| WIKI | FAQ | Tech FAQ | |
 http://csua.com/feed/ | |
| ||||||
| 5/25 |
| 2008/7/8-11 [Politics/Domestic/President/Clinton, Politics/Domestic/President/Reagan] UID:50498 Activity:nil |
7/8 Economic data fudging by the government:
http://preview.tinyurl.com/5ol574 [madconomist.com]
\_ I liked this: Soviet Collapse Lessons
http://preview.tinyurl.com/6gw4ax
\_ I liked this one as well.
\_ Where does this site come from? |
| 5/25 |
|
| preview.tinyurl.com/5ol574 -> madconomist.com/data-fudging-101-the-history-of-us-government-statistics-manipulation In recent years, it has become increasingly clear to those who follow US economic statistics that there is something dubious about the numbers released by official government agencies and used to guide many aspects of social and public policy. The details and chronology of the corruption of economic data are presented in a new book by Kevin Phillips, the political commentator and former Republican Party adviser who has become something of a muckraking critic of the "excesses" that he helped set in motion. The book is entitled, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism Phillips summarizes some of his main conclusions in an article in the current issue of Harper's Magazine. The article focuses primarily on three measures: the monthly Consumer Price Index (CPI), the quarterly Gross Domestic Product (GDP), and the monthly figure for the unemployment rate. Phillips convincingly demonstrates that the real unemployment rate in the United States is between 9 and 12 percent, not the 5 percent or less that is officially claimed. The real rate of inflation is not 2 or 3 percent, but instead, between 7 and 10 percent. And real economic growth has been about 1 percent, not the 3-4 percent officially claimed during the most recent Wall Street and housing bubble that has burst. Phillips's background makes his statements all the more significant. He was a prime strategist for Nixon's 1968 presidential campaign and one of the main architects of the notorious "Southern strategy," through which the old Republican Party of Wall Street and Main Street refashioned itself with a right-wing populist appeal, stoking racial antagonisms while above all capitalizing on the bankruptcy of American liberalism to shift the political spectrum sharply to the right. The corruption of official statistics is not the work of one administration, and Phillips traces it back nearly 50 years. The current occupant of the White House has, in fact, been somewhat less active on this front than his predecessors. Soon after John F Kennedy took office in 1961, Phillips points out, he appointed a committee to recommend possible changes in the measurement of official joblessness. What soon followed was the use of the category of "discouraged workers" to exclude all those who had stopped looking for jobs because they weren't available. Many who had lost employment in basic industry, in a trend that was just beginning to pick up steam with automation and the rise of global competitors in such industries as steel and auto production, were no longer counted as unemployed. During the administration of Lyndon Johnson, the federal government began using the concept of a "unified budget" that combined Social Security with other expenditures, thus allowing the current Social Security surplus to disguise growing budget deficits. As Phillips reports, Nixon tried to tackle the "problem" of statistics in typically Nixonian fashion: he actually proposed that the Labor Department simply publish whichever was the lower figure between seasonally adjusted and unadjusted unemployment numbers. This was apparently deemed too brazen an attempt at manipulation and was never implemented. Under Nixon's Federal Reserve chairman, Arthur Burns, however, the concept of "core inflation" was devised. This became the means of excluding certain areas like food and energy, on grounds of the "volatility" of these sectors. The suggestion was that these prices jumped and then sometimes fell, so that it was best to remove them from the prices surveyed. In fact, food and energy together accounted for an enormous portion of spending for most sections of the working class and, as Phillips also explains, these two sectors are "now verging on another 1970s-style price surge." Gasoline prices, meanwhile, have soared by more than 30 percent since just the beginning of this year. The Reagan administration addressed itself to the pesky problem of housing in the inflation index. An "Owner Equivalent Rent" measurement was dreamed up for the purpose of artificially lowering the cost of housing--from a purely abstract statistical standpoint. Under Reagan, Phillips also points out, the armed forces began to be included in the labor force and among the employed, thus reducing the unemployment rate, even though these same members of the military would in many cases have no employment in civilian life. George HW Bush and his Council of Economic Advisers proposed the recalculation of inflation statistics to give greater weight to the service and retail sectors and, again, reduce the official rate of inflation. This change was actually implemented during the Clinton administration. Clinton also carried out other changes, including a reduction in the monthly household sampling from 60,000 to 50,000, a decrease that was concentrated in the inner cities and had the effect of reducing official jobless figures among African-Americans. The Clinton years were an especially active time for imaginative tinkering with