Romney was telling a completely different story, but rather than attack him on that, Obama kept attacking the old story.  

Friday, October 5, 2012

Small Business and the Presidential Debate -- Who are the 3%?

The following exchange from the debate interested me, for reasons I'll give below:


OBAMA: And we do have a difference, though, when it comes to definitions of small business. Under -- under my plan, 97 percent of small businesses would not see their income taxes go up. Governor Romney says, well, those top 3 percent, they're the job creators, they'd be burdened.

But under Governor Romney's definition, there are a whole bunch of millionaires and billionaires who are small businesses. Donald Trump is a small business. Now, I know Donald Trump doesn't like to think of himself as small anything, but -- but that's how you define small businesses if you're getting business income.
And that kind of approach, I believe, will not grow our economy, because the only way to pay for it without either burdening the middle class or blowing up our deficit is to make drastic cuts in things like education, making sure that we are continuing to invest in basic science and research, all the things that are helping America grow. And I think that would be a mistake.

LEHRER: All right.
ROMNEY: Jim, let me just come back on that -- on that point, which is these ...
LEHRER: Just for the -- just for record ...
(CROSSTALK)
ROMNEY: ... the small businesses we're talking about ...
LEHRER: Excuse me. Excuse me. Just so everybody understands, we're way over our first 15 minutes.
ROMNEY: It's fun, isn't it?
LEHRER: It's OK, it's great. No problem. Well, you all don't have -- you don't have a problem, I don't have a problem, because we're still on the economy. We're going to come back to taxes. I want move on to the deficit and a lot of other things, too.
OK, but go ahead, sir.

ROMNEY: You bet. Well, President, you're -- Mr. President, you're absolutely right, which is that, with regards to 97 percent of the businesses are not -- not taxed at the 35 percent tax rate, they're taxed at a lower rate. But those businesses that are in the last 3 percent of businesses happen to employ half -- half of all the people who work in small business. Those are the businesses that employ one-quarter of all the workers in America. And your plan is to take their tax rate from 35 percent to 40 percent.

Now, and -- and I've talked to a guy who has a very small business. He's in the electronics business in -- in St. Louis. He has four employees. He said he and his son calculated how much they pay in taxes, federal income tax, federal payroll tax, state income tax, state sales tax, state property tax, gasoline tax. It added up to well over 50 percent of what they earned. And your plan is to take the tax rate on successful small businesses from 35 percent to 40 percent. The National Federation of Independent Businesses has said that will cost 700,000 jobs.

I don't want to cost jobs. My priority is jobs. And so what I do is I bring down the tax rates, lower deductions and exemptions, the same idea behind Bowles-Simpson, by the way, get the rates down, lower deductions and exemptions, to create more jobs, because there's nothing better for getting us to a balanced budget than having more people working, earning more money, paying more taxes. That's by far the most effective and efficient way to get this budget balanced.

---

I'm just trying to figure out who exactly these three percent are.  Are they all Donald Trump, or are they the guy in St. Louis?  What do the statistics say?

First, let's try to get a handle on what the candidates are saying above.

Small business income is considered regular income. So if you raise the income tax on some segment of the population, you are going to be raising taxes on small businesspeople in that segment.   Obama says he won't raise taxes on 97% of small businesses.  From elsewhere, we know that he's not going to raise taxes on people who make less than $250K.  Based on these two figures, it follows that he won't raise taxes on small businesses having incomes of $250K or less.  It also follows that he will raise taxes on small business owners whose incomes exceed $250K.  From the figures that BOTH candidates seemed to agree on, this means that 3% of small businesses are owned by people making more than $250K and that under Obama's plan these people would be taxed more.  Romney, on the other hand, would not tax them more, because he says that these rich small business owners employ half the workers in the United States.

Here is some info on SBA size requirements (for purposes of determining if a business is a "small" business) from SBA site:


-- Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;

-- Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;

-- Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;

-- Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;

-- General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
   
-- Special Trade Construction: Annual receipts may not exceed $7 million; and

-- Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.


So far so good.  We really need to get more data, but this already tells us that a small business CAN be pretty big -- you can employ up to 1500 people if you're in manufacturing; and you can have "receipts" of over $20 million if you're in some types of services and retailing.

