I’m going to confess that I did not read Eugene Robinson’s column this morning so I don’t actually know what it’s about. I suspected that I could tell as much as I needed to about it from its caption, “Economic Facts Get in the Way”.
Whether you have a job or not is an economic fact. Whether you can or do pay your bills or not is an economic fact. The size of your paycheck is an economic fact.
Reports from the CBO or BEA are mostly not facts. That they wrote and published them are facts but not what they contain. With the exception of economic tautologies they are predominantly interpretations or opinions of facts.
GDP is a construct, an abstraction, not a fact. The same is true of the unemployment rate, the rate of new business formation, or the rate of inflation. When the price of gas at your local station plummets from $4.00 to $2.00, that’s a fact. Whether that means there’s a change in the rate of inflation or not is an opinion. It may be variously informed but it’s still an opinion
If it’s something you can see, hear, smell, taste, or feel or something that hits you in the pocketbook, it’s a fact. Nearly everything else is an opinion and that goes double for the stuff you read in the CBO’s or BEA’s reports.
I’m going to stop reading a few paragraphs in. He makes the claim that the reason the participation rate is down “has to do with long-term demographic and social trends”. As I’ve pointed out not that long ago:
He is either too ignorant to look anything up, or he’s a lying sack of shit.
Nice post.
“How to Tell the Facts From the Opinions”
Pretty difficult for most people.
“When the price of gas at your local station plummets from $4.00 to $2.00, that’s a fact. Whether that means there’s a change in the rate of inflation or not is an opinion. It may be variously informed but it’s still an opinion.”
That’s a great sentence because it not only makes the point of the post but illustrates a common and topical piece of economic ignorance that permeates current discourse. Because of the negative bias engineered towards Big Oil many view expenditures on gas as a “tax” as if the money is wasted atbthevexpense of “good” expenditures like eating out or a new TV or beer. Accordingly, the fall in gas prices is deemed good for GDP without a thought about the reduction in economic activity in the energy sector.
Taking the opinion observation further, have we reached a point where you can’t trust the numbers out of Washington or data mills not just because of opinion, but because of raw manipulation. Before you laugh, remember that if you like your doctor you can keep him, you will save $2500 in insurance premiums, the employment situation is dandy, (you just don’t know it) and income inequality is the scourge of the earth, but how bout that stock market.
How many of you really pay attention not only to the “adjustments” to reported statistics (which can dominate the result) but also to the pattern of revisions, waiting to deep six long forgotten data so that newly reported statistics appear artificially better in YoY comparisons. Yeah. And this is a crowd that would. How hard is it really to keep the general,public at the headline level. What is the acronym….IBGYBG?
I may be wrong, but the magnitude and frequency of the bullshit, er, manipulation seems greater than I have ever seen.
I think the best example of that is the unemployment rate. When the various adjustment factors dwarf the non-adjustment factors they’re trying to measure using their constructed unemployment rate as is presently the case, that means they might as well just be making it up. Just to pull some figures out of thin air, imagine a measured change in employment of 10,000 souls and birth/death figure of 200,000.
When the real changes are very large, large adjustment factors aren’t nearly so troubling. But when the measured changes are very small the adjustments are essentially the entire change in the constructed rate.
Theoretical science gives you exact numbers. Experimental science gives you scattergrams. I know that criticizing CBO numbers is now the cool, in thing to do, especially if you are a right winger. (When the GOP wins in 2016 they will become reliable again.) I don’t see it. Of course, you should take every result with a bit of skepticism, but claiming that all of the numbers, all of the research is useless leads to chaos. Perhaps medicine, which is far from pure science, prepares one well for this. You know that even the best research can be wrong, but that doesn’t mean you ignore it because it is not “fact”.
First, for most of these numbers we have alternate sources of data and different calculations. Take inflation. Some people are convinced that the govt is cooking the books to keep the numbers low. (This is setting aside the long term argument about what to include.) You can go look at the billion price index, not run by Treasury or the Fed or CBO, etc., and find that it tracks pretty well with published governmental generated numbers.
