December 25, 2005

Joe Carter & Bayes Theorem: A Train Wreck

My advice to those Creationists out there that do not understand probability theory is to simply leave it alone. Failure to head this advice could lead one to look perfectly ridiculous. Case in point, Joe Carter.

Joe wants to calculate the probability of the existence of God. To do this he has decided that Bayes Theorem is the way to go. Predictably the results are a complete train wreck of a post.

Well, lets check it out. First up is this comment,

The evolutionary history of man proceeds from the beginning of the universe (i.e., the Big Bang) to the pinnacle of human development (i.e., the creation of the human mind). Because the progression is linear, we can examine the evidence for each step and use Bayes' theorem to help us update or revise beliefs in light of new evidence.

Linear? No, the progression is sequential, not linear. So what are the events in question?

    E1. From the Big Bang to chemical evolution of non-living matter

    E2. Chemical evolution of non-living matter to single cell organism

    E3. Single cell organism to multicellular organism

    E4. Multicellular organism to Homo sapiens

    E5. Evolution of Homo sapient brain to modern human mind.

Joe then assigns relative probabilities to these events as follows:

  • E1. 0.5
  • E2. 0.1
  • E3. 10
  • E4. 2
  • E5. ??

For the last one, Joe says it is easy to assign a probability, but he apparently forgot to tell us the actual number.

Then based on all this Joe cranks out that the probability that God exists is 91%, implying a 9% chance that the world and universe are the result of natural processes.

So what is wrong with this? First, the God Hypothesis does not have to be mutually exclusive with some of the events that Joe mentions. That is E2 - E5 could have all been somehow "pre-programmed" into the universe prior to the big bang. After all, we are talking about a supernatural being who has powers we cannot understand. Thus, Joe's interpretations of the final probabilities is just not correct,

When I plug these rather generous numbers into the Bayes’ formula* I find that there is a 9% probability that the data supports the claim that human beings are the result of natural undirected causes and a 91% probability that it does not. To be clear, this is not saying that there is only a 9% likelihood that the theory is true, only that based on the data (or at least my interpretation of it) I would be foolish to think it is even remotely plausible that humans could be created by non-teleological processes.

Since the God Hypothesis is not mutually exclusive from many of his events Joe's conclusion does not follow.

The other problem is that Joe's probability assessments are completely and totally wrong. We are talking about God after all so the obvious probabilities are

E1 = E2 = E3 = E4 = E5 =1

That is God can do all of these things if he wills it. So even if we start with a low probability for the God Hypothesis, the mere fact that these events occurs will result in us favoring the God Hypothesis. Here is the proof:

Let G be the event God exists. Let A be one of the events in Joe's list. Now what we want to know is P(G|A), that is what is the probability that God exists given that A occurs (or we learn of A). Using Bayes Theorem we get

.

And dropping the denominator on the right hand side we can write,

And using similar reasoning we have the following for the Naturalist Hypothesis (i.e. there is no god),

Now, if we start with a non-informative prior probability (note this is Steve Unwin's default prior) The P(G) and P(~G) are equal and can be dropped. Now, with naturalism, it is probably going to be the case that P(A|~G) < 1. After all, isn't this what Creationists love to argue? The probability of the human brain evolving is miniscule via natural methods, therefore God. Therefore it follows that,

Even in the general case where the priors for God existing and God not existing being different wont save us so long as we have enough of these events. Eventually the God Hypothesis will win out. This is just another reason why the God Hypothesis is a science stopper. Including an omnipotent being into your scientific analysis destroys all other hypotheses. We can dispense with all other scientific theories and go with simply the God Hypothesis.

And the problems don't stop there. Joe Carter has whole heartedly embraced Dembski's explanatory filter in other of his arguments for why God exists and evolutionary theory is insufficient to explain the existence of even something as simple as a 100 protein amino acid. The problem here is that Dembski's explanatory filter is a classical or frequentist statistical concept...not a Bayesian one. Hence, Joe Carter literally doesn't know whether he is coming or going with regards to his statistical philosophy. He'll glomb onto anything that fits his world view, and to Hell with all the significant contradictions it implies about that world view.

