Marxian Economics

Marx

Government statistics are no longer credible.

Reports that the unemployment rate is dropping don’t compute with what is experienced. We all know people who have been out of work and looking for jobs for too long. Further we know people who now game the system, claiming to be work-less in order to collect benefits. Part of that is due to the benefits being attractive and part due to the economy being so bad.

We see economic hardship everyday. Too many homes are for sale in our neighborhood. Stores we used to frequent have closed. Neighbors opensly speak of how they are hurting and must cut back. How can an economy be recovering under such conditions?

Yet our government tells us not to worry. Things are getting better. Published GDP statistics say so. They don’t conform to what we see and hear. But few people understand what GDP is, no less how it is calculated. It is too detailed and complex for the average citizen to comprehend. However, when GDP sends messages that don’t conform to what happens in our own little world, we wonder whether any of this can be true.

Inflation is another matter. We see what is happening to the prices of products that we buy regularly. They are going up and they seem to be going up faster than government is willing to admit. When government tells us inflation is not a problem and it conflicts with our experience, that is something we can comprehend. Here is Stuart Varney on why food prices have skyrocketed in past year. Do the data presented by Mr. Varney suggest inflation is not a problem? How about energy prices?

It is possible to construct an index in such a way that it reports what you want (low numbers in this case). Although if it purports to be a “consumer price index,” what is more important than food? Weighting items like housing prices (which are still decreasing)  and the like can suppress the overall number if that is your objective. But people buy houses once every five or ten years. Housing is not a consumer good. Is it even relevant that it be included in a consumer index?

What we are seeing is Marxian economics is at work. It always fails, making people poorer. It always leads to government lying about conditions. We saw it with Cuba, the USSR, North Korea and all other Marxist states. Pretend it works even when it doesn’t. At this stage we are experiencing not Karl’s version but Groucho’s version at work:

Who are you going to believe, me or your own eyes?

The divergence between government statistics and reality has become so large that credibility is becoming an issue. Groucho’s approach has been combined with Karl’s in an effort to make you believe all is well. It is not and matters will get worse from here, although it is doubtful that reporting will improve until after the election. By then the pressures to paint rosy pictures will have declined and the gap between reality and fiction will have become even larger.