Use sleight of hand to persuade your propaganda target

Canada Incomes

TL;DR Summary

There is a whopper error in this poster. Can you spot it? Let’s rewrite the first line:

US $7.25 Minimum Wage 49.95 Danish Krone

Written that way, you would convert one currency in to the other, right? Canadian currency, like the US, is called a “dollar”. But the US dollar and the Canadian dollar are not equivalent. This propaganda poster uses this sleight of hand magic trick to persuade – most people see the $7.25 and the $10.45 and think they are making a meaningful comparison! [1]

  • This technique – sleight-of-hand and a false comparison – is effective in propaganda, just as a magician’s use of distraction is used to hide how the trick is done.

The statement should read:

     US $7.25 Minimum Wage Canadian $10.45

As of January 31, 2016, one Canadian dollar is worth 71 US cents. Thus C$10.45 is US $7.46 so the poster now reads:

     US $7.25 Minimum Wage US equivalent $7.46

But there are several more errors in this chart than just this …

  1. Canada does not have a national minimum wage. The C$10.48 figure is the average of the minimum wage values set by each province. Numerous U.S. states also set their own minimum wage and the comparable average of US states is US $8.00 which is more than the Canadian equivalent when converted to a common currency.
  2. Another way to compare currency values is the purchasing power parity calculation which tries to take into account the cost of living in each country. For example, a simple metric is to compare the price of a Big Mac hamburger in each country – if it costs US $7.25 for a Big Mac and it costs C$10.48 for a Big Mac – we could say that a Big Mac costs the same in terms of hourly wage. Its more complex than that, but this conveys the idea. Using a PPP calculator, the calculated PPP value for C$10.48 is about US$8.00. In other words, no difference in the minimum wage.
  3. In the US today, a majority of government workers are unionized and very few private sector workers are unionized. In Canada, many more people work for government, which is also unionized like in the U.S. This accounts for a significant part of the difference in unionization rates: Canada’s government work force is just way bigger.
  4. Taxes are more similar than I had expected, although Canada appears to be slightly higher. The big difference is in terms of capital gains taxes. In the US, capital gains are a single flat rate tax, regardless of income. In Canada, you pay regular income tax on half of your capital gains.  That means capital gains have a progressive tax structure unlike the U.S. However, once you calculate out how this works in practice, capital gains taxes are taxed at a lower tax rate if you earn less money (total), and at a higher rate as you earn more money. But due to the maximum tax rate in Canada, ultimately the capital gains tax rate is close to the fixed rate in the U.S.
  5. The $4316 figure for health costs is near random. The figure is the average employee contribution to a company’s employer provided health insurance plan, in the U.S. The figure comes from a 2012 research report from the Kaiser Family Foundation (which researches health topics). This figure is then compared, in the chart, to the price for health care at medical clinics – which is zero at point of service in Canada. If we compare costs using comparable figures, we should probably compare US $4316 to C$3870, or the estimated per person tax costs in Canada in 2012. Total Canadian health care spending is about half that in the U.S.
  6. The last item on the poster is true. Canada has one of the financially strongest banking systems in the world.

APOLOGY: When I originally wrote this post, I cited and linked to underlying references at government web sites. However, in transferring this post to this blog, I inadvertently lost the links. I have chosen to edit this post without the original links as it is time consuming to do the research again.

Footnote

[1] This poster was shared into my FB news feed by many smart people who clicked “Share” before thinking. The “sleight of hand” magic trick of writing $7.25 to $10.45 was very effective – and sleazy – way to promote this message. This poster had been shared many tens of thousands of times on Facebook even though it has made a false comparison. The creator of this chart was aware of currency translation issues – in a similar chart they created about Denmark, they did convert the Danish Krone to US $s. Thus it seems that this error was deliberate, to confuse the target of the poster.

Text for Search Indexing

How did Canada surpass the US to have the world’s richest middle class (in after tax dollars)?

Minimum Wage

Unionization Rate

Health costs

Bank Regulations

Share if we should follow Canada’s lead!

 

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