Friday, September 30, 2011

Lies, Damn Lies, and Excel Charts - Impressions #29

First - My apologies to Mark Twain

Second - I know this is off topic, having nothing to do with my impressions of Saudi Arabia, or my escapes to other exotic climes.

Third - since their usually has to be a third, The 3 Musketeers, The 3 Stooges, The Holy Trinity ... well, actually, I've got no third.

With all the wild talk going on about how Washington is taxing us all to death (no income taxes here in Saudi, since the oil sector is nationalized and the huge revenues are spent for the benefit of the citizens, providing free education and low cost health care, as well as huge new infrastructure projects. Maybe we should try nationalizing some of our natural resources in the USA...) and lots of statistics and graphs being thrown around I thought I'd write a little something about how to use the "truth" to deceive, especially with regard to graphs.

Napoleon is attributed with saying that a picture can tell 1000 words. I would suggest that a picture can also tell 1000 lies.

I saw a chart yesterday that shows the scandalous growth in income tax revenues collected by the IRS. I recreate it here.

The chart is in millions of dollars. So that low figure is $131 Billion. The high figure is $1.164 trillion.

Some of you may find the chart more meaningful if we put it in percentage terms.

From this chart you can see the revenues actually increased by almost 900%.


Well, what does this chart NOT tell you?

In court, when you're standing in front of the judge you have to "tell the truth, the WHOLE truth, and NOTHING BUT the truth". Leave any of those out and you can deceive while telling "the truth".

This chart is not telling the WHOLE truth by a long shot. First of all it's telling you nothing about inflation. Second, it's telling you nothing about about population growth over the period.

Here's the same chart, but taking into account inflation.

All the sudden 884% becomes about 250%
Inflation is real. It makes a difference. Back in 1976 you could buy a gallon of gas for 60 cents. Remember that?

There's still something important missing, population. Revenues have gone up, but so has the population. What does this mean at an individual level? After all, that's what it's all about, isn't it?

Here's the chart, factoring in population growth.

Where does that leave us? What does this all mean? In short, compared to 1976, the Federal government collects 23% more revenue, per person, through income taxes. That's all it means. Nothing more. We're a long way from that horrifying spectacle of 884% increases.

(An aside... has our "standard of living", in purely monetary terms, increased more than 23% since 1976? I would argue yes. We have longer life spans, more cars, more gadgets, bigger houses, etc. So the 23% growth in tax revenue probably gets mostly canceled out by this increase in our standard of living.)

There is still a lot of truth that's missing from the above pictures. But this exercise starts to show the importance of taking into account ALL the relevant information, the WHOLE truth.

How about the "nothing but the truth"? Well, this discussion only looks at revenues collected from INCOME taxes. It doesn't discuss any other sources, in particular, capital gains taxes. That's a huge subject. The very rich make much more of their wealth from capital gains and dividends, which have a much lower tax rate. Warren Buffett has brought that to the country's attention very eloquently in the last couple of months.

Another big subject is State and local taxes and fees. When Federal rates are cut, these usually go up to compensate. However, State and local fees tend to burden the very rich far less than you or me. If their sales taxes or car registration fees go up ... well ... whoop de doo. But you and I feel it where it hurts, right in the ... So, cutting Federal taxes can even end up increasing the total tax burden we face.

From a historical standpoint, these charts would be much more revealing if we took them back to 1945, encompassing several economic cycles and periods when income tax rates were MUCH higher than they are today. When I have the time I will extend the charts further back.

Lastly, these charts say nothing about how these tax revenues are collected across the different economic strata. It's ironic that the periods of highest economic growth in the last 60 years have also been the periods with highest income tax rates on the upper brackets. It SEEMS that taxing the wealthy actually makes the economy grow. But does it? Well, we need to look CLOSELY at the numbers to be sure.

THE MORAL, since every tale is supposed to have one...

The next time somebody waves an impressive graph in front of your face, or starts rattling out lots of numbers, don't let your own insecurity with math be your undoing. Don't just nod or shake your head based on whether you think that person holds the same political agenda as you. Instead, say, "Thank you very much." Then take their numbers and give them a good look over. If you're still insecure about your math, it's time to get out the old 8th grade math book (not the new one) and brush up on your fractions and percentages. It's no more complicated than that.

And don't become cynical. Not everyone is out to deceive. Snoop around online and you'll find many people doing the work I've just done. There are a lot of people out there, just like you and me, who want to get at the truth, the whole truth and nothing but the truth. These are honest people who also happen to be good at math.

Until next time...

a note on my sources:
Tax revenue figures are from the White House Office of Management and Budget

Inflation rates
are from a study by Robert Sahr, Oregon State University.
For population statistics I used the Census data collected each decade and interpolated the years in between.

