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You are here: Home / Open Threads / For Richer or Poorer

For Richer or Poorer

by John Cole|  July 11, 20052:47 pm| 24 Comments

This post is in: Open Threads

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Rick passes along this Jerry Bowyer piece in the National Review which is sure to cause a stir and widen the red state/blue state divide (at least in the minds of pundits):

Recently the Bureau of Economic Analysis released two reports which shed a lot of light on what

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24Comments

  1. 1.

    Molly McRae

    July 11, 2005 at 3:01 pm

    it

  2. 2.

    albedo

    July 11, 2005 at 3:06 pm

    “But if the GOP is not the party of the rich, is it the party of the poor? No. Increasingly, and counter to the Kansas theory, it

  3. 3.

    p.lukasiak

    July 11, 2005 at 3:10 pm

    The top graph makes it appear that per capita income of blue states is nearly three times that of Red States.

    Of course, that’s nonsense — and the fact that the BEA is producing these kinds of deliberately deceptive graphs strongly suggests that they are also “cooking the data” for political purposes….

  4. 4.

    Jason

    July 11, 2005 at 3:26 pm

    I wonder if there is also a correlation with education level, i.e. Blue states are more educated or have a higher educational attainment.

  5. 5.

    Zifnab

    July 11, 2005 at 3:30 pm

    If you checked by district, you’d notice that this logic doesn’t pan out. Sugar Land – arguably the richest district in Texas – is home to Tom DeLay. Wisconsin’s Senenbrenner is from an equally money heavy district. Meanwhile, poorer inner-city districts tend to vote Democrat. They also tend to have much lower voter turn-outs. Check Shella Jackson Lee. She wasn’t exactly elected by a bunch of Beverly Hills actors and lawyers.

    Heavily impoverished districts also tend towards religous conservatism. You don’t see alot of gay bashing and bible thumping among Manhattan crowds or in Hollywood, but in the back hills of West Virgina its rampant. Likewise in Alabama and Mississippi.

    Voter apathy among poor Democrats combined with the religous fervor of poor Republicans and the financial backing from rich Republicans make poor states go Red. You’ll also notice Red States missing something that Blue States boast a great number of – people from the middle class.

  6. 6.

    JG

    July 11, 2005 at 3:36 pm

    The notion that the GOP is the party of the rich simply doesn

  7. 7.

    Rick

    July 11, 2005 at 3:41 pm

    The top graph makes it appear that per capita income of blue states is nearly three times that of Red States.

    Kinko’s p.luk.,

    Mental health alert: conspiracy mongering. Ever see stock market graphs? They don’t all start at a zero baseline.

    A grip, please.

    Cordially…

  8. 8.

    Stormy70

    July 11, 2005 at 4:00 pm

    I am in Red State central, and live in one of the fastest growing areas in the country. Trust me, there is a huge vibrant middle class here. Plus, Dallas has the largest Black upper middle class.

    People are flocking here because the job market is booming and the housing market is booming. We have no state income tax, and our Governor just sent a bill up to slash property taxes by billions. I can go to any type of shop, grocery store, or restaurant, and not drive more than 10 minutes. Years ago, when I lived in a small apartment, all those amenities were still within 10 minutes of where I lived.

    The best schools around my neighborhood are public, and the community is involved in lots of charitable activities. Plus, if I shoot an intruder, the sheriff will say nice aiming, and pat me on the back.

    The Democrats are now known as the Elite party, and even when one is poor, they hate being looked down on. Why vote for a condescending jerk?

  9. 9.

    Rick

    July 11, 2005 at 4:03 pm

    You’ll also notice Red States missing something that Blue States boast a great number of – people from the middle class.

    I think what you see is that Red States tend to be growing a middle class, as the Blue States tend to lose population relative to the Red. Economic refugees, in some cases.

    Cordially…

  10. 10.

    Bernard Yomtov

    July 11, 2005 at 4:21 pm

    This is idiotic. Why didn’t Bowyer start his chart at $30,000 instead of $27,000? Then you really would have seen something. (And why only ten red and ten blue states? That alone should tell you he’s peddling BS).

    First, Zifnib is correct. You have to look at much smaller areas to draw this sort of conclusion. Or, you could also look at exit polls.

    Once you get above $50K in income you have majorities for Bush of 55% and up, going to 63% for the $200K plus crowd.

    Big surprise, I know, that NRO would publish something this stupid, but there it is.

  11. 11.

    p.lukasiak

    July 11, 2005 at 4:24 pm

    Ever see stock market graphs? They don’t all start at a zero baseline.

    stock market graphs don’t provide two oppositional values.