Update: I thought I'd also note that I think that Joe's view/post is bad theology as well. Think of it this way, here we have a God that has to keep monkeying around with his creation. He can't "write really good code" and then run the "program". No, we have an idiot God that has to keep tweaking things. He has to make sure the right kind of life evolves, that amino acids form, create the flagellum, etc. This God is so dumb he has to leave his signature all over the place for us to find. Some God, he can't get it right after billions of years trying.

Posted by Steve at 12:06 PM | Comments (4)

December 24, 2005

Jonathan Witt and His Sit & Spin

After reading this article by Jonathan Witt at the Discovery Institute's Evolution News and Views website, I have to wonder if Jonathan Witt has a Sit & Spin in his office. I haven't seen this kind of spinning since the end of the 2004 election.

First up we have this...less than honest comment:

When comparing and contrasting intelligent design and creationism, the problem for any commentator is which definition of creationism to use. Kenneth Miller, a staunch Darwinist who believes that the Biblical God designed the Big Bang and fine-tuned the physical constants of nature, admitted at the Dover trial that he is a creationist in a broad sense of the term.

Why is this comment "less tha honest"? Well, Paul Nelson, IDer and contributor to the ID The Future blog has written an interesting article on just this topic. What is the title of Nelson's article? How about: LIFE IN THE BIG TENT: TRADITIONAL CREATIONISM AND THE INTELLIGENT DESIGN COMMUNITY. Gee, how could one ever get the idea that Intelligent Design (ID) and Creationism are linked. I mean when a leading proponent of ID writes,

In short, humility on all sides is in order — but so is joyful confidence. What is the fastest way for any design theorist to discover what’s wrong with his or her theory of origins and how that theory might be improved? Talk to someone who shares the foundational design premise, but disagrees about the details. “As iron sharpens iron, so one man sharpens another” (Prov. 27:17). The promise of the big tent of ID is to provide a setting where Christians (and others) may disagree amicably, and fruitfully, about how best to understand the natural world, as well as Scripture. In a recent article on the interpretation of Genesis 1–11, theologian R. C. Sproul wrote that the issue is “both neglected to our peril and elevated to a degree of importance it does not deserve.”19 The issue is often elevated too high, said Sproul, because Christians historically have affirmed not any particular theory of earth history, but rather God’s authorship of the universe: “I believe in God the Father Almighty, maker of heaven and earth.” The issue cannot be neglected, however, because the Bible does speak unequivocally of creation and the evidence of God’s authorship in nature. As painful as it may sometimes be, Christians must continue the struggle to understand the relationship between science and faith. The existence of a research community where design is taken seriously and where all inquirers are welcome means that the ongoing struggle need not be solitary. It may even turn out to be a tremendous adventure.

In short, what Nelson is saying is that ID is a "Big Tent" and that it can accomodate many different types of (Christian) Creationism. So it is pretty damn funny watching an adult climb onto a Sit & Spin and try to pretend that reality is something other than it is.

But Witt doesn't stop there. Oh no, he has to go on and highlight what a large group of unethical and unproffesional group the IDers are.

The legally relevant definition of creationism comes from Edwards vs. Aguillard (1987), the Supreme Court decision that declared creationism unconstitutional for public school science. There the Court found that Louisiana’s creationism act entailed the teaching of religion by virtue of a specific religious construction, comprised of particular teachings clearly paralleling the ‘Book of Genesis. Thus, it was a specific set of teachings or doctrines from a religious source that constituted religion.

The IDers learned the lesson of Edwards vs. Aguillard (1987) very well. They went back to their "Creation Science" and stripped out all references to Christianity and the Bible. Hence they disguised Intelligent Design to slip past the Edwards vs. Aguillard (1987). Here is the analogy:

You have a young child who goes into the kitchen to get some cookies. Mom catches him and takes the cookies and says, "Not until after dinner." The child waits fifteen minutes and then sneaks into the kitchen and gets the cookies.

Now, in the second case the child didn't get caught, but just about everybody who reads that analogy will agree that the child misbehaved in sneaking into the kitchen to get the cookies. Similarly so with IDers. So intent are they on getting their religious message into public schools they will break the spirit of the law if not the letter. Such behavior is unethical, unprofessional, and in my view, also not very Christian.

Further, what else are we to call a "scientific" theory that posits that there is a designer who is not only capable of working at the level of the cellular level, but also creates a universe with various physical constants that are within a narrow band? Such a being would have to be outside our universe. The skill set for such a being would pretty much rule out anything other than a supernatural being...a deity. But Witt wants us to believe there is no creationism in ID.

