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Read how all presidents during the last decades had nothing better to do than to fool the public.
http://madconomist.com/data-fudging-101-the-history-of-us-government-statistics-manipulation
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.” As of last January, Phillips writes, the price of imported goods had increased 13.7 percent compared with a year earlier, the biggest jump since these statistics began in 1982. 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 H.W. 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.”
http://madconomist.com/data-fudging-101-the-history-of-us-government-statistics-manipulation
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.” As of last January, Phillips writes, the price of imported goods had increased 13.7 percent compared with a year earlier, the biggest jump since these statistics began in 1982. 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 H.W. 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.”
