Tuesday, November 8, 2011

Observations From the Back Row: 11-8-11

By Rich Kozlovich

There is a reason that I say that Thomas Sowell is probably one of the nation’s greatest thinkers if not one of the worlds. Why? Because he has the innate ability to simplify complex problems so that they are completely understandable by everyone.

He recently wrote an article called, “The truth about 'top 1%', which I enjoyed because recently Fox News flashed a chart showing that those households run by people 65 or over are 15 times richer than those under 35. My first thought was...ok....so? Isn't that what you would expect? He uses this as an illustration to explain this; "when I have gone on luxury cruise [emphasis added] ships, is that most of the passengers look like they are older than the captain – and luxury cruise ships don't have juveniles as captains. The reason for the elderly clientele is fairly simple: Most people don't reach the point when they can afford to travel on luxury cruise ships until they have worked their way up the income ladder over a long period of years. The relationship between age and income is not hard to understand. It usually takes years to acquire the skills and experience that high-paying jobs require, or to build up a clientele for those in business or the professions."

We hear unendingly how the top one percent of income earners is getting richer while the rest of becoming more and more impoverished. He points out that if you are talking about income categories you are right. If you are talking about people you are wrong.

He points out that; "The Internal Revenue Service can follow individual people over the years because they can identify individuals from their Social Security Numbers. During recent years, when "the top 1 percent" as an income category has been getting a growing share of the nation's income, IRS data show that actual flesh and blood people who were in the top 1 percent in 1996 had their incomes go down – repeat, DOWN – by a whopping 26 percent by 2005. How can both sets of statistics be true at the same time? Because most people who are in the top 1 percent in a given year do not stay in that bracket over the years."

He went on to say; "A University of Michigan study showed that most of the working people who were in the bottom 20 percent of income earners in 1975 were also in the top 40 percent at some point by 1991. Only 5 percent of those in the bottom quintile in 1975 were still there in 1991, while 29 percent of them were now in the top quintile."

One of the many observations I have made in my life is that, unlike most everywhere else in the world, in this country where the Occupy groups are protesting the most open opportunity driven culture the world has ever known, is that anyone....and I mean anyone....can become part of the top one percent; and they do.

I haven’t seen it for a long time, but they used to publish who the top 25 richest people in the nation were ever year. And guess what? The top 12 or so were always newcomers. Oprah Winfrey, Bill Gates and a host of other well known names that became self made millionaires and billionaires. The bottom 12 or 13 were old money that was dissipated by time through those who inherited their wealth and eventually dropped off the list entirely. At least five or six of them represented two family fortunes. This was old money and I don't think they are on the list at all anymore. Only in America!

That is the problem with statistics and those who use them with an agenda in mind that has nothing to do with the truth or educating the public about what is really going on. Especially the media. Although I might be willing to give them a pass because I don't think they are smart enough to get it. Of course...that is why statistics are called the arcane science.

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