The rest of the post is just Witt trying to spin ID as science and not creationism. As can be seen by reading the Dover decision, the transcript and even the IDers own writings, this is just simply not the case. ID is creationism/religion in disguise. Its purpose is to promote a religious outlook (primarily Christian) and to undermine the notion of philosophical naturalism. To claim anything else is simply a lie.

Posted by Steve at 09:48 PM | Comments (3)

Environmentalist Group Must Post $100,000 Bond

Intersting, an environmentalist group contesting a timber sale must post a $100,000 bond. A federal judge ordered environmental groups to post the bond to cover the potential costs of delaying the sale. The judges reasoning is as follows,

Molloy set the bond at $100,000, saying that while it was significantly less than what the Forest Service had requested “it is an amount that does ensure meaningful accountability if I am correct in denying the request for an injunction in the first place.”

I'm not sure what my view of this is. On one hand I can definitely see the point the Forrest Service and logging industry are making. If the judge decideds that there is no reason to stop the sale, then delaying the sale would pose an burden on the logging company and the Forrest service. At the same time making access to the courts more expensive will mean that even justified cases could be prevented from coming to court. Of course, with the latter if the case is justified, then going out and finding the cash shouldn't be impossible.

Via the Commons Blog.

Posted by Steve at 08:40 PM | Comments (3)

David Friedman on Libertarians and Republicans

David Friedman has an interesting post on his blog that looks at Libertarians and their tendency to identify more with the Republican party. A very good point is raised by Mr. Friedman,

Libertarians still tend to identify with the Republican party. Save for historical reasons, it is hard to see why. The current administration, despite its free market rhetoric, has been no better--arguably worse--than its predecessor on economic issues. Its policy on public schooling, the largest governent run industry in the U.S., has been a push towards more central control, not less. Its support for free trade has been at best intermittant. Reductions in taxes have been matched by increases in government spending, increasing, not shrinking, the real size and cost of government. It has been strikingly bad on civil liberties. Its Supreme Court nominees have not been notably sympathetic to libertarian views of the law. Libertarians disagree among themselves on foreign policy, but many support a generally non-interventionist approach and so find themselves unhappy with the Iraq war.

This pretty much sums up my current feelings on the current Administration (save for the foreign policy part). Bush was not a candidate I liked...problem was I liked Kerry even less.

Friedman also notest that the Democratic party has its own serious problems. That their political coalition has been losing strength for quite a while now, and things don't look like they are going to change all that soon.

One solution Friedman suggests is for the Democrats to try and lure away some of the Libertarian vote. Frankly, I don't see why the Democrats don't want to do this other than some sort of pathological dislike for the notion of free markets. Consider the following issues:

  1. Abortion,
  2. Stem cell research,
  3. Gay marriage/rights,
  4. Evolution/Creationism

These are issues where I'm probably more in line with the typical Democrat than I am with the typical Republican. All that I really want in return is that the Democrats to consider dropping some of their more nonsensical notions in regards to markets. Instead of trying to control markets through regulation and legislation, consider not doing those things. For example, unions. Many Democrats still seem to think that unions are a swell idea and that we need more of them. The other is schools. Why not at least consider a more market based approach? And while the deficit is indeed a problem, the only solution is not to raise taxes. Heck, they don't have to do all of these things, but some of them sure would be nice. Hell, lets put it this way...if the Democrats had actually gotten their act together and nominated Lieberman, I probably would have voted for him. I don't like many of his economic policies...but that goes for most of Bush's policies.

Frankly, I doubt anything like this would happen. Right now the Democrats seem to almost revel in their minority status and seem quite content to watch their party wither away while decrying the evils of Bushitler.

Posted by Steve at 12:19 AM | Comments (6)

December 19, 2005

Now This Is A Real Controvery in Evolutionary Theory

This exchange in the American Scientist is well worth reading. Guaranteed you wont find anything like this over at the Discovery Institute. A discussion like this is not interesting to them as it actually entails things like science.

Posted by Steve at 11:47 PM | Comments (2)

The Real King Kong?

Gigantopithecus blackii may be a real life example of King Kong. The priamte was around 13 or so feet tall and weighed in at over 1,200 pounds.

Why did this primate die out? Some speculate he came into competition with humans, or perhaps giant pandas and lost out.

