How economic data can misrepresent economic health

I just wanted to do a quick video to demonstrate how economic data can be used to manipulate and to misrepresent the actual economic situation in a country. I'll use Malaysia as an example. The World Bank has recently said that Malaysia is almost at the level of being a high income country, and they're using what's called gross national income per capita to validate that claim about Malaysia. I mean, we hope that it would be true, certainly. But what gross national income per capita means is that they're taking the entire income of the country and then basically dividing that among the population size as if the national income is evenly distributed among the people.

Of course, we know it is not. In order for a country to qualify as a high income country, the income has to be around $12,000, equivalent of $12,000 per month. Okay. In Malaysia, around the top 10% of people make that much money or more. The top 20% of people in Malaysia, the t 20, are earning roughly half of the entire national income.

And the top 10% of that 20% are responsible for around 90% of that half. So in other words, the overwhelming majority of the national income is actually being made by the top 10% of people in Malaysia. Economists tend to judge the health of an economy based on the income of the rich. And they don't look at income disparities, and they don't look at actual real per capita income. They average it out.

That's what the World Bank is doing. Because the reality is that the overwhelming majority of people in Malaysia do not make the kind of income that is required for a country to be called a high income earning country. The overwhelming majority of people in Malaysia make maybe half that or less. This is just the kind of trickery that economists like to do with numbers, to misrepresent the health of an economy. And again, it's coming from an elitist position whereby you sort of do a head count of the billionaires in a country to decide whether or not that country has a healthy economy.

Normal people do not look at the economy in that way. Normal people look at the economy in terms of is there money circulating in the domestic market? Do people have financial security? Do they have jobs? Are they able to pay their bills?

Are they able to pay their rent without drowning themselves in debt? That's the way normal people look at an economy. But economists generally are rich people, so they think about it in those terms.