Business Insider wanted to get to the bottom of the public stance on the Amazon HQ2/NYC issue. If you don't know, Amazon chose NYC to host half of their second headquarters. They were set to receive approximately $3 billion dollars in tax incentives to locate there and add 25,000 jobs to Queens. City and state Democrats approved the deal, including the mayor and the governor, but after the announcement, some local Democrats, including the representative of the 14th District in New York, strongly objected.
One of their arguments was that the $3 billion dollars could be better spent elsewhere. "It's fair to ask why we don't invest the capital for public use, + why we don't give working people a tax break." Many jumped on these comments as illustrating ignorance of the mechanism involved. The statement is vague enough that it could be interpreted either way, but she could easily augment it to make it not sound idiotic.
So to determine whether people agreed with the Governor or Mayor or the local socialists, Business Insider conducted a poll. The poll found that a plurality of respondents thought $3 billion dollars would be better spent on tax breaks for residents.
This poll is completely divorced from the situation though, and ironically, it shows that still no one agrees with the socialists, because its result indicates most people want lower taxes. Even so, the poll does not make clear that the $3 billion dollars "given" to Amazon should be compared to the $27 billion dollar increase in tax receipts from Amazon's entry. So NYC made a deal to increase their tax revenues by $24 billion on net. What if the poll asked "Should NYC lower Amazon's tax bill over ten years to guarantee $27 billion dollars in new tax revenue or offer no tax break and receive no new tax revenues?" What if he poll asked "How much should NYC be willing to give up to guarantee $27 billion dollars in new tax revenue?"
The option chosen by the plurality, though I doubt the respondents considered the implication, might arrest the exodus of New Yorkers from the state or incentivize more work, but Democrats and Socialists don't believe that tax cuts improve the economy or that workers respond by increasing their labor, nor do they decry the loss of the people who are fleeing for lower tax states.
Also, it's pretty hard to believe that either of those would offer the nearly 900% return that the tax incentives were offering, which would only grow as time went on.
Wednesday, February 20, 2019
Fact-Checking an Entertainer's Exaggerations
On Fox News Sunday with Chris Wallace, Rush Limbaugh made some points regarding climate change that he often makes on his radio show and are not far off from arguments other climate skeptics make. Politifact took a look at them and rated them "False."
Given his role as a radio commentator, one should expect exaggeration, and Politifact should have investigated his claims not as whether they were true or false, but rather if there was a grain of truth that he was exaggerating and how much exaggeration there is.
I have zero confidence in the prominent newspapers when it comes to climate change coverage. Despite the fact that the climate is complex and there is variation, their coverage is fifty times stronger of the "up" variations than the "down" variations and they clearly exaggerate climate change.
For example, any time the average temperature increases even the tiniest amount, they provide the same 'sky is falling' coverage as when it goes up substantially. Recently, all the surface measurement entities said the same thing--the average global temperature for 2018 was lower than 2017, however, not a single press story mentioned that. Instead all coverage was that 2018 was one of the hottest years on record. And they would not say there was a two-year downward trend since 2016.
I'm not arguing that the trend will continue, and I'm not arguing that there hasn't been a trend upward, according to that data, since 2000. A reasonable person can admit both. I don't understand why the media, though, can't acknowledge that the temperature has declined since 2016. They could easily quote a scientist saying it's likely a temporary decline because of El Nino in 2016, but they'd rather just omit the inconvenient truth from their stories because they can't handle or they believe their readers can't handle any amount of nuance or complexity.
Turning back to Rush Limbaugh's comments, he said
Climate Change is Happening Now
Most data bears out that it's hotter now than it was ten or twenty years ago or more. However, the statement by climate scientist Kevin Trenberth that "The Earth is now hotter than it has ever been." Is factually inaccurate. As it was hotter two years ago than it is now. His point was probably the point that I made, not the narrow inference I made, but good science and good journalism (and good fact checking) should distinguish in the interest of clarity and accuracy. There is really no reason to let a general and technically incorrect statement like that stand on it's own. (As an aside, I doubt that the fact-checker even understands that the statement is not 100% accurate).
Predictions from the Past have Been Borne out
This is where Rush is on his firmest footing. The Politifact article uses one expert who conducted an analysis for a website, then cites a single model which overpredicted the temperature increase by 20%. They also refer to this analysis which shows that the models have been off by varying degrees but claim that they're basically right. After reviewing the models and evidence, the models do not consistently over-estimate like I originally believed, but they also don't seem especially accurate. The difference here might be the reporting, an interesting investigation may be to look at how these are reported. I suspect that the media tend to emphasize the highest estimates and that's what gives the impression that the models are always over-estimating.
Near-Term Projections Are Usually Correct
What terrible evidence. I should hope that they're usually correct. I can get pretty close to a good prediction just by saying the temperature will be exactly the same. There is no difficulty in guessing small changes, and furthermore they are pointless. What is important is the long-term projections. This defense should not be included.
Given his role as a radio commentator, one should expect exaggeration, and Politifact should have investigated his claims not as whether they were true or false, but rather if there was a grain of truth that he was exaggerating and how much exaggeration there is.
I have zero confidence in the prominent newspapers when it comes to climate change coverage. Despite the fact that the climate is complex and there is variation, their coverage is fifty times stronger of the "up" variations than the "down" variations and they clearly exaggerate climate change.
For example, any time the average temperature increases even the tiniest amount, they provide the same 'sky is falling' coverage as when it goes up substantially. Recently, all the surface measurement entities said the same thing--the average global temperature for 2018 was lower than 2017, however, not a single press story mentioned that. Instead all coverage was that 2018 was one of the hottest years on record. And they would not say there was a two-year downward trend since 2016.
