How Governments Manipulate Statistics Without Lying — Transcript

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1. 0:00hiring a lot of PhD statisticians in
2. 0:02order to create propaganda apart from
3. 0:04anything else is just an expensive way
4. 0:05of creating propaganda. Look, if I have
5. 0:08to buy you off and say create a
6. 0:09department of propaganda and we can have
7. 0:11low-level political hacks there who get
8. 0:13paid $40,000 a year, at least I'm going
9. 0:15to save us a lot of money.
10. 0:18>> Hi, Justin. This week you released a
11. 0:20video about how in August the Commerce
12. 0:23Department quietly scrapped its ban on
13. 0:25political interference in official
14. 0:27statistics. You talked about how
15. 0:29official reports can now be delayed,
16. 0:32buried, rewarded, or stripped of their
17. 0:34uncertainty. Today, I have several
18. 0:36follow-up questions from our audience
19. 0:38that I would like to ask you. I'm
20. 0:39Augusta. I'm a producer here at
21. 0:40Platypus.
22. 0:42>> I'm Justin Wolfers. Uh, this is the
23. 0:44professor is in. Think of this as office
24. 0:47hours. Uh, Augusta is going to open the
25. 0:49door. Come on in and bring me your
26. 0:52questions.
27. 0:53Welcome to my office, Augusta.
28. 0:56Okay, this was by far the biggest
29. 0:59question that we got from the highest
30. 1:01number of people in light of this. How
31. 1:04can we believe the most recent jobs
32. 1:06numbers?
33. 1:08>> Austo, I don't know if you you know
34. 1:09this, but when you and I started
35. 1:11talking, I woke up this morning in the
36. 1:13best mood. I was having the best day.
37. 1:15Just thinking about this makes me sad.
38. 1:18And the reason it makes me sad is cuz my
39. 1:20therapist told me anger doesn't help
40. 1:22anyone.
41. 1:23Um, okay. Breathe through it. We can get
42. 1:28to some of the reasons to be sad or mad,
43. 1:31but I'm going to give you the reason to
44. 1:33be glad. This whole issue is about the
45. 1:36Commerce Department. The Commerce
46. 1:38Department just rewrote the Commerce
47. 1:40Department's rules to say political
48. 1:43interference in statistics is okay.
49. 1:47It took the set of rules that provided
50. 1:49insulation and said you're not allowed
51. 1:51to do political interference,
52. 1:52inappropriate influence is inappropriate
53. 1:54and so on and it just crossed them out.
54. 1:55>> Right?
55. 1:56>> The commerce department is the parent
56. 1:59of the Census Bureau
57. 2:02which collects data like housing starts,
58. 2:04retail trade, um the American Community
59. 2:07Survey,
60. 2:09much of our important social data as
61. 2:12well uh as well as congressional
62. 2:14districts. Um it's also the parent of
63. 2:17the Bureau of Economic Analysis which is
64. 2:19most important because it collects the
65. 2:21GDP statistics and in fact the personal
66. 2:24consumption's expenditure deflator which
67. 2:26is the measure of inflation that the Fed
68. 2:29uses. So the commerce department
69. 2:31directive applies to the census bureau
70. 2:33and to the bureau of economic analysis.
71. 2:35Collectively those two are two very
72. 2:37important statistical agencies. The US
73. 2:40unlike other countries has many many
74. 2:41many statistical agencies. Just by
75. 2:44contrast, the Australia Australia has
76. 2:46the Australian Bureau of Statistics one.
77. 2:50The jobs numbers come from the Bureau of
78. 2:53Labor Statistics, which whose parent is
79. 2:56the Department of Labor. This directive
80. 2:59was a commerce department directive. It
81. 3:01flows straight down through commerce to
82. 3:03the Census Bureau and the BEA. But it
83. 3:06until the Labor Department adopts
84. 3:08something similar
85. 3:12then it still has its existing set of
86. 3:14protections.
87. 3:16Now
88. 3:19because of that
89. 3:21I don't believe there's been any
90. 3:22interference in labor statistics and
91. 3:25it's not just because of that. I also
92. 3:26have friends on the inside and also the
93. 3:29numbers make sense and
94. 3:33the sort of conspiracy that would be
95. 3:35required to just start telling lies
96. 3:37about the unemployment rate is very uh
97. 3:41it would involve so many people and this
98. 3:42administration leaks anytime there's two
99. 3:45people in a room.
100. 3:46>> Um so I feel like we're in pretty good
101. 3:49shape there. I also want to point out
102. 3:51one really important thing for our
103. 3:54audience for how you think about how
104. 3:56statistics get manipulated.
