Thursday, 6 November 2008

Interesting use of statistics

I was listening to a podcast from the US tonight and it brought together some interesting statistics on immigration and poverty. It appears that what you might call the "underlying" poverty rate has been declining since 2000, but the constant arrival of new (and poor) illegal immigrants keeps topping up the number of people living in poverty.

I will use some dummy numbers to illustrate the point.

Let's say you have 10 million people living in poverty in 2000. By 2008, 5 million of them have worked their way up the income scale (the US is the land of opportunity after all), so you'd expect the poverty rate to have halved.

But it hasn't - it has stubornly remained at around 10 million.

Now your initial thought might be that just as 5 million people got a bit wealthier, maybe the evil capitalist system dumped 5 million more below the poverty line. Some greedy bastards closed some factories etc etc and put people out of work and so on, which is why we still have 10 million people living in poverty.

That's how a lefty would explain it, since it fits their world view regarding the evils of capitalism and the need for governments to provide all manner of safety nets.

Back in the real world, what's actually happened is that 5 million poor people have arrived from south of the border.

Like I said, I made up the figures to make my point, because I couldn't remember the exact numbers - but the real numbers tell the same story. The US economy has been creating enough wealth each year to drag millions out of poverty, but just as quickly as it does so, more poor people move in to fill the vaccuum.

Australia runs a very different kind of immigration program, and we have nothing like the illegal immigration problem that the US faces, but I'd be interested to see whether we have something similar going on here. Of those refugees and asylum seekers that we let in, how many quickly end up as a statistic "below the poverty line?"

One interesting factoid about the way the US calculates poverty is that it does not include any government welfare programs. Let's say the poverty line is $10,000, and you earn $8,000 from various non-government sources. Officially, you are poor. But if the government gives you another $5,000 in benefits, thus taking your total earnings to $13,000, you are still officially classed as being below the poverty line. That's what I would refer to as an interesting use of statistics.

The reason these numbers were brought up is poverty statistics are always used by people with soft heads (like ACOSS in Australia) to justify calls for ever increasing buckets of cash being thrown at "the poor", whilst also generating howls of confected outrage any time any form of tax cut is proposed.

I can now see why conservatives in the US get so angry when illegal immigration is raised as a topic. If it wasn't for illegal immigration, poverty would decline rapidly in the US. That would allow welfare programs to be cut back, and that would flow through to tax reductions. However, what's happening is that illegal immigration is ensuring that the absolute number in poverty stays the same, thus justifying the continuation of welfare programs, and allows the left to screech loudly (and build papier mache heads) every time a tax cut is floated.

The other fascinating number is that out of 47 million people in the US without health care plans, 9 million are illegal immigrants. Obama has of course promised to give all 47 million health cover, whether they are legal or not. Not even Medicare does that in Australia.

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