Best Charts of the Day

The Internet is great at churning out slide shows of dancing kittens and YouTube videos of toddlers riding corgis, but it’s even better at churning out great (and not-so-great) infographics. If you’re judging by the charts’ usefulness and how well they convey information that would otherwise be difficult to visualize, my two favorites today definitely fall into the “not-so-great” category. They fail miserably as visual representations, as both could easily be replaced by a short sentence. But just because something is unnecessary doesn’t make it any less amusing — or, in the case of the second chart, profoundly depressing.

Here’s a tongue-in-cheek example from Matt Yglesias, who titled his post “How Many Popes Are Alive at Any Given Time in One Chart” and appends the snarky one liner, “In case you were having trouble keeping count.”

Good ol’ Benedict. He may have been a staunchly conservative traditionalist who sniffed at the reforms of Vatican II, promoted the incomprehensible Latin Mass (yeah, that’s a way to reach new audiences) and notably quoted a Byzantine emperor who called Islam “evil and inhuman,” but he sure broke new ground in the Living Popes category!

This chart from Mother Jones is far more sobering.

South Dakota, which recently passed a law allowing teachers to carry handguns in schools, has no mandatory waiting period for gun purchases. Yes, folks, it’s a quick in-and-out at the local Firearms “R” Us — no reflection needed before you take home a weapon able to mow down dozens of people in a matter of seconds. Abortion, on the other hand, now that’s a decision that requires some forethought. As Kate Sheppard notes, South Dakota has had a law on the books since 2011 mandating a 72-hour waiting period and a visit to a “crisis pregnancy center,” where women are often given “God doesn’t want you to kill your baby” lectures and told that abortion causes suicide and breast cancer, before undergoing the procedure. The same legislature that doesn’t want you to think twice before putting an AR-15 on your Visa then decided that women should not only be forced to think really, really hard for three days about their abortion, but that those same women were too stupid to do that thinking on the weekend:

Two weeks ago, the state legislature passed another new law excluding weekends and holidays from the 72-hour waiting period, which means a woman may actually have to wait five or six days between her first appointment and the actual abortion procedure.

Yeah, you know how foggy your brain gets on those long Saturday afternoons. The state legislature apparently feels that women in South Dakota leave their critical thinking skills at the office when they clock out on Friday evening.

Mother Jones provides this nice chart, which shows just how off-kilter the debate over “rights” in this country has become. Challenge the right to own firearms and you’re greeted with NRA lobbyists and Ted Nugent screaming about how Obama will have to pry his rifle from his cold, dead hands. Challenge a woman’s right to make her own reproductive decisions, however, and the politicians in far too many red states will welcome you with open arms.

 

 

In Which I Employ My Impressive High School Math Skills

Paul Krugman gets a lot of flak from the right about cherry-picking numbers and leaving out inconvenient facts when he makes his case for Keynesian stimulus. I tend to disagree with these critiques, to put it mildly, but I do think nice-looking charts and graphs can disguise a poorly-sourced argument. Even when I agree with Krugman’s overall point — that Republican-driven austerity, particularly at the state level, is damaging the economy — I sometimes question the evidence he marshals to support it.

This graph has been popping up on several left-wing websites, from The New Republic to Greg Sargent’s blog at the Washington Post.

Krugman posted it on his blog in advance of his Monday column, in which he argues that the narrative of President Obama as a big-spending socialist is an invention of the conservative message machine. In fact, the Republican prescription for the economy — lower spending and lower taxes — is “precisely the policy we’ve been following the past couple of years.” He explains:

What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.

This isn’t an opinion; it’s a fact. Stimulus money ran out by 2010, and nearly 610,000 public jobs — teachers, police officers, etc. — have been lost since 2009, contradicting Mitt Romney’s claim that the stimulus package “didn’t help private sector jobs, it helped preserve government jobs.” (The 145,000 added “government jobs” were almost entirely at the federal level in departments like defense and homeland security, which Romney actually wants to expand.)

Yet the graph Krugman offers doesn’t necessarily support this point. Government spending per capita seems to be an accurate enough measure of how much the spending is occurring under Obama, but the chart shows not absolute amounts but “percent change from year earlier.” When the line dips into negative territory, the casual viewer (at least this casual viewer) assumes that spending per capita has decreased below whatever baseline the x-axis represents. (In this case, it looks like spending in the year 2000 is the baseline.) But all we’re really seeing is how much spending changed from one year to the next. Zero means no change from the previous year; when the graph dips to negative 3%, it doesn’t necessarily indicate that spending is lower than the 2000 baseline. It’s simply lower than whatever it was the year before. Even at right-hand side of the graph, in 2012, when the line descends precipitously, per capita spending is still higher than it was in 2000 — the ostensible baseline, when the line hits at zero instead of negative 3.

