In his classic book Taking the Risk Out of Democracy, Alex Carey argued that corporate propaganda shapes public political opinion on two different levels: grassroots propaganda aimed at the masses, and "treetops" propaganda aimed at elites and intellectuals. In contrast to grassroots propaganda like, for example, the recent Chamber of Commerce national advocacy campaign,1 "'Treetops' propaganda is not directed at the person on the street," Carey wrote. "It is directed at influencing a select group of influential people: policymakers in parliament and the civil service, newspaper editors and reporters, economics commentators on TV and radio." In the words of one former director of a British neoliberal think tank, it helps to use "intellectual artillery to soften up the enemy's entrenched strong points," so that eventually the "ground troops can advance."2

The purpose of this post is to refute three falsehoods perpetuated by two neoliberal think tanks, the Heritage Foundation and the American Enterprise Institute, in their steady campaign of "treetops" propaganda. These falsehoods have in my experience either been a source of confusion for progressives or have been cited by moneyed organizations like insurance companies to help discredit policies that might threaten their profits. A longer version of this post is available on ZBlogs.

The American Enterprise Institute (AEI) was founded in 1938, partly by executives from corporations such as Eli Lilly, General Mills, Bristol-Myers, Chemical Bank, and Chrysler who were disgruntled with the effects that the New Deal was having on society. Its board is today made up almost entirely of executives from major corporations, and it's staffed mainly by intellectuals and former government officials. Growing rapidly between 1970 and 1980, when its revenue expanded from less than $1 million with a staff of ten to about $8 million with a staff of 125, it played an important role in ushering in the current era of Reaganist, supply side, neoliberal economics.3 It is currently ranked sixth on a list of America's most influential think tanks, the second highest of "partisan" think tanks, just behind the Heritage Foundation.4

The Heritage Foundation was founded in 1973 with help from beer magnate John Coors. It was instrumental in creating the Contract with America that helped Republicans win a 1994 majority in Congress. In partnership with the Wall Street Journal, it publishes the annual Index of Economic Freedom. The Index notes that this year, "Regrettably, populist attacks on the free market, fueled by the economic slowdown and the political temptation of quick interventionist remedies, have gained momentum." It is currently ranked fifth on a list of America's most influential think tanks,  the highest ranked of those that are considered "partisan."5,6

Falsehood #1. The US does not spend an excessive proportion of its GDP per capita on health care.7

This statement is so clearly untrue that it doesn't seem to be quoted much even by other right wing sources, but it's still important because it demonstrates a total lack of intellectual integrity by the AEI authors who made the claim.

To understand how they rationalize this, let's start with another analysis of US health spending by Princeton economist Uwe Reinhardt published on the New York Times Economix blog.8 Here's the graph from that website.

Reinhardt explains:

You'll notice that there is enormous variation in health spending per capita in different countries within the O.E.C.D. But the graph also indicates that there exists a very strong relationship between the G.D.P. per capita of these countries (roughly a measure of ability to pay) and per-capita health spending. The dark line in the graph is a so-called regression equation (whose precise mathematical form is shown in the upper left corner).

That line tells us something important about the relationship between a country's wealth and its health care spending.

An additional insight from the graph, however, is that even after adjustment for differences in G.D.P. per capita, the United States in 2006 spent $1,895 more on health care than would have been predicted after such an adjustment. If G.D.P. per capita were the only factor driving the difference between United States health spending and that of other nations, the United States would be expected to have spent an average of only $4,819 per capita on health care rather than the $6,714 it actually spent.

Now let's compare the American Enterprise Institute source. After listing a similar graph to Reinhardt's, they then explain that it is irrelevant because the U.S. "residual" is sensitive to "model specification." In other words, you can just do this:

But as other bloggers have noted,9 they give no justification for why you would do that. They do state the US is an extreme value, because it's richer than almost all other countries, but that difference pales in comparison between differences between many of the other countries in the model (in other words, US GDP isn't an "outlier" in a technical statistical sense). And as Reinhardt states, the more intuitive model is a very good fit:

Just knowing the G.D.P. per capita of nations helps us explain about 86 percent of the variation in how much different countries pay for health care for the average person.