Posted by Steve at 11:42 PM | Comments (3)

Is China Mercantilist?

That is the focus of this NBER Digest article. The standard story I've seen is that China is sucking up lots of dollar denominated assets and hence building up a huge foreign exchange reserve and is also drawing in quite a bit of foreign direct investment. This policy is an extension of some sort of "war on many fronts" philosophy that China is pursuing against the West and the U.S. in particular. That is, since China knows it is currently not a match for the U.S. military due to the U.S.' technological advantage they are "waging war" on other less obvious fronts, namely economic.

This article says, that what is going on in China is far more complex and that the above simple story doesn't fit. What is the evidence?

  • 87 percent of the acceleration in the increase in China's foreign reserve holding from the period 1988-2000 to the period 2001-4 can be explained by a surge in non-FDI type of capital inflows (sometimes called "hot money"), including a dramatic reversal of capital flight.
  • Furthermore, they note that China's FDI, which in 2004 was $61 billion, comes from countries that are running a current account surplus with China rather than those with a deficit. The main contributors are based in advanced Asian economies such as Japan, Korea, and Singapore. Europe and the United States combined account for, at most, about 30 percent of China's FDI.
  • Prasad and Wei also view the focus on an undervalued currency as off the mark. As recently as 1997 and 1998, China chose not to devalue its currency even though such a move would have aided exports. And in the 1980s and 1990s, China's currency was more likely to be overvalued than undervalued. "Further research will be needed to disentangle the competing explanations for [the rise in FDI in China], but there is little evidence that mercantilist stories are the right answer," they write.

Simple hypotheses/explanations are to be preferred over the more complex...unless of course the simple hypothesis/explanation doesn't fit the data very well. Seems that China still retains some of its age old mystery.

Posted by Steve at 11:29 PM | Comments (5)

Well This is Rather Annoying

A paper out of UCLA and the University of Missouri on Media Bias is stirring up a minor blog swarm, but do I get anything out of it, Hell no. Not like I found that paper via Steve Antler, also left out in the cold as far as I can tell, well over a year ago.

Posted by Steve at 10:40 PM | Comments (4)

December 18, 2005

What A Hissy Fit

I have to say that this is a quite a hissy fit by Gary Hurd over at the Panda's Thumb. It is all based on the Paul Mirecki (Kansas University) incident. I've been reluctant to blog on the incident since I don't know what the heck happened. The basic facts of the incident are as follows,

  1. Prof. Mirecki offered a class entitled, REL 602 Special Topics in Religion: Intelligent Design, Creationisms and other Religious Mythologies.
  2. Mirecki then sent an e-mail/posted to a discussion group the a comment that in part stated, "The fundies want it all taught in a science class, but this will be a nice slap in their big fat face by teaching it as a religious studies class under the category “mythology.”"
  3. Religious (and conservative) groups, individuals and politicians responded negatively and Mirecki apologized fro his intemperate remarks and later pulled the class.
  4. Several days later (on a Mondy, IIRC) while driving early in the morning Mirecki was tail-gaited, he pulled over, exited his car and was beaten by two gentlemen following him.

According to Mirecki his assailants made comments about his anti-ID/anti-religious views.

The reason why Mr. Hurd is throwing a hissy fit isn't his recapitulation of the facts of the incident, it is the rest of his post. In particular his vitriol for those who are doubtful of Mirecki's claims.

They hate liberals and publically associate them with murder, greed, lies, etc. Further, they hate “Hate Crime” legislation, driven to rabid frothing at the mere mention of “politically correct” language. They are such fierce opponents (they say) of limits to free speech intended particularly to block racist speech; the term “PC” in the mouths of the far right is an epithet. The creationist movement commonly associates scientists generally, and particularly evolutionary biologists with the Nazi Holocaust, Communism, Pol Pot, Racism and every other perceived atrocity and social failure of the last 2000 years.

Of course, lets not forget that the Panda's Thumb has linked creationists to the communist famines, and holocaust denial. So to say it is just the Religious Right that engages in this kind of thing is just silly, and yes, I'm saying that Gary Hurd is being silly...no, strike that he is being hysterical.

Based on this photo it does seem pretty clear that Mirecki was assaulted. The symmetry of the bruising under the eyes indicates to my non-professional eye that Mirecki was wearing his glasses when struck. So, I think it is safe to say that Mirecki was assaulted.

