Growth Rates

Tim Pawlenty took a drubbing today for saying that his super plan will generate 5% growth for a decade. One article on the subject is here at TPM. Currently the growth rate is 1.8% according to the article. Growth rates are tied to the exponential function. As much as this guys pleads with his students and now millions of viewers on Youtube the exponential function is little understood.

In this case we are going to look at continous GDP growth at a rate of 5% and 1.8% for 10 Years. The function for continous growth like compounding interest is pert or



What does that actually look like. Using the google history of US GDP I made this chart.




Five percent doesn't look that crazy based on the previous years, but a lot of people think its impossible to do that for a decade straight. In fact its never been done before.


Just to illustrate how crazy big 5% growth is lets investigate the history of the growth rate and expand his promise out a few years. The fed has GDP measured here data from the fed available here. By calculating the change in growth each quarter, taking the mean and standard deviation of the result we can get sense of typical growth rates. The resulting distribution shows how rare 5% growth is.



To compare typical growth to 5% growth lets expand our charts to 20 and 50 years. The distribution function was used to create a random growth rate for each year past 2011. At twenty years twice as long as Pawlenty is promising we get this.



Redoing it for 50 years, You can see how incredible that kind of growth would be.



So take growth predictions with a grain of salt and remember the exponential function when a politician, broker or god forbid an engineer promises you a growth rate.

Adding a Javascript Function to a Blogger Blogpost

I had a lot of trouble getting the income calculator java code to work in the previous post then i discovered a poorly written post that clued me in. If you copy paste java script code into the edit html portion of the blogger editor it wont work. Thats because when the post is published blogger converts carriage returns into <br > messing up the java script.

If you want javascript to work you have to put the entire javascript code block on one line. Thats an impossible task to do manually for complex code blocks. So write and test them elsewhere and then once your satisfied it works use this tool. It will strip the new lines placing the entire block of text on one line. Copy and Paste the single line version of your code into the blog editing pane in the blogger editor and you are good to go.

Where Do I Stand? Income disparity and me.

I was looking for a calculator that would visualize income disparity for me as an individual but I couldn't find one. The closest I came was a javascript tool created as part of the great article series: The Great Divergence by Tim Noah at Slate. He also did the excellent healthcare plan comparative series during the 08 Democratic primaries. The visual essay compiled for the series is available here . I also suggest you read the articles here.

As for that comparative income calculator:

Where do I stand?

Enter your zip code and income to find out where you fall on the curve.

Zipcode: Income:


How you compare:
Average income in zipcode:
Median income in state:
Median income in country: $52,059
Percentile in country:

Sources: American Community Survey (State and National Data), IncomeTaxList (Zip code data).

NOTE: All information you enter is private and will not be recorded or stored in any way.

Anyway this was compiled by the folks at Slate using publicly available data This is based on a normal distribution. The actual distribution of incomes has a key outlier though, the people at the very top make a lot more than the mean. There is a football field metaphor description of this at the L-Curve. Here is a video explanation, I warn you though the voice over sounds like Ben Stein on Ambien.




So grab your tax statement, find your income percentage with the tool, and take a look at what yard line your on.

Fun with Graphs: Deficit Edition

I have seen two articles that point out that if we locked the doors of the Congress and prevented anything from happening the budget would come under control in a few years. The first was at Slate by Annie Lowrey and the second was at Daily Kos had a graphic created by the Incidental economist Blog using CBO data.

Note how revenue suddenly jumps to catch up with all those piles of liabilities we have. As the articles explain there are three actions that Congress must takesto keep us in debt. The first was extending the Bush Tax Cuts which were set to expire this year and will now expire next year. The other two they do every year because if they didn't a lot of people would be mad. One annual event is renewing the Alternative Minimum Tax dodge for middle income families. The second is circumventing the codified funding of Medicare to pay doctors rates higher than they would be under the original law.

Rather than do any of those unpopular things the Republican budget choose to do other unpopular things: cut a bunch of programs and privatize medicare. Paul Ryan shows how this will save us all a bunch of money in this video as shown on the daily show last night (I couldn't find the original video.) Check out those slick graphs.

The Daily Show - Ryan's Private Savings - Path to Prosperity
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

As Stewart points out with his own graphs the elimination of the Bush Tax Cuts does essentially the same thing without destroying medicare and medicaid. Thats the rub for the Republican Party, as Scott Walker and other Governors have shown. There is always room in a budget to give rich people more money. Even when confronted by serious problems the Republican solution is give rich people more money. That was the agenda of the Federal Reserve during the Banking Panic and thats the plan now that the Bush fiscal Chickens have come home to roost.

AAAAAHHHHHH Class

I like labor unrest, its fun to watch and reminds me of the Tom and preacher Casy's I becomes We dialogue in the Grapes of Wrath. It is unlikely though we'll see rallying around labors cause from most Americans. I don't have an explanation for the ongoing disconnect in perceptions of the stagnation of the middle and lower classes and the prosperity afforded the top 1%. One may be the narrative of the American dream keeps people from criticizing the rich because theres a chance they may become part of the elite. With the current labor disputes this manifests itself as non- union workers and skilled professionals expressing their anger at their situation with the unionized workers and not the robber barons they work for. Getting mad at the unionized state workers for having health benefits and pensions one doesn't receive leads to rooting against the worker. Why doesn't anger lead to introspection and organization, demanding fair compensation from ones employer. In general people don't seem to think this way, some graphs and statistics from Mother Jones bear the dissidence from perceptions and reality bear this out.

http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

A few Choice examples ( Click to get a clearer image )

Payroll tax is only paid on the first $100,000 or so of payroll income. It is paid by the middle class and the poor.




People think they are better off than they are.

And income disparity has gone up and up and up.