Cooking the books betrays our trust

 David Strom, The Daily Record Newswire

One of the distinguishing characteristics of modern, well-functioning societies (we often call them First World countries) is that you can trust government statistics.

This is no small thing.

Modern economies run on data, and have for decades. Whether a business involves finance, retail, manufacturing, or services, data drives planning, and good planning maximizes efficiency and hence growth.

And economic growth, in turn, drives the ever-increasing quality of life that maintains the social contract and the legitimacy of a political system in which everybody agrees to compromise and accept being on the losing side in political disputes.

In other words, the political stability of rapidly changing modern societies depends at least partly on government bureaucracies staying above the political fray to be relatively neutral arbiters of the data that allows our society to function well.

In recent years, we have plenty of reason to believe that they are failing in that role.

The recent scandal at the Veteran’s Affairs Department is just the latest example of a very troubling trend. For years the VA medical system has been held up as a shining example of a health care system that works well —  works so well, in fact, that it should provide a model for health care reform in the United States.

That isn’t an ex post facto conservative fantasy. The New York Times, Paul Krugman, and the Washington Monthly have all pointed to the VA as a model for a superior socialized health care system that should supplant the fee-for-service/private insurance model in the U.S.

Philip Longman of the Washington Monthly wrote a book — originally published in 2005, and released in its third printing in March 2012 — called “The Best Care Anywhere: Why VA Health Care Would Work Better For Everyone” — that argued precisely what its title implied: The VA medical system works better that the private market precisely because it is data driven and centralized.

In 2007, the New York Times editorialized along the same lines, and Krugman attacked former Republican presidential nominee Mitt Romney’s health care proposals by citing the success of the VA.

Of course, we now know that the VA was cooking the books — along the lines that any embezzler does when stealing from an employer, or a Third World country does when trying to convince its citizens that things are better than they really are.

The VA’s lies didn’t just hurt veterans — which is more than bad enough — but it also changed the political debate about health care reform quite substantially. A large number of people were convinced that a system that was failing quite badly was in fact a beacon of quality, and a model for what ought to be done to reform 17 percent of the U.S. economy.

Cooking the books isn’t a new phenomenon, but it is especially worrisome when it creeps into official government data.

Many people, including more and more financial players and economists, are worried that the government has been cooking the books with inflation and other economic data. Any person who eats or drives — and that accounts for every person I know — is quite well aware that prices for food and energy have been skyrocketing. The $2.49 a pound ground beef at Trader Joe’s is now $3.99, and the gallon of gas that cost $1.89 a few years ago now costs $3.50.

Yet inflation is said to be “low,” or even “too low,” despite the fact that our salaries buy less every day. In turn that means interest rates are kept low, driving down incomes for people on fixed incomes. The Federal Reserve prints more money to prop up financial institutions and help fund outrageously high federal deficits, while citizens see their quality of life decline. Oddly enough, this is one of the main reasons driving income inequality up — the 1 percent are getting richer, government bureaucracies and employment go up, while the rest of us do worse.

Other economic statistics look sketchy too. Economic growth projections are almost all rosier than the facts turn out. On Thursday GDP growth numbers were released for the first quarter, and they were revised sharply downward. In fact, economic growth had been first reported as modestly positive, but the revised numbers showed a contraction in GDP of 1 percent.

Revisions happen, of course, as data gets crunched, but almost every revision in the past few years has been downward. It’s hard to believe that it is a coincidence that the better numbers get the headlines, and the worse are mere corrections of old news.

The politicization of hard data isn’t just “politics as usual” — it is a serious breach in the social contract. People make important, life-changing decisions based upon what they are told are hard facts. When those “facts” turn out to be politically driven spin, faith in the government rightly declines. Eventually we will reach a breaking point.

Politics is a rough and tumble game, and we would be idiots to assume that everything any politician tells us is the gospel truth. But at least until recently we could generally take what the bureaucracies tell us to the bank — literally.

That’s not true anymore, and I for one think that is setting us up for disaster.

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David Strom is principal at Think Write Do, a public affairs and communications consulting firm. He is also a senior policy fellow at the Center of the American Experiment.

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