SAN DIEGO -- I live with my wife and a 13-year-old and while each of us is different, we do all agree on some fundamental issues. Here are three things you will never hear in my house:
1) "Let's watch Dr. Phil."
2) "I don't think duct tape will fix that."
3) "Boy howdy do I like math!"
Math, both by nature and by design, sucks. My family hates numbers and not just because numbers are hard to figure, but also because the numbers that matter most, those preceded by currency symbols, are, for my middle-class family of three, so damnably scarce. Talking about money at my house is like talking about Darwin at the Huckabees', a sure-fire way to stir up more trouble than a little bit. Since we avoid money-talk like leprosy, we've little use for math at home. We have no hobbies that require calculations of any kind, our scale rounds to the nearest pound, our clocks are digital, our thermostat manual and our checkbook perennially the same -- right near useless. About the only use we do have for math is figuring how many times a lot goes into a little so we can dole out the proper fraction to each set of in-law kids come Christmastime. I bet my home is a lot like yours.
One thing we talk about quite a bit at my house is politics -- who's up, down or holding steady, who's leaning right or left, who's looking forward or backward, and most of all, who's getting screwed and who's doing the screwing. Talking so much about politics presents us with a problem, because if one follows the rabbit hole of American politics deeply enough one eventually encounters a mathematical jabberwocky guarding the real facts and figures that would inform a sound opinion. So we must, at times, put aside our distaste for sums and factors and charge ahead into the whirl of large numbers from which we'd naturally run, for in that confounding vortex the truth abides.
We all know politicians are long on rhetoric and short on facts and that's why Americans insist that they rub some math on their stories since numbers, presumably, don't lie. And they don't, not exactly, but they do fib. For instance, I keep hearing that the average American is worse off today than just a few years ago. That sure feels right. Turns out it's not. If you doubt me, that's fine, but you should believe what truths math has to impart. I consulted the numbers and it turns out the average American is a good deal better off today than in 2007. The median American, he's worse off, but the average American is doing markedly better.
You will not be tested on this, but if you're going to listen to bankers, realtors, statisticians or especially politicians, the most important mathematical truth you should know is that "median" does not mean "average." Those two terms aren't identical in any universe. In the economic universe, they're not even similar. "Average" means... well you know that, but "median" means half of the things being talked about are above it and half are below it.
Take this series of numbers: 1, 2, 3
The average of those values is... that's right, two, and in this example the median is also two.
Now take this series: 1, 2, 96
The median value in this example is... yep, two. But the average value is 33. Median and average are not the same thing.
In 2007, the median household income in the U.S. was a tick over $50,000. That figure has declined slightly since then. The most recent reliable data puts 2009 median household incomes in the $49,000 range and perhaps even lower today, which would seem to mean that, on average, Americans have taken a two-percent pay cut since the economy went to hell. It would seem to mean that, but it doesn't. What has happened to the median household income reflects nothing at all about the hypothetical "average American." In fact, while median Americans have been earning less, average Americans have earned more!
In 2007, the per capita income of all Americans was $39,392. Per capita is average. Median is not. If all the income earned in this country is divided by the total number of Americans, that's what per capita income means. Yes, math sucks, but bear with me.
The typical American household consists of 2.59 people, a figure that hasn't changed significantly in a long time now. So in 2007, the average household earned $39,392 x 2.59, which comes to $102,000 and change. Swear to God.
That's a tidy sum for the average American family, but the news gets better. The country's per capita income in 2010 was up to $40,584, meaning that the average household of 2.59 people had a combined income that year of more than $105,000, which amounts to an increase of $3,000 per year for the average family during a time that the median family took a thousand-dollar pay cut.
This contrast comes about because averages are flat while medians are curved, like the grading system in your high school math class. And just like in your math class, in America there are some curve bumpers, the kind of outlying jerks the rest of us detest. I'm just pointing out mathematical facts here -- there is more available income to go around in America today than there was a few years ago, but more than half of us are still doing worse.
"Wait Tony, this sounds like socialism."
Well it's not. It's just math. And besides, I don't care if it's socialism, communism, Dadaism or abstract expressionism, it's purely hypothetical. I'm not saying it's what we should do, I'm just saying that if we did all share equally in this country's combined earnings, a three-member family, say a couple with a 13-year-old, would have a combined household income of more than $120,000. If that's how things worked, almost everyone in the United States would make a lot more money than they do now and only a comparatively few families would make considerably less. However, as it is, we don't redistribute American wealth very aggressively.
