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Historically Inaccurate Numbers

This article was written by in Economy. 4 comments.


I generally like the articles Bill Fleckenstein writes for his “Contrarian Chronicles” column at MSN Money. Today he published an article about the way the government manipulates the rules of arithmetic to maintain an happy economic outlook.

Here’s the first example: unemployment. If unemployment data are calculated using the same methods that were used during the Great Depression, we would be seeing numbers more like 12%. Real (not inflation-adjusted) consumer price index is at 8%.

The information Bill is quoting is coming from an interview with economist, not composer, John Williams. That article is not yet available online, but it will be interesting to read once it is published on March 11. Until then, I’ll have to live vicariously through Bill’s interpretation of the interview.

Williams differentiates between two data-manipulation practices. One is “systemic manipulations, where methodologies are changed.” That’s done in order to align the government’s view of the world with the world, i.e., make things look better than they are. The second practice is out-and-out fudging of the data to produce whatever result is desired.

Why would the government manipulate data? What is the benefit of making the economy seem “better” than it is? Here’s one idea: Social Security is tied to the CPI. If CPI was calculated the same way it was 30 years ago, Social Security checks would be 70% higher.

Paired with Ben Stein’s article, a grim view of the future, Bill gives us a grim view of the present. Why do I always misplace my bottle of soma when it is needed?

Published or updated March 6, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 2 comments… read them below or add one }

avatar JLP at AllThingsFinancial

I don’t care for Fleckstein. I think maybe it’s his hair.

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avatar Herb

Why would the govt manipulate data? Oh, I don’t know… is it because very few people get re-elected when unemployment is running at 12%? Additionally, one of the big FOMC ideas with inflation is to kill the expectation of inflation. ie. if people don’t expect inflation then it’s not a problem even if there is inflation. So, you take out of the calcs all of the stuff that rises in value and voila, no inflation!

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