Facts are stubborn, but statistics are more pliable.— Mark Twain
Democracy is an abuse of statistics.— Jorge Luis Borges
We wrote the other day about the power of memes — ideas, styles or patterns of behaviour that spread through cultures and societies. In the digital age, memes can replicate with virtually infinite fecundity, near perfect fidelity and enjoy a potential longevity far beyond that of a gene.
Like their biological cousins, however, memes can be both productive — contributing to generally increased knowledge and truth discovery — and harmful — dragging the minds they encounter further away from the reality of a situation.
Consider the following graph, for example, which began replicating and spreading across the social media waves last month. It appeared in a column titled, “Who Is The Smallest Government Spender Since Eisenhower? Would You Believe It’s Barack Obama?”
Here it is:
At first glance, the data would appear to support the headline’s somewhat counter-intuitive claim.
“Hey, isn’t Obama’s 1.4 less than G.W. Bush’s 8.1…and Reagan’s 8.7? Wow…this guy sure is turning the conservatives’ narrative on its head!”
There is probably plenty of fiddling with the data, as would be expected when building a series out of dot.gov website statistics. But even taking the numbers at face value, a closer examination of the way the graph was constructed betrays the author’s rather ill-concealed intention; that of painting Mr. Obama as a (relatively) thrifty steward of the wider economy.
Notice, however, that while the graph (and headline) leads the casual observer to surmise one thing, it actually reveals exactly the opposite. Spending has grown under ALL the listed presidents. That is not disputed. So how, you might be wondering, can eight consecutive increases in government spending lead to the claim that the final spender is also the “smallest spender”?
In short, it can’t. And it doesn’t.
Imagine lining up members of a basketball team in order of height. The first guy, the point guard, stands at 6 ft. The next fellow, the shooting guard, is 8.7% taller: 6’5”. Then come the forwards. The power forward is, say, 5% taller than the shooting guard. He’s 6’8”. Our fictional small forward is 3% taller, hitting the 7ft mark. And let’s say our center is 1.4% taller still. Our team’s big man towers in at 7 feet 1 inch.
Pop quiz: Who is the shortest member on the team? And the tallest?
A slowing in the rate of growth is not the same as shrinking. Likewise, increasing spending “less quickly” is not the same as saving. What the graph above actually shows is that Mr. Obama is spending as much as president Reagan’s record…PLUS the obscene growth under Messrs Bush I and II…PLUS the growth under Clinton…PLUS his own increase.
On the government’s economic Dream Team, Obama is the Shaq of spending.
Of course, there are many ways to measure “relative” spending. One might adjust for inflation, for example…but that only leads us into murkier statistical waters with a heavier reliance on the government’s own tortured figures. What then about spending per capita? The population has grown by some 70 million people since Reagan first took office. Shouldn’t each successive government then spend more to stop members of this mushrooming population from “falling through the cracks”?
Even if one buys this claptrap, it must be obvious that not everybody contributes/detracts the same amount to/from the overall market. Some people build companies that satisfy real world demands. They employ thousands of people and bring new products to market, enriching their own lives and the lives of those around them. Other people work for the state, where they spend their years standing in the way of real, honest progress, all the while patting themselves on the back for having “done something” with their nosey little lives.
No two people are alike, in other words. Neither is the value of the work they do. And without productive workers, the government has less confiscated wealth to smooth over the cracks it created in the first place.
Remember, in the Soviet Union, everyone had a job…
“They pretend to pay us…and we pretend to work” was a common political joke at the time. The planners were in charge of everything…until they planned it all into the ground. More people contributing value to a marketplace — ceteris paribus — should mean more ideas, more competition, more division of labor, more goods, more services and generally, more wealth. Less “need” for government, in other words, not more. Of course, that’s rarely ever the case…and “more government” is almost always the reason why.