Where things get a little less clear is in Mirecki's claims. Mirecki doesn't know where he was assualted, he claims to have been driving to breakfast, but he was reportedly in an area which according to Yahoo Maps has very, very few restaurants. He was in the wrong part of town to be going to work (Mirecki was south of his house, and the university is north of his house). Mirecki also claims he was driving around to "clear his head and think about things".

Now, none of this means that Mirecki wasn't beaten. However, it does make me wonder about the claims that he was beaten for his views on intelligent design. Road rage incidents happen over the slightest things. Maybe Mirecki cut somebody off, maybe they just wanted to beat somebody up, who knows. But, given the oddities of his comments after the attack, I'm a bit suspicious of Mirecki's claims. Do I think his story is true? I'd say that there is a good chance it is true, but I'm not going to take his word at face value. As Mr. Hurd has pointed out, there have been past incidents where people have faked incidents to garner attention and support for their cause. Granted, as far as I know, none of these incidents actually involved violence.

Further, I'm also suspicious of Hurd's claim that local law enforcement is somehow involved is also suspect. Note Mr. Hurd's position regarding the impounding of Prof. Mirecki's car and computer,

This is a potential reinforcement for my conclusion that it is likely that men somehow associated with law enforcement attacked Mirecki. This can be a number of professions, former military police, prison guards, current or former police officers. This conclusion is obvious to anyone with the proper background. If my speculation as the identity of the assailants is correct, then the following events are perfectly plausible; The car will be carefully examined for any evidence that might need to be eliminated, Mirecki’s private Email will be reviewed and archived, and who knows but there will be “kiddy porn” or some other reprehensible material “discovered” on his hard-drive.

This is also perfectly in accord with the police doing their job in the investigation. So the law enforcement is screwed when it comes to hysterical ding-dongs like Mr. Hurd. If they impound the car and computer to look for evidence they are trying to frame Mirecki, destroy evidence and so forth. If they don't impound the car and computer they are not conducting a serious investigation and are probably in league with the men who assaulted Prof. Mirecki.

And the evidence that it was people in or affiliated with local law enforcement strikes me as flimsy at best. One of Mr. Hurd's co-bloggers Jason Rosenhouse managed to do a fine bit of cyber-stalking on Mirecki post beating finding both a picture of Mirecki and his home address. Following him from his house would be the next logical conclusion. And as for tailing him, how hard is that? I doubt Prof. Mirecki was looking for a tail when he left his home, so it isn't like great skill would be needed. So I don't think there is any "special training" necessary here as implied by Mr. Hurd.

Frankly, I think it is a good thing that the Panda's Thumb is "losing" Mr. Hurd. His conspiracy theorizing and other nonsense is no loss.

Update: Also read this post by the Right Wing Professor. He gets is just right on several points.

  • One can be skeptical of Mirecki's claims, this doesn't make one reprehensibel.
  • Hurd gave into his emotions and went into full hysterical rant mode.
  • Many of the Religious and/or Right comments were vile and inexcusable (e.g. Mirecki was beaten while trying to score drugs...please, such a smear is baseless and despicable).
  • It seems to me there is a tendency for smuggness and supreriority on the part of many Left/Liberal professors/scientists who tend to excoriate anybody who doesn't agree with them, this is bad in that it means science has many if not of its "eggs" in one basket, the Democrats basket.

All good points. I doubt Gary Hurd has the intelligence to shut up and listen, though.

Update II: Gerard Harbison, the Right Wing Professor informs me that there is a popular restaurant in the area where Mirecki was assaulted. So that "odd" part of the story has been resolved.

Posted by Steve at 11:57 AM | Comments (32)

December 14, 2005

Robert Reich on the Changing Labor Market

Brad DeLong points to an article by Robert Reich that looks at the changing structure of the labor market. Here is the gist of the article,

  1. Manufacturing jobs are disappearing.
  2. The jobs are falling to off-shoring or computer software
  3. Unless something is done things are going to get bad in advanced economies.

By bad Reich means that advanced economies will lose their edge in sciences and as he calls it "symbolic analysts". Here's my problem with Reich's "analysis". First off, he doesn't look at the rates at which things like college educations are subsidized in countries like India vs. the U.S. and Europe. Maybe the latter two subsidize more heavily...but maybe not.

