Oct 2, 2009

What Philip didn't tell you (the DQ Index©)

The two most recent articles on the Southeast Texas Political Review are excellent examples of Philip R. Klein's ineptitude concerning financial and statistical data:
  • Specious analysis of Jefferson County budgets
  • Misconstrued speculation on the unemployment rate for Jefferson County
Philip presents a biased and uninformed comparison between the 2000 and 2009 Jefferson County budgets
So let's do the math...
Unfortunately, Philip didn't provide all of the numbers, such as property appreciation, the inflation rate, or the effective tax rate!  Nor did he provide the numbers upon which his calculations were based! Without the numbers that Klein omitted, the relevance in data that's almost a decade old is questionable.

Most math teachers advise students to first understand the problem before solving for X. Klein's failure to grasp the problem is further corroborated by his definition of "tax revenue" for the county:
Property tax, sales tax, alcoholic beverage tax and HOT Tax (those that come to visit us pay a Hotel Occupancy Tax). The tax revenue for property is set by the Jefferson County Appraisal District who is independent of the county (wink, wink).
Taxes on alcoholic beverages are collected by the state, not the county according to Title 5, Chapter 201 of the Texas State Code (wink, wink). 

Nor does the Jefferson County Appraisal District "set the tax revenue" as Klein claims. Rather, the JCAD determines the value of property upon which tax revenue is derived (wink, wink). This is an important distinction, but apparently too subtle for Klein's simplistic understanding.

Philip offers this primary conclusion based upon his mangled math:
Well - here is a shocker - how much in increase has the county taken from all of you and business since the year 2000? How about a whopping 71.5% increase in taxation?
Let's examine some of the numbers that PRK failed to include in his analysis. Here is the difference in the effective tax rate between 2000 and 2009:

Year
2000
2009
Percentage difference
Rate
0.365/$100
0.365/$100
0.0%

How much has property in Jefferson County appreciated in the past 9 years?

Year
2000
2009
Percentage
change

Net Taxables
$11,866,488,070
$21,138,044.986
78.13%

While the effective tax rate has remained the same, the value of property in Jefferson County has appreciated by 78 percent. As property value appreciates, equity and taxable wealth by citizens increases. Philip probably missed those classes in college. I'm sure he missed his English and Composition classes.

Nor does Philip R. Klein address the change in purchasing power and inflation, which has increased by 27.86 percent.  So, I've developed my own economic index to describe purchasing power parity when analyzing Philip's fuzzy math:

The DQ Index©

Simply put, the DQ Index© is a comparison between the cost of a Dairy Queen Hunger Buster in 2000 and 2009; it also reflects other influences on purchasing power, such as individual sector increases in production and transportation costs.

Since the DQ Index© is a comparison of purchasing power within the same geographical region in the same monetary unit extrapolated over time, it avoids the geographical and cultural bias of the Big Mac Index used to measure the purchasing power parity of currencies in real-time:

The DQ Index©
2000
2009
Percentage
Change
$1.89
$2.79
47.6%
Source: Dairy Queen, Nederland, TX

Between 2000 and 2009, inflation increased by 27.86 and purchasing parity increased by 47.6 percent, according to the DQ Index©. Furthermore, as of 2009, the cost of living in Jefferson County is 24.48 percent lower than the national average.

Philip shifted the context of his original figure of 71 percent:
Here are some fun numbers - total tax intake has increased since the year 2000 from $56 million (and change) to $104 million. In the year 2000 when they took $56 million from us all the unemployment rate was at 6.6%. Hmmm.....we wonder what it is now? Oh...wait....today it is 9.2% as of the date of the report - however - TWC tells us it is topping way over 10% not adding in those that have simply given up.
Klein's inductive fallacy is obvious: it's a faulty comparison. The year 2000 marked the last year of the bull economy in the 20th century. Here's a better comparison of the historical unemployment rate in Jefferson County:
  • 2000: 6.6%
  • 2001: 7.2%
  • 2002: 7.8%
  • 2003: 8.6%
  • 2004: 8.2%
  • 2005: 7.8%
  • 2006: 6.1%
  • 2007: 5.5%
  • 2008: 6.8%
There is no annual rate for the current year until after December 31, 2009. However, one can clearly see the increase in unemployment during the recessionary years of 2001 through 2004. This has been documented by Jim Van Geffen. After 2004, the economy recovered during the second Bush term and unemployment dropped to a low of 5.5 percent in 2007.

Only Philip R. Klein would claim that the Jefferson County Commissioners have control over the U.S. economy.

Philip miquoted his one attributed citation, an article from the Bayou:
Well hello raises. As the Bayou told us this morning - since the Team Walker has been in place the commissioners have awarded elected officials with a 24% raise over the past few years!
However, the Bayou provided context for their figure by comparing salaries with five other counties of similar sizes:
Brazoria: $85,894
Galveston: $86,207
Lubbock: $55,840
Montgomery: $129,573
Nueces: $69,880
Avg: $85,478
Jeff Co.: $83,961
Bottom line: Philip's fuzzy math and misrepresentation of the facts do not support his ultimate conclusion:
All is good in the most corrupt county in Texas! Welcome to Jefferson County Texas!
While the salaries of public officials may well deserve scrutiny, Philip R. Klein's facetious analysis in evidence of nothing more than his ignorance of the real issues.

4 comments :

Anonymous said...

The DQ Index!! LOVE IT!!!

Anonymous said...

ROTFLOL...that makes a hell of lot more sense than Klein!

Anonymous said...

Yes, Phil, we know: a miasma of corruption spreading from the Jefferson County, Texas courthouse caused a worldwide recession. Now takes your meds and go to bed. The doctor will see you in the morning.

Anonymous said...

"Oh My God! Why don't we hear about this from Mr. Klein? I just moved here from North Texas and my girlfriend turned me on to your site. I wanted to simply thank you for being a moderate voice of the people. My husband and I read your words on Mr. Klein's articles and were shocked. I wrote a letter to Philip Klein this morning for his Reader Mail page. I hope he learns a little from you. Keep up the good work!"