Friday, April 11, 2008
Dust on the Mirror
Dust hides a mirror...
During the twentieth century, various government bureaus began publishing economic statistcis at regular intervals, in order to inform the public of the state of the nation's economy. But as America's economy grew chronically more troubled after 1970, these same bureaus were ordered by the executive to change the ways in which they compiled these statistics, so as to present a rosier picture than a realistic assessment would permit.
In time, the purpose of these ubiquitous statistics, used by economists in and out of government in their analyses and prescriptions, became to disseminate disinformation rather than information. Now Kevin Phillips has published a short but important article in this month's Harper's magazine (May, '08) detailing the history and purposes of this disinformation campaign, which, he says "arose gradually, at no stage stemming from any concerted or cynical scheme. There was no grand conspiracy, just accumulating opportunisms."
However, despite the absence of conspiracy, the purpose of such disinformation is obvious: it is used to cover up and hide the truth, so real information will be kept away from the public. Using disinformation is a sophisticated technique; it has to be close enough to the truth to be credible, but at the same time cover up the truth in a way that those being lied to will never know what they missed.
The three sets of statistics most distorted and manipulated by our government's deliberate deception are the Consumer Price Index (CPI), which is our chief indicator of inflation, the Gross Domestic Product, which indexes economic growth, and the monthly unemployment figure.
The unemployment rate got tweaked first. During Lyndon Johnson's administration, a Labor Department committee decided at the president's behest that "discouraged workers" -- those who had been out of work for so long that they had given up looking for a job -- were not really unemployed and should be excluded from the total. The fed began learning how to lie with statistics.
Johnson's successor, Drahcir Noxin (pictured above) directed his Fed Reserve Chairman to develop a distinction between "core inflation" and "headline (or real) inflation," with the result that the most volatile items in the basket of things ordinary people buy every day, week, or month are left out of the economists' caluculations. These days, those items are energy and housing, of course. So the new, improved CPI is kind of like fat-free ice cream. It's inflation information with the inflation removed, and an exercise in masturbatory fantasy if there ever was one.
The Gross Domestic Product, of course, replaced the Gross National Product, which by 1991, under Bush I, had become a constant stream of bad news due to the rising U.S. international debt. Some economists are openly contemptuous of the GDP figures, one saying that "Upward growth biases built into GDP modeling...have rendered this important series nearly worthless."
This article, for which I cannot provide a link since it's not on line (Harper's, being in the dead-tree publication business, does that a lot), is important because it shows how similar our government has become to the government of Oceania in Orwell's novel "1984." The happy chatter of bogus statistics shat out by the Ministry of Truth serves only to confuse and misinform, but is sucked up eagerly by the orthodox and credulous, who can never understand why anyone would be so perverse and cynical as to question the integrity of our wonderful rulers.
Drawing on the work of genuine and truth-seeking economists, Phillips briefly sets the record straight. "Today's U.S. unemployment rate is somewhere between 9 percent and 12 percent; the inflation rate is as high as 7 or even 10 percent, economic growth since the recession of 2001 has been mediocre, despite a huge surge in the wealth and incomes of the superrich, and we are falling back into recession."
He might have added (and I will) that we'll never be able to deal with reality until we look it square in the face.