How to lie with inequality statistics

In the world according to Paul Krugman, “most Americans” have gotten considerably richer over the past two years (even if “the gains have been especially big at the top”), “lower-income Americans [have] seen relatively large income gains,” and “the simple story that the pandemic has been great for the wealthy and bad for the working class doesn’t hold up.”

Really?

To support his argument, Krugman trots out a series of charts from Realtime Inequality, which is in fact an eye-opening set of statistics on wealth and income inequality in the United States. But not in the way Krugman uses them. The two biggest problems in Krugman’s treatment are (a) he excludes the bottom 50 percent (so that “most Americans” refers only to the middle 40 percent) and (b) he focuses on growth rates and not levels or shares of income and wealth (so that, once again, we have that pesky problem of large percentage increases on a low base yields small increases).

That’s how you lie with inequality statistics.

What happens if you look at other statistics? Let’s start with wealth.

Here, I’ve depicted the shares of wealth for various deciles of the U.S. population: top 0.01 percent, top 0.1 percent, top 1 percent, middle 40 percent, and bottom 50 percent. Lo and behold, we can see that, starting in 1979, the shares of wealth held by those at the very top have soared, the share of the middle 40 percent has fallen, and the share of the bottom 50 percent hasn’t budged.

What about for the most recent period (which is what Krugman focuses on), from the end of 2019 to the end of 2021. Same thing: the shares of wealth of the top 1 percent (and subsets of that group) have continued to rise, the share of the middle 40 percent has fallen, and the share of the bottom 50 percent has actually risen.

Wow! The share of wealth owned by the bottom 50 percent (which consists mostly of housing they may own) has gone up. By how much? From a minuscule amount to another minuscule amount—from 0.3 percent to 0.8 percent. Or, in absolute terms, from an average wealth of $2.9 thousand to $7.9 thousand—a difference of $5 thousand. You might even say such an increase means a lot to the 125 million people in the bottom 50 percent of the U.S. population but it’s certainly no more than a drop in the bucket in terms of closing the gap with the wealth of those at the top (for example, the $19 million of wealth owned by those in the top 1 percent).

What about income? Same problem.

The growth rate of post-tax income for those in the bottom 50 percent was, in fact, much higher than for those in the middle 40 percent and top 1 percent—8.5 percent compared to 3.8 percent and 4.1 percent, respectively.

And that proves what? Not much. Those in the bottom 50 percent gained $2.8 thousand (mostly from transfer payments), which is similar to the gain for those in the middle 40 percent ($3.2 thousand). And those in the top 1 percent? Well, they managed to capture an extra $48 thousand during the period from late 2019 to late 2021.

So, sure, wages for those at the bottom are growing at a faster rate than those at the top. But they’re still barely staying ahead of inflation. And they’re not such as to even put a dent in the gap that separates them from the incomes captured by those at the top. The share of post-tax income taken home by all those workers in the bottom 50 percent only increased from 20.1 percent to 20.9 percent, while the share of income captured by the 2.5 million people in the top 1 percent is still 14.4 percent.

All of which means what? That the gap between workers at the bottom (including those in the middle) and the small group at the top continues to be enormous—in terms of both wealth and income. And no policy of keeping existing interest-rates or increasing them will help close that obscene gap.

It’s time we stop lying with inequality statistics and focus on the real culprit: all the ways contemporary capitalism, both before and during the pandemic, has managed to funnel most of the surplus to those at the top of the economic pyramid, leaving barely enough wealth and income to get by for everyone else.

It’s a “simple story,” with clear political implications. Maybe that’s the reason the Krugmans of the world don’t want to tell it. . .

“Sick societies have sick institutions”

The pandemic is once again spiraling out of control. Right-wing commentators and political leaders are doing everything they can to stop any kind of effective public-health response and to divert attention from the severity of the pandemic. And liberals? The best they can come up with is “follow the science.”

Jay S. Kaufman, a professor of epidemiology at McGill University, is having none of it. He rejects that simple—and too simplistic—mantra because it “misses the fact that the same social pathology that exacerbates the pandemic also debilitates our scientific response to it.

The problem is, Kaufman pulls his punches and limits the reach of both arguments. He notes that the pandemic itself is “socially patterned” but then he refers only to excess deaths across countries (such as Peru, Bolivia, South Africa and Brazil), which in his view are tied to political turmoil and weak social institutions. What he forgets about or overlooks is the fact that the severity of infections and deaths with countries is closely related to economic inequality and poorly functioning public institutions. In other words, the people who have suffered most from the pandemic are those who are forced to have the freedom to work at jobs and live in communities where they are more likely to be infected by COVID-19 and where adequate medical care is unavailable, either because it is not provided or is financially unattainable.

