Gimme shelter

The recent decision of Pfizer, the $48-billion-dollar drug company, to reneg on its promise to build a new research division in New London, Connecticut and instead relocate elsewhere (taking some fourteen hundred jobs with it), is part of a scenario that has sent spasms of rage among conservatives and libertarians. Not that the rightists question the privilege of a corporation to do whatever it pleases--since corporate self-interest, along with absolute property rights--is at the very core of their ideology. Nor that they likely care the city will lose all those jobs.

Rather, their ire derives from the fact that Pfizer's offer to New London was predicated on the government seizing private property for the proposed research structure through the process of eminent domain, which is usually employed to meet some urgent public need (road safety, a water line route, a hospital, etc.). To the economic right, public need is virtually non-existent; private property is sacrosanct; therefore government seizure is the very essence of evil.

As a consequence of the seizure, several people lost their homes. So I find myself in a once-in-a-lifetime agreement with the right wingers, but for the opposite reason. I have never considered property ownership inviolable--and I say this as a small property owner myself, as well as a renter. To me, it is the right to affordable shelter--a very pressing public need--whether through owning your own home or renting it, that is, or should be, beyond question. My opposition, then, is that the Pfizer scenario reflected the dominance of corporate self-interest over public need.

In most cases today, the loss of one's shelter is a function not of an independent government's "interference" in the market economy, but of dominant private interests--capitalists--who, acting in their own self-interest, exercise undue influence to get government to do their bidding. As clichéd as it sounds, it is the private sector behemoths that pull the strings under which government officials act.

Think of the innumerable gentrification battles in New York City, Boston and other municipalities between gargantuan landowners and beseiged residents, mostly tenants but also small shop keepers. Think of every instance in which large landlords seek to evict tenants clinging to the few government protections they have, in order to make room for higher paying tenants. (In most of New York City's Manhattan neighborhoods today, a one-bedroom apartment typically rents for around $3,000 a month!)

As one who has fought for years against the dislocation of residents--tenants and small businesses--before the onslaught of corporate expansion and landlord greed, I have experienced time and again how large private sector interests dominate the urban economy, making life precarious for all but the very wealthy. In these battles, the government may be the public face of the "enemy." Behind the scenes, however, it is always the giant private interests--large real estate developers, landlords, highway promoters, universities (which are non-profit, but in name only) and others, that are the key actors. Funding them, of course, are banks and other private financial entities.

Therefore, it seems to me that the New London City's action, rather than consitituting an assault on private enterprise, was business as usual in a capitalist economy. You don't have to agree fully with Karl Marx, who (at least according to Leon Trotsky) regarded government, or "the state," as little more than an "executive committee of the ruling class." But he did have a point. Because while such a formulation may appear simplistic today, the New London/Pfizer case seems to typify that very government-corporate relationship. Pfizer made known its desire; the city government jumped to do its bidding; and people lost their shelter, all for a pie-in-the-sky promise of economic development that never took place.

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Estimates and projections

All the financial writers on your publication's staff have been laid off, so your editor wants you--with your zero experience in financial reporting--to prepare a story about the direction of key economic indicators over the next two years. The focus will be on corporate profits nationwide, and it is your task to come up with some reasonable estimate of how profits will fare.

And no, your article may not consist merely of dueling quotes, as New York Times columnist Paul Krugman describes them, from economists with opposing views. You have to generate your own estimate, and then, perhaps, vet it with the views of experts.

Chill. First thing to keep in mind is that estimates--or in this case projections--are notoriously shaky things. The most solidly grounded projections can be upended by unforseen events: an unexpected war (think Iraq); the vaporizing of a bubble (housing, the dot.com debacle); implosion of some of the country's leading financial institutions (Bear Sterns, Lehman Bros.); a devastating earthquake.

But however common such cataclysmic events are today, you cannot approach your story with the view that they will always take place. You have to assume that the nation's economy does contain some degree of stabilization, without which no estimates, let alone projections, can be attempted.