Though relying on my high-school math skills is always a dangerous proposition, I think this scenario is an accurate interpretation of what Krugman’s graph shows:

• Assume the government spends a certain amount — say, $100 — on each person.
• At the graph’s highest point, toward the end of 2009, per capita spending increases by 6% from the previous year. It’s now $106.
• By 2012, per capita spending dips by 3%. Three percent of $106 is $3.18, so spending now stands at $102.82.
• $102.82 > $100. Obviously.
• That means per capita spending is still higher, by about 20%, than at the beginning. Not exactly the massive austerity that Krugman purports to show.

Even though the graph is technically correct — after all, the y-axis is clearly labeled “percent change” — it seems misleading. When I see a chart going into negative territory, I assume (perhaps naively) that I’m seeing an absolute decrease. However, Krugman’s graph disguises the fact that spending, while lower than at the height of the stimulus, has actually increased.

This is not an argument for lower government spending. On the contrary, it’s only reasonable that spending increase during a recession, when demand for safety net programs like unemployment insurance and food stamps soars. And when the private sector is pulling back, government should step in and spend even more to make up the difference. Add in the effect of a growing elderly population, which naturally requires increased outlays for Medicare and Social Security, and it’s no surprise that government spending as a percent of GDP is going up. The Republican proposal to cap it at 20% is not only unreasonable but cruel. So don’t take this as a case for lower spending. Take it as a case for better, more responsible charts.

Two Demerits for the Post’s Graphic Design Team

When it comes to economics, the Washington Post has trouble differentiating between its news pages and its editorial section. Dean Baker of the left-leaning Center for Economic and Policy Research devotes an entire blog to slamming various media outlets on shoddy economic reporting, and sometimes it seems that half the entries are about the Post. Last Wednesday he took the paper to task for a piece, supposedly a straight news article, that he saw as a thinly veiled “front page editorial about the deficit.” Baker isn’t far off the mark; the Post continually implies that reckless spending, not a recession or the Bush-era tax cuts, feeds the deficit. The economists it quotes uniformly believe that debt, not unemployment, is the greatest threat to the country. Its reporters paint austerity as a grim pill that America must inevitably swallow without acknowledging that mainstream economists encourage the government to spend more, not less, during a slowdown.

The Post's Social Security chart

So I am sure that Baker will have something to say about the Post’s latest front-page hand-wringing, which tells readers that the “payroll tax cut raises worries about Social Security’s future funding.” Who’s doing all the worrying? That eternal newspaper catchall: “some in Washington.” Naturally, reporter Jia Lynn Yang speaks only to economists and special interest groups who are indeed worried, including one advocate who claims the cut is “breaking the kind of firewall that has always existed between the trust fund and the operating fund.” That would be a well-founded concern only if the so-called firewall were more than a metaphor. In reality, we’ve been raiding the Social Security trust fund for years to pay for the government’s everyday expenses. Excess payroll taxes — the surplus that Al Gore wanted to put in a “lockbox” — aren’t sitting in a savings account at the Treasury. Instead, that $2.6 trillion is invested in U.S. bonds no different from the treasuries sold to investors and grandparents looking for a gift for their grandkids. When payroll taxes aren’t enough to cover the benefits paid out by Social Security, those bonds will be redeemed . . . with money from the general fund. The point is, Social Security dollars are a lot more fungible than the Post suggests. The argument that the payroll tax cut endangers Social Security — despite a promise from the government to backstop the $110 cost with general funds — ignores the fact that the program is already inextricably tied to the overall financial health of the government. The single valid point the article makes is an issue more of psychology than of budgeting: Because Social Security is funded by a dedicated tax, it is not forced to compete with other programs — the FDA, aid to the states, etc. — for scarce general fund dollars. Many people in Congress fear, quite legitimately, that relying on the general fund will turn Social Security into just another bloated government program for Republicans to cut. Still, a problem of perception is not necessarily a problem of finances. The New York Times points out that “many budget experts (but not all) and the chief actuary for the Social Security Administration” maintain that the temporary cut will not undermine the program, and that Republican protests to the contrary are less about preserving Social Security than about a sudden insistence on “offsetting” any new spending (even, it seems, disaster-recovery spending). The Times writes that, “[p]olitics aside, the bottom line is that a temporary tax cut is inconsequential to Social Security’s long-term health, from an accounting perspective. The threat remains the financial pressure of an aging population.”

