Writing a Critique Through the Lens of Behavioral Economics

The persuasive essay asks, Is America Becoming a Third World Country? The author sites several reasons to support their views that America is indeed losing its status as a world leader and fading to mediocracy. The key reasons behind this belief include several economic and social demographics that the author believes have deteriorated in recent years (Life Standards in America, 2016). The discussion in this essay will address the emotional triggers that may be aroused when reading the article and the credibility of the analysis used in the final conclusions.

Citizens of the United States of America will adhere to the notion of “The American Dream” narrative. Certainly, many in this country will credit the personal narrative “rags-to-riches” to the many opportunities that this country has afforded them. This persuasive essay runs the risk of disrupting the American Dream narrative (Lakoff, 2009). This may cause, as it did in my case, a defensive posture deeming this persuasive essay as unpatriotic. The author additionally runs the risk of losing credibility with those that identify with the American Dream narrative. A reader of the persuasive essay could succumb to the “halo-effect” in which the disruptive narrative as a first impression would cause System 1 thinking to draw wide ranging opinions about the author (Kahneman, 2011). As these emotions start to form in the very early stages of reading the authors argument, System 2 thinking starts working on ways to debunk the general thesis of the persuasive argument.

There are serval flaws in the way the data was analyzed and presented, in my view. The first argument for the deterioration of the American Dream was with the use of poverty statistics, i.e., 43.9 million U.S. citizens are officially poor. This is a weak argument in that it does not consider the overall population of the country for cross-comparative purposes. While 43.9 million citizens considered poor may be high for the United States with a population of 330 million people, 43.9 million citizens labeled as poor in a country of only 100 million people is far worse. The appropriate measure in this instance would be wealth per capita. Using the average wealth per capita metric, one would find the United States in the top five most prosperous nations relative to all nations (Global wealth report, n.d.). Additionally, using the median wealth per capita, to adjust for the dispersion of wealth within countries, the United States ranks in the top 20 of all nations (Global wealth report, n.d.).

The article also states that income inequality is another function of the country’s deterioration. While it is true that the gap between wages for the top 1% of earners and the remaining 99% has widened over the years, looking at that gap just based on wages in misleading. Income inequality as defined by the Congressional Budget Office draw their conclusions from taxable income as reported by the IRS. What this analysis fails to consider are the increases in non-cash benefits bestowed on the 99%. For one, the dramatic rise in health insurance has been prevalent over the years and much of this increased expenditure is absorbed by employers and government (Cannon, 2012). When looking at the Quality of Life Index, that considers purchasing power, pollution, home availability, cost of living, safety, and health care, the United States Ranks 15th in the world (Quality of Life, n.d.).

Lastly, the author makes a point that 4.4 trillion dollars of our nation’s debt is held by foreign governments (approximately 31% at the time the article was written), compared to just 13.5 billion U.S. dollars for Ecuador and Iran. The author fails to include the total debt for these countries. Total sovereign debt in Ecuador was 43 billion U.S. dollars so their debt held by foreign countries was 31%, identical to the U.S (Ecuador National Debt, 2019). As far an Iran is concerned, financial sanctions towards this oppressive nation forbids many nations from purchasing Iranian sovereign debt, resulting in an illiquid market (U.S. Department of the Treasury, 2020). This is a comparison that cannot be made logically.

In summary, the persuasive essay is a disruptor of the American Dream narrative and may be impulsively deemed unpatriotic through System 1 thinking. The way the statistics were presented could possibly lead to neglect in base-rate information and a failure of Bayesian reasoning (Kahneman, 2011). Immediate conclusions and assumptions are drawn that will lead to other assumptions that may or may not be true as per the Halo-effect. This will entice System 2 thinking to immediately start researching to debunk the theory set forth and discredit the author. While respecting and listening to the authors point of view, my conclusion is that the facts from which the conclusion is drawn are flawed and I would humbly disagree with the overall thesis.

Joseph S. Kalinowski, CFA

References

Cannon, M. F. (2012, January 03). Is Income Inequality Increasing? Only If You Don't Count Health Benefits. Retrieved September 12, 2020, from https://www.cato.org/blog/income-inequality-increasing-only-you-dont-count-health-benefits?queryID=cbffd0255e1a8c7c5f3428e8fb1b2f3e

Ecuador National Debt 2018. (2019, October 16). Retrieved September 12, 2020, from https://countryeconomy.com/national-debt/ecuador

Global wealth report. (n.d.). Retrieved September 12, 2020, from https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html

Kahneman, D. (2011). Thinking, Fast and Slow. New York, NY: Farrar, Straus and Giroux

Lakoff, G. (2009). The Political Mind: A Cognitive Scientist's Guide to Your Brain and Its Politics. New York, NY: Penguin Books.

Life Standards in America: Free Persuasive Essay Sample. (2016, October 24). Retrieved September 12, 2020, from https://academichelp.net/samples/academics/essays/persuasive/america-third-world.html

Quality of Life. (n.d.). Retrieved September 12, 2020, from https://www.numbeo.com/quality-of-life/rankings_by_country.jsp

U.S. Department of the Treasury. (2020, August 14). Retrieved September 12, 2020, from https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/iran-sanctions