The second is more fundamental. Basically people have innate abilities. I'm pretty decent at math and economics, but my english/grammar skills...well leave something to be desired. I'm a pretty decent cook, but I can barely change a light bulb, and if something goes wrong in the bathroom and I start getting out the tools...well, lets just say my wife and son leave the house. Now, suppose that without any government interference a certain number of people go into a give technical field. Presumably, those coming out of univesrities will be those with an aptitude for that field. Could we increase the number of people coming out of universities with degrees in that field? Sure. We could dumb down the standards to allow for more people to graduate with say, engineering degrees. Or we could dump more money into producing more engineers. My guess is that with regards to the last one, we'd see a diminishing rate of return. That is the first round of subsidies might produce 25% more engineers. But and equal amount of subsidy in the second round might only produce 17% more engineers. And so one till we have to spend lots and lots of money to get a small increase in the number of engineers.

Further, while it may not be exactly a zero-sum game, it will likely be somewhat approximated by a zero-sum game. If we want more biologists we may have to be satisfied with fewer engineers or computer scientists. Add on top of it various institutional factors such as how our legal/judicial system works and Reich's focus simply on education may be completely foolish. After all, the U.S. has a very high number of lawyers. Could it be due to the practice of allowing lawyers to take their payment as a share of any settlement?

Another problem I have with this kind of a view is that basically if we applied it about 120 to 150 years ago, we'd be sitting around wringing our hands of advances in farming technology that allowed people to move off of farms and into cities. While I'm sure such dislocations/relocations weren't exactly all picnics and sunshine, it has allowed our economy to get to its present state. In short, if we find that there is a large pool of labor that isn't being employed that is a productive resource that could be utilizied to increase production and thus make ourselves better off. The problem with this view is that for those people who hold it they don't know exactly what will happen. But it is fallacious to argue that just because we don't know what people will be doing in the future doesn't mean they will be sitting around unemployed wallowing in abject misery either.

My basic feeling is that Robert Reich is pretty good at painting a scary picture, but for the most part that is about all he is good at doing. It would be a good thing is more poeple simply ignored him.

Posted by Steve at 09:57 PM | Comments (5)

December 13, 2005

Real Wage vs. Real Compensation

In the comments to this post several commenters raised the issue of real compensation. That is, medical benefits and other benefits that are in the workers pay (from the employers perspective) are taking up the difference and hence real compensation is increasing. Over at MacroBlog Dan Altig argues the same thing (I highly reocmmend clicking through as he has some informative graphs).

However, a there are several points. First off, I'm not saying that the President should or even can do anything about this issue. I do argue there is a perception that President's in general are excpected to do something about this issue. Second, I agree with Dan Altig that health care expenditures increases are putting a binding constraint on the wage portion of compensation. The third is a micro issue. While total compensation is increasing it isn't clear that this is welfare enhancing. In the parlance of microeconomists it could be the case that we are not only moving along the same indifference curve (and indifference curve represents all points where consumer welfare is the same--i.e. the consumer is indifferent to all these points, each is as good as anyother along the curve) as the relative prices change, but that we are dropping to a lower one. If this is the case, then the fact that total compensation is increasing, while interesting from a statistical standpoint, it doesn't counter the conclusion of my previous post: this is a (percieved) problem (weakness) for the Bush Administration.

Could we be seeing the situation where we are dropping to a lower indifference curve? I think there is a good reason to think this. As prices increase for goods there are two effects. The first is a substitution effect and the second is an income effect. For health care and things like gasoline there isn't going to be much of a substitution effect. But, I bet there is an income effect. The income effect is basically that we could get the same reduction in demand for the good in question by simply taking away income from the consumer vs. increasing the price. Income effects reduce the consumption of all goods, not just the good whose price went up. And this seems to fit with much of what we hear in regards to employer provided benefits: that over time the benefits are decreasing in terms of coverage, increasing in terms of co-pay, etc. So, it seems that these kinds of increases will make people worse off not better off even though total compensation is going up in real terms.

Posted by Steve at 09:03 PM | Comments (6)

December 11, 2005

The Real Wage Rate

This is another problem for the Bush Administration. Since the start of 2005 the real wage rate has been declining and in the last two months the real wage has dipped below its November 2001 level. In other words, the real wage (the hourly wage put out by the BLS adjusted for inflation) is lower now than it was 4 years ago.

