Statistics: The Bureaucrat’s Weapon
The government “shutdown” enters its second month.
But today we raise a celebratory cheer…
A cheer for the temporary unemployment of one subset of furloughed federal employees.
We refer to the government statisticians who collect, sort, analyze, worry, torture and weaponize economic data.
That is, those who throw false weights upon the scales in support of government policy x or government policy y.
For without statistics the government is all thumbs, a plodding doofus… a fumbling cyclops speared through its one and only eye.
This beast forms a greatly reduced menace to American liberty.
Explains the late libertarian economist Murray Rothbard (with a polite tip of the cap to old Daily Reckoning hand Gary North):
Certainly, only by statistics, can the federal government make even a fitful attempt to plan, regulate, control or reform various industries — or impose central planning… on the entire economic system. If the government received no railroad statistics, for example, how in the world could it even start to regulate railroad rates, finances and other affairs? How could the government impose price controls if it didn’t even know what goods have been sold on the market, and what prices were prevailing?
Statistics… are the eyes and ears of the interventionists: of the intellectual reformer, the politician and the government bureaucrat. Cut off those eyes and ears, destroy those crucial guidelines to knowledge and the whole threat of government intervention is almost completely eliminated.
That is, without statistics the government could not “govern” us as it would.
And to be governed, noted 19th-century philosopher Pierre-Joseph Proudhon:
Is to be watched, inspected, spied upon, directed, law-driven, numbered, regulated, enrolled, indoctrinated, preached at, controlled, checked, estimated, valued, censured, commanded… registered, counted, taxed, stamped, measured, numbered, assessed, licensed, authorized, admonished, prevented, forbidden, reformed, corrected, punished… drilled, fleeced, exploited, monopolized, extorted from, squeezed, hoaxed, robbed… repressed, fined, vilified, harassed, hunted down, abused, clubbed, disarmed, bound, choked, imprisoned, judged, condemned, shot, deported, sacrificed, sold, betrayed; and to crown all, mocked, ridiculed, derided, outraged, dishonored.
We might file additional torts… but we operate on a strict word count.
And the federal government presently lacks an entire bucketful of data to govern us…
MarketWatch reports the current cataclysm may delay the following economic reports:
Durable goods orders (Jan. 25)… core capital equipment orders (Jan. 25)… new home sales (Jan. 25)… advance trade in goods (Jan. 29)… housing vacancies (Jan. 29)… gross domestic product (Jan. 30)… personal income (Jan. 31)… core inflation (Jan. 31)… construction spending (Feb. 1).
We prefer to be uninformed rather than misinformed.
We therefore relish the prospect of going uninformed about the latest GDP numbers, for instance.
Government at all levels is credited with a thumping 36% of U.S. GDP spending.
But assume the government pays a fellow to dig a hole. Assume further it pays him to refill it.
By the official telling, you have just witnessed an increase to the gross domestic product.
Imagine further that the charade was financed through debt.
In its GDP calculations, the Bureau of Economic Analysis suggests debt-financed government spending adds authentic oomph to the economy.
But financial advisory firm Baker & Co. says money government borrows must eventually be repaid.
Thus, it is not income. It is “artificial stimulus.”
Subtract the artificial stimulus, Baker argues… and real GDP has declined an average 7.45% each year since 2007.
On a similar note…
A fellow by the name of John Williams captains the website ShadowStats.
His stated purpose is to expose and analyze “flaws in current U.S. government economic data and reporting.”
The government adds a cup of water to a cup of milk, for example. Thus may it claim to produce two cups of “milk.”
Williams penetrates the shim-sham — two cups of watery milk is not two cups of whole milk.
Here is how official GDP stands against ShadowStats’:
Revealed is a roughly 4% difference.
Which data do you believe?
Redirect your attention to the inflation rate…
Last year the official consumer price index (CPI) indicated a 2.44% rate of inflation.
But if you measure inflation as the government measured inflation in 1980… a different sketch emerges.
By the standards of 1980, CPI increased not 2.44% last year, says ShadowStats — but 9.6%:
Go here should you seek additional light about ShadowStats.
Again, which do you believe?
Perhaps ShadowStats stretches the figures some. No cloak of infallibility surrounds it.
They nonetheless perform a capital service in our estimate:
Exposing the government’s statistical myths.
So today we hoist the black flag of anarchy… and raise three cheers for our liberation from the government statistician, however temporary.
“The only good bureaucrat is one with a pistol at his head,” said the irreplaceable Mencken.
We would add but one detail:
Be sure it’s loaded…
Managing editor, The Daily Reckoning