Regardless of what dubious numbers you hear thrown about by Republicans or Democrats trying to sound like Republicans, the real truth is that in this country, wealth is divided more unequally than in any other advanced country you can think of. The United Nations assesses countries according to their distribution of available wealth. One measure of that distribution we can call the UN R/P, which is shorthand for the ratio of the income of a country's richest 10 percent to its poorest 10 percent.
Whereas our UN R/P ratio is 15.9-to-1, in the U.K. it's 13.8. In Australia it's 12.5 and in Canada it's just 9.4. Even those countries making news this past spring for their citizens' collective yearn to breathe freely have more equal wealth distribution than does the U.S. In Egypt, the CIA R/P ratio is a mere 8-to-1. In Yemen the UN R/P ratio is 8.6. In Tunisia it's 13.4. Some less developed countries have income distributions more unequal than ours. Two of them are China, at 21.6, and Venezuela, at 48.3, which doesn't sound very socialist to me. In Germany, a country with one of the highest marginal income tax rates in Europe, topping out at 45 percent, the UN R/P is a paltry 6.9-to-1 and you might think, "Yeah but who wants to live in Germany?" Well I bet most Michiganders would if they knew that German exports exceeded imports by some $200 billion last year and that the German economy is projected to grow more than two percent in real terms this year.
There is no intrinsic reason that a fair distribution of income means a weak economy and, conversely, there is no way to argue that a strong economy necessarily requires concentrating wealth in a few hands. Nevertheless, we slice the American pie more unequally today than ever before. Pie is a sloppy metaphor. Let's use cookies.
Say you've got 10 kids and four-dozen cookies. Now say you choose your favorite kid and you give him 16 of those cookies, a third of the total, right off the top. Then say you split 31 of the remaining cookies among eight other kids. Then say you give your least favorite kid just the one cookie that's left over. Now assume that your least favorite kid is the youngest, the darkest and the femalest and that's basically how American incomes get divided.
Almost all Americans are like one of those eight kids with 3.875 cookies. We're better off than the kid who got royally screwed, but what we got was screwed all the same. It strains definition to say that three cookies and some crumbs are "in the middle" of one and 16, but that's what it is to be middle-class. There's nothing remotely "middle" about America's middle class. If you make a median income, sure enough you make more than half the rest of the folks, but you're no more in the middle of the poor and the rich than off-white is in the middle of white and black.
It could be worse, I suppose. You could be really poor. I learned only recently that prior to 1964 there was no official definition of poverty in the United States. It's true. There were certainly poor people before then, but not until Lyndon Johnson declared war on poverty did anyone try to define exactly what "poverty" meant. As we all know, when you declare war on an abstract noun it's best to know what it means, so Mollie Orshansky, an economist working for the Social Security Administration, set about trying to decide just what counted as poverty for Great Society purposes. Orshansky learned from Department of Agriculture reports that families of three or more Americans spent, on average, one-third of their income on food. From that fact she deduced that if a household earned less than three times the lowest possible cost for adequate nutrition, then that household was officially poor.
I'm not making that up. That's the standard method we have used from 1964 right up to today with no alteration. If you make at least three times as much money as it costs you to eat, you aren't poor. Hence the Federal Poverty Threshold, which, at the moment, for a family of three everywhere but Alaska and Hawaii, is $18,530. That's a year, y'all. A husband and wife with a baby at home and a combined annual income of $18,531 aren't, strictly speaking, poor. And that, of course, is ri-god-damn-diculous.
So I'm left to wonder, given that math is certain and given that the right math should inspire by its very certainty right choices by the overwhelming majority of voters, when will we stop trusting rich people to manage our economy? I know the temptation is to suppose, "He's rich. He must understand money." But that's like thinking Charlie Sheen must understand women. He probably does, but I wouldn't trust him with my sister. Cher probably understands surgery, but I don't want her cutting my face open.
The one thing a rich candidate probably understands most about money is the fact that if we all took more of it, he'd have to take less, and where would that leave him? I guess in the middle class and that, I assure you, is no picnic.