So here's how to attempt it: We assume that corporate profits have a certain ratio (relationship) to Gross Domestic Product. Therefore,

1) Get an official listing of corporate profits over the past few years.
2) Get an official listing of GDP over the past few years
3) Get an official projection of GDP over the next few years.
4) Divide existing profits by existing GDP over the past few years. This gives you recent annual percentages--your ratios, in other words.
5) Now note if these percentages follow a slight pattern. For example, do they decline each year? Increase each year? Go up and down?

All this is easier than it sounds. Let's start with steps one and two. Both recent corporate profits and recent GDP figures are available from the Commerce Department's Bureau of Economic Analysis. Click on this site, and go to Table 11. On the top line, you'll see that corporate profits for the past three years were:

2006: $1,608.3 billion (or more than one and a half trillion dollars).
2007: $1,541.7 billion.
2008: $1,360.4 billion.

In other words, recent profits in general (as of this posting) have declined over the past three years. No surprise there, given our deep recession. (Ignore the fact that some companies made out like bandits during the same time period.)

Now go to Table 9. You'll see that GDP was:

2006: $13,398 billion.
2007: $14,077.6 billion.
2008: $14,441.4 billion.

GDP rose slightly. (If only jobs and wages rose along with it! But stop digressing.)

Now divide each year's profits by that year's GDP. Use a calculator, or better still, a spreadsheet program like Excel. Here's what you'll find: In 2006, profits were twelve percent of GDP. In 2007, they were eleven percent. And in 2008, they were 9.4 percent.

In other words, recent profits appear to follow a slight downward pattern in relation to GDP, dropping by one to two percent of GDP each year.

You're almost done. Now you need to apply this pattern to the GDP projections, which you can get from the Congressional Budget Office. The top line of this report shows that the CBO projects GDP for 2009 at $14,163 billion; and for 2010 at $14,570 billion.

So take, say, 8.5 percent of the 2009 amount. Why? Well, it follows the pattern: it's nearly a point below the 2008 figure. (You can tinker with this percentage a bit, after you talk to an economist or two.) So you get $1,203.85 billion projected profits for 2009.

Now take, say, 7.2 percent of the 2010 GDP figure: you get $1,049.04 billion projected profits for 2010.

You now have your own projections. Are they accurate? Well, many factors affect profits, of course, and anything can happen to disrupt the pattern. But other things being equal, these projections are, indeed, reasonable assumptions.

Jobs: public transit vs. highways

With official unemployment in the United States above ten percent (considerably higher when counting underemployment and workers who have given up looking for jobs), it is good to see President Obama calling for massive investments in public energy improvements. But his recent praise of Dwight D. Eisenhower's 1950s-era promotion of the Interstate Highway System, as reported in a recent Bob Herbert column, was off the mark, especially since his speech was made before a startup solar energy company that says it will save tons of greenhouse gas emissions "which is equivalent to removing 4,500 cars from the road each year for the life of the project."

The irony here is that those 4,500 cars--and millions of others polluting our air year after year--owe much of their presence to the very same interstate highway system that Eisenhower championed. There is no question that highways, long touted as a solution to unclogging urban areas, in fact accomplish precisely the opposite, generating enormous sales of automobiles, as consumers seek to take advantage of more rapid car traveling. More highways mean more cars, not fewer.

This was noted decades ago. As one critic (Helen Leavitt, Superhighway Superhoax) wrote in 1970: "Our great urban centers have been subject to the busy concrete mixers and asphalt rollers in the guise of progress, where the ribbons of highway they create are further strangling automobile traffic, adding to the already dangerous air pollution levels and displacing the city's residents with still more cars while transportation daily becomes more difficult."

Who primarily benefits from the Interstate Highway System? As Leavitt noted, after Eisenhower made his proposal, "Capitol Hill was flooded with lobbyists representing contractors, oil, auto, real estate, trucking and concrete interests, all bent on establishing the biggest pork barrel legislation in the history of the United States."

Certainly, highway construction creates jobs. But jobs can be created by other undertakings, such as massive investments in public transportation. Thousands of employees are needed to build public rail systems; additional thousands of permanent jobs can be created to operate them, to maintain them, and not least to devise new technology for ongoing improvement.

