Saturday, February 12, 2011

Nominal Numbers Make No F***ing Sense!

I'm begging you all, please, please, please, stop using nominal numbers when you are talking about economic data over time. They are meaningless and only serve to stir up emotions. Thomas is the latest culprit (sorry bud), writing "I also believe that on average each American home receives $17,000 worth of entitlements." What does this number mean, what is it comparable to?

I'm pretty sure that when most on the Right think about entitlement spending, they think of something like this (my data comes from here http://bit.ly/geAhBE):


But these are nominal numbers. They value of a dollar in 2008 is different than the value of a dollar in 2001, which makes a direct comparison impossible. On the other hand, you can make direct comparisons as a percentage of GPD. What do you get?


Entitlements haven't really increase at all in 10 years, other than a spike in 2009 because GDP actually decreased. So can someone tell me where exactly this great entitlement problem is, demanding we cut the hell out of social security?

People worried about immediate spending and tax levels deserve some recognition. Taxes are at their lowest, and spending is at its highest, for the first time since 1945, which, by the way, was the last time we faced an economic downturn this serious. (I apologize for the tiny font, a better version of the table can be found here http://bit.ly/ibAiUq)


But this is just more evidence that we need to fix our economy (and run elevated spending levels like in the 40s) before worrying about anything else.

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