We don't yet have data on exactly who the 3% are.  One can readily imagine that there are a good number of "big" small businesses out there.  In fact, Romney tells us that the 3% are responsible for half of the nation's jobs.  Based on this, it seems highly unlikely that the guy with the 4 employees in St. Louis is even in the 3%.

Low hanging fruit:  Without knowing any breakdowns whatsoever, we can see a fallacy in Romney's argument.  Romney's basic idea is that he will NOT raise taxes on anyone with an income greater than $250K.  And his justification is that some people with incomes over $250K are small business owners and job creators.  But until someone tells us how many of them are small business owners, we must reject his argument.  As we saw above in "Who Are the 1%?", people earning over 250K are typically doctors, lawyers, real estate developers, consultants, bankers, etc.  While some of these people certainly provide jobs, they are not all necessarily "growing" businesses.  So if we're trying to help rich small business owners, there's no reason that we need to help the rest of the rich as well.

And that leads to the second question -- Do we need to help rich small business owners by giving them tax breaks?  By definition, these are people whose small businesses are generating more than $250K in income for them.

The reason they are making this income is simple economics -- this is the money they take in from their customers, minus the money they pay for material and labor.

Read what I just wrote again.  And then try to think of circumstances under which taxing this profit would cause a business to stop hiring employees.

A business will hire a new employee when the business realizes that it can get more money from customers than it has to pay in expenses, including the employee's salary.  In other words, the decision to hire another employee will typically have nothing whatsoever to do with your tax rate.  If I have a great product, but am having trouble getting the word out, I might decide to hire a new sales person, on the theory that the sales person will cause more sales to occur, and as a result my profits due to that sales person will exceed what I had to pay that salesperson.

Obviously, there is always a risk involved in hiring a new employee.  If the employee ends up costing me more money than I can make off of his work, I lose money.  So presumably an employer does some kind of calculation before hiring.  He makes his best guess as to the probabilities of different outcomes, and chooses the outcome that will give him an expected income greater than zero (or significantly greater than zero, if he is risk averse).  Some employees will turn out to be real profit centers; others, not so much.  And if there's an economic downturn or other unforeseen event, each employee on the payroll will be a problem.

Taxes DO play a part in this calculation, but really only a very minor part.  For example, say I hire an employee for $100K, on the thought that I'll get $110K back, i.e. I'll make $10K off of the employee.  At the 35% tax rate, I'd get to keep $6500 of the $10K; whereas at 40%, I'd get to keep $6K.  I might not do the hire if I thought the employee would likely mean considerably less than the $10K, but there are very few cases where the difference between the possible outcomes due to taxes (in the example given, merely 0.5% of the investment in the employee) will make the difference between hiring and not hiring.  In fact, the GREATER this percentage, the MORE likely I am to do the hire, since that will suggest that I am making more money per employee.

I also found this article by Sarah Ayres of the Center for American Progress.

The article confirms what I'm saying above -- "Small-business owners overwhelmingly are not millionaires, and the vast majority of millionaires do not make their millions from small business."

-- it notes that a report by the Office of Tax Analysis at the U.S. Treasury defines a “small business” as "a flow-through entity that engages in business activity and has income over $10,000 but less than $10 million. A small business is then considered an employer if it has at least $10,000 in labor deductions."

    Less than 4 percent of small business owners are millionaires



-- there were 3.8 million small-business employers in the United States in 2007.

--3.3 percent of small businesses are owned by millionaires (a bit different from the statistic that both parties seemed to agree to in the debate -- that 3% of small business owners earned 250K or more.




I'm quoting the next one in full, because the text doesn't seem to match the chart (Figure 2) in two ways.  The text quite clearly states that only about 20% of small business income goes to millionaires, but the title says "less than 20% of small business owners are millionaires" (whereas above, we've been told it's 3%), and the pie chart is labeled "millionaires' income by source" which bears nto relation to the text or the rest of the pie chart.   But if you look past the label on the chart, the numbers do match up -- apparently millionaires only do take home about 20% of small business income.
    Less than 20 percent of small business employers are millionaires
  • "Millionaires take home only 19 percent of small-business employer income. Small-business owners made $183 billion in 2007. Most of this income was earned by employers who made less than $1 million that year. In fact, the majority was earned by employers who make less than half that; 60 percent of small-business employer income went to individuals who earned less than $500,000 [PF Note: possibly wrong, since chart gives 57.8% for people making 200K-1M]. About a quarter was earned by employers making less than $200,000 a year. Most of the income earned through small businesses does not go to millionaires. It goes to businessmen and businesswomen who make much less. (See Figure 2)"
  • Less than 3 percent of millionaires' income comes from small businesses
    -- And Figure 3 is fairly self-explanatory -- millionaires are overwhelmingly NOT getting their income from running small businesses.












