Government Uses Statistics to Lie about Economic Realities. We Don't Need Their Numbers.
No amount of data manipulation can quantify individual human experience
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Ayn Rand once said “Every artist is a moral philosopher,” and I would argue economists aren’t much different from artists in that regard. Much like artists offer commentary on society through their creative works, economists reveal their philosophical view of society with every work they release whether it be a study, article, or book.
The deep philosophical connection between economics and people can’t be broken. If you’re an Austrian School economist, you understand the economy is a metaphorical living organism made up of people making individual decisions every day. If you’re a political economist, you view these individuals not as free people left to make their own choices, but cogs in a machine that can and should be manipulated, or nudged, for the “best” outcome for a collective.
The problem is, Like Mao’s Great Leap Forward or the atrocities committed by the Stalinist regime during what is now known as the Holodomor, an authoritarian group’s opinion on what “the best outcome for a collective” really is generally ends in disaster.
“Statistical Calculation Doesn’t Equal Sound Logic”
I spent most of my Monday with all of these economic and philosophical implications roving around in my head. This spark of thinking happened after reading Mises Institute writer Robert Aro’s recent article “More Lies in the CPI,” where he uncovers the many ways political commentators along with the Department of Labor and Statistics use data to paint consequences of federal policy in a deceivingly favorable light.
Referencing the latest CPI report that shows inflation is at 6.5%, Aro expertly goes through the faulty inputs behind this data that has become one of the most followed and reported on economic indicators that consumers and political figures use.
Aside from shoddy inputs like population samples used, charts show itemized inflation for individual products like milk and bread. My Austrian economist brain always leaves me asking:
Who the hell is the one actually deciding how much an egg costs?
In a free market economy, it would be the consumer, who always has the final say in whether he or she buys a product or not.
But in a centrally planned “economy” with heavy government intervention, which is exactly what we have, how is the unit price of an egg listed in this chart, released by some faceless government department, really determined?
After all, the naturally-occurring producer-consumer pricing mechanism has been destroyed, or heavily manipulated, in a socialized “economy.”
With that in mind, why do we accept these statistics at face value without further inquiry?
Aro’s questions driven by sound logic and reason are a breath of fresh air, and it’s comforting to know I’m not the only one leery of this data-only revolution we are currently experiencing.
Historic economic data only goes so far when it comes to human nature and our experiences in the real world.
For a full breakdown on how the federal government “massages” these statistics to produce reports in their favor, read another of Aro’s articles, “Inflation: The Art of Moving The Goal Posts.”
No matter how many times a bureaucrat or mainstream news outlet uses faulty CPI statistics to quell fears about the economy, their reports do not comfort you while you’re at the pump or grocery store. Inflation is indeed not transitory, and it’s getting worse.
Government’s “Dangerous Obsession with Statistics”
Aro’s eye-opening articles brought me back to Murray Rothbard, fully immersed in his endless scope of knowledge.
As an artist, the current entertainment industry’s obsession with data has never sat right with me. Sure, general figures can be helpful when executing marketing campaigns. But in reality, nothing beats the Hemingway model when it comes to developing a following,
“Just sit in front of your typewriter and bleed.”
Nothing beats poignant, moving art and honest, personal conversations with people. At the end of the day, as subjective as tastes in art can be, you can’t automate your artistic career.
This realization translates easily to the economic world.
Rothbard goes into this in “The Politics of Political Economists” which first appeared in Economic Controversies.
He spends part of his commentary focusing on the different economic camps, particularly Austrian School economists, or free market economists, and Interventionist economists, or political economists.
Understanding the difference between the two means understanding the difference between freedom and tyranny.
Austrian economists are deeply entrepreneurial. They are the only school I’ve ever studied who actually fixes the entrepreneur, or the producer, at the forefront of the economy.
Interventionists always fix government at the center, with key political figures, or captains, steering their ship, the economy, wherever they please as minnows, us serfs or laymen, are taken control of underneath by its unsteady current, with ultimately no choice in the matter as the vessel is driven straight into an iceberg.
Market entrepreneurs will always have superior knowledge of the economy because they are the true drivers of it, along with consumer wants and needs of course.
Contrary to popular belief, government workers are not vital in any way to the economy. Actually, the government is antithetical to the economy. Don’t believe me?
Rather than data, which we’ve already established is highly flawed and faulty, let’s look at some history:
The Soviet Union
The U.S.S.R. “economy” was one of the most centrally planned economies the world had ever seen. The government, or the State, owned all of the means of production, therefore its job was to control the prices, production, and exchange of goods for the economy. The results were disastrous, even down to their failure of ordering goods properly, which should be done by individual unit amount. Instead, the State did it by cumulative weight. This common Soviet problem is highlighted in this vintage comic piece.
