Muck and Mystery
   Loitering With Intent
blog - at - crumbtrail.org
April 03, 2006
Phun With Numbers

A pair of posts by Russell Roberts at Cafe Hayek highlight one of the difficulties of public debates about important issues: figures lie and liars figure. In The impact of immigration Roberts takes apart an NYT article.

There's nothing in the graphic that questions whether these numbers are accurate. They're presented as facts ("Reduced Wages") with no disclaimers about the statistical techniques or assumptions that went into them. Borjas is quoted in the article but no skeptic is quoted about whether these estimates are reliable. The numbers are about the impact of legal and illegal immigrants even though the article is about illegals, a smaller group. And there's nothing about the impact on the immigrants themselves from coming to America relative to the country they've left behind.

But what's really misleading and bizarre about the chart is that there's no visual benchmark for these decreases. Your eye can see that 5.0 is almost twice 3.1. But is 5% a big decrease or a small one? The way you'd show the size would be to have a bar chart of what average wages are for Asians, Whites, Blacks and Hispanics and then show the average wages that would allegedly exist if there were no immigration. If the data were presented in this way, you'd see how small or large the impact is.

Ironically, just below this chart in the Times article is another chart that does exactly what could have been done with the wages chart. This second chart shows how little the impact on food prices would be if didn't allow immigration and we had to pick farm products with native-born labor. Farm wages would go up and so would prices. But the impact on food prices would be small, the Times graphic points out, only about two or three cents on the dollar: . . .

What a dishonest article. The Times should be ashamed.

The Times knows no shame, it's OK to lie to the infidel, that's the dark-sider ethos.

Even more interesting is Roberts' brief remarks about the recent Guardian article which discussed Hugo Chávez's attempt to lock-in $50 oil if, and only if, Venezuela's huge reserves of extra heavy crude are counted. They have 90% of the world's known reserves of this difficult substance which is only of value when oil prices are above $40 per barrel. Roberts' remark is a pointer to an earlier post:

Never mind that these kinds of books that are meant to frighten the citizenry are also meant to increase the demand for the services of the author. Even more disturbing is that the worriers seem oblivious to history. Don't they know that "experts" have been warning us of the peril of running out of oil for decades? Don't they know that technology and prices have solved the alleged problems with any central leadership or design?

I prefer prices to "real leadership."

Why is Venezuelan extra heavy crude not currently counted as part of world oil reserves? It seems that a key reason is that if they were counted then Venezuela would have even more reserves than Saudi Arabia and be entitled to pump and sell more oil, would get an increased OPEC cartel quota and have more world influence.

What interests me here is that like in the story about immigrant wages the numbers are massaged and used selectively for strategic advantage, and the ordinary person not following the detailed debate is deceived. Contrary to claims, food would not be noticeably more expensive without cheaper immigrant labor, and "peak oil" may be significantly farther away than heavily advertised by those in the crisis business.

It is almost axiomatic that the heavily promoted crises of any day are hype bubbles that will soon deflate. There are real troubles and they will bite us, but they are almost never the ones that take a star turn on the red carpet for adoring fans. It gripes me that this is so because it is a bit hard for me to get good information here in my isolated mountain home.

Bless the net.

Posted by back40 at 03:44 PM | Media

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Comments

The Venezuelan President Hugo Chávez seems to be considering pegging the price of oil at $50 a barrel according to the UK’s Guardian newspaper. Why?

Posted by: Jason Spalding at April 3, 2006 08:32 PM

Hi Jason,

The article explains that, though it is speculation in the end. The thought is that the attraction for Venezuela is that its XHcrude, which is currently not counted as proven reserves, would be counted, thus making them the country with the most reserves, and so have a louder voice in the cartel and an increased pumping quota.

Opinions differ about whether this is a smart move or not, and it seems to me that it would be foolish to expect Venezuela, especially under Chávez, to honor any deal for long.

The interesting bit for me was just the huge amount of oil, even if it is XHcrude and expensive to refine, and that it is dropped from accounts of world reserves. That seems to give a false picture of things. It's a mudge about the manipulation of numbers rather than oil politics.

Posted by: back40 at April 3, 2006 08:56 PM
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