Thursday, February 4, 2010
Boskin Encourages Obama!
"Politicians and scientists who don't like what their data show lately have simply taken to changing the numbers. They believe that their end--socialism, global climate regulation, health-care legislation, repudiating debt commitments, la glorie francaise--justifies throwing out even minimum standards of accuracy. It appears that no numbers are immune: not GDP, not inflation, not budget, not job or cost estimates, and certainly not temperatures. A CEO or CFO issuing such massaged numbers would land in jail. ... A commission appointed by French President Nicholas Sarkozy suggests heavily weighing 'stability' indicators such as 'security' and 'equality' when calculating GDP. And voila!--France outperforms the US, despite the fact that its per capita income is 30% lower. ... With Venezeuela in recession by conventional GDP measures, President Hugo Chavez declared the GDP to be a capitalist plot. He wants a new, socialist-friendly way to measure the economy. ... There is historical precedent to a 'socialist GDP'. When President George HW Bush sent me to help Mikhail Gorbachev with economic reform, I found out that the Soviet statistics office kept two sets of books: those they published, and those they actually believed (plus another for Stalin when he was alive). In Argentina, President Nestor Kirchner didn't like the political and budget hits from high inflation. After a politicized personnel purge in 2002, he changed the inflation measures. Conveniently, the new numbers showed lower inflation and therefore lower interest payments on the government's inflation-linked bonds. Investors and public confidence in the objectivity of the inflation statistics evaporated. His wife and successor Cristina Kirchner is now trying to grab the central bank's reserves to pay for the country's debt. ... The president and his advisers--their credibility already reeling from exaggeration (the stimulus bill will limit unemployment to 8%) and reneged campaign promises (we'll go through the budget 'line-by-line') consistently imply that their new proposed regulation is a free lunch", my emphasis, Michael Boskin (MB) at the WSJ, 14 January 2010, link:
What's MB doing here? Is MB giving Obama a roadmap to defraud Uncle Sam's creditors, as if Obamites like the Orzags need one. Would Vampire Squid's CEO or CFO "land in jail" for massaging numbers? Wow, the USSR kept multiple sets of books. Don't you know the US spends 45% of the world's total military spending? I don't know it. Imagine, government officials "revised" inflation statistics to cut Argentina's interest rates paid on TIPS. Still want Obama's? We remember MB, head of the "Boskin Commission" and new "Boskin Commission", my 5 October 2007 and 11 October 2009 posts: http://skepticaltexascpa.blogspot.com/2007/10/tip-on-tips.html and http://skepticaltexascpa.blogspot.com/2009/10/boskins-baaack.html.