The Declaration of Independence is a wonderful document. In it, Thomas Jefferson penned those immortal lines:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these, are Life, Liberty, and the pursuit of Happiness.
Now, we have Barack Obama and others who are saying that we need to extend these unalienable rights. They say that you should have a right to healthcare. A right to a job. A right to a house. In his infomercial this week, he had video of people complaining that they had to work multiple jobs, that they may lose their home, that they needed healthcare. One woman complained about the cost of gasoline and the cost of a gallon of milk. But, according to research company ComScore Mobile, it’s highly likely that they have an iPhone:
Lower-income U.S. consumers are flocking to Apple’s iPhone, sending an early signal that smartphones are changing from a luxury to a necessity, according to research company ComScore Mobile.
In a series of surveys ending in August, ComScore found that iPhone purchases grew fastest among people with annual household incomes between $25,000 and $50,000. The growth rate in this group was 48 percent, compared with just 16 percent among people with incomes above $100,000.
A baseline iPhone 3G is $200, and the cheapest iPhone plan from AT&T is $70 per month.
A quick check on eHealthInsurance.com shows that a 4-person household (adult male and female, teenage boy and girl), can find health insurance as low as $107 per month from United HealthCare. If we apply that $70 for the iPhone plan to the health insurance premium, that leaves a deficit of $37. Where can such a household find $37?
Well, according to an ICR survey, it’s highly likely that this fictitious household has more than one cell phone, due to the fact there are two teenagers living in the house. At an additional $20 per line, assuming both teenagers have a phone, there’s $40.
What if they only have that iPhone? Well, statistically, this family is likely to have cable TV. With basic cable running about $40 per month, there’s the remainder of their health insurance premium.
Let’s face it… There are many ways to prioritize a household’s budget so that healthcare is part of it. But what about milk and gasoline? Let’s say they have health coverage provided by their employer, but are struggling to buy gasoline and milk. If they really need a cellphone, they could easily got one of the free phones from the various providers. With a basic plan running $20 per month, that’s $50 left over for an extra tank of gas per month. And since they didn’t spend $200 on the iPhone, spread that out over 12 months and you get an extra $16.67 per month to buy milk.
The fact is, as we have said before, we are exchanging our freedoms for stuff. Stuff has become more important than liberty, and as long as politicians keep raising the expectations of “free” government goodies, as long as we keep believing that healthcare and jobs and houses are rights and iPhones are necessities, we will hurdle ever-faster toward giving up all of our freedoms and all of our liberties for a socialist nightmare.
— Thomas Jefferson
With the elections reaching a fever pitch, no doubt many people have heard one party or the other tout their historical performance in the stock market. Something along the lines of: “If you look back over the past X number of years, if you had invested only when my party was in office, you’d be richer.”
Media outlets such as the New York Times also jump onto the bandwagon. A recent piece by Tommy McCall showed that if you had started with $10,000 and only invested during Republican years, you would have grown your investment to a mere $11,733. But if you had invested that same money during only the years Democrats held the office of President, you would have make $300,671. What a difference!
As the saying goes, there’s lies, damn lies, and statistics.
Numbers can be skewed however you want them. When dealing with numbers — especially dealing with such things as the economy — you need to drill down and look at all the variables. Fortunately, there are people who love to crunch numbers. More fortunate still, some of these people post their results to their websites. Case in point: Theodore Gray, co-founder of Wolfram Research, makers of Mathematica.
First he points out that there are some errors in the methodology used in generating the New York Times’ analysis:
First, it gives each president “credit” for stock market performance from the first day of his administration. That’s not reasonable: it surely takes at least a few months if not years before a president’s actions can start to affect the performance of the market.
Second, it completely ignores dividends: in earlier financial eras dividends were much more important than capital gains, and ignoring them distorts the picture.
Third, it ignores inflation: If the stock market was shooting up during a given administration but inflation was also high, the stock market gains may not count for much. Anyone can print money, that’s easy.
Fourth, there is the problem of the great stock market crash of 1929. While it occurred during a Republican administration, and while there were in fact a full eight years of Republican presidents preceding it, there were a lot of other factors involved as well. (McCall acknowledges this problem by including the observation that if you ignore the Great Depression a Republicans-only investment would now be worth $51,211 instead of $11,733.)
He delves down further, puts a myriad of factors into play, and comes up with some startling and rather surprising results. Rather than spoil the surprise, we encourage you to read his full blog post, then come back here to discuss.
The bottom line: when properly used, the numbers don’t lie. The problem is, many sources of information will “adjust” the factors used to generate their convincing numbers, and hope that you, the average reader, will just take them without questioning, and without doing the math yourself.
Sharpen your pencils, folks. Do the math that politicians — and newspapers — don’t want you to do.
Last month, US Treasury Secretary Henry Paulson said that Social Security is “financially unsustainable” and needs an urgent overhaul.
Ya think? Simple elementary-school math shows it’s unsustainable.
“As the baby boom generation moves into retirement, these programs face progressively larger financial challenges,” Paulson said.
The Treasury secretary said a growing number of retirees and the programs rising costs could harm Americas future prosperity if Social Security and Medicare are not overhauled and bolstered.
The needs of the Social Security program, which provides retirement benefits to all Americans as long as they have contributed to the program, are less acute, however, than Medicare.
Paulson said the Social Security programs cash flows are projected to turn negative in under 10 years and that a Social Security trust fund would likely be exhausted in 2041 without urgent reform.
Regardless what any politician will tell you, Social Security cannot be maintained. And you can prove this by doing some simple math. So sharpen your pencils, and read on for today’s lesson.