Sunday, September 25, 2011

A day in Thun - last Switzerland post - Impressions #28

This is the town of Thun, on the shores of the Thunersee, at the point where the river Aar flows out from the lake. This is the same Aar that flows through the Aareschlucht (see my earlier post). Thun, by the way, means "town". It has its origins in the same root word, which is also the "ton" found at the end of the names of so many British towns. It's not confined to the UK of course. Boston comes to mind. That would be the boss's town. (Okay, just kidding). Then of course there's Pleasanton, out in California, purportedly a pleasant town.

Now Thun, is definitely a pleasant town, even if it's just called Thun.

The center of town clusters around the network of waterways that makes up the river Aar.

North-east of the river a hill rises, capped by this church tower, beckoning invitingly to follow the twisted streets.

From a small terrace at the base of the church this view opens out, looking back over the center of town to the Thunersee beyond.

A sundial casts its shadows on the wall of the church.

These massive arches lead to the church entrance, which is to the right, inside. Look closely and you will see figures painted inside the archway.

The medieval frescoes extend from the walls up onto the vault of the ceiling.

The eternal homage to the baby who carries the future in his being...

From the church the hill mounts a little higher, capped by a medieval castle.

The first courtyard of the castle

Passing into the second courtyard of the castle, these stairs mount the exterior of the castle Keep. Apparently it's not necessary to use rulers and straight-edges when building castles.

The view from the open stair, the church tower at the left, the town below on the right and the Thunersee beyond...

This fireplace dominates the main room of the Keep.

At the four corners of the Keep, tight spiral stone stairways wend their way upward.

At the top of the highest tower this little nook frames the endless mountains across the valley.

Inside the castle the town leaders have set up many exhibits of local art and history. Here are some mannequins wearing examples of traditional dress. This was back before progress led us all to wear blue jeans and t-shirts.

Red is always in fashion.

These tapestries were captured in a historic battle, when the Duke of Burgundy tried to invade the area and was defeated by the free forces of the citizens of the canton. This was sometime around 1475.

Some quite lovely pottery that is produced in the region.

Back down the hill towards the town center, I'm following the Aar upstream towards the Thunersee. The Aar passes through a really beautiful neighborhood of exquisite 18th and 19th century homes.

Thun has always been a refuge where the famous would go to get away from it all. Many important political and cultural figures spent time here.

Johannes Brahms spent the better part of 3 years in Thun, composing some of his most loved chamber music here. The house he lived in, sadly, was demolished, when one road along the lake was widened early in the 20th century.

This house was actually built just a few years ago, one of the very few new houses in the area. The other that I found was a hideous purple modernist box, which I'm refraining from posting so that I don't get into a rant.

A narrow path leads across the water, through the mysterious gates, to an exquisite home hidden among the trees.

At the edge of town, near the lake, this old church was hosting a wedding the day I passed by.

Oh my god, it's all crooked and tilted! Call the lawyer! Sue the contractor. Sue the architect too while we're at it.

Just goes to show that a building can stand for centuries, even if it's not plumb and level. What it needs is to be loved and maintained.

Across the road, this 19th century recreation of a French Renaissance chateau now hosts a fancy restaurant and a place to hold your wedding reception.

a bit of lovely sculpture peeks out at you, a little yapping dog!

Turning back towards town I pass the serene church standing among its trees, a witness of the passing generations.

A nice comfy place tucked behind its bushes... Thun is full of spots like this.

On the train back towards Brienz.

That night there was a big thunderstorm. In the morning, out my window I saw fresh snow capping the peaks.

That's all for Switzerland for now. I hope I can make another trip back again soon. I hope to go in the early Spring when the waterfalls are at their peak.

Saturday, September 17, 2011

Forest and Mountain Dwellers - Impressions #27

The village of Brienz has a population of about 3500. The 2 hamlets next to it bring the total up to about 5000. This is no metropolis, but it has many hidden jewels.

On one of my walks from the village center back home (my bed & breakfast in the next hamlet) I decided to detour off the road and follow a footpath up into the forest. I passed this house, almost too perfect to be true, and saw a sign pointing deeper into the woods.

One of the ancient traditions of Brienz is its wood sculpting. For many hundreds of years it has produced a stream of talented artists who turn the local linden trees into all kinds of lifelike forms.

About 100 years back a sculpture school sprang up. It continues to exist today. I visited it. There were 20-30 students in a couple of big studios, working hard, surrounded by the scent of fresh wood shavings. Most of the students appeared to be Swiss. I think a couple were Italian, and there were 2 young Asian women as well.

Anyhow, soon after the school started, the founders decided that the students would benefit from being able to spend time studying the native fauna. So they created a small "zoo" in the forest. I hesitate to call it a zoo because it's more like a section of the forest with a fence around it. It's as simple as that. The animals have all they need inside the fenced area. They're living in their native habitat. It's just a smaller area. Since they've got what they need, they don't need a lot of space.

The trail through the woods skirts these fenced enclosures. There's no big entrance gate. No entrance fee. You can't drive there. The only road is a dirt track just big enough for a local utility vehicle to come in and do basic service.

While I was there I saw nobody except a mother and her 2 year old, who were talking to a stag through the fence.