Given the prevalence of the automobile in this country, and the fact that we take superhighways for granted, it is difficult to imagine what life in both urban and rural areas would be like if, instead of all the highways, we had efficient, safe, clean public transit, transporting thousands of people daily in comfortable high speed trains or other cleaner-energy "people movers." Difficult, but not impossible.

Think of fewer cars clogging our streets. Fewer accidents--yes, while highways are generally safer than unmended roads, fewer cars necessarily mean fewer crashes, and less road rage.

And try to think of the affordable housing that would not have been lost to highway expansion. And the rural areas that would have remained bucolic. And the large urban areas that would not strangle themselves on endless traffic jams and greenhouse emissions. In fact, when the occasional highway is removed, as the Preservation Institute notes, life becomes far more pleasant.

Jobs? Obama, and Herbert as well, are right to stress the central importance of job creation today. But we can do that without glorifying a boondoggle that has worsened our quality of life.

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Misleading percentages

When is a fact less than a fact?

When the fact is a percentage of a very small absolute number.

For example, I can state with near certainty that I gave more to philanthropy last year than most other Americans. Indeed, while individuals in general decreased their giving by 2.7 percent (even steeper after inflation), according to the Giving USA Foundation, I increased my giving by 100 percent!

What I'm not revealing, of course, is that my altruism amounted to precisely one dollar in 2007, and to two dollars the next year--a one hundred percent growth rate.

Okay, this is an extreme hypothetical example, but real life examples abound, especially in political campaign literature. A critique of the Michael Bloomberg campaign for Mayor in New York City, for example, cites US Department of Education figures showing declines in violent crime at certain Impact Schools during Bloomberg's reign "as large as 59 percent for major crime...and 33 percent for all crime...." But it adds immediately that "the numbers on which these percentages are based are so low that even very small numerical deceases create large percentage changes."

That's the key point. In one NYC high school, the critique notes, violent crime dropped forty-one percent between the 2004-5 to 2005-6 school years. A phenomenal decline? Not when you realize that the number of incidents in the earlier period was only seventeen, and in the later period ten. To be sure, any decline in violence is good news, but the percentages cited present an unwarranted picture of astounding success by the Administration.

As noted in one of my favorite books, "How to Lie With Statistics" by Darrell Huff (1954), "Percentages offer a fertile field for confusion. And like the ever-impressive decimal they can lend an aura of precision to the inexact."

For journalists covering political campaigns--or anything else--it's good to keep in mind Huff's admonition: "Any percentage based on a small number of cases is likely to be misleading. It is more informative to give the figure itself." (Emphasis added)
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Full disclosure: The critique cited above was prepared by the former leader of a tenants organization in which I was an active member.

Citing imports to gauge US trends

Unless they work for Goldman Sachs or JP Morgan, even the rich are having problems these days. In fact, that's the theme of the story your editor assigns to you. Give examples, s/he says, of how the rich aren't buying as many luxury products as they once did.

You select jewelry (the non-costume kind).

Where to start? Typically, you call Tiffany's, and ask how business is doing. Or, you go to Tiffany's website, or to the website of the Securities and Exchange Commission, and get the company's annual report (10-K, in governmentese). From that, you compare this year's sales with last year's, and draw the appropriate conclusion.

But Tiffany's, no matter how prominent a luxury retailer, is still only one. There are many others, and most of them are privately held, which means they aren't likely to release their revenue or profit and loss figures.

So here's another approach: find out how the countries that export the most jewelry to the United States have fared in 2009 versus the year before.

Start with one of the government units that tracks imports and exports. It's the International Trade Administration. (There are others, but don't bother about them now.) Then click on "Consumer Goods."

On the left, you'll see a list of industries: click on "Jewelry."

When the new window opens, look for "Current Imports," and under that "Jewelry (except costume)." Clicking there yields a page of how all the major exporters--India, China, Thailand, Italy, Hong Kong, France, etc.--are doing. Glancing at the very last column on the right, you can see that all of them have sharply lowered their exports of jewelry to these shores, at least over the first six months (from January through June). India is down more than twenty-eight percent, China more than thirty-seven percent, Italy almost forty-two percent.