So based on all of this, I'm baffled why Obama didn't give a more coherent response to Romney's point about the 3% (i.e. that 3% of small business owners are rich small business owners who provide more than half of the jobs in this country).

The answer would have been:

1) That's no reason for lowering (or keeping low) taxes on ALL rich people, since the statistics show that only a tiny percentage of rich peoples' income has anything to do with small business.

2) And remember, the 3% of small business owners that we're talking about are those who are making more than $250K from their business [if that's right; the graph above seems to suggest that about 25% make over $200K, and that the 3% is millionaires].  Why shouldn't they pay the same tax rate as other people making that kind of money/

3) There's no showing anywhere that increasing taxes from 35% to 40% is going to significantly affect hiring decisions.  If you're thinking about hiring a new worker, you will only do that if you are pretty sure you'll make enough money off of that worker to offset the risks involved of the hiring.  That last 5% is a trivial amount, as PriceFixer has shown in his/her blog.  It is highly unlikely to affect hiring decisions -- if you thnk you'll make good money off of another hire, you'll do it, even if you end up paying an extra 5% of your profits (which might translate to as little as 0.5% of your investment in the new hire) to the government. 

Thursday, October 4, 2012

Using MP3 Recorder with Nuance Dragon Naturally Speaking

Yes, you can buy the recorder that Nuance recommends, or you can buy their app for your phone.  Or another voice-recording app.  But the main thing is that you need to match their bit rate.  An MP3 recorder won't do this on its own.  However, it's a very simple matter to use Audacity open source software to convert your MP3 voice-recording to a WAV file that Dragon will then transcribe for you.

Here's what it takes:

1.  Download Audacity if you haven't already.  Sourceforge  is a safe place to get it.

2.  Make the recording with your MP3 player.  In doing this, remember to do it like you would do a dragon recording -- speak clearly, and state the punctuation.  Save it on your computer in a location that you can easily browse to.

3.  Open Audacity.  In lower left hand corner you will see the sampling rate.  The default seems to 44100. Change this to 22050.  This step might not matter, but that's the sampling rate that Nuance's recorders use.

4.  Go to File -> Import -> Audio.  Browse to your MP3 file and import it.

5.  Go to File -> Export and browse to the location where you want to save the recording.

6.  Save the recording as an WAV file WAV Microsoft (signed)16 bit PCM

--

You're done.  You can now hit "Transcribe" on Dragon, choose your options, browse to the file, and hit "transcribe." 

Causation, Correlation, and Job Creation



I had an obvious thought just now, and then decided to google it just after writing the title, as opposed to after writing the post.   I see some people on Straightdope have made this point, but I think it bears repeating here and elsewhere.

I didn't say it so many words in my previous posts, but it's worth pointing out that the "rich people as job creators" myth is not just empirically silly, it's also an example of the correlation/causation fallacy.  While it's true that people who create a lot of jobs are typically rich (or on their way to becoming rich), that does NOT mean that any given rich person is likely to be a job creator.

Much of Mitt Romney's platform is based on the fallacy that giving MORE money to rich people will result in more jobs being created.

The only reason that Republicans are in this race at all is because they appeal to rich people, who can spend a lot of money to try to persuade the uneducated and unwashed that they know best how to solve the problem.

But look at it this way.  If you had a billion dollars and wanted it to create jobs, who would you give it to?

(1) Paris Hilton, with no strings attached

or

(2) A government agency given the specific task of using the money to create useful, lasting jobs.

I admit I cringed as I wrote (2) above -- I don't think the government has done a particularly good job at creating jobs.  But I think we (even the uneducated unwashed) can agree that the government would do a better job than Paris Hilton.