As for the second argument, that “science itself is a social process,” he’s right to note that “epidemiologists exist like everyone else inside the social forces that shape the pandemic.” But he’s really only referring to the step from “evidence to policy,” to the “politicization of proven interventions” (for example, under the Trump administration), not the process of gathering and analyzing the evidence itself. Thus, he never questions the science itself. Kaufman seems to be uninterested in or incapable of posing questions about what scientists decided were the basic issues to be investigated in terms of the emergence and transmission of the novel coronavirus, especially the ways the pandemic has both revealed and compounded pre-existing inequalities in wealth, income, and race.

The alternative was, in fact, staring him in the face. Kaufman begins his essay by invoking Rudolf Virchow, the Prussian pathologist who, in the winter of 1848, was sent to investigate a typhus epidemic raging in Upper Silesia, in what is now mostly Poland. As Kaufman explains,

After three weeks of meticulous observation of the stricken populace — during which he carefully counted typhus cases and deaths by age, sex, occupation and social class — he returned with a 190-page report that ultimately blamed poverty and social exclusion for the epidemic and deemed it an unnecessary crisis. “I am convinced that if you changed these conditions, the epidemic would not recur,” he wrote.

Today, Virchow is known as the “father of modern pathology” and as the founder of social medicine. He developed the theory of cellular pathology, which laid the conceptual foundation for modern medicine. But he also had a specific notion of medicine, which is today mostly ignored. In his own words:

Medicine is a social science, and politics is nothing else but medicine on a large scale. Medicine, as a social science, as the science of human beings, has the obligation to point out problems and to attempt their theoretical solution: the politician, the practical anthropologist, must find the means for their actual solution. . .Science for its own sake usually means nothing more than science for the sake of the people who happen to be pursuing it. Knowledge which is unable to support action is not genuine—and how unsure is activity without understanding. . .If medicine is to fulfill her great task, then she must enter the political and social life. . .The physicians are the natural attorneys of the poor, and the social problems should largely be solved by them.

Not only did Virchow conclude, based on his research, that poor sanitation, the absence of basic hygiene, lack of education, and near starvation were the root problems of the epidemic in Upper Silesia. According to David M. Reese, “a few weeks after his Silesian expedition, Virchow manned the barricades beside fellow democrats, armed with a rusty sword and an antiquated rifle.” Following on his participation in the revolution of 1848, Virchow continued to be active in politics: he was soon elected representative to a newly formed Prussian diet, “delivering fiery speeches against the royal family”; in the late 1850s, he was elected Berlin City Councillor, an office in which he served for 42 years (“his achievements ranging from improving the city’s sewer and water supply systems to reforming the arrangement of public hospitals” so that all citizens would have access to basic medical care); and he was a founding member of the German Progress Party, the main left-wing party before the rise of the Social Democrats.

The fact is, more than 170 years ago, Virchow established a practice of both scientific social medicine and politically committed scientist that gives lie to the notion of just “follow the science.” The question, then as now, is: which science?

In the midst of a sick society characterized by sick institutions, we need to critically examine both the economic and social institutions that have generated the profoundly unequal effects of the present pandemic as well as the specific ways scientific methods and protocols have been conditioned by those same institutions.

Chart of the day

Both the number of initial unemployment claims for unemployment compensation and the number of continued claims for unemployment compensation are once again on the rise, signaling a worsening of the Pandemic Depression.

This morning, the U.S. Department of Labor (pdf) reported that, during the week ending last Saturday, another 935 thousand American workers filed initial claims for unemployment compensation. While initial unemployment claims remain well below the peak of about seven million in March, they are far higher than pre-pandemic levels of about 200 thousand claims a week.

The number of continued claims for unemployment compensation, while also below its peak, rose from the previous week and was more than 20.6 million American workers—a figure that includes workers receiving Pandemic Unemployment Assistance.* This means that, since the end of April, the number of continued claims has fallen below 20 million only once (and that to 19 million, toward the end of November).

To put this number into further perspective, consider the fact that the highest number of continued claims for unemployment compensation during the Second Great Depression was 6.6 million (at the end of May 2009), and in the week before the Pandemic Depression began there were only 1.6 million continued claims by American workers.

