The Only Thing We Have to Fear…

Please listen to our podcast version of The Swail Letter. It's fun. Also available on iTunes.

Fear seems to be ruling the world right now, especially within the United States. The population has bought into fear-mongering, 85 years after Franklin Delano Roosevelt uttered this phrase:

“So, first of all, let me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

Many people today assume Roosevelt was talking about Hitler and the ramping up of World War II, but this quote came seven years before Pearl Harbor. Instead, the President was talking about the devastation left by the 1929 Stock Market Crash which ushered in the Great Depression. The newly-coined President was asserting to people that they shouldn’t be afraid of doing the right thing and should be mindful, if not careful, of doing the wrong thing, which in this case was taking money out of the banks. People were running scared, aided in large part by the newspapers and radio broadcasts. Roosevelt new he had to put a stop to it to save the economy and the nation. Interesting enough, though Roosevelt was talking about domestic politics in his address, it was the 1929 stock market crash that helped bring Hitler and his party to power a few years later. Perhaps the President should have been talking about Hitler after all, since America helped create him. Funny, we seem to have a history of creating world leaders of the worst kind.

Fast forward the better part of a century and we find a nation steeped in fear. This is the political playbook for many, including the GOP, and especially, President Trump. Trump scared his way in to office, for the most part. The “Let’s Make America Great Again” campaign, also known as MAGA, was a ploy to get people to think that the US is a shadow of its former self. It isn’t, of course, and it never was at the same time. The US was never as great as we want to believe it; nor was it as bad as some would have us believe. But the US played such an important role to the world in the last half of the 19th century and throughout the 20th century it has been imprinted upon us that we were the greatest nation and that somehow we aren’t anymore. The US is a great nation. But it doesn’t do everything well and it never did.

Fear mongering doesn’t stop with politics. Our society is based, in large part, on the fear factor. And yes, we even had that TV show in the mid 00s to capitalize on people’s fear. We like horror movies and gross outs. And a quick skim of the 24-hour news channels illustrates our focus on fear, if not hate. We hold within us a fear within politics, fear of what some people will do to others, and fear of natural and unnatural occurrences. As I write this, the TV networks are ablaze with news about Hurricane Florence, and even though it has reduced to a CAT 2 storm, the networks continue to offer the gravest of possible outcomes. I take particular umbrage with the comparison of this storm with Hurricane Katrina, the storm that took out New Orleans. The difference being that Katrina took a direct hit on the Big Easy, a city that resides mostly under sea level, much in the same way as Amsterdam. New Orleans actually faired decently well during Katrina. It was the aftermath that took a toll. The night after the storm hit, all eyes were on the levy that was precariously listing during the storm surge. Once the levy broke (cue Led Zeppelin now), the damage got serious.

Just this morning, former FEMA director Michael Brown, the same guy who took some real heat during Katrina, commented on Fox News that he wished that networks would provide more facts about the dangers rather than use hyperbole (his word) about the potential impact of the storm. But this is what cable news does. It provides an entertainment value through fear.

Newsmagazines have made a killing out of alarming people because it sells magazines. Each year in and out, the top news magazines produce cover articles about (a) God and religion; (b) the end of the world; and yes, (c) the rising cost of college costs, which is, ultimately, my point today.

Politicians, policy analysts, economists, and educators preach loudly about the potential crises for the nation if we fail to increase the number of people going to college. There are plenty of reports of the cost of college, the issues of student debt, and the ROI of higher education. All of these are issues that EPI publishes regularly because they are important. The difference is the use of hyperbole and cherry-picking data by those in the media, including some of my colleagues in academia. The deliberate use of segmented facts becomes the problem. Case in point: I particularly remember the Newsweek cover from April 1996 (below) exclaiming “$1,000 a Week: The Scary Cost of College.” The reality, of course, is that the $1,000 a week pertained only to a small number of elite colleges around the country who, at the time, had a total cost of $50,000/year. Therein lies the $1,000 a week moniker. Twenty-two years later, there are 368 colleges, based on my IPEDS analysis, that have a cost of attendance above $50k, for what this is worth.

The covers below show the interest into these issues: “How Colleges are Gouging U;” “Is College a Lousy Investment;” “Is College Still a Good Investment?” “I Kind of Ruined My Life by Going to College;” and “The College Crunch.”

Similarly, the constant dialogue about the returns to a college degree is interesting. While it is true that the rewards for a higher education produce earnings that outpace lower degrees, it is also true that the increases in this space occur for the “higher” degrees, such as professional and Ph.D. level programs. Bachelor’s degrees have kept earnings pace over time, but even associate’s degrees and certificates are losing ground. The common statement that “College graduates earn a million dollars more than high school graduates,” is a true statement, but we must keenly note that is isn’t true for everyone; it is only true “on average,” and that is a key term.

Average, or the mathematical mean, is the number where we sum up all values and divide by the number of values. In a normal distribution, half of the values are above average and half below. But only in a normal distribution. In a skewed distribution, there are less on one side than another. The median value is a term we use to describe the value of the exact middle of the distribution. For instance, out of 100 values, the place in the middle when we count off 50 from one side and 50 from the other is the statistical median value. In a normal distribution, the mean and median are the same. In a skewed distribution, they are not.

As we learn, we find that many things in life are not “normal” and are somewhat skewed. Incomes are one of the items that are normally skewed. For instance, we have heard much about the top 1 percent of earners, in part, because they earn far more than anyone else. Specifically, the top 1 percent earns about 20 percent of the nation’s total personal income.[1] They also pay about 38 percent of all federal income taxes. The top 5 percent of earners earn 35 percent of total income and pay 59 percent of all federal income taxes. This is an example that shows a skewed distribution, which is why we must make a determination between mean and median values. With regard to income, we typically use median rather than mean values because these skewed values get marginalized. Thus, when we hear about the average returns to education, or the average incomes, we should be very wary. There is a great explanation of this on the web if you are so interested, and I’ll use their example to showcase the problem associated with misrepresentation and hyperbole.

The chart below uses international mean (average) and median income data. Note, in particular, the variation between the grey bars (mean) and red bars (median). For the US, average income is described as $60,000 per year between 2012 and 2014. The median, or middle income, is only about $30,000. How can they be so different? They differ because the distribution of income earners in the US is highly skewed towards the affluent and their high earnings mask the reality of the situation. Some people would like you to believe that the average earnings of Americans is $60,000/year. While statistically accurate, the more representative statistic is that half of Americans earn $30,000 or less. Thus, how we use data and what we use it for is important. 

My intention is not to provide a high school-level discussion about measures of central tendency. Rather, this is the problem, in large part, of the fear factor in the US regarding what is real and what is not. It is precisely why the Russians and even those within our borders have isolated people on political and other issues: because they can. They understand that a majority of our population will believe what they are told without inquiry into what is real or fiction. And that, my colleagues, is the United States of America. We are a gullible society, and the rest of the world knows it. What is most remarkable is that people point to the least educated as the problem. The reality is that our highest educated populace is complicit. And they control the money. That is the problem. 

I wish we all lived in Lake Wobegon, where “all children are above average.”[2] But we do not. We live in the global society that becomes more intricate every day q q. While some see that as a distortion of the America we grew up in, it is the world that will be. Our youth get it. The Tsunami of internationalization is here, even if Florence may not be.

Data rules. If we do not have good data, we cannot do what we need to do with any efficacy. If we continually battle over bad data, even worse. We need to be better. But we’re not.

[1] https://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/.

[2] https://en.wikipedia.org/wiki/Lake_Wobegon.