    I guess the real question is….why is the BEA even DOING “red state/blue state” analyses? When you stop and think about it, there is really no reason for a government agency to be creating graphs based on state-by-state the results of the last Presidential election. The very creation of a dichotomous comparison that conflates a closely contested state like Ohio with a “runaway” state like Utah in order to to “economic analysis” is simply ridiculous.

    Ohio isn’t “red” its a slightly reddish shade of purple (and Pennsylvania is a slightly bluish shade of purple.”) So why are taxpayers paying for this kind of crap?

  12. 12.

    John Cole

    July 11, 2005 at 4:29 pm

    I don’t think the BEA made the graphs, the author did with the stats from the BEA. I should have made that clear.

  13. 13.

    MC

    July 11, 2005 at 5:11 pm

    There are a couple things wrong with this that really don’t have anything to do with ideology, just poor research methodology.

    First of all, if these graphs were made based on BEA statistics, they computer Per Capital Personal Income as “total personal income divided by total midyear population.” That’s a mean, not the median, and not appropriate for something like this. The uber-wealthy in the county are located in blue states: Gates, Ballmer, and Allen in WA, Ellison in CA. If you look at this map:

    http://www.forbes.com/2002/09/13/rich400land.html

    You’ll see the concentration in NYC, Chicago, California cities, Seattle. The only real counterbalancing force is the Walton family in AR and Buffett in NE. These figures skew the data dramatically.

    Secondly, the income is not normalized for cost of living. NYC, LA, Chicago, Philadelphia, San Diego…all in blue states…only Phoenix, San Antonio, Dallas and Houston in the red and population of NYC, LA, and Chicago combined is more than most red states. These areas have higher cost of living, so obviously they’re going to have higher per capita income, even using median.

    Third, the problem with using percentage growth as an indicator is that it masks real numbers. For instance, CA has about 1.3 trillion in personal income per quarter. A .1% increase in personal income is 1.3 million, Kansas would need ten times as much growth – 1.1% to achieve the same amount of growth in real numbers. Because the author didn’t normalize for cost of living or population, the growth rates
    as percentages for less populous, poorer red states could be higher than richer, more populous blue states. You could make the argument that they’re growing the economy faster, but they’re starting from less.

    I’m not even going to get into n=1 for trending.

    There’s the criticism : how do you fix it?

    Use median disposable income as a measure of wealth. It’s the best way to normalize for cost of living and the uber-wealthy. When measuring growth, don’t add percentages and divide by number of states (NOTE: I *think* the author did this, I don’t know for sure). You use real growth figures and figure out cumulative percentage growth from that.

    Personally, if you want to show “aspiration”, there are a lot of other metrics that might be better – new business starts per capita, business expansion loans, number of jobs created per capita, you name some…oh yeah, and trend more than one data point

  14. 14.

    Sojourner

    July 11, 2005 at 5:20 pm

    The Democrats are now known as the Elite party, and even when one is poor, they hate being looked down on. Why vote for a condescending jerk?

    Especially when they can vote for a Republican like Bush who’s quite happy to cut their benefits and services to pay for a tax cut for the wealthy.

  15. 15.

    p.lukasiak

    July 11, 2005 at 5:25 pm

    John wrote:

    I don’t think the BEA made the graphs, the author did with the stats from the BEA. I should have made that clear.

    But here is how John described the charts in the text of his blog entry…

    It even comes with two handy-dandy charts from the Bureau of Economic Analysis:

    now, I’m not trying to make John look foolish here… he copied the charts from the NRO article which included the “SOURCE:BEA.GOV” phrase in the lower left-hand corner, and made the logical assumption.

    The point I’m making here is that John resists acknowledging the intellectual dishonesty of NRO (and actually blames himself.) John basically pointed us to an article that is virtually worthless because its analysis is so skewed and suggested that we discuss its conclusions as if they were credible. (It should be noted he does caution us by noting that looking at data from a single quarter is a lousy way to draw conclusions…)

  16. 16.

    neil

    July 11, 2005 at 5:31 pm

    I’ll take John’s cue from the ‘income levels’ thing and state that this demonstrates nothing besides the red states’ increased propensity for upper-bracket tax cuts.

    The third chart to look at here would be the percent change in tax receipts between blue states and red states from the preceding quarter.

    Discussion question: What’s the difference between increasing personal income by cutting taxes, and wealth redistribution?

  17. 17.