105. 3:59The easiest thing to do is think of a
106. 4:00conspiracy. A bloke with a big cigar out
107. 4:02the corner of his mouth picks up the
108. 4:04phone and orders up uh
109. 4:08orders up. Hey, could you make the
110. 4:10unemployment rate 2.8%.
111. 4:12And you just lie. You just go into
112. 4:14Microsoft Word and you delete 4.1 and
113. 4:17you type 2.8 Right?
114. 4:19In the history of statistical
115. 4:21manipulation, it's almost never how it
116. 4:22happens. And I think it's really
117. 4:24important for people to understand that.
118. 4:25What you do is you for instance change
119. 4:27the definition of unemployment or you uh
120. 4:31change the the statistical weights that
121. 4:34are used or instead of relying on the
122. 4:37household survey or sorry the the firm
123. 4:40survey you you rely on the household
124. 4:42survey or you change the industry
125. 4:45definitions or you only look at citizens
126. 4:48or only look at non-citizens or there's
127. 4:51so many ways you can make this month's
128. 4:53number incomparable with last month's
129. 4:55number or you just bury the number, you
130. 4:58stop publishing. If they changed the
131. 5:00definition of unemployment, we'd see.
132. 5:02So, the thing is it actually happens in
133. 5:04broad daylight. And that's partly
134. 5:06because trying to manipulate statistics
135. 5:08in the dark requires a conspiracy too
136. 5:12difficult to pull up.
137. 5:15Let me look folks in the eye and make
138. 5:17you a promise. As soon as I think we
139. 5:20can't believe the numbers, I will tell
140. 5:22you.
141. 5:23I want to point out and I think this is
142. 5:26very important.
143. 5:27What they did is they changed the rules
144. 5:30to allow the Census Bureau to create
145. 5:32propaganda in the future. That is
146. 5:35different from a claim that Census
147. 5:37Bureau data are unreliable. It says look
148. 5:40out this could happen.
149. 5:43Um,
150. 5:44and so far there's nothing that looks
151. 5:47and in fact I believe that the career
152. 5:49public servants are going to continue
153. 5:50doing their job and continue doing good
154. 5:52economic measurements and if you get
155. 5:54nihilistic about this and this may be
156. 5:57what they want then you say we can't
157. 5:59believe the Census Bureau statistics
158. 6:02then there's no truth and if there's no
159. 6:05truth there's no foundation for any. So
160. 6:08you've partially answered this question,
161. 6:10but I think it's worth posing directly
162. 6:12because a lot of people asked this as
163. 6:13well, which was in a broader sense, does
164. 6:17this mean that we can trust any numbers
165. 6:19that are coming out of this
166. 6:20administration?
167. 6:22>> So far, there's no evidence that any
168. 6:24numbers have been messed with out of
169. 6:26this administration. One exception. The
170. 6:28exception is the report on so-called
171. 6:32voter fraud in the 2020 election. We
172. 6:35made a video about that. I lived up to
173. 6:37my promise to our audience, which is I
174. 6:39looked at her in the eye and I said,
175. 6:40"This is a lie. This is incoherent. This
176. 6:44is more wrong than it is right. This is
177. 6:46the result of political interference.
178. 6:48This isn't serious." Wow. That ruined my
179. 6:50day when they did that because what it
180. 6:52did is it destroyed a century, you know,
181. 6:54a decadesl long tradition of attachment
182. 6:56to and dedication to the truth by people
183. 6:59who work so hard to defend the
184. 7:01reputation of an organization
185. 7:04that will now take decades to put back.
186. 7:07But again, we don't live in a world
187. 7:09where you get to make up your own facts.
188. 7:12I'm angry about this change at the
189. 7:15commerce department because it moves us
190. 7:17closer to a world in which a trusted
191. 7:19source of truth may become less trusted.
192. 7:23But so far this is one of the world's
193. 7:26leading statistical agencies and with
194. 7:28the exception of one report that had
195. 7:29ever released it has been absolutely
196. 7:31relentless in publishing its best
197. 7:34understanding of the truth. And I know
198. 7:37that there are people who are so mad at
199. 7:39politics right now, all they ever want
200. 7:41to do is throw away inconvenient truths.