Perhaps, then, spending as a percentage of GDP is a fairer method? Some models show that, under these parameters, President Clinton had the lowest relative spending of the above mentioned presidents. During Clinton’s last year in office, US GDP was about $10 trillion. Expenditures that year, in 2000, were estimated to be a tad over $3.2 trillion: a 32.6% spending-to-GDP ratio. Using the same method, in 2010 US GDP was measured at roughly $14.5 trillion. Expenditures, under Obama, came in at just over 40% of GDP…the highest level for all the presidents mentioned in the graph, and only the second time it surpassed 40% since WWII (the other year being 2009). In any case, these levels are a far cry from the single-digit percentages that were commonplace up until 1918 (when the spending-to-GDP ratio jumped from 9.5% to over 22%.)
But again, it’s all junk science. GDP is so obviously a fraudulent metric (as we’ve explained in these pages before), it’s embarrassing to think anyone (outside the government) uses it at all. Take, for instance, the expenditure method for calculation, which looks like this:
GDP = private consumption + gross investment + government spending + (exports − imports).
As you can see, government spending is actually counted as a net positive when calculating the size of the economy. If the government were to simply pay all the economists in the nation to shave one another’s beards, the expenditure method would register an enormous increase in GDP…even though the overall economy might be no better off at all. Think misallocation of resources (perhaps debatable in this example), widespread malinvestment, vast diminishing of the dollar’s purchasing power, academics pinheads wielding straight blade razors…etc., etc., etc…
That the government can create value is, to continue our metaphor, the baldest-faced Keynesian lie of them all. At best it can redistribute it…all the while watching it atrophy, whittling away in their bureaucratic distribution pipelines and misguided, make-work programs.
To be clear, the above list of presidents houses no heroes for this editor. Just crooks, shysters and politicking pony paraders varying only in degrees of waste, market distortion and outright theft. A graphic portrayal of marauding pirates “dividing the loot.”
After a quick meme search of our own, we found the following cartoon which, we feel, more accurately depicts the situation in Washington, DC. Swap the candidates around if it makes you feel better…the result is still the same.
Joel Bowmanfor The Daily Reckoning
Joel Bowman is a contributor to The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
“One might adjust for inflation, for example…but that only leads us into murkier statistical waters with a heavier reliance on the government’s own tortured figures.”
then I propose a measurement based on the price of gasoline. call it the “mega-gallon”. how many megagallons of gasoline did reagan spend vs obama? etc. surely this would give a good picture of what is being taxed, and spent across time.
” … what is being taxed, spent, and borrowed across time.”
I’m not sure I buy your premise and here is why. Another article made the claim that under Obama govt jobs have decreased by 500,000 and increased by this much under both Bush and Clinton.
Other people work for the state, where they spend their years standing in the way of real, honest progress, all the while patting themselves on the back for having “done something” with their nosey little lives.
With no govt, how long before the oil companies have destroyed life in the oceans?
How long before the less able are enslaved by the big employers?
How long before nukes are exchanged?
How long before genetic mutation accelerates out of control?
You guys hate govt. Fair enough, but perhaps you just have a govt or a system that has past its use by date. The old world oligarchs have been white-anting your system in the States from the very start so that now you are not a democracy but a corporatocracy (is this a word?).
I wish I could believe you anarchists but I think you would end up in a mad max world. There are too many psychos out there.
As Bertrand Russell once said, “Too little liberty brings stagnation, too much liberty brings chaos.”
The key word here is balance. Neither the government nor private enterprise alone can bring or keep us at a sustainable and equitable state.
The unfortunate thing is that today, we have devious men in both public and private sectors. So until we clean house, it is merely musical chairs.
Time for an American Spring?
Here Here et2cetera.
Break the banks and make the white house a rubber stamp for congress. Ban corporate donations and apologise to all your victims and voila it’s springtime.
In rebuttal to the article to-day by Joel Bowman, and editor here for the Daily Reckoning, I refer the reader to his article entitled, “A Look at the Numbers Behind Gov’t Spending”….. Being an official moron, I would rather look at govn’t spending from a whole different angle and ask, “What was the spending and what were the programmes or policies in Washington that gave us these still (albeit slightly) growing numbers in federal spending?”
Being a rarely seen official moron (with test-scores and papers, even medical opinions to prove it, I need a bit more help in understanding why the Obama Administration has been slowing the rate of increase in federal spending and apparently is successfully reaching a plateau ( or upper limit ) in spending.