UPDATE 10/03/12

Just saw the following headline in Slate:

The Internet Blowhard’s Favorite Phrase

Why do people love to say that correlation does not imply causation?


So does that make me an "internet blowhard," or is the fact that I just used the phrase above another example of the correlation/causation fallacy?

The article is by Daniel Engber, and I've gone through it a couple of times and am not sure I get his point.  The short story is that he seems to acknowledge the prevalence and problems with the fallacy, but he calls people who point it out "blowhards" and seems to advocate that we stop using the "catch-phrase" altogether.  Go figure.

He starts off on a confusing note by citing a study which apparently found that depressed college students send more email and IMs and do more file-sharing than do non-depressed college students.  In other words, the study found a correlation.  He doesn't say that the study somehow concluded that these kinds of internet activity caused depression, or that depression caused these kinds of internet activity.  If he had, that would have explained his next sentence, which was that "Not everyone found the news believable."

But so far, the news is just that there was a correlation.  From his report, I don't see any indication that anyone disbelieved the correlation.  One has to click on his links to see what the article reporting the study actually said, and what the commenters were reacting to.  In short, it was this:

"The researchers recommend using these primary findings to further identify correlations between Internet usage and other mental health disorders including anorexia, bulimia, ADHD and schizophrenia. The study’s authors hope to use the findings to apply future software applications that could warn Internet users if they are displaying depression symptoms online."

Commenters were reacting to what they thought was an assumption that an increase in certain web behaviors that are correlated with depression actually justifies warning people that they might be depressed.  Perhaps the commenters were over-reacting a little bit -- as Engber later points out, correlations often are useful indicators.  [as an aside, I generally agree with the commenters that the fallacy is at work here, but I also think the software is silly for other, even more important, reasons]

So he started off on a bad note by not fully explaining his example.  He then goes on with stuff like this:

"So how did a stats-class admonition become so misused and so widespread? What made this simple caveat—a warning not to fall too hard for correlation coefficients—into a coup de grace for second-rate debates?"

He never provides data for his assumption that the admonition has become "so misused."  So far, he's only given us one example, and in that example, the internet blowhards citing the fallacy were simply pointing out the obvious fact that just because a person sends more email, that doesn't mean he's depressed.  Although this doesn't finally answer the question of whether or not the software will be useful, it's perfectly fair to point it out -- I don't think it's a "misuse" of the admonition.  But in any event, the reader of Engber's article can't judge whether or not it's misused, because he hasn't taken the trouble to explain how they were using it.

He then goes on to report on the origins of the phrase, and the fact that it has becoming significantly more widespread in the "computer" age.

I am slowly beginning to think that this article is satire -- he seems to be linking correlation after correlation to causation after causation.  Let's take a closer look:

"Those first, modest peaks of 'correlation is not causation' show up in print in the 1890s—a date that happens to coincide with the discovery of correlation itself.  That's when the British statistician Karl Pearson introduced a powerful idea in math: that a relationship between two variables could be characterized according to its strength and expressed in numbers."

The second sentence more or less refutes the first one here.  It's not that "correlation" was "discovered" in the 1890s, it's just that someone figured out a way to use math to show the strength of a correlation.  But it's probably true that Pearson's work paved the way for studies that pointed to correlations, and made assumptions about causation, which might have caused others to point to the correlation/causation fallacy.  Engber seems to acknowledge this: "As correlations split and multiplied, we needed to remind ourselves of what they meant and what they didn't."

He then provides an interesting if somewhat pointless graph showing that usage of correlation has increased since 1890, whereas "causation" has stayed relatively constant:

120926_SCI_SCIchart2

Not a surprising graph given that the increase in usage started when the math was worked out.  The increase just shows that the concept caught on, and entered the popular vocabulary in a way that "causation" has not. If you think about it, people today use the word "correlation" a lot more than they use the word "causation."  (As an aside, he invites "someone else [to] explain why correlations have been trending downward since 1976."  I can't answer that definitively here, but I note that there has been an explosion of texts, as well as new words, since 1976.  This is apparently just measuring the percentage of the time that any given word in a book (on average) happens to be "correlation."  If the overall vocabulary is increasing, the percentage usage of any given word will go down.  Likewise, it might be explained by a differential growth of types of literature that are less likely to use the word "correlation" than the types of literature that were sampled for 1976.)

