The Uselessness Of Economic Statistics

Jane Galt, aka Megan McArdle, is one of the sharpest gals in the blogosphere. But she already knows that.

Anyway, I was checking out one of her recent posts on the ideas of the Left, fine as always, and started reading the many responses. (Boy, it would be nice to get a string of responses.) One persistent guy, Spencer, believed he could prove the Left is better for our economy than the Right. Trouble is, there are always thousands of things going on in the economy, and it's hard to show correlation is causality.

Let me give you an example of Spencer's statistics:

average real per capita income growth; 1960-1980 = 2.9% 1980-1992 = 1.7% (Reagan- Bush I) 1993-2000 = 2.9% (clinton) 2001 - 2004 = 0.8% (bush II).

So that's part of his evidence--and I'd say by far the best part. Let's say we accept the numbers (and I don't). They're still too simplistic to tell us much.

First, the decades of growth after WWII might be hard to compare with other eras, since we were practically the only major country in the free world that wasn't simply rebuilding from dust. Furthermore, following a lengthy Depression and a World War, we had nowhere to go but up, arguably.

As to the Reagan era, Dems love to pick it apart. But a big question here is what years are relevant. We had perhaps the worst recession since the great Depression in 1981-1982, and throwing those numbers into any grouping will greatly bring down the average. We have to ask ourselves, then, were the first couple of Reagan's years necessary to reverse the stagnation and high inflation of Carter, were they due to Reagonomics, or was it something else? It does seem to me when a new administration comes in it takes at least a year to get its programs in place, and perhaps another year or two for them to have an effect. (When Michael Kinsley tries to prove Dems are better, he--dishonestly, seems to me--gives the Prez only a year lead-time.)

Then of course, there are business cycles, pretty much unavoidable. Timing, in such cases, are everything. (Reagan wouldn't have been re-elected in 1982, nor Clinton in 1994, though Bush I would have made it in 1990).

Then there are sea changes. Did Reagan (or others) make big enough changes that we were able to enjoy their fruits in the 1990s as well (even after the fairly mild recession that knocked out Bush I)?

Then there's the question of whom to credit even speaking contemporaneously. Clinton was lucky enough to inherit an economy on the rise. But how much credit does a Clinton get, then, when six of his eight years (six very good years) were spent banging out agreements (budget, welfare reform) with a Republican Congress. (Obviously the same question goes for Reagan and Bush and their respective Congresses.)

Then there's the Bush II years. Congress was with him, so how much blame or credit should he get? Well, he did inherit an economy that was tanking. Then, not long into his first term, 9/11, which gave the market and the rest of the country willies for quite a while. You might think this would guarantee a mini-depression, yet even during the worst, the numbers weren't that bad, and for the past few years we've had solid growth and low unemployment.

I'm not an agnostic. Some measures are better for the economy than others (though, with any move, there will be winners and losers). I'm just saying if you insist that your way is best, it's not hard to find numbers that support you. How else can we explain all those upper middle class Nation readers who still believe in Marxism?