Finally, there's also the small matter that if we extend the above AEI model out another twenty-five years and assume a reasonable rate of economic growth, it eats up literally the entire US economy. But doing the slightest sanity checking is evidently uninteresting to these authors.

Falsehood #2. If you adjust US life expectancy for violent deaths, it becomes #1 in the world.

This is simply a lie. Unlike the falsehood above, though, it's not completely obvious that it's wrong, and so it's been used extremely successfully to muddy the debate.

What AEI did was create a model that predicted life expectancy from two factors: GDP per capita and violent deaths. But despite that the US ranks #1 in this model if you remove sources of violent death, that doesn't mean anything because the other factor, GDP per capita, totally fails to correctly predict US life expectancy. Putting it simply: the model's wrong, so any conclusions drawn from it are also.10

The OECD explains it thus:

It has been claimed (Ohsfeldt and Scheider, 2006) that adjusting for the higher death rate from accident or injury in the United States over 1980-99 than the OECD average would increase US life expectancy at birth from 18th out of 28 OECD countries to the highest. In fact, what the panel regression estimated by these authors shows is that predicted life expectancy at birth based on US GDP per capita and OECD average death rates from these causees is the highest in the OECD. The adjustment for the gap in injury death rates between the United States and the OECD average alone only increases life expectancy at birth marginally, from 19th among 28 countries on average over 1980-99 to 17th. Hence, the high ranking of adjusted life expectancy at birth mainly reflects high US GDP per capita, not the effects of unusually high death rates from accident or injury.

It took about a year for this study to be refuted after it was published, finally prompting the authors to divulge to the Wall Street Journal that they were "not trying to say that these are the precisely correct life-expectancy estimates. We're just trying to show that there are other factors that affect life-expectancy-at-birth estimates that people quote all the time."11

What is really more interesting, though, than the study itself is the vast extent to which this keeps being repeated in the (supposedly more democratic) blogosphere because people are just unaware of the falsity. For example, when Betsy McCaughey cited these statistics on the Daily Show, most people even on Democratic blogs like Daily Kos and Firedoglake did not realize that this study had already been definitively refuted, though of course they were very skeptical of McCaughey in general. On Daily Kos not one post mentioned it at the time, though of course it's possible that people were distracted by McCaughey's claims of "death panels." But on Firedoglake we still have people wondering about this in blog posts--and no one pointing out it's already been refuted--as of a few weeks ago.12 Meanwhile a July post on the "slightly left of center" blog Angry Bear cited this study as "casting serious doubt" on the significance of the life expectancy difference, with no refutations in the first few pages of comments.13

Senators like John Ensign have also cited these statistics in Congress. Meanwhile Amanda Terkel, a Deputy Research Director of the Center for American Progress, doesn't realize in her Think Progress blog response to Ensign that it's all a complete lie despite being skeptical in general.14 And don't even mention the right wing blogs!

What seems to be happening here is that the traditional media has mostly ignored the fact that these figures are false, leaving amateur bloggers to wander about hopelessly in a swamp of misinformation. If the media was more decent, they would call these people out vigorously as liars, not write, say, one Wall Street Journal blog post and then forget about it. (The post cited above concludes ambiguously, "What do you think? Should certain deaths be excluded from life expectancy? Is it a solid basis for comparing health systems? Please let me know in the comments.")  

In an effort to promote Z Magazine, ZNet, and ZBlogs, I have made a longer version of this post (including falsehood #3) available exclusively on ZBlogs. Z Magazine is currently in dire financial straits and desperately needs support. It had to reduce the size of the October issue due to lack of funds and reportedly may fold up as soon as January 2010 if donors don't help. Given its extremely valuable perspective and twenty year history, this would be a tragedy. Also, for those bloggers of explicitly leftist persuasions, ZBlogs is one of a very few blogs that is too--so you may want to consider becoming a Sustainer and posting there.