He then points out that "in the present day, . . . Google, Amazon, and the other data juggernauts belch smoggy clouds of information and spit out correlations by the ton" and quotes someone as saying "To them [Amazon, etc.], perhaps, automated number-crunching stands for the highest form of knowledge that civilization has ever produced."  And then Engber speculates:  "In that sense, the admonitory slogan about correlation and causation isn't so much a comment posted on the Internet as a comment posted about the Internet. It's a tiny fist raised in protest against Big Data."

Hard to tell where he wants to go with this; he seems to have become so enthralled by his metaphors that he forgot to link them to his thesis.  I would guess that people who point to the fallacy are typically pointing out a misuse of "correlations," as I am doing above.  I'm not trying to shake my tiny fist at big data.  It's not a movement, it's just an occasional observation, made in reaction to bad logic (or, if misused, in reaction to perceived bad logic).

Engber then veers off to say that there are other limits on the utility of statistics as well -- e.g. that the term "statistical significance" is arbitrarily set at 5% (i.e. a result is considered "significant" if the chance that it occurred randomly is less than 5%).  BTW, this reminds me of a good xkcd.com cartoon on the subject:


Significant
That's http://xkcd.com/882/ (since people who read this blog might not be as mathematically-inclined as those who read xkcd, the point is if there's a 5% chance of coincidence, and you test something 20 times, chances are that the coincidence will occur in one of your tests).

Back to Engber -- he now wonders why people don't point out this problem with "significance" as often as they point out the problem with correlations:

"'Don't confuse statistical and substantive significance!'" That comment-ready slogan would be just as much a conversation-stopper as correlation does not imply causation, yet people rarely say it. The spurious correlation stands apart from all the other foibles of statistics. It's the only one that's gone mainstream. Why?"

The answer is pretty obvious -- people abuse causation/correlation much more often, and more blatantly, than they "abuse" statistical significance.  

More rumination and the conclusion from Engber:

"I wonder if it has to do with what the foible represents. When we mistake correlation for causation, we find a cause that isn't there. Once upon a time, perhaps, these sorts of errors—false positives—were not so bad at all. If you ate a berry and got sick, you'd have been wise to imbue your data with some meaning. (Better safe than sorry.) Same goes for a red-hot coal: one touch and you've got all the correlations that you need. When the world is strange and scary, when nature bullies and confounds us, it's far worse to miss a link than it is to make one up. A false negative yields the greatest risk.

"Now conditions are reversed. We're the bullies over nature and less afraid of poison berries. When we make a claim about causation, it's not so we can hide out from the world but so we can intervene in it. A false positive means approving drugs that have no effect, or imposing regulations that make no difference, or wasting money in schemes to limit unemployment. As science grows more powerful and government more technocratic, the stakes of correlation—of counterfeit relationships and bogus findings—grow ever larger. The false positive is now more onerous than it's ever been. And all we have to fight it is a catchphrase."

So he has meandered back to the basic point -- that there currently IS a lot of abuse of correlation/causation going on, in all manner of discourse. and that this IS a problem.  If that's the case, why is he so against people trying to point it out?!

His final words -- "And all we have to fight it is a catchphrase" -- are baffling.  If overuse of correlations is a problem, and our only weapon is this catchphrase, why is he preaching unilateral disarmament?!  Why does he "correlate" use of this phrase with "Internet blowharded[ness]"?

It might be our only weapon against all these false correlations, but it's a pretty effective one -- it reminds people, in language that nearly everyone understands, that a correlation -- such as the fact that people who create jobs are typically rich -- says nothing about causation.  The state of being rich does not cause one to create jobs, and giving more money to the rich (by lowering their taxes) will not cause the rich to create more jobs.  What's odd is what I observed when I started this post -- that so few people on the internet had pointed out that the "job creator" myth is yet another example of the causation/correlation fallacy, even though that's so obviously what it is.

If you're one of those internet blowhards that likes to point out causation/correlation fallacies, keep up the good work!

(And for the record, I'm still afraid of poison berries.)