The worst part of the Post’s crusade against deficits, however, is the truly awful chart that accompanies the article. It’s not on the level of Fox News’ blatantly distorted graph of the unemployment rate (see here for more on the kerfuffle), but it’s close. The chart purports to show the effects of the payroll tax cut by plotting the increase in funding from the general fund. Social Security started drawing on general fund dollars in 2010, when benefits exceeded taxes collected and the “trust fund” was tapped for the first time. Thus, until 2010, the line showing the general fund contribution was at zero. Between 2010 and this year, it jumps to $110 billion. That is certainly a lot of money, but the Post dismally fails to put the figure in context. Compared to the $2.6 trillion in the trust fund, $110 is not an astronomical amount. Yet the line on the Post’s chart skyrockets quickly and steeply enough to give even the most sanguine reader heart palpitations. It’s reminiscent of the jagged-peaked graphs pasted on Tea Party posters to stoke outrage about the national debt. Tell me this one doesn’t scare you:

This graph, like the one created by the Post, suggests that Armageddon is just around the corner. The national debt will eat America alive! The payroll tax cut will suck Social Security dry! Steep trend lines, a feature of both graphs, imply that the situation is out of control. Yet the Post makes deliberate choices that ensure the reader has no context in which to place a $110 billion tax cut. The highest value on the y-axis coincides with the cost of the tax cut, so that by the time the line reaches $110 billion, it is literally “off the chart.” Like the national debt, it hits the top of the graph at the far right-hand edge, as if it will increase into infinity. Of course any line which jumps from zero to the top of the graph will appear to skyrocket. On close examination, the Post’s chart actually tells us very little. All the reader can glean from the graphic is that, between 2009 and 2011, the amount contributed by the general fund will reach $110. It doesn’t tell us anything about how large a bite $110 billion will take from the total payroll taxes collected, or how it compares to the size of the Social Security trust fund. Why not extend the y-axis to $2.6 trillion, to show the cost of the payroll tax cut in relation to the value of the trust fund?

The uselessness of the graph and the arbitrary nature of the $110 billion y-axis maximum is perhaps best seen by considering what the Post would have drawn if President Obama’s entire jobs bill, which would have cut the payroll tax by an additional 2 percentage points, had been approved by Congress. In this case, the tax cut would have cost $240 billion, but the graph to illustrate it would have looked largely the same. The values on the vertical axis would simply extend to $240 instead of $110. On the left is my amateur rendering of the original Post chart; on the right is a similar chart illustrating the larger tax cut.

 

 

 

 

 

 

They are almost identical: a flat line and a precipitous increase that ends at the top of the chart. The payroll tax cut shown in the second graph is twice as large, yet the visual representation remains basically the same; only the numbers on the y-axis are different. Unlike in a chart drawn on graph paper, in which the units on both the horizontal and vertical axes are proportional (one square on the x-axis represents the same amount as one square on the y-axis), the scale of the y-axis — whether the numbers go up to $110 or $240 — in the Post chart is completely arbitrary. Because the years marked on the x-axis are unrelated to the dollars shown on the y-axis, one vertical unit can be 20 billion dollars or 50 billion.

Imagine a chart that puts the size of the payroll tax cut in context instead of simply showing it as the largest value possible. Compared to Obama’s $240 billion proposal, $110 billion is a bargain. The red line on the next chart looks a lot less scary when viewed next to the more expensive scenario:

Perhaps most helpful would be a chart that put the cost of the tax cut in the context of the total payroll taxes Social Security will take in. According to the government’s own data, which the Post links to but declines to use in its chart, the payroll tax generated roughly $545 billion dollars in 2010. Extend the y-axis to $545 billion, and suddenly the line from zero to $110 billion becomes a gentle slope: a wheelchair ramp, not a mountainside. In fact, the incline would be one-fifth as steep as the graph produced by the Post. The numbers would be the same, and the graph would convey the exact same information as the one created by the Post. Yet it would present a much less alarmist picture.

