Distorting Income Growth With Statistics

link here to article Its common to hear one of the talking heads on TV news shows boasting about the growth of per capita GDP in the US in comparison to Europe's welfare states. This proves to them that the US economy, and its purported free market system, is superior to that of "old Europe". For example, per capita GDP growth in the US was 5% higher in the US than it was in France between 1975 and 2006. Its easy to distort reality with statistics, however, and the talking heads are very good at it. If we subtract income growth among the top 1% in the US from this analysis, the US and France show about the same growth in per capita GDP. Moreover, there is little difference in the French statistics with or without the inclusion of the top 1%. Income growth was more equally shared in France than it was in the US. Of course, the talking heads would not view greater income equality in France as an advantage of the French economic system. Another common misuse of statistics is to use the average instead of the median as the measure of the central tendency. Average growth in per capita GDP in the US has been quite impressive. However, the growth in median per capita GDP has been dismal. That is because most of the growth in income went to the top 1% of households in the US. The conclusion that one reaches from the data on income growth in the US is that the economy has been very good for the top 1%. The bottom 99% have missed out on most of the growth in income. Perhaps that is the major advantage of the US economic system. If you are lucky enough to be in the top 1%, the US has the best kind of economy for you. If you are in the bottom 99% you might be one of the "lucky duckies" who sends fewer income tax dollars to Washington. If you have less income, you will obviously have a lower absolute tax bill than the top 1% which has most of the income. Your effective tax RATE however will be very similar.