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Jun 11, 2012

Statistical Prosperity

Gov't Economist:  Eureka! We can hire more government workers. Everything we pay them will add to GDP according to our accounting rules. And, they will be employed.

Assistant:  What will be hire them to do?
Economist:  That doesn't matter. The statistics will be better.

Assistant:  Why not just "adjust" the statistics?
Economist:  You should be ashamed. That would be dishonest.

Government promotes itself as a scientific manager. It sets goals with numeric precision and finds direct ways to meet those goals.

Obama's economists come into his office each week and discuss how to improve the economy. They discuss the official statistics of GDP (Gross Domestic Production) and jobs held. The government wants a statistical recovery.

They want to report hard numbers, however that is accomplished. If you argue with numbers, you are a moron. Who are you to question the non-partisan measurements of a government bureaucracy analyzing huge datasets with giant computers? You are a peasant.

Those economists offer a direct plan. When government hires more workers, their pay and benefits are counted as increasing GDP no matter what they do or accomplish. Obviously, they now have a job, so the employment statistics improve. This is a no brainer!  It's a two'fer.

Expanding government employment directly and immediately improves the two statistics which government cares about. It is the direct path to statistical prosperity.

Plus, Team Obama believes in the Keynesian Multiplier. They actually believe that they will produce more wealth for us all, if they can pay out more cash to accomplish anything or nothing. So, it is a three'fer.

If the Multiplier were true, then we could Counterfeit Our Way to Wealth. But sorry, it isn't true.

Here is how government master plans, oversight, and statistics work out in reality.

Unintended Consequences and Perverse Incentives
06/2012 by M.J. Perry

[edited]  Managers and employees of glass plants in the former Soviet Union followed master-plan production guidelines.

First, they were rewarded according to the tons of sheet glass produced. Unsurprisingly, most plants produced sheet glass so thick that one could hardly see through it.  (And, this glass did not fit prior applications such as broken windows.)

The rules were changed to reward the total area of glass produced. Then, they produced glass so thin that it broke easily.

Team Obama wants to manufacture higher statistical GDP and jobs numbers in any way it can. Thick or thin doesn't matter.

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