[Note on the Graph: The Benchmark line represents the November 2001 wage]

What is the most likely reason for this decline? My guess is the increase in gasoline and other prices. Energy prices comprise a very important part of the CPI and can usually account for a large chunk of many increases. If one were to look at the change in the CPI less energy the changes are very modest (around 0.1%/month), but in looking at the CPI that includes energy items and the changes are much larger (5 to 6 times as large). Further, compounding to an annual rate for the last three months the percentage increase is 89%.

Now this isn't something that Bush or any President has much control over. I'm pretty sure that every President, if they had one, would wave a magic wand over the economy and keep energy prices low and thus, help ensure that real wage rates were not eroded over time. While one could argue that recent increases in gasoline prices are in part due to the conflict in Iraq, I don't think that is all of it. There is a great deal of speculation that the Saudi fields are peaking and starting on the downward portion of their production curve. Production from U.S. fields has been in decline for years, and usage shows few signs of diminishing. Add on top of this that right now the alternatives to the internal combustion engine aren't ready for large scale use as well as the turmoil in the Middle East and Iraq in particular and you have all you need for high gasoline/oil prices. Then throw in a couple of strong hurricanes in the Gulf of Mexico and things can look rather depressing for the worker who earns an hourly wage.

Still this is a problem for the Bush Administration since people have now come to expect the President to do something about their living standards. So the President or his press secretary is going to go into the Rose Garden and talk about how wonderful the economy is. Every little bit of good economic news, no matter how trivial, will be trumpeted and linked to the President's policies. This is standard operating procedure for Presidents (yes, all of them). The reason they do this is because in reality President's have little control over things like the real wage...after all, what President can control Hurricane's and Sauid oil field production?

Posted by Steve at 10:53 AM | Comments (10)

December 04, 2005

Partisan Blinders on the Economy

Seems to me that there is quite a bit of partisan nonsense about the economy right now.

And it isn't just from the GOP's official website.

Is 215,000 jobs good? Well, sure it is better than 0 zero job growth in the non-farm payroll survey, and it sure beats the heck out of negative numbers, but it really isn't all that great. Putting up a picture like that and making it out to be something grand is definitely the case of lowering the bar. For example, if we return to the days of Clinton, we'd see that on average the non-farm payroll increased by just under 240,000 jobs. Further, 68% of the 96 months Clinton was in office the non-farm payrolls growth was in excess of 200,000, 50% were in excess of 250,000 and 27% in excess of 300,000. Yes, yes, I know the tech bubble and all that. While there was definitely a bubble at the end of Clinton's terms, I think one could argue there is a real estate bubble currently. So, if you want to discount the non-farm payroll numbers from the end of Clinton's term, then discount these as well on the grounds of consistency.

Or better yet, lets not pretend that 215,000 is all that big a deal. Especially considering that the month before only 44,000 jobs were added and the month prior to that a paltry 17,000 jobs were added. Granted going back yet another month we'd see 277,000 jobs added, but the average over those 5 months is a disappointing 140,200 jobs per month.

And saying that prices for gasoline are dropping back to the pre-Katrina and we are "sitting pretty" levels is kind of like saying that things are looking great because instead of spending $25 to fill up your gas tank, now you spend $22.50! Ye-haw! With savings like that it's going to be a good Christmas. Lets ignore that natural gas prices are still very high, likely to go higher, and this in turn will mean that electricity is more expensive as well.

And the audacity at the Republicans to put this in their press release,

The foundation for growth is strong. It's based upon low taxes and restrained government spending, legal reform, incentives for saving and investment.--emphasis added

Kerrwhat?!?! Let me read that again. I think I'm going to have to call Bravo Sierra on the emphasized portion of that comment. Exactly what kinds of "restrained government spending" did President Bush have in mind? The black hole that is better known as the Sorta Free Drugs for Old People Medicare Program? Or is it the No Child Left Behind Program that has bloated federal educational spending to new heights?

We're not going to rest until every American who wants a job can find one. We're going to continue to work for good policies for our workers and our entrepreneurs. I'll continue to push for pro-growth economic policies, all aimed at making sure every American can realize the American Dream.

Ahhh, nothing like big government Republicans who are going to take care of each and everyone of us. I just love a paternalistic state.

Posted by Steve at 09:27 PM | Comments (15)