So, using a different analysis: I ask why the Republicans ( also known as “the Repukes” ) in America are upset at the spending of the Obama Administration?
Might it be that the Obama Administration is not funding hot wars, cold wars, space races, arms races and not to mention other rubbish such as so-called,”fights for freedom”, and nation-building campaigns abroad.
Might I go into the list of some of the wastefully spending under previous administrations, both Democrat and Repuke?
Might I mention the nation-building efforts funded by Washington for South Korea, South Viet-Nam, Eastern Europe, Latin America, Formosa, Indonesia, Malaysia, Turkey, Rhodesia, Japan, Iran, Syria, Afghanistan, Thailand, Cambodia, Laos, Lebonon, Cyprus, among many other nations and hot spots over the years? Each one of these black-holes of waste cost billions of dollars, and for what?
Shall I go into the insane decades of Cold War with the Soviet Union and Red China, not to mention with Cuba, and what did those black-holes cost in spending— all for nothing? What did the missiles cost? What did the hydrogen bomb cost to develop?
Shall I go into the nation-building in South Viet-nam, especially for the merchants in Saigon to prosper? Shall I go into the cost in lives and billions of dollars that the whole black-hole cost, not just for America but for all of the people of South-east Asia?
Being the slow-learner here, I just find it incredible that anyone, Repuke or Republican, conservative, Southerner or whatever would try to blame the Obama Administration for its spending policies.
And even getting back to the calculus of federal spending, the rate of increase in that spending has been lowered by the Obama Administration to the lowest number of any post-WWII administration in Washington. The Obama Administration is capping the spending to an upper limit on your graph of federal spending.
Hmmm…The Obama Administration “has [not been] funding hot wars, cold wars, space races, arms races and not to mention other rubbish such as so-called,”fights for freedom”, and nation-building campaigns abroad.” I must have missed all of these good news stories over the past 3+ years. I had wrongfully gotten the impression that Obama, in spite of his lofty rhetoric, is in many ways a continuation of GWB and in some ways even more stridently militaristic. Apparently also the widely-reported growth of the DoD budget since 2009, even excluding the wars, was just a canard.
“The Obama man can ’cause he mixes it with
hope and makes the world feel good.”
I do believe the heading on the graph reads “annualized growth.” By which I suppose they mean “annual change in the growth of government spending.”
Plain English is not spoken anywhere these days. All it means is that O’bama is increasing the rate of government spending (as a percentage) at a smaller rate than his predecessors.
Of course, 1.4% of 3.5 trillion is still a larger number than 8.4% of 700 million.
This is a very stupid article. Bowman either does not know Govt 101 or is just stupid. The only place Obama can get money from is Congress. Ergo, if Congress (remember the GOP runs the House), does not want Obama to spend over a certain amount, just do not give him over that amount.
The Earth prepares for a limited summer by decreasing the rate of increase in day-length, snd the Earth starts this beginning of setting a limit to summer on March 22nd in the Northern Hemisphere….. This is what the Obama Administration has done with Federal spending now; it has set a limit for just how far and how long this Federal spending is going to go.
Then analagus with the planet Earth, the day length in the Northern Hemisphere reaches its final (longest length) or limit on June 21st.
Then, we get the limit for the rate of increase in the length of winter nights, and this is set on September 22nd…. The longest night of the year is reached December 21st….. And then we move toward March 22nd where the rate of increase in the length of day reaches its maximum, and we repeat the whole annual cycle of solar day length and night length again.
Moving now toward August, summer really starts to fade away because the nights get longer faster.
Now analogous to the Obama Administration, we have just observed the fastest decrease in the rate of growth of spending, in decades. Corresponding to Federal spending, the Obama Administration has established a mechanism to put an end to the summer ahead. The analogus date is March 22nd. The final top in Federal spending will be analogus to June 21st, and so on…..
Isn’t it funny how the Republicans and the conservatives have forgotten their calculus and their physics, their astronomy and their basic geography? They continue to try to blame the Obama Administration and the liberals for the fiscal mess that America has dug itself into now.
