Furious Friday

Is money the root of all evil? And, how statistics are used to perpetuate misunderstandings and f*ck with you

Welcome to Furious Friday – These episodes aim to solve misunderstandings

In this episode –  Furious about the muckery of statistics used to perpetrate misunderstandings

  1. Misconceptions about the world when it comes to the world, the economy and what we are taught, by the media.
    • Click Bait is the winner when we are too busy to fully look into an article!
  2. So, I did it for you – I’ll go through two examples
    • Article about 9 out of 10 Australians support Healthcare and Education being free
    • Oxfam study of income and wealth inequality – how the rich suck up all the wealth

Study one – The “Findings” (read: The Claims)  

  1. About Support for universal access for free to healthcare and education
  2. 9 in 10 Australians believe those services should be provided free of charge. (88% for Education) (89% for healthcare) –
    • Who doesn’t like free stuff?
    • Free services are a human right?
  3. 8 in 10 Australians agree the rich should be “taxed more” to support the poor.
  4. 8 in 10 Australians agree – every citizen should have the right to UBI
  5. Found that 49% agree that ‘socialist ideas’ great value for societal progress…for who?


Digging deeper

  1. Grain of salt – The “Australians” surveyed was only an online Ipsos survey of 1,000 Australians who are working aged.
    • Most people who are working don’t have time to fill out 20-minute surveys…they are working.
  2. Free education –
    • No Free lunch – And it isn’t free, other people pay somewhere along the line.
    • What about those who don’t want to go to uni? They pay for those that do!
    • But …what is to stop people just doing degree after degree after degree… “Van Wilder” style
  1. Healthcare – already subsidised by the rich – do you pay for blood tests? Tests? It’s all Medicare funded!
    • When something is free (public good) – it gets overused and the system is burdened
    • Bulk billed – I feel for doctors in this system – work in 15-minute time slots. It’s hard to help someone properly within this time restriction – healthcare declines
    • If the costs go up, wages would be capped by the government
      • If you study for 10 years, you are in that bottom 10%
      • Sacrifice a lot to get higher income

Study two – the findings

  1. Oxfam – Inequality report – Richest 1% are sucking up the wealth
  2. Top 1% of population has 22% of the wealth
  3. Income Growth – Between 1988 to 2011
    • Bottom 10% made up 3% of all growth
    • Top 10% made up 27% of all growth

Digging deeper

  1. Misrepresenting “inequality” as immoral – poverty is the issue not inequality.
    • Focusing on inequality is economic resentment.
    • The guy next door has a bigger house, so go steal his stuff?
  2. Income growth – this is not the same group of people over time – Just shows statistical spreads
    • Remember our Student Doctor? They go from working for free to earning higher wages over time
  3. Income inequality means nothing – most people listening would be doing okay, you would have a computer, or phone.
    • So does Bill Gates. But rather than trying to make Bill Gates less rich, we should be focusing on poverty. How much poverty do we have?
    • Bill gates is rich because we use the stuff he helped get out to us at a low cost. And thanks to that we are better off than we have ever been!
  4. They ignore what a ‘fair share’ is – do the rich do their fair share?
    • 3% of Australian income earners (only 399,000 people) – pay 30% of the tax bill
  5. The irony here is that Oxfam turns out to be hypocritical
    • Chairman of Oxfam international was detained in February for corruption charges
    • Senior staff members paid local Haiti woman for sex after the 2010 crisis.
      • Talk about taking ‘advantage’ of the poor.
    • Standing on a position of morality doesn’t avoid reality


Issue with this methodology

  1. Only focus on population distributions – broken up into percentages
    • Doesn’t look at age, their lives, how they got their wealth
  2. The 1% is a group – that can only ever be the 1% – so if the number of people who compete to get there get more and due to people trying harder, this group gets richer and richer
  3. There is always going to be a “1%” if you measure things in percentages
  4. It’s dangerous to lump people into groups this way – as policies are designed to benefit one group, they destroy another group. We lose more and more of our freedoms the more policies are built around group think. Punishing one, for the benefit of another.

 

I am not in the 1%…yet! But I do hope to be there one day

  1. I don’t want to get there through stealing things, but through voluntary transactions – giving more than I get = VALUE
  2. Why don’t people want to be there? What biases do you harbour that are telling you that having money is bad? All money does is provide freedom and stability.
  3. The Media’s job is to sell fear. Not inform you – a good story sells better than the truth.

The most ignored factor –

  1. Age! Someone who is a 24 year old head-of-the-household, will have half the income on average of someone who is a 45 year old head-of-the-household.
    • Time is your friend here – Mobility of the wealth over time.
    • Pareto Distribution
      • Example – two individuals with the same income $90k ($67K net), 30 years old, over the following 30 years one individual invests 15% of their net income and the other person doesn’t.
      • Return 8%, income reinvested, wage increase with inflation = $1,580,000
      • A lot of this is choices made along the way, over time, compounding effect.
  1. Nobody should have the moral authority to tell people how wealth should be distributed, or how people should spend it
    • They have in the past they have tried though, and it hasn’t gone well. We will discuss this in next Friday’s episode

Why does this go on? And what does it lead to?

  1. Looking at the whole picture is really hard.
  2. IMO this is simply people, not willing to take responsibility for themselves, blaming the people who do take care of themselves
  3. When you repeat a lie enough, people start to believe it. This creates more and more unjust outrage.
  4. Nobody actually explains what it takes to be wealthy and some assume it’s just the roll of the dice.
    • Some are born “with a silver spoon in their mouths”, however economist Thomas Sowell estimated only 10% of wealth is ‘old money’.
  5. Economic resentment – thinking that the rich people steal form the poor?
    • If they are poor they have no money to steal. It would make more sense to steal from rich people – which is what those without are crying for through increased taxation and redistribution
  6. Is there an ‘economic morality’ to being poor? Malcom Gladwell – ‘I never root for the underdog as statistically they don’t deserve it.”

 

Conclusion

Ask yourself: Is money the root of all evil? Or is it evil people doing evil things who are the root of all evil?

I’ll leave you with that question to think about.

 

In next Friday’s episode, we look at giving the masses what they want – Socialism V Capitalism!

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