201. 7:43That might help you feel good, and it
202. 7:45might help you win a debate at the
203. 7:46basketball court, but throwing away our
204. 7:48only understanding of the truth will not
205. 7:50lead us to a clearer view of the world,
206. 7:54better policies, and better economics. I
207. 7:57am not asking anyone to be a fool. A
208. 7:58fool is someone who says, "Well, the
209. 8:00president may have lied in the past, but
210. 8:02I'm going to bully him this time." I
211. 8:04don't want that naivity. The rule of
212. 8:06thumb was if it comes out of the White
213. 8:08House and if it comes out of a cabinet
214. 8:09secretary or a political appointees
215. 8:11mouth. In the past
216. 8:15that would have meant the number was
217. 8:16true but cherry picked. In the present
218. 8:20it's not even true. Like literally
219. 8:23making up numbers. Drug prices haven't
220. 8:25fallen 600%. I know that's surprising.
221. 8:28The US has not had $20 trillion worth of
222. 8:31investment under President Trump. uh
223. 8:33because that would be nearly all of GDP.
224. 8:36Um so those numbers have all gotten to
225. 8:40the point of being so relentlessly
226. 8:41unreliable, they're not even
227. 8:42cherrypicked and true, they're just
228. 8:44false.
229. 8:45Numbers that came out of an official
230. 8:47statistical agency, the Bureau of Labor
231. 8:48Statistics, the Census Bureau, the
232. 8:51Bureau of Economic Analysis, the most
233. 8:53prominent ones, um those numbers have
234. 8:56always been true. They're muddying up
235. 8:59the information environment to make it
236. 9:01hard to know what, if anything, is true.
237. 9:04This upsets me because I come from a
238. 9:06world in which I think truth is the only
239. 9:08way to freedom.
240. 9:10Um, I think the stakes can't be
241. 9:13overstated. And with this new directive
242. 9:16and what that signals for the future is
243. 9:18putting us in the same set of tinpot
244. 9:20dictators
245. 9:22like Russia and Argentina and Venezuela
246. 9:27that is a club we don't want to be in
247. 9:29and this is a story that has never ever
248. 9:32ended well. So if that is the case, if
249. 9:37this is a potential step down a very
250. 9:39terrible path,
251. 9:42what are the chances or what are the
252. 9:44incentives for the next administration
253. 9:47to reimplement these protections? Is
254. 9:49this high on anyone's priority list?
255. 9:51>> There's a reasonable chance that the
256. 9:53next administration at some point will
257. 9:55ask me for some advice on some stuff. My
258. 9:57commitment to truth is absolute.
259. 10:00I will tell them let's get statistical
260. 10:04agencies in the business of truth.
261. 10:06Hiring a lot of PhD statisticians in
262. 10:08order to create propaganda apart from
263. 10:10anything else is just an expensive way
264. 10:12of creating propaganda. Look, if I have
265. 10:14to buy you off and say create a
266. 10:15department of propaganda and we can have
267. 10:17low-level political hacks there who get
268. 10:19paid $40,000 a year, at least I'm going
269. 10:21to save us a lot of money. It's an
270. 10:24economist perspective for you. Um, every
271. 10:27serious social scientist I know thinks
272. 10:30that the value of data
273. 10:33is very high.
274. 10:35That adding propaganda to data buys you
275. 10:39very little propaganda value, but it
276. 10:42undermines the value of all the
277. 10:43statistics you've collected because
278. 10:44instead of knowing you have the truth,
279. 10:46now you know there's some TN you have
280. 10:48the truth and some TN you have
281. 10:49propaganda.
282. 10:50There's a very real question is if what
283. 10:52we're going to do is allow the
284. 10:54statistical agencies to produce
285. 10:56propaganda, maybe we should just slash
286. 10:57their budgets because the data they're
287. 11:00collecting literally has very little
288. 11:02value if we no longer know if it's the
289. 11:04truth. I don't want to overstate it and
290. 11:06say let's get rid of all statistics, but
291. 11:08it's not clear that having statistics
292. 11:10mixed with propaganda has much value at
293. 11:12all. Uh so for sure I'll be in favor of
294. 11:15it. Every serious Republican I know
295. 11:19serious
296. 11:21they might be doing a lot of work there
297. 11:24says that knowing the truth is useful
298. 11:26for
299. 11:28creating useful policy.
300. 11:30So the only counterargument is well our
301. 11:32guys can use it to our advantage. We'll
302. 11:34leave it to the next guys to clean up.
