Hold on. HOLD ON!! I am not a lurking right-winger. When I saw the speculation by idiots like Jack Welch and others about the recent unemployment numbers being cooked, I laughed. I didn’t even need to see the data. I’ve studied BLS data, communicated with people at the Bureau, and examined labor and economic figures and studies for years. I’m no expert, but I have a sense of how these things work. This interview on CNBC reflects pretty much everything I assume about this department, and the idea that these particular numbers could be skewed for political reasons is beyond silly.
At the same time, I work in education. I understand very well how testing results are reported, how “excellent” doesn’t actually reflect excellence, and how administrators work their tails off to spin and skew data to make it look like a school is performing better than it actually is. It's called “Juking the stats,” as the rookie math teacher and former cop Prez from The Wire noted in Season 4, similar to the creative math employed by the police department about crime statistics.
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Most of us who follow politics can identify instances where government skewed or misrepresented data. It happens all the time. Remember the Patriot missiles in the first Gulf War? President Bush (1st) shows up at a Raytheon plant claiming the missiles successfully intercepted Iraqi missiles in 41 out of 42 attempts. But because actual analysis showed the missiles probably had a zero success rate, the administration and the defense department changed the standards – if the Iraqi missile had continued on the trajectory it was assumed it was on, then the Patriot would have intercepted it, so that counts as a successful interception. In other words, if the person I shot at would have stayed where they were when I first took aim and fired, I would have hit them, so therefore I shot them. F*cking ridiculous.
So we know numbers can and have been juked. Again, I’m not saying the BLS numbers were skewed, and I don’t believe for a second they were. But the idiocy of Jack Welch and others might provide us an opportunity to have a serious discussion about how government misrepresents important economic figures.
For much of this, I’m relying on Kevin Phillips’ great article from 2009, “Numbers Racket: Why the Economy is Worse than You Know.”
Phillips begins by stating the importance – political and otherwise – of government economic data:
The corruption has tainted the very measures that most shape public perception of the economy—the monthly Consumer Price Index (CPI), which serves as the chief bellwether of inflation; the quarterly Gross Domestic Product (GDP), which tracks the U.S. economy’s overall growth; and the monthly unemployment figure, which for the general public is perhaps the most vivid indicator of economic health or infirmity. Not only do governments, businesses, and individuals use these yardsticks in their decision-making but minor revisions in the data can mean major changes in household circumstances—inflation measurements help determine interest rates, federal interest payments on the national debt, and cost-of-living increases for wages, pensions, and Social Security benefits. And, of course, our statistics have political consequences too. An administration is helped when it can mouth banalities about price levels being “anchored” as food and energy costs begin to soar.
Phillips recalls a
2003 op-ed by then University of Chicago economist Austan Goolsbee in which Goolsbee claimed the 2001-2002 recession was much worse than reported because the government misrepresented the data. Goolsbee wrote that unemployment had been low during this recession “only because government programs, especially Social Security disability, have effectively been buying people off the unemployment rolls and reclassifying them as 'not in the labor force.'...It has been a more subtle manipulation than the one during the Reagan administration, when people serving in the military were reclassified from 'not in the labor force' to 'employed' in order to reduce the unemployment rate. Nonetheless, the impact has been the same."
Goolsbee also noted that in the 1980s and 1990s, people on disability who had previously been counted as unemployed were now moved into the disability system and no longer counted as unemployed.
Phillips notes that this has been going on for decades, and it’s bipartisan. It was the Kennedy administration that labeled out-of-work Americans who’d stopped looking for jobs as “discouraged” workers and excluded from the ranks of the unemployed where they’d previously been counted. President Johnson was rumored to tweak Gross National Product numbers before their release, and created a “unified budget” where Social Security was combined with other federal spending so the surplus in Social Security could mask the growing deficits in other government spending, especially due to defense spending and the Vietnam/Laos/Cambodia wars.
It goes on…Nixon had the Fed create “core inflation” to mask actual inflation. And Reagan actually succeeded in getting BLS to redefine housing values:
In 1983, under the Reagan Administration, inflation was further finagled when the Bureau of Labor Statistics decided that housing, too, was overstating the Consumer Price Index; the BLS substituted an entirely different “Owner Equivalent Rent” measurement, based on what a homeowner might get for renting his or her house. This methodology, controversial at the time but still in place today, simply sidestepped what was happening in the real world of homeowner costs. Because low inflation encourages low interest rates, which in turn make it much easier to borrow money, the BLS’s decision no doubt encouraged, during the late 1980s, the large and often speculative expansion in private debt—much of which involved real estate, and some of which went spectacularly bad between 1989 and 1992 in the savings-and-loan, real estate, and junk-bond scandals.
Phillips notes that some economists cite this change in housing values under Reagan as one of the causes of the recent subprime mortgage crisis. The trend continued under George H.W. Bush, and again under Clinton:
…in 1994, the Bureau of Labor Statistics redefined the workforce to include only that small percentage of the discouraged who had been seeking work for less than a year. The longer-term discouraged—some 4 million U.S. adults—fell out of the main monthly tally. Some now call them the “hidden unemployed.” For its last four years, the Clinton Administration also thinned the monthly household economic sampling by one sixth, from 60,000 to 50,000, and a disproportionate number of the dropped households were in the inner cities; the reduced sample (and a new adjustment formula) is believed to have reduced black unemployment estimates and eased worsening poverty figures.
Clinton's move was especially troubling, because by falsely reducing black unemployment figures and poverty those communities were denied federal and state funding they otherwise would have received.
So we should be clear…while there is no evidence the BLS figures for this month's jobs report have been cooked, it should not keep us from recognizing what I.F. Stone used to urge all journalism students to always remember: all governments lie. The U.S. government, no matter which party is in control, has continuously “juked the stats” in order to present a rosier, more positive economic picture. And let's be honest, we’ve seen examples of the Obama administration doing the same. Moving away from economics to national security, the administration recently made the ridiculous and horrific claim that it was assuming and classifying many of the dead from U.S. drone strikes as “militants” based only on the fact that they were males of a certain age and within range of the bombs. Our obedient media continues to report those deaths as "militants" without identifying the tortured logic of the administration.
Unfortunately, I’m afraid the idiocy of Jack Welch and other right-wing fools will be our focus in this case, when we could take this opportunity to demand real transparency and accountability from our government. I’m writing this in the hope we could direct the conversation the other way. It’s hard to do during an election season, when everyone wants to pile on Romney for whatever lie he told in the last hour (and let’s face it, there’s probably one every hour). But our democracy demands and depends on it.
Peace.