Surely the Lake Wobegon joke is old enough now that people get it?

Of course, that headline is subject to Venning’s Law, the correct answer to any question including the word “surely” is “No”. As proof of this contention, the latest attempt at economic analysis from IPPR:

In new analysis, Common Wealth and the IPPR, the thinktank of which I’m executive director, have dug into the profit side of this equation. Our findings are stark: up to the end of 2021, half of firms have retained or increased their profit margins compared to pre-pandemic levels.

The Lake Wobegon joke is, for those few who haven’t heard it over the decades, that the Minnesota community is a place where “all the children are above average”.

On a radio show it’s a cute little, joking, observation. When discussing the economy it’s less funny. For what IPPR is really saying there is that fully half of all companies have seen falling profit margins over the time period - yes, for their claim is that 50% have maintained or increased. The modal change in profit margin is, therefore, assuming the three possibilities of lower, same and higher, actually for lower profit margins. It’s also true that the median experience is likely going to be on the edge between falling and static.

That is, if IPPR actually understood how averages work then they’d be worrying about falling profit margins and the ability of capitalism to regenerate itself by covering depreciation and future investment needs. IPPR instead takes this all to mean that companies are making too much profit, despite the actual move being in the other direction.

Ah well, there’s no licence on the use of the phrase “think tank” so we can’t insist that they do, can we?