All of these graphs are technically accurate. However, by playing with the scale of the vertical axis, the Post can paint the payroll tax cut as either profligate or fiscally prudent. It seems much more helpful to show the tax cut in relation to the total taxes collected, but none of the charts really tell the reader anything new. The fact that Social Security will draw $110 billion from the general fund is not one that needs graphic elaboration. But by isolating the $110 billion value, the Post does its readers a disservice. It’s as if the newspaper wrote a story about a teenager purchasing her first cell phone: Suddenly, she has a new monthly bill for $110. Will she go broke trying to pay for her Blackberry? To answer that question, it helps to know that she earns $545 each month from her job at McDonald’s. The phone bill might stretch her budget or preclude a few shopping sprees, but it’s not the end of the world.

Unfortunately, the attitude at the Washington Post is that overspending and national debt may well be the “end of the world.” That’s a fair opinion to have, and certainly one that a lot of Republicans in Congress subscribe to. But it shouldn’t be the basis of an ostensibly neutral news article.

Yet Another Chart You Need to See

Pseudo-intellectual publications like Mother Jones are always angling for page views with posts like “Eleven Charts That Explain What’s Wrong With America” and “Overworked America: 12 Charts That Will Make Your Blood Boil.” Even the Atlantic gets in the game with “The Chart That Should Accompany All Discussions of the Debt Ceiling.” Some of these neat little graphs are actually informative; others, like the one talked up by the Atlantic, raise more questions than they answer (e.g. “can you really blame all the Bush tax cuts on Bush when Obama extended them?). Invariably, the pie chart or trend line is used by the author to demagogue about whatever injustice, from income inequality to tax avoidance, has animated him (or her) that day. This chart, from the slightly more sober New York Times, really does speak volumes, however. It’s a shame that it hasn’t gotten the sort of breathless play that Mother Jones gave the blood-boilers.

The gist of the accompanying article, by Floyd Norris, is that companies — what Republicans invariably refer to as “job creators” have never been doing better. Workers, on the other hand, have never been doing worse. The statistics are eye-opening:

In the eight decades before the recent recession, there was never a period when as much as 9 percent of American gross domestic product went to companies in the form of after-tax profits. Now the figure is over 10 percent.

During the same period, there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.

Furthermore, corporate taxes as a percentage of profits have hit an all-time low of 21 percent. The average, since 1960, is 34 percent. Personal taxes as a percentage of income have also decreased, though by a much smaller amount. They now stand at 14.1 percent of income, compared to an average of 15.1 percent.

This information, which was released by the Commerce Department, puts the lie to the conservative shibboleth that a high taxes are “killing jobs” and preventing companies from expanding. When Rick Perry claims that “the tax structure that we have in place in this country is what drove the masses away,” his rhetoric does not match the facts. And when the Republican members of the deficit-reduction supercommittee argue that the tax increases proposed by Democrats “would kill job creation and economic recovery,” they are ignoring the fact that companies have never had it so good. Surely corporate America wasn’t suffering under Ronald Reagan’s presidency, when taxes took a much larger slice of profits. Even if we take at face value the theory that “business decisions are highly sensitive to the rates of the capital gains, dividends and death tax,” we’re left with the conclusion that lower tax rates have led to . . . less hiring? Fewer jobs? The GOP lambastes President Obama’s economic policy as more of the same, but it really should be asking what it hopes to achieve with more of the same Bush-era tax rates. I’m not going to argue that higher corporate taxes would create jobs, but they would certainly help unemployed and low-income Americans weather the recession. If we’re looking for cash to fund food stamps and Medicaid, perhaps we should heed Willie Sutton’s advice, apocryphal though it may be, and look to banks and other corporations: Because that’s where the money is. This is not Occupy Wall Street-style screed against banks or any other money-making behemoth. Rather, it’s a simple acknowledgement that the people and companies who have done best over the past fifty years can afford to chip in a bit more.

As Times columnist Paul Krugman has repeated ad infinitum, the U.S. economic crisis is not one of businesses stifled by the heavy hand of government; instead, it is primarily a problem of demand. Companies are earning plenty of money; in fact, most large corporations are sitting on record piles of cash. If Apple wanted to open a thousand more stores or Pepsi wanted to build a new bottling plant, a lack of funds or a debilitating corporate tax rate is hardly preventing them from doing so. The real hurdle to expansion is the lack of demand: consumers just aren’t buying. And who can blame them? With wages at an all-time low as a percentage of GDP, it’s no wonder that Americans are reluctant to open their wallets.

Frankly, it’s enough to make your blood boil.