Reaganomics = (increasing spending for the military) + ( increasing the waste of money on a few wars, including the drug war in Mexico and the drug war in Columbia ) + ( increasing the spending on the Cold War with Russia and the Cold War with China ) + ( increasing the spending on the Arms Race ) + ( increasing the spending for the Space Race ) = Ronald Reagan’s idea of a plan for the United States to have an economic recovery from the deep recession of 1979/80 = digging the debt-hole deeper, faster = (sweeping the economics problems under the rug and for a new generation of kids to worry about solving someday) = a variety of failed Keynesian Economics policy = “Who cares about the future?” = “We can inflate our way and devalue our way out of the mess, if need be.”
One more comment, and this is a true story: A few years ago, I worked as a substitute teacher for the Gilroy School District in Gilroy, Calif. And one day during my term as a sub, the administration of Gilroy High School summoned its students into its high school auditorium for what amounted in reality to another one of their brain-washing sessions about U.S. history.
During this brain-washing session about how wonderful U.S. foreign policy was through the years of the Cold War, the speaker touched upon the history of the Vietnam War. He termed the war, another necessary fight to keep America free. He then went on with his Republican garbage saying to the kids that America needed to have a very strong military and occasional wars like the Vietnam War.
Listening politely to this garbage, I got up and challenged the speaker…. I asked in front of the entire high school (Gilroy High School) a few questions: 1.) What freedom did for Vietnam or freedom for the US was achieved by the American adventure into Vietnam? 2.) What about the million lives of the Vietnamese that were lost in the war? 3.) What do we have here in America to show for the lives of the 50,000 U.S. soldiers who were lost during the Vietnam War? 4.) How many more Vietnam Wars could America pay for? 5.) Why did Richard Nixon and Lyndon Banes Johnson create and fund the Vietnam War? What was their real reason?
The entire high school auditorium went quiet……. The speaker and the conservatives who brought him to the high school went into shock.
Needless to say, that was my last day working for the Gilroy School District…. I was never called again to substitute.
The entire event proved to me how controlled the public education is in America by the rightwing— in Gilroy, California by the religious right.
A few more wastes of money on wars and campaigns for so-called, “freedom” just in our own Western Hemisphere by the U.S:
a.) The waste of money on Nicaragua for their freedom;
b.) The waste of money in Columbia for trying to escalate the so-called, “War on drugs”;
c.) The waste of money to try to “contain communism” in Cuba;
d.) The waste of money in trying to ignite a war against Panama over the issue of U.S. occupation of the Canal Zone;
e.) The waste of money in trying to help with the a “nation-building campaign” in Suriname and French Guiana;
f.) The waste of money in nation-building campaigns about trying to establish democracies in Bolivia, Ecuador, Peru, Chile and Argentina; g.) The waste of money in trying to ignite a nation-building campaign for democracy against the Somosa rejime in Nicaragua……
e.) The waste of money in trying to expand the drug war south-eastward from Mexico to Guatemala;
And this imperialism and squandering of American money has just gone on and on, and apparently will continue to go on-and- on forever thanks to the conservatives in America not giving one-damn about what it costs. Again, this goes back to the kind of brain-washing kids are getting in the U.S, in its K-12 primary education…. This is why in 2012, we are facing bankruptcy as a nation.
Imagine: that the Republicans have the nerve now to try to blame the Obama Administration for this fiscal day of reckoning that we have arrived at in America!
Would the right term be the slowest growth in spending? So, it’s like putting the brakes on the growth of the spending, but continuing to grow nonetheless. Still, you understand that when you drive a car a high speeds there is no way you can stop safely unless you do it gradually. Also, you would certainly have a harder time going from high speeds to reverse in a heartbeat without being reckless… If we are just interpreting stats, we could agree that 1.4 is better than 8.1. It does not mean that we are better off, but we could be worse if we kept growing at the same speed.
Wow, readers who think more than the newsletter’s author. This is refreshing! I’d just like to remind everyone that we don’t have to worry about debt or spending. Dick Cheney told us “Deficits don’t matter!”, remember? So why all the crying on the right about US debt now? What changed in 4 years?
