The Pardu

The Pardu
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Wednesday, February 18, 2015

DAVID F. RUCCIO : Charts, Headlines As A Tool For Lies

Essayist DAVID F. Ruccio      

OCCASIONAL LINKS & COMMENTARY

on economics, culture and society


How to lie with headlines and charts

Posted: 17 February 2015
David Leonhardt’s headlines reads “Inequality Has Actually Not Risen Since the Financial Crisis” and his chart, provocatively titled “The Rich Have Gotten Poorer Since 2007,” shows that the incomes of the highest-earning households (top 1, top .01, and top 10 percent) have fallen even more than the income of others.
Really?
Well, yes and no. Yes, incomes at the top have fallen more than the incomes of everyone else since 2007—but those at the top are certainly not “poorer.” And, even more important, no one has claimed top incomes didn’t fall off during the Great Recession. Of course they did, since those at the top receive most of the capital gains generated in the economy and the crash in equities wiped away a good portion of their wealth.
 
But the real questions are, what happened before the crash? And what’s happened since the recovery began? And there the charts don’t lie: those at the very top have made out like bandits while everyone else is forced to continue to subsist on their meager, unchanging incomes.
In fact, Leonhardt’s own text challenges both his headline and key chart:
None of these facts, to be clear, changes the larger story: Inequality is far higher than for most of the last century. The Great Depression and the New Deal helped reverse the high inequality of the 1920s. The last several years haven’t reversed more than a small fraction of the post-1980 rise in inequality.
It’s even possible that inequality will soon surpass its 2007 peak, because the affluent often fare better than any other group in the second half of an economic expansion. On the other hand, the current data doesn’t reflect several of Mr. Obama’s efforts to fight inequality, such as the expansion of health insurance or top-end tax increases. Whatever happens in the next few years, top incomes will almost certainly remain vastly higher than they were in previous decades, while incomes for the middle class and poor will remain only marginally higher. This stagnation has damaged living standards and caused widespread frustration.
That’s the real problem, which headlines and charts about the very rich not having yet recovered all their losses simply can’t hide.

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