So this column contains the most important figures for your story. If these countries are shipping so much less, it can mean only one thing: the rich (and likely the upper levels of the middle class, which is also a vast market for jewelry) simply are not buying as much as they used to.

That's a good statistical grounding for your report.

Bigotry resurgent

Three news items of recent days belie the oft-touted boast that, in light of Barack Obama's election to the Presidency, the United States is now largely "post-racial." Indeed, Obama himself has said as much. Further, with all the gains made by the gay and lesbian rights movement, we are said to be done with bias in that arena. And for a long time now, we've certainly been religiously tolerant.

Really. On October 15, a white justice of the peace in Louisiana denied a marriage license to an interracial couple, arguing that his sole concern is for the possible offspring of such a union, as he is convinced that neither white nor black society will readily accept them. Justice Keith Bardwell is worried that the hypothetically future kids will be treated, alas, unfairly. Unbelievably, he reportedly told the Associated Press, ''I'm not a racist. I just don't believe in mixing the races that way.'' You can't make this stuff up. (Note: Bardwell resigned in November.)

Also that day, 53 House Republicans have demanded, in a petition to Obama, that he oust Kevin Jennings from his Administration position promoting school safety "because of his career as an advocate of teaching tolerance of homosexuality," according to a report in the New York Times. After all, they continued, the message of tolerance--which they label a "pro-homosexual agenda"--runs counter to the "values that many parents desire to instill in their children." Seems that to some parents, and to lots of Congresspeople, tolerance is simply intolerable.

And finally, another four House Republicans are warning that Muslim "terrorists" are infiltrating U.S. institutions, including Congress, by getting positions as interns. And no doubt by selling Halal food to unsuspecting Americans. And by refusing to drink alcohol.

That sound you hear is coming from the late Wisconsin Senator Joseph McCarthy, cheering and applauding from his seat of honor in hell.

Subjectively objective

Your story on how well or poorly American families fared in 2008 compared with 2007 is due shortly. You've completed all your interviews with selected families, and with two respected professors of economics. Income, not surprisingly, is the first issue you tackle. Here's where your hard facts come in. . .or so you think.

For your most important hard fact, you will cite data on income. But reviewing your notes, you see that one professor said families increased their income by nearly a thousand dollars during the year, while the other professor said household income declined during that time. Not only that, but the first professor said that 2008 income was over $67,000 per family, while the second maintained that, no, it was only around $52,000.

Both professors cited the same source: the U.S. Census Bureau.

Neither professor is wrong. The Bureau, rightly regarded as the gold standard in data collection on income and population, is also (in)famous for its blizzard of statistical reports, so many of which appear to present conflicting data, on the same subjects, for the same periods of time.

What does this mean to you, the journalist? It means you have to visit the Bureau to find the "correct" figure yourself. Not a daunting task, but it is essential that you pay close attention to the definitions the Bureau uses. For example, it makes a distinction between families and households. To confuse matters more, it has a separate definition for family group. And another for family households.

So in one report, Median Household Income in the Past 12 Months by State and Puerto Rico: 2007 and 2008, you will see that the estimate of median household income in 2008 was just as the second professor noted: $52,029, around six hundred dollars less than in the year before. But in another report, Median Income for 4-Person Families, by State, you'll find 2008 median income for this particular family composition just as the first professor said: $67,019, or some nine hundred dollars more than the previous year.

Further, one report uses fiscal years, the other calendar years.

There's really no rule of thumb regarding which figures to use. Most likely, your decision will reflect whether you want to show that we're worse off now, or better off. In other words, no matter how "objective" you think you are, to some extent the hard facts you choose to cite will reflect your subjective view. That's inevitable. If you wish to be honest, alert your readers to the differences between households and families (essentially, households may include people who are not related to each other). Full definitions are available at the Census Bureau site.

In the end, to maintain your integrity as a journalist, don't wave the flag of "objectivity." That term is a lot murkier than it appears.