Second, there is certainly the perception that these numbers are worse than in the past because of the failure of elites on both sides to speak out when they should. So, when we had the large adjustment in unemployment during an election you had guys like Welch claiming the books were cooked. You should have had experts from the right, and a few did, come out and note how the data is collected, and how variable a single month can be. That it would take too many people to hide a conspiracy. That other data supported the finding. Instead, most kept quiet. Indeed, the OIG confirmed this in November, AND the continued trend also served as confirmation.
Steve
Who said useless? I said “not facts”. They aren’t facts. They’re opinions.
One of the most egregious discrepancies between the reported numbers and the likely reality is in the Social Security Trustees Report. For years the Social Security Administration’s own actuaries, faithful to their fiduciary responsibilities, have been issuing dissenting reports of their own.
Those are opinions, too, but they’re better informed opinions than the rather obviously fudged Trustees’ reports. Figure out your own explanations for why the trustees might be fudging their numbers.
As to the CBO, I don’t give a darn about what right-wingers think. The CBO operates at the pleasure of Congress. It’s been highly politicized at least since the Newt Gingrich days when the trend towards “all politics, all the time” went on steroids.
Dave Schuler: GDP is a construct, an abstraction, not a fact. The same is true of the unemployment rate, the rate of new business formation, or the rate of inflation. When the price of gas at your local station plummets from $4.00 to $2.00, that’s a fact.
When the price of gas at your local station plummets from $4 to $2, that’s data.
GDP is an estimate, not an opinion. If it is a well-supported estimate, then it can be treated as a tentative fact.
Dave Schuler: They aren’t facts. They’re opinions.
Well-supported quantitative estimates are not merely opinions, but can be treated as tentative facts.
I think you missed the point, Z. Some of the components are so subjective and sufficiently large as to render meaningless your “well supported” qualifier.
Guarneri: Some of the components are so subjective and sufficiently large as to render meaningless your “well supported†qualifier.
Just because an estimate is not perfect doesn’t mean it has no factual basis. We can reasonably conclude that China’s GDP has increased over the last two decades, that the U.S. economy the largest in the world, that New York City has a higher gross product than Palermo.
If you don’t recognize the difference between fact and “factual basis”, I’m not sure there’s much more to say.
Dave Schulter: If you don’t recognize the difference between fact and “factual basisâ€, I’m not sure there’s much more to say.
GDP is a measure. While the measure may be only an estimate, it is not merely an opinion. It is a summation of observations.
Try it on for size. The GDP of the U.S. is greater than the GDP of Russia. True, false, or just a matter of opinion?
I can tell by that answer that you have never looked into the way that the CBO comes up its estimate of GDP. It’s not a measure. When you use a thermometer to take a temperature, that’s a measure. When you use a yardstick to determine length or a scale to determine weight, those are measures, too.
GDP isn’t like any of those. They’re not measuring anything. At best it’s an extrapolation of an interpolation with a variety of fudge factors applied to it.
Notably, you didn’t answer the questions. The GDP of the U.S. is greater than the GDP of Russia. True, false, or just a matter of opinion?
I didn’t answer because it’s a facetious question and you’re a sophist. It is also my policy not to remonstrate with people in the comments sections of blog posts. The medium is poorly suited to the purpose. I’ll put in a comment or two and end it there but I don’t go back and forth. It serves no point.
Does the U. S. produce more or is its GDP higher? It produces more. Its GDP is whatever the scorekeepers say it is. Production is real. GDP is an abstraction, only tangentially related to anything real.
Now it’s your turn. Did you go back and research how the CBO calculates GDP? That’s a yes or no question. You either did or you didn’t.
Dave Schuler: I didn’t answer because it’s a facetious question
It wasn’t facetious. When estimating, we might first determine whether it’s bigger than a breadbox. We can then narrow down our margins to determine the accuracy of our estimate.
Dave Schuler: Does the U. S. produce more or is its GDP higher? It produces more. Its GDP is whatever the scorekeepers say it is. Production is real. GDP is an abstraction, only tangentially related to anything real.
You didn’t actually answer, but reading between the lines, both the production and the GDP are higher for the U.S. than for China. In other words, GDP is a reasonable measure of production, within the given margins.
Dave Schuler: Did you go back and research how the CBO calculates GDP? That’s a yes or no question. You either did or you didn’t.
There are a number of ways of measuring GDP, the primary being expenditure models and income models. Measuring income is fairly direct because most income; salary, rent, interest, etc.; is reported for tax purposes.