So Bowman is basically agreeing with the original Forbes piece that under Obama we’ve had the lowest growth in spending. Sure the absolute amounts have changed over the years but what matters more is growth rate. If the growth rate in government spending can be kept low enough, the growth in the economy will eventually reduce in relative terms the deficit because tax revenue goes up faster. This is what most countries try to do, the alternative is to do a Greece or Spain style slash and burn with the hope that out of the ashes something better emerges.
I think this article is essentially saying that spending is so great, the economy so poor, and the accountability of our government so lacking there is no real way to calculate how bad things are. But we know they are bad. Isn’t that enough? The only way to solve our economic vices ongoing since the end of WWII is a combination of measures, sacrificing sacred cows to both parties: close tax loopholes, repeal Obamacare, reform all entitlements, and close all military bases around the world and finally end our global presence. Military technologies should still be funded out of scientific altruism, but preemptive invasions should be expressly ruled out. Only until each major party gives will there be an endgame opening up reality. Until then, we spin into a Roman oblivion of excess and denial, with all of our physical sensory pleasures satisfied but the soul never nurtured.
The article is poorly written. I agree-the USA is fast approaching bankruptcy-simple because the Federal, State, and Local governments are too big. If you were to look at the second derivative of government spending (the increase of the rate of increase), it would tell a different story.
The only solution:
-repudiation of debts
-start over-with a vastly reduced government
With all the problems this President is not able to fix, WHY do people vote for him JUST because he is likable. I like a lot of people but do not trust them to be my President.
Bottom line that while it is important to reduce the deficit with spending decreases, the current slowdown will create a smaller deficit in the longrun, if spending is sustained until the housing market starts to recover, and they reduce spending at that time.
This article dosent point out the other misleading item about the numbers…Bush spending was that high in the second term in part due to TARP bail outs.. TARP was repaid under Obama which was counted as income and on ratio – looks like he slwoed increase of spending. Also..if boken down between his first 2 years under Peolsi and now, you will see a very start difference of spending. It only slowed cause the republicans blocked as much as they could.
Lots of interesting comments and varying viewpoints…good to read. And clearly, most everyone is well-educated and has thought through what they’ve written. That said, one of the comments sticks out to me because of its lack of observing what’s happening in the real world.
StarvingSteve tells us that the California education system and the greater American education system, are both controlled by the right wing.
He/she either needs to read up on what right wing truly means or open his eyes to the world around him.
If the debt grew at the rate the GDP increase, all would be not so bad. If the debt increased 2% and GDP increased 2% all would be the same as the starting point. But except for Clinton and Obama the growth in the debt greatly exceeded the growth in the GDP (you have to take a bit of license with the timing of when one president hands off to another, or you blame or credit someone who does not deserve it, so I just ignore the first year for all presidents when I make this point)
When a big company IPOs, investors can hardly contain their excitement. In a flash of exuberance, they throw money at a company they've already decided is worth something... even if the market hasn't made up its mind yet. Today, Jonas Elmerraji explains how one simple word can change the fate of every IPO investor. Read on...
Baltimore was abuzz this weekend with parades, festivities, tall ships and air shows... And it only cost $5.5 million of taxpayer money! Yes, Saturday marked the bicentennial of a critical moment in the War of 1812 - the battle of Fort McHenry. And if you know of a better way to celebrate a war, Dave Gonigam is all ears...
Want to self-publish a book? You can't afford to miss out on this series. Chris Campbell promises to deliver a step-by-step guide to self-publishing that leaves nothing out. Today, you'll learn how the most successful self-published book got to where it is today - and how you can use the same strategy to make your own book a success. Read on...
While most of the commodity sector is getting beaten down right now, there's one commodity that's been on an uptrend since early 2013. And you're in luck... It's on a two-week dip in price right now, that could turn around any minute. Today, Greg Guenthner explains why this could signal a solid buying opportunity. Read on...
Forget about the new iPhone or the Apple Watch. They may create a huge frenzy right now, but they don't have any staying power. In fact, as Ray Blanco points out, these new products are just fads, especially when compared to one incredible story that's poised to be the biggest technology trend of this decade. Read on...