303. 11:36And actually, I think this is at a piece
304. 11:38of a broader part of the Trump agenda,
305. 11:41which is the president through a range
306. 11:43of things, whether it's taking um
307. 11:46taking power from Congress,
308. 11:49um whether it's moving to a world in
309. 11:52which the White House lies rather than
310. 11:54cherrypicking truths and so on. He buys
311. 11:57himself short-term political gain, but
312. 12:00he hasn't thought about the future. in
313. 12:01the future is, you know, if he appoints
314. 12:02deep partisans to the Supreme Court,
315. 12:04what do the Democrats have to do? If he
316. 12:06blows out the budget without caring
317. 12:08about the future so he can spend money
318. 12:10on Republican priorities, what should
319. 12:12the Democrats do? And if what we get is
320. 12:15the next party says, "Well, you guys did
321. 12:17all this irresponsible stuff for
322. 12:19short-term political gain. Well, we need
323. 12:21that gain no less. We're going to do
324. 12:23that." Then we end up in a country that
325. 12:24basically can't govern itself.
326. 12:27And that's why I really think on all of
327. 12:31these issues, Congress just needs to be
328. 12:32a whole lot more active because if all
329. 12:34you're doing is governing for the next
330. 12:36news cycle and you've set up the
331. 12:38incentives for the other side to govern
332. 12:40for the next new cycle, then you'll
333. 12:41never do anything like put the budget
334. 12:43anywhere back on a sustain sustainable
335. 12:46fiscal trajectory again. this style of
336. 12:48short- termism
337. 12:50which you know essentially you can think
338. 12:52about the old rules were uh we're mostly
339. 12:55going to tell the truth. We're mostly
340. 12:57going to act in our long-term better
341. 12:58interests and occasionally we'll put a
342. 13:00thumb on the table our thumb on the
343. 13:02scale our way and if what you do is you
344. 13:04jump on the scale and you don't bother
345. 13:05doing any governing in between then you
346. 13:08break the system for both sides which
347. 13:09means you're breaking for Americans.
348. 13:12So this is my last question and this is
349. 13:14uh something a few people alluded to. Do
350. 13:18you have a rule of thumb or a way for
351. 13:20people to assess statistics who are not
352. 13:22trained in it? Any way that they should
353. 13:24look at these statistics and think about
354. 13:26what they really mean because many of us
355. 13:29and I'm including myself in that do not
356. 13:30have a PhD in economics and and don't
357. 13:32know how to really think deeply about
358. 13:34this.
359. 13:35>> Yeah. Um yeah. So, first of all, let me
360. 13:39just describe the foundational story of
361. 13:41Platypus Economics. I want to empower
362. 13:43you to be able to do this. If what we
363. 13:46did was left at all to talking heads on
364. 13:48TV, there are a bunch of dopey leftwing
365. 13:50talking talking heads and a bunch of
366. 13:52right-wing dopey talking heads. And when
367. 13:53you watch TV for too long, all you
368. 13:56realize is you got a whole lot dumber
369. 13:58and half an hour of your life just
370. 14:00slipped away.
371. 14:02So, the current ways we think about this
372. 14:04or communicated this, I think, are quite
373. 14:06broken. Um, and so the goal of Platos
374. 14:08economics is to teach the world
375. 14:09economics. I want to give you the skills
376. 14:11to be able to think through these issues
377. 14:14for yourself. My theory of the case, we
378. 14:16all have different theories, but my
379. 14:18theory of the case is the world will be
380. 14:20a better place if people have the
381. 14:24economic skills to navigate it a little
382. 14:27more subtly. So,
383. 14:29glib answer, watch platypus economics.
384. 14:32Um, let me give a more serious answer.
385. 14:34When you're thinking about statistics,
386. 14:37the rule of thumb I gave earlier was if
387. 14:39it comes out of a statistical agency,
388. 14:41and I want to be clear, that's the
389. 14:42Bureau of Economic Analysis, the Bureau
390. 14:44of Labor Statistics, the Census Bureau,
391. 14:47um, for climate staff, Noah, um, these
392. 14:50are official statistical agencies, the
393. 14:52Federal Reserve, the Congressional
394. 14:53Budget Office, they all tell the truth.