economic data. Three other "adjustments" in the Consumer Price Index were implemented under the Democratic administration: product substitution, geometric weighting, and hedonic adjustment. Product substitution means that, for example, if steak gets too expensive, individuals substitute hamburger. Steak is simply removed from the typical food basket even though it has been used in the past to track price changes. Geometric weighting is defined as lower weighting in the price index for those goods and services that are rising most rapidly in cost, on the assumption that they are consumed in lower quantities. This may of course be true, but the aim is to reduce the inflation figure, covering up the fact that some items are no longer affordable for tens of millions of people. Phillips is particularly scathing about "hedonic adjustment," also implemented during Clinton's presidency. In this concept, the supposedly improved quality of some products and services is translated into a reduction in their effective cost. This is another obvious attempt to reduce official inflation. "Reversing the theory, however, the declining quality of goods or services should adjust effective prices and therefore add to inflation," Phillips writes, "but that side of the equation generally goes missing." Phillips explains that every single one of the statistical revisions implemented over the past two generations have become permanent. Once initiated by a Democratic or Republican administration, they were carried over to the Bureau of Labor Statistics and other agencies in bipartisan fashion, no matter who the current occupant of the White House was. To all of the above should be added one other element, which Phillips does not discuss, perhaps because it does not stem from the economic data itself. This situation, the outcome of the misnamed war on drugs and the overall bipartisan law-and-order hysteria, keeps the official unemployment rate artificially low. Between the army and the prison system, official joblessness is reduced by perhaps 2 percent. Phillips points out that all of the changes in economic recordkeeping over the past 50 years were not the result of some grand conspiracy. They certainly did not stem from a master plan hatched in the 1960s or 1970s, of course. This does not mean, however, that there is no logic to these developments, no broader economic and political source. The corruption of economic data corresponds to deepening contradictions of US and world capitalism. These contradictions impelled the bourgeoisie to abandon a general policy of social reform that had lasted for more than three decades, and to embark on what has been termed a "one-sided class war," in which the services of the pro-capitalist trade unions were utilized to carry out an unprecedented transfer of wealth from the working population to a tiny ruling elite. There was a step-by-step logic to all of the measures that were taken to misrepresent basic economic statistics. Big business could not have carried out the policies it required without falsifying economic reality. Even though daily life became increasingly difficu... |
| preview.tinyurl.com/6gw4ax -> madconomist.com/what-if-us-collapses-soviet-collapse-lessons-every-american-needs-to-know Statistics And Other Lies Good evening, ladies and gentlemen. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is. My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the "Collapse Gap" - to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War. The subject of economic collapse is generally a sad one. But I am an optimistic, cheerful sort of person, and I believe that, with a bit of preparation, such events can be taken in stride. As you can probably surmise, I am actually rather keen on observing economic collapses. Perhaps when I am really old, all collapses will start looking the same to me, but I am not at that point yet. From what I've seen and read, it seems that there is a fair chance that the US economy will collapse sometime within the foreseeable future. It also would seem that we won't be particularly well-prepared for it. As things stand, the US economy is poised to perform something like a disappearing act. And so I am eager to put my observations of the Soviet collapse to good use. I anticipate that some people will react rather badly to having their country compared to the USSR. I would like to assure you that the Soviet people would have reacted similarly, had the United States collapsed first. Feelings aside, here are two 20th century superpowers, who wanted more or less the same things - things like technological progress, economic growth, full employment, and world domination - but they disagreed about the methods. And they obtained similar results - each had a good run, intimidated the whole planet, and kept the other scared. The USA and the USSR were evenly matched in many categories, but let me just mention four. The Soviet manned space program is alive and well under Russian management, and now offers first-ever space charters. The Americans have been hitching rides on the Soyuz while their remaining spaceships sit in the shop. The arms race has not produced a clear winner, and that is excellent news, because Mutual Assured Destruction remains in effect. Russia still has more nuclear warheads than the US, and has supersonic cruise missile technology that can penetrate any missile shield, especially a nonexistent one. The Jails Race once showed the Soviets with a decisive lead, thanks to their innovative GULAG program. But