    John Cole

    July 11, 2005 at 5:33 pm

    Umm.. The point of my post was a discussion. That would be why I used the following words:

    I can immediately state a few criticisms, first being I am wary of drawing any conclusions from a single Quarter, not to mention it does not explain how the growth was distributed across income levels, as well as a number of other things that might make this little more than statistical sleight of hand. But, it is a good starting point for a discussion by much smarter people than me…

  18. 18.

    neil

    July 11, 2005 at 5:44 pm

    Looking at the actual numbers, it looks like John had a winner with his ‘one quarter’ theory.

    From Q4 2004 to Q1 2005, personal income increased by less than it did during any of the quarters of 2004. Wages increased at a reasonable rate (92.2 billion more than Q4 2004), but what accounted for the decrease was that personal dividend income -decreased- by 91.3 billion from Q4 2004.

    Disposable personal income for Q1 2005 was up by 9.8 billion, compared to 284.3 billion in Q4 2004 and 89.4 billion in Q3 2004.

    Taken together, it appears that rich people had a bad quarter, and poor people had an ordinary one.

    Since the first chart in this helpful series demonstrates that the blue states have richer people, it follows logically that the red states had more of an ordinary quarter.

    What I’d really like to see is the percent change in income by state color for Q4 2004. If my analysis is correct, the ‘blue state’ income growth would be about 10x the ‘red state’ growth. But I can’t find personal income by state on BEA.gov. Anyone else want to take a stab at it?

  19. 19.

    MC

    July 11, 2005 at 6:16 pm

    Neil:

    Per Capita Personal Income is available under the annual statistics at:

    http://bea.gov/bea/regional/spi/

  20. 20.

    neil

    July 11, 2005 at 8:55 pm

    Excellent, MC, thank you.

    It turns out that the main source of error is major outlier Washington, which had -7.68% growth in Q1 2005, and 11.68% growth in Q4 2004. Don’t know why that is. Without that outlier, blue state personal income growth in Q1 2005 was 0.75%, compared to red state 1.05%. Not too much of a difference.

    The numbers for previous quarters…
    Q4 2004 Blue states: 3.15%
    Q4 2004 Red states: 3.25%

    Q3 2004 Blue states: 1.25%
    Q3 2004 Red states: 0.92%

    Q2 2004 Blue states: 1.58%
    Q2 2004 Red states: 1.67%

    Q1 2004 Blue states: 0.98%
    Q1 2004 Red states: 1.10%

    Q4 2003 Blue states: 1.67%
    Q4 2003 Red states: 1.60%

    Q3 2003 Blue states: 1.41%
    Q2 2004 Red states: 1.52%

    Q2 2003 Blue states: 1.54%
    Q2 2003 Red states: 1.39%

    Q1 2003 Blue states: 1.23%
    Q1 2003 Red states: 1.09%

    Q4 2002 Blue states: 1.02%
    Q4 2002 Red states: 1.13%

    There’s not much of a trend there, folks.

  21. 21.

    ppgaz

    July 11, 2005 at 11:41 pm

    I’m confused. Is the GOP the party of those who vote for it, or the party of those who fund it?

    (The same question, of course, applies to the Democratic Party).

    The GOP is the party of the rich to the extent that it is beholden to moneyed interests.

    It is the party of the Dobsonites to the extent that it is beholden to their interests.

    etc.

    A major party is a creature of coalitions and funding. Trying to find meaning in these charts is a form of deranged navel-gazing.

    Something like studying your hair follicles and extrapolating a theory of the liver from them. Hey, the hair comes from IN THERE and the liver is IN THERE. So …..

  22. 22.

    MC

    July 12, 2005 at 7:20 am

    Neil:

    BEA explains why Q4 growth was so high in Washington. Microsoft made a dividend payment.

    http://bea.gov/bea/newsrel/SQPINewsRelease.htm

    “The slowdown reflects the pattern of recent corporate dividend and compensation payments. Excluding last December’s special Microsoft dividend, growth was 1.7 percent in the first quarter and 2.3 percent in the fourth. In addition, bonuses and other lump sum wage payments contributed to make fourth quarter earnings growth the strongest in more than four years.

    The effect of the Microsoft dividend payment on personal income growth is most striking in Washington state, home of many of the company’s largest shareholders. Personal income there declined 7.7 percent in the first quarter after growing 11.5 percent in the fourth quarter.”

  23. 23.

    neil

    July 12, 2005 at 8:52 am

    Brilliant, MC! A fitting epitaph to this sorry attempt at class warfare.

  24. 24.

    neil

    July 12, 2005 at 9:28 am

    Brilliant, MC! A fitting epitaph to this sorry bit of class warfare.

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