As I mentioned above, centrally planned economic enforcements like collective farming resulted in famine. Now known as “The Holodomor,” Stalin’s authoritarian regime killed almost 4 million Ukrainians who literally starved to death.
Weimar Republic
Before Hitler ever enacted his Nationalist Socialist rule in Germany with the Third Reich, the country experienced what happens to currency when big government is at the center of an economy.
After taking Germany off of the Gold Standard in order to pay down war debts from WWI, the country’s ruling class continued to kill off any entrepreneurial will that was left by increasing regulations, bullying business owners, enacting tax after tax, and all but stopping trade.
One can only understand just how Hitler came to power by understanding the intense and draconian economic struggles German people went through by studying the Weimar Republic.
Venezuela:
It is often the story associated with economies subjected to socialist policies, and it’s cited in this Mises Wire article as well, “...death by a thousand cuts.”
That’s precisely what happened to Venezuela’s economy as its government enacted increasingly interventionist policies over decades.
Like the Weimar Republic, the South American country experienced horrible hyperinflation starting in the 2000s, and is still dealing with its effects today.
The Venezuelan government’s interventionist, socialist policies date back to at least the ‘70s, when it (also like the Weimar Republic) took its currency off the Gold Standard. To be fair, America did the same thing as well, severing any tie to gold we had left in ‘71.
Just for kicks, have a look into how it all started with the Bretton Woods Agreement then scream into a pillow for a few.
As if taking a page out of a Keynesian playbook, the country then established a central bank.
It also nationalized its oil industry, which was its most profitable resource that powered its economy.
Once interventionist policies got a stranglehold of the economy, it was too late for any of the government’s half-hearted attempts at ushering in market measures.
A constant increase in the money supply to fund socialist policies and to try and hide economic damage took its toll and hyperinflation set in. Despite heroic protests by Venezuelan citizens, their despotic government couldn’t be stopped.
In 2022, over half of the country’s population was still considered to be in extreme poverty.
These are just a few examples of what happens when governments attempt to plan the economy. The list unfortunately goes on and on.
The few examples I’ve included in this article should show you political economists are daft when it comes to business, freedom, and people. And anyone who supports these clowns is either lazy or stupid. I have been called much worse by them so I don’t feel bad for saying that.
The best economists are like entrepreneurs. They understand human existence can’t be quantified, or “planned.”
To further illustrate the extent to which the lies go, if you look up whether the Soviet Union was Capitalist or Communist on Google, this is the answer you get:
Just a reminder, government’s relationship with Google has long been documented. The search engine is not some bastion of objective truth.
Also, the Soviet Union’s ultimate goal was indeed communism, and nothing about their so-called economy was even remotely capitalist.
Planned Economies Fail Because Human Experience Can’t Be Controlled
America’s Great Depression was driven by and prolonged by excessive taxes, regulations, zombie government programs, and worst of all, tariffs.
In 1913, the Federal Reserve Act took effect as a supposed safeguard against economic crisis because it made money “more elastic.” Isn’t it ironic though that one of the world’s worst economic disasters took place after The Fed’s creation?
The Smoot-Hawley Tariff Act also served as a catalyst for the forthcoming bust of the 1930s.
Only when the government rolled back taxes, got rid of tariffs, and allowed entrepreneurship to blossom after WWII did America pull herself out of the worst economic turmoil the country had ever experienced.
Planned economies fail because the human experience can’t be controlled. If you think it can and should be, and consider yourself virtuous because of it, you have sociopathic tendencies.
Due to the government’s abusive role in our lives from day one of our existence, we are taught that desiring control of one another is normal, and obedience is a virtue.
No matter how many times a government tries to successfully control an economy, it ultimately fails. An economy’s lifeforce is the brilliance of entrepreneurial minds behind it who supply indispensable goods and services to consumers. Economies are powered by genius innovation that comes from the freedom to think and create.
Governments can imprison people. They can’t imprison ideas.
Data only goes as far as the objectivity of the person interpreting it.
And in this world where statistics reign supreme while reason is abandoned for emotionalism, we are experiencing a poignant lack of humanity and truth.
You are more than a number to be manipulated.
You are an entire universe inside one body.
And every chance you get, remind politicians and bureaucrats of your intrinsic worth.
Remind them, that’s one thing they’ll never get to regulate into submission.
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Live rebelliously,
-Rebecca-
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