At Real Clear Politics the other day, I came across an article by economist, Arthur Laffer in the Wall Street Journal. the same Arthur Laffer whom developed the Laffer Curve during the Reagan administration. As I often do, I scanned the article and bookmarked it as a possible source for a post. Then this morning I had an e-mail in my in-box from Pat Slattery of The Free Market Project suggesting that I consider doing a post on an article by John Hayward about the Laffer article. And, I thank him. So, I will discuss both the Laffer and Hayward articles in today’s post on economic statistics.
Economic Statistics that Deceive
With good reason, we mere mortals, without a PhD, have to wonder if government agencies and politicians, including the President, are lying to us. Well, of course, they lie to us. That is a given. But, when it comes government generated statistics, they don’t so much lie to us as they don’t tell us all that we need to know. In other words, they tend to cherry-pick data to put the economy in the best possible. With today’s economy, that is more difficult than usual.
One example of government cherry-picking data is the reported inflation rate. According to the Federal Reserve, inflation is negligible. We know that is not true. The reason reported inflation appears low is that they do not include price changes in oil, gasoline, and food. The items that impact the budgets of 90% of the population the most are not included in the calculation of inflation.
Anther example of the government only telling us part of the story are the monthly employment numbers. I watched a news video the other day Debbie Whatshername-Schultz say how proud she was of Obama because under his leadership we have had 29 consecutive months of job growth. PROUD! Give me a break.! The workforce participation rate is getting smaller by the month! The July jobs report announced that non-farm jobs increased in July by 163,000. This was more than what was expected. The stock market went wild. If you want to know what really happened with the jobs market, check out this article at PJ Media and this article at Inform the Pundits. You will find out that there was a net loss of jobs in July. Just ask yourself why the unemployment rate increased to 8.3%?
So, with all the efforts to put our economy in the best possible light, our GDP is growing at an abysmal rate of 1.5%. That is pathetic! Let’s find out why our economy is so anaemic.
Some Economic Statistics Matter
The Obama administration, more than any administration in my memory, has based their economic policies on nothing more than tax and spend. Obama has set the all time record for government spending “crapweasels” like Paul Krugman and Democrats in general and the main stream media keep calling for more and more stimulus. (Crapweasel is a term Kurt Silverfiddle always uses when referring to Paul Krugman. It fits.)
One of the best ways to measure the success or failure of an economic policy is to look at the empirical results where that policy has been tried. This is exactly what Arthur Laffer has done and reports on his findings in this Wall Street Journal article and suggest that:
Policy makers in Washington and other capitals around the world are debating whether to implement another round of stimulus spending to combat high unemployment and sputtering growth rates. But before they leap, they should take a good hard look at how that worked the first time around.
Dr. Laffer looked at 34 countries that implemented stimulus programs after the 2008 financial crisis. The results weren’t very stimulating:
It worked miserably, as indicated by the table nearby, which shows increases in government spending from 2007 to 2009 and subsequent changes in GDP growth rates. Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus.
There is a table in Laffer’s article show just badly stimulus worked for these countries. John Hayward in his Human Events’ article about the Laffer report, like this quote from Laffer:
Often as not, the qualification for receiving stimulus funds is the absence of work or income – such as banks and companies that fail, solar energy companies that can’t make it on their own, unemployment benefits and the like. Quite simply, government taxing people more who work and then giving more money to people who don’t work is a surefire recipe for less work, less output and more unemployment.
” a surefire recipe for less work, less output, and more unemployment.” This reminds me of a conversation back in the eighties, to which I was present, between brother-in-law and two of his friends. They were all UAW members and employees of the Chevrolet plant in Flint, Michigan. They were all in their middle fifties and they had been doing some sharp penciling about whether it made sense for them to take early retirement at age 58. They concluded that with their General Motor’s pensions and Social Security (in those days you could opt for early Social Security at a reduced rate at 58) that it made no sense to keep working 40 hour weeks for just a few hundred dollars more. I’m thinking that the same thinking applies to many of our citizens on welfare and other government assistance. They are likely figuring why should they take a forty-hour a week job when they can do nothing for only a few hundred dollars less..
John Hayward would add something to Laffer’s analysis:
The other obfuscating factor I would add to Laffer’s analysis is that government spending is treated as highly significant by the media, while private investment is either ignored or criticized. The financial papers might carry tales of business success, and once in a while the public imagination is captured by a company like Apple… but none of that compares to the front-page, above-the-fold coverage given to huge government spending initiatives.
We know what Obama and his team are up to. With the support of the main stream media, they want to pull the wool over the eyes of those that still have a job (the majority of voters) by convincing them that the economy, however slowly, is steadily growing and now is no to change horses. Economic statistics do matter and it is going to be up to us, the conservative bloggers, to get the truth out there. It won’t come from the media, that is for sure.
Well, that’s what I’m thinking. What are your thoughts?