they gradually fell behind, and in the end the Jails Race has been won by the Americans, with the highest percentage of people in jail ever. The Hated Evil Empire Race is also finally being won by the Americans. It's easy now that they don't have anyone to compete against. Continuing with our list of superpower similarities, many of the problems that sunk the Soviet Union are now endangering the United States as well. Such as a huge, well-equipped, very expensive military, with no clear mission, bogged down in fighting Muslim insurgents. Such as energy shortfalls linked to peaking oil production. Such as a persistently unfavorable trade balance, resulting in runaway foreign debt. Add to that a delusional self-image, an inflexible ideology, and an unresponsive political system. An economic collapse is amazing to observe, and very interesting if described accurately and in detail. A general description tends to fall short of the mark, but let me try. An economic arrangement can continue for quite some time after it becomes untenable, through sheer inertia. But at some point a tide of broken promises and invalidated assumptions sweeps it all out to sea. One such untenable arrangement rests on the notion that it is possible to perpetually borrow more and more money from abroad, to pay for more and more energy imports, while the price of these imports continues to double every few years. Free money with which to buy energy equals free energy, and free energy does not occur in nature. When the flow of energy snaps back toward equilibrium, much of the US economy will be forced to shut down. I don't see why what happens to the United States should be entirely dissimilar, at least in general terms. The specifics will be different, and we will get to them in a moment. We should certainly expect shortages of fuel, food, medicine, and countless consumer items, outages of electricity, gas, and water, breakdowns in transportation systems and other infrastructure, hyperinflation, widespread shutdowns and mass layoffs, along with a lot of despair, confusion, violence, and lawlessness. We definitely should not expect any grand rescue plans, innovative technology programs, or miracles of social cohesion. When faced with such developments, some people are quick to realize what it is they have to do to survive, and start doing these things, generally without anyone's permission. A sort of economy emerges, completely informal, and often semi-criminal. It revolves around liquidating, and recycling, the remains of the old economy. It is based on direct access to resources, and the threat of force, rather than ownership or legal authority. People who have a problem with this way of doing things, quickly find themselves out of the game. One important element of collapse-preparedness is making sure that you don't need a functioning economy to keep a roof over your head. In the Soviet Union, all housing belonged to the government, which made it available directly to the people. Since all housing was also built by the government, it was only built in places that the government could service using public transportation. After the collapse, almost everyone managed to keep their place. In the United States, very few people own their place of residence free and clear, and even they need an income to pay real estate taxes. When the economy collapses, very few people will continue to have an income, so homelessness will become rampant. Add to that the car-dependent nature of most suburbs, and what you will get is mass migrations of homeless people toward city centers. Soviet public transportation was more or less all there was, but there was plenty of it. There were also a few private cars, but so few that gasoline rationing and shortages were mostly inconsequential. All of this public infrastructure was designed to be almost infinitely maintainable, and continued to run even as the rest of the economy collapsed. The population of the United States is almost entirely car-dependent, and relies on markets that control oil import, refining, and distribution. They also rely on continuous public investment in road construction and repair. The cars themselves require a steady stream of imported parts, and are not designed to last very long. When these intricately interconnected systems stop functioning, much of the population will find itself stranded. Economic collapse affects public sector employment almost as much as private sector employment, eventually. Because government bureaucracies tend to be slow to act, they collapse more slowly. Also, because state-owned enterprises tend to be inefficient, and stockpile inventory, there is plenty of it left over, for the employees to take home, and use in barter. Most Soviet employment was in the public sector, and this gave people some time to think of what to do next. Private enterprises tend to be much more efficient at many things. Such laying off their people, shutting their doors, and liquidating their assets. Since most employment in the United States is in the private sector, we should expect the transition to permanent unemployment to be quite abrupt for most people. When confronting hardship, people usually fall back on their families for support. The Soviet Union experienced chronic housing shortages, which often resulted in three generations living together under one roof. This didn't make them happy, but at least they were used to each other. The usual expectation was that they would stick it out together, come what may. In the United... |