395. 14:56if it comes out of someone who if you've
396. 14:59ever visited Washington on a school
397. 15:01trip, uh the White House is at 1600
398. 15:04Pennsylvania Avenue. There's a big fence
399. 15:05around it and inside that fence there's
400. 15:07a whole lot of other organizations and
401. 15:09acronyms. Um there's obviously the
402. 15:11president, the vice president, there's
403. 15:12also the cabinet. There's the Office of
404. 15:14Management and Budget, OM, there's the
405. 15:17Council of Economic Advisers, CA,
406. 15:19there's the National Economic Council,
407. 15:21NEC. These all sound very official, but
408. 15:23the important thing to understand is
409. 15:24their address is 1600 Pennsylvania
410. 15:26Avenue. 1600 Pennsylvania Avenue is a
411. 15:29political organization devoted to
412. 15:31achieving political ends and at the
413. 15:34moment despite the truth that in fact at
414. 15:37war with the truth. Um, so recognizing
415. 15:40what comes from 1600 Pennsylvania Avenue
416. 15:42versus the official statistical
417. 15:44agencies. And it gets hard because when
418. 15:45we're talking about the budget, a lot of
419. 15:47the budget numbers come from the Office
420. 15:48of Management Budget and Budget,
421. 15:51which is full of lying liars who lie.
422. 15:53But a lot of the better projections come
423. 15:55from the Congressional Budget Office,
424. 15:56which in fact is independent and totally
425. 15:59serious.
426. 16:01Boy, who can keep track of OM versus
427. 16:03CBO? it feels like there's a lot going
428. 16:05on and everything's got a a TLA, a
429. 16:08three-letter acronym. Um, and so this
430. 16:11all becomes difficult. The other thing
431. 16:12then is to suggest that you become a
432. 16:14discerning consumer of economic news. So
433. 16:18this is not an advertisement for me off
434. 16:20a platus, but it is thinking about who
435. 16:22has a track record of relentlessly
436. 16:24telling the truth. A very simple rule of
437. 16:27thumb is that someone who's lied to you
438. 16:28once will lie to you again. And so in
439. 16:31academic life, if you're guilty of
440. 16:33intellectual misconduct, of lying, we we
441. 16:37drum you out. We say you're not welcome
442. 16:39here anymore. And that, I think, is
443. 16:42actually useful guide for thinking about
444. 16:44all of these things. So there are many
445. 16:46so-called experts that you'll see um
446. 16:49turn up on cable TV, Larry Cuddlo,
447. 16:52Steven Moore, Peter Navaro, who are
448. 16:55lying, liars who lie. And once they've
449. 16:57lied to you, once they will lie to you
450. 16:58again. get rid of them. They're a very
451. 17:01good and very serious conservative
452. 17:03economist. Greg Mankey is a very dear
453. 17:04friend of mine. Doug Holtzen has
454. 17:06enormous integrity. Um they're a very
455. 17:09good and very serious leftwing
456. 17:10economist. Um so be very thoughtful in
457. 17:14that diet. Um, and then anything that
458. 17:16has a name like America First or,
459. 17:20you know, America's Super Dupart, you
460. 17:22know, all these think tanks and groups,
461. 17:25they all seem to be called America
462. 17:27Eagles, Fireworks, Guns, Woohoo, um,
463. 17:30they're not very imaginatively named,
464. 17:32but if they sort of sound like
465. 17:35um, a bad college rock band, um, they're
466. 17:39probably in the propaganda business.
467. 17:41Again, not uniformly true. They're very
468. 17:42good and very serious think tanks. The
469. 17:44Heritage Foundation is a joke that
470. 17:45hasn't told the truth in decades. The
471. 17:47American Enterprise Institute is a
472. 17:50centerright organization that I held in
473. 17:52quite high esteem. The Brookings
474. 17:54Institution is a very serious outfit
475. 17:55that I hold in very high esteem closer
476. 17:57to center left. Um, so thinking about
477. 18:00the WHO, unfortunately, is a very easy
478. 18:03shortcut to thinking about whether
479. 18:05something is likely to be truthful.
480. 18:08>> Thank you, Justin. And thank you so much
481. 18:10to our audience for these questions. We
482. 18:12really hope that you enjoyed and learned
483. 18:14something from this episode of The
484. 18:16Professor is In. If you would like your
485. 18:18question answered in a future segment,
486. 18:20leave a comment if you're watching this
487. 18:22or listening to this. And make sure to
488. 18:24like and subscribe to Justin and
489. 18:26Tupatopus Economics on YouTube, on
490. 18:29Substack for an audio only format. You
491. 18:32can subscribe to us wherever you listen
492. 18:33to your podcasts. Thank you so much.
493. 18:36>> And one last thought before we go.
494. 18:39Washington won't care about this issue
495. 18:41or any issue unless voters care about
496. 18:44it. The whole point of trying to
497. 18:46describe all of this is so that folks
498. 18:47out there can understand what's going
499. 18:49on. And if you get active, then we can
500. 18:51get a step closer to the truth. Uh,
501. 18:54look, none of us know exactly what the
502. 18:56truth is, which is why I always end on
503. 18:59stay curious.