In the meantime, at least 1,074 new coronavirus deaths and 40,607 new cases were reported in the United States yesterday. As of this morning, more than 6.1 million Americans have been infected with the coronavirus and at least 185.6 thousand have died—more than any other country in the world, which has received barely a mention from anyone in the Trump administration.

According to Gregory Daco, chief U.S. economist at Oxford Economics, “We are not moving in the right direction. With the looming expiration of benefits, it’s even more worrisome.”

In the meantime, at least 3,611 new coronavirus deaths and 245,033 new cases were reported in the United States yesterday—two morbid new records. As of this morning, more than 17 million Americans have been infected with the coronavirus and at least 307,642 have died. That’s more than any other country in the world, a crisis continues to receive barely a mention from anyone in the Trump administration.**

The result will be new waves of business slowdowns and closures, which in turn will mean millions more U.S. workers furloughed and laid off. Widespread inoculations of the U.S. and world populations are still many months off. Therefore, in the absence of a radical change in economic policies and institutions, Americans can expect to see steady streams of both initial unemployment claims and continued claims in the weeks and months ahead.

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*This is the special program for business owners, the self-employed, independent contractors, and gig workers not receiving other unemployment insurance.

**The last time I posted a chart of unemployment claims, in early September, some 6.1 million Americans had been infected with the coronavirus and 185.6 thousand had died.

Cartoons of the day

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Chart of the day

U.S. billionaires have recouped all of their wealth—and more—during the Pandemic Depression. Meanwhile, since May, the number of poor Americans has grown by about 8 million. And the number of American workers applying for and receiving unemployment benefits continues at record levels.

According to Forbes,

Pandemic be damned: America’s 400 richest are worth a record $3.2 trillion, up $240 billion from a year ago, aided by a stock market that has defied the virus. 

When the Covid-19 pandemic began to sweep the world earlier this year, the wealth of U.S. billionaires plummeted in lockstep with the stock market. Yet, just six months after the market bottomed out—with hundreds of thousands Americans dead and the coronavirus still to be contained—the wealthiest Americans are doing better than ever. In other words, the pain, at least for the ultra-rich, was remarkably short lived.

Meanwhile, more and more American workers, who have lost their jobs or been furloughed, are attempting to survive on meager unemployment benefits. And many of them and their families—especially Black people and children—are now falling below the poverty line.

Part of the reason for this obscene growth in poverty is the expiration of the CARES Act’s $600 per week unemployment supplement. The other reason is that the number of American workers who are applying for unemployment benefits continues at elevated levels.

This morning, the U.S. Department of Labor (pdf) reported that, during the week ending last Saturday, another 898 thousand American workers filed initial claims for unemployment compensation. While initial unemployment claims remain well below the peak of about seven million in March, they are far higher than pre-pandemic levels of about 200 thousand claims a week.

The number of continued claims for unemployment compensation, while also below its peak, was still more than 25 million workers—a figure that includes workers receiving Pandemic Unemployment Assistance.*

To put this number in perspective, consider the fact that the highest number of continued claims for unemployment compensation during the Second Great Depression was 6.6 million (at the end of May 2009), and in the week before the Pandemic Depression began there were only 1.6 million continued claims.

In the meantime, at least 1,011 new coronavirus deaths and 59,751 new cases were reported in the United States yesterday. As of this afternoon, more than 7.9 million Americans have been infected with the coronavirus and at least 217.1 thousand have died—more than any other country in the world, grotesque outcomes that continue to receive barely a mention from Trump or anyone (aside from Dr. Anthony Fauci) in his administration.

Meanwhile, many colleges and universities that have attempted to reopen with students in residence are reporting hundreds of (and, in some cases, more than a thousand) novel coronavirus infections.

The result will be new waves of business slowdowns and closures, which in turn will mean millions more U.S. workers furloughed and laid off. Unless there is a radical change in economic policies and institutions, Americans can expect to see steady streams of new COVID-19 infections and deaths, initial and continued unemployment claims, and growing poverty in the weeks and months ahead.

As for those at the top: during the first six months of the pandemic, the United States added more than 29 more billionaires, increasing from 614 to 643. The Pandemic Depression has been a boon to their fortunes.

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*This is the special program for business owners, the self-employed, independent contractors, and gig workers not receiving other unemployment insurance.

Cartoons of the day

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Cartoons of the day

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Cartoons of the day

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Cartoons of the day

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Cartoons of the day

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