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If You Have to Ask, You Can't Afford It

Governmental distortion of truth through statistics is nothing new. We’ve seen irrelevant distractions, like the Johnson administration’s reporting of Vietnamese troops killed instead of actual battles one or territory gained in Vietnam—and a fading desire to discriminate friend from foe to keep those figures inflated. We’ve seen fudged values, like the Reagan administration’s technique of ignoring inflation when announcing only minor absolute cuts in social programs, when in fact they were making enormous real cuts. We’ve seen outright redefinition of values for comparison, like the Clinton’s announcements that unemployment was down—after they ceased counting people who had been looking for work within the past year, but not in the past six months. I suppose it should come as no surprise that the current, most secretive and deceitful of presidencies should employ all these tactics on a regular basis. But I have to take particular exception at their approach to inflation.

Officially, the current rate of inflation is 1.7% a month. This figure is already fudged a bit, being measured against the average of the most favorable spread of months to be found in the previous year. It is only by virtue of this hedging that Bush has been able to claim (incorrectly) that we are not in a recession. But even this fudged value 1.7% is still really high; that comes to 22% a year. (We no longer report annual inflation precisely because it looks so scary in print like that.) So the White House wants you to stop looking at inflation. Just look at the core inflation rate. That’s a measure of the increase of the cost of living attached only to the essentials, unaffected by changes in the price of luxuries.

Or rather, it used to be. Beginning in the Reagan years, the core inflation rate was repeatedly indexed against a changing, and ever cheaper, collection of products. A rise in the price of steak, for example, was ruled to be unimportant because, as steak got more expensive, people would switch to hamburger. So the figure was readjusted to hamburger—but still compared to the earlier figures including steak. Reagan introduced the core inflation rate as a way to detach official inflation reports from their ultimate purpose of accurately measuring the cost of living, substituting the cost of merely surviving. “Sure, you’re paying twice as much rent as you used to, but you could move into a slum for slightly less than you used to pay for a decent apartment, so your standard of living is going up!”

(But don’t take my word for it; Stephen Cecchetti was there in person: “As a young economist on the staff of the White House Council of Economic Advisers in 1980, I saw US consumer price inflation hit its modern peak of nearly 20 per cent. In an attempt to improve appearances, we started computing various alternative measures of inflation. Half jokingly one of my colleagues noted that our job was to remove all the components of the price index that rose by more than the average. What was left was the core.”)

Unfortunately for the Bush administration, even the cost of surviving is going through the roof: food and fuel prices are leading the current inflationary surge. Government-sponsored economists would like you to focus on the core inflation rate, because they can redefine that as Reagan did to conceal a declining standard of living, but those pesky essentials are making even the core inflation rate look bad. Their solution? Eliminate food and fuel prices entirely from even the core inflation rate, on the grounds that continuing to include them in inflation figures would distort the inflation figures.

That bears repeating: The Bush administration feels that to include rising prices in the official formula for measuring rising prices would distort the measurement of rising prices. That’s not just debatable economic theory; it’s not just false; it’s tautologically false. It is logically impossible regardless of the meaning, purpose, or context of the official inflation figures. That anyone can offer an argument like that with a straight face demonstrates just how far we’ve slipped into Bizarro World, where where up is down, white is black, and ignorance is strength just because the president declares it to be from his own little existential bubble.

Yet they will continue to push this new definition without the slightest recognition that there’s anything wrong with it, and will cheerfully ignore, or even attack, anyone who disagrees, as they have ignored or attacked anyone who has questioned their other blatant lies. And this new, reality-free concept of inflation will enter the national dialogue as though it had any meaning. It is already; economic apologists appearing on CNN repeat the appeal to core inflation instead of asking on our behalf why we aren’t looking at actual inflation, simply because that’s what the White House wants to talk about. Why wouldn’t it? After all, it’s not like anyone actually has to pay a significant portion of their budget for gas, heating, rent, or groceries. Not anyone who matters to the Bushies, anyway.

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