Reliable Government Statistics

cropped-bob-shapiro.jpg  By Bob Shapiro

Many years ago, a guy I knew told me of how he was becoming wealthy all due to government decree. Henry said that when he bought his house, it stood on about 0.95 acre. His town had redefined the acre, so that his property became about 0.99 acre. The town had redefined the measure once again, so that it all of a sudden was 1.04 acre. He was growing rich!

Henry allowed that the actual land hadn’t changed, and his property taxes had gone up as a result of the two changes. “Still,” he said tongue in cheek, “pretty soon I’ll be able to retire and live off my land.”

There are things in life that we take for granted, like how big is an inch (or an acre). If we arbitrarily changed the standards of weights and measures (protected under Article 1, Section 8 of the US Constitution), we would have chaos.

inch

Our government has created other standards to report information to us, including the Consumer Price Index (CPI). Initially, it was intended to give us a rough measure of the “Cost of Living.” A number of commonly used items were chosen, and the price of that basket of goods was measured and reported on each month.

For the CPI to have any real value, this Standard MUST not change. But, change it has. Starting in the 1980s, following the “Double-Digit Inflation” of the Carter years, the methodology of how the CPI was calculated began to change. They’ve changed the list of items. They substitute less expensive goods for more expensive (hamburger for steak). They adjust for quality improvements.

In short, they have made the new CPI to be unrecognizable and not comparable to any of the older versions. Each adjustment to the methodology has tended to reduce the CPI reported number compared to what it previously would have been (funny how that works).

But, why would our government do such a thing?! If the CPI number is lower:

  • Social Security & other benefit increases are lower
  • Interest paid on Inflation Protected Treasuries (TIPs) is lower
  • GDP, adjusted for inflation, looks higher

All these things make our government look good. Remember the number one job of all our elected officials is re-election.

Here’s a chart from ShadowStats which shows the reported number, together with what the CPI would have looked like using the 1980 methodology.

CPI Sep 17

Instead of CPI going up around 2% as reported, if we keep the measuring stick constant using the 1980 formula, the CPI is rising just under 10% a year (almost in Double-Digit territory). And, since 1980, the CPI would have grown to about 2 ½ times its current high level if the 1980s methodology had remained in place.

As easy as it would be to criticize Obama for his awful deception, he just continued (worsened) a problem which started during the Reagan presidency and has continued through both Democratic and Republican control. Also remember that there were reasonable justifications for many of the changes. But, what is of utmost importance is that the numbers be comparable from year to year and from decade to decade.

Action Item: Return the CPI Standard to its 1980 methodology, recalculating and restoring the intervening years’ numbers. Place the CPI, and all other government created statistical standards, under the Constitutional protection of Article 1, Section 8, with a required ¾ majority in both houses to change one of these standards.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s