My jaw dropped when I heard this listening to Question Time yesterday:
Hon Trevor Mallard: Does he understand that real average wages go up when high-income earners get massive tax cuts-$1,000 a week, in his case, and low-income workers lose their jobs?
Hon Bill English: No, I do not understand that, because it is not true.
Does English really not understand this, or does he just not want to acknowledge the truth?
The points that Mallard rises are undeniably true and pretty basic stuff. Of course giving tax cuts to the rich while the poor are losing their jobs means the average wage goes up even though most are no better off and some are worse off.
English must know this but doesn’t want to admit it because his ludicrous claim that Kiwis are better off despite 3 years of recession or near recession and rapidly rising prices relies on using the average after-tax full-time wage as his measure of Kiwi incomes. When you look at broader measures like the median household income, which captures all income, not just that of full-time workers, you see that incomes have clearly fallen. Which is what you would expect given the state of the economy.
Honestly, who feels 10% better off than 3 years ago? Very few people I would suggest, but English uses tricky statistics to avoid reality in favour of spin.
I remember my maths teacher in 3rd form explaining to us the different limitations of using averages (ie means), medians, and modes.
Two of the limitations of averages are relevant.
Our teacher had 10 of us line up at the front of the class and measured our heights. From that she calculated an average.
Then, she got the tallest boy to stand on a chair and measured his height again. He was now 50cm higher. The average of the ten kids went up 5cm. But nearly all of were the same height.
That was the first lesson: average does not mean typical, it can be influenced by movements in outliers.
Next, the teacher told the shortest 2 kids to sit down. The average height of the standing kids rose even though none of the heights of those remaining standing had changed.
That was the second lesson: a change in the composition of your population can distort the average even though the values of the individuals within the population haven’t changed.
Pretty simple stuff.
Does English need to go back to High School?
– Bright Red