Category: Statistics

The Data War Comes Home

jpellg1 Comment

The Trump administration’s ongoing attempts at manipulating US government economic data echoes controversies that have existed in the realm of development data for decades. These controversies highlight the unavoidable, intrinsically political nature of measuring social phenomena with economic statistics, and the role of economists in legitimizing (or not) such measures.

In early August, the employment report from the Bureau of Labor Statistics (BLS) showed weaker than expected job growth for July and announced downward revisions (fewer new jobs than previously reported) for the two months prior. Trump responded by calling the accuracy of the report into question, and firing the head of the BLS, a career civil servant. This move provoked a round of criticism from other civil servants, economists, and experts on democracy, which only intensified when Trump initially nominated as the replacement E.J. Antoni, the chief economist for the right-wing think tank The Heritage Foundation. Antoni had been an outspoken critic of the BLS reports, even suggesting the possibility of ceasing to release monthly jobs data altogether, and was widely perceived by critics as both highly partisan and underqualified for the position. There is widespread concern that the jobs report will become less reliable, even leading to the current staff at the BLS publicly pleading with the public to still trust their numbers, for now. The BLS is also responsible for producing the Consumer Price Index (CPI), the central measure of inflation produced by the US government. Inflation’s centrality in recent politics, including promises from Trump to bring down prices on “day one,” have led to concerns that this measure could also be affected by political manipulation. There would be important real-world and policy impacts of a degraded CPI measure,  which affects tax brackets, the value of some treasury bonds, and social security and other social insurance payments.

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Kicking Away the (Statistical) Ladder

assaj4012 Comments

kicking-away-the-ladder

Developed countries often lecture developing and emerging countries on the appropriate policies and institutions necessary for economic success. This is done either bilaterally or through multilateral organizations such as the World Bank, IMF, OECD or European Union. Cambridge economist Ha-Joon Chang exposed the hypocrisy of this approach in his provocative 2002 book Kicking Away the Ladder: Development Strategy in Historical Perspective. Chang suggests that when today’s rich countries were themselves developing, they used practices opposite to what they preach today, including industrial policies, high tariffs and infant industry protection. Therefore their current advice to poorer countries amounts to ‘kicking away the ladder’ of development.

A lesser-known but equally disturbing process has occurred in the realm of economic statistics, in particular national income accounts. The EU and OECD often criticize the national accounts of developing countries, and a recent example is a claim made in a blog by Robert Barro: “There are suspicions that China’s reported growth rates in recent decades have been boosted by manipulation of the national-accounts data.” While no statistical system is beyond doubt, the biggest manipulations of data in history, in fact, have benefited (and were supported by) rich countries.Read More »