I'm not arguing that the trend will continue, and I'm not arguing that there hasn't been a trend upward, according to that data, since 2000. A reasonable person can admit both. I don't understand why the media, though, can't acknowledge that the temperature has declined since 2016. They could easily quote a scientist saying it's likely a temporary decline because of El Nino in 2016, but they'd rather just omit the inconvenient truth from their stories because they can't handle or they believe their readers can't handle any amount of nuance or complexity.
Turning back to Rush Limbaugh's comments, he said
"Climate change is nothing but a bunch of computer models that attempt to tell us what's going to happen in 50 years or 30. Notice the predictions are never for next year or the next 10 years. They're always for way, way, way, way out there, when none of us are going to be around or alive to know whether or not they were true."Politifact's rebuttal is three-fold--climate change is happening now, predictions from the past have been borne out, and near-term projections have usually been correct.
Climate Change is Happening Now
Most data bears out that it's hotter now than it was ten or twenty years ago or more. However, the statement by climate scientist Kevin Trenberth that "The Earth is now hotter than it has ever been." Is factually inaccurate. As it was hotter two years ago than it is now. His point was probably the point that I made, not the narrow inference I made, but good science and good journalism (and good fact checking) should distinguish in the interest of clarity and accuracy. There is really no reason to let a general and technically incorrect statement like that stand on it's own. (As an aside, I doubt that the fact-checker even understands that the statement is not 100% accurate).
Predictions from the Past have Been Borne out
This is where Rush is on his firmest footing. The Politifact article uses one expert who conducted an analysis for a website, then cites a single model which overpredicted the temperature increase by 20%. They also refer to this analysis which shows that the models have been off by varying degrees but claim that they're basically right. After reviewing the models and evidence, the models do not consistently over-estimate like I originally believed, but they also don't seem especially accurate. The difference here might be the reporting, an interesting investigation may be to look at how these are reported. I suspect that the media tend to emphasize the highest estimates and that's what gives the impression that the models are always over-estimating.
Near-Term Projections Are Usually Correct
What terrible evidence. I should hope that they're usually correct. I can get pretty close to a good prediction just by saying the temperature will be exactly the same. There is no difficulty in guessing small changes, and furthermore they are pointless. What is important is the long-term projections. This defense should not be included.
Saturday, February 9, 2019
Doubling Down on Bad Programs
Democrats want to fix Social Security. Unfortunately, the way they want to go about it is to double-down on a poorly designed program. To summarize their plan, they want to raise the payroll taxes by almost 20% (from 12.4 to 14.8), increase benefits by 2%, and expand the program to income 400k and up (excluding income between 132.9k - 400k)
Social Security was designed over 75 years ago for a society much different from todays. It redistributes wealth from low income earners with low life expectancy to the affluent. It redistributise wealth from dual-earner couples to single-earner couples. Why do we want a system that does this?
Furthermore, as has been shown, Social Security is a terrible pension plan. Their own research shows that almost everyone would be better off investing their money in an index fund. The only people whose returns might rival an index fund are couples, with only one earner in the lowest income group. Every other income group, every other combination of earners performs relatively poorly.
Let's take an example to show how much better off most would be with an index fund.
A two-earner couple, born in 1985 is in their 30s now. They can expect a return of 2.45% on their Social Security "contributions." The S&P500's average annual return is 9.8% over the past 90 years. If each starts working at 25 with a salary of $30,000 and gets a 3% raise every year until they retire, at retirement, they'd have more than five times the savings from an index fund as from Social Security. (You can play with assumptions by copying this workbook)
This demonstrates how lousy a program Social Security is. I understand that one of the benefits of Social Security is that it can provide some security in case the market crashes. It would be intolerable to have saved your whole life, and then the market crashes. However, this is an extremely high price to pay to guarantee retirement security. Imagine there was no payroll tax as you worked, but Social Security was funded by taxing your retirement savings right as you turn 65. This example shows that it's an 80% tax of your potential savings.
Surely we can design a system that can guarantee retirement savings (even for single-earner couples) and not mal-distribute so much wealth for a fraction of the price.
Social Security was designed over 75 years ago for a society much different from todays. It redistributes wealth from low income earners with low life expectancy to the affluent. It redistributise wealth from dual-earner couples to single-earner couples. Why do we want a system that does this?
Furthermore, as has been shown, Social Security is a terrible pension plan. Their own research shows that almost everyone would be better off investing their money in an index fund. The only people whose returns might rival an index fund are couples, with only one earner in the lowest income group. Every other income group, every other combination of earners performs relatively poorly.
Let's take an example to show how much better off most would be with an index fund.
A two-earner couple, born in 1985 is in their 30s now. They can expect a return of 2.45% on their Social Security "contributions." The S&P500's average annual return is 9.8% over the past 90 years. If each starts working at 25 with a salary of $30,000 and gets a 3% raise every year until they retire, at retirement, they'd have more than five times the savings from an index fund as from Social Security. (You can play with assumptions by copying this workbook)
This demonstrates how lousy a program Social Security is. I understand that one of the benefits of Social Security is that it can provide some security in case the market crashes. It would be intolerable to have saved your whole life, and then the market crashes. However, this is an extremely high price to pay to guarantee retirement security. Imagine there was no payroll tax as you worked, but Social Security was funded by taxing your retirement savings right as you turn 65. This example shows that it's an 80% tax of your potential savings.
Surely we can design a system that can guarantee retirement savings (even for single-earner couples) and not mal-distribute so much wealth for a fraction of the price.
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