When President Jimmy Carter was running against President Gerald Ford in 1976, the economy was by most standards doing very poorly, and Carter wanted to focus on this condition to make his case for the presidency. In the process, he coined the term “misery index.” Typically, unemployment and inflation tend to run in counter cycles with one running higher, while the other runs lower. In the 1970’s, we suffered under both high inflation and high unemployment and the sum of the two is what Carter defined as the misery index. Carter’s new index had a saliency because it was easy to understand and it reflected the sad concurrent economic experience of most people.
Carter inherited an historically high misery index in the low teens from Ford, but managed to steer the economy into a misery index over twenty before handing over to President Reagan an economy at a misery index in the high teens. The misery index plummeted thoughout Reagan’s two terms. Reagan’s second term ended at the post-war average of ten for the misery index. We have either been just a little over ten or substantially below that figure since then. Indeed, the first four years of George W. Bush’s Administration had a lower misery index than Clinton’s first four years.
The current misery index is about where it was when Bush took office despite an inherited recession and the attacks of September 11. The current inflation rate of about one percentage point less than is less than the post-war mean of 4.4% and the current unemployment rate of 5.5% is less than the post-war average of 6.4%
Under these conditions, the traditional misery index was useless as a political bludgeon to go after Bush. Hence, Democratic presidential candidate John Kerry yielded to the temptation to conjure up a new misery index. Kerry’s index was so contorted and convoluted that it made Jimmy Carter’s record of double digit inflation and double digit unemployment (and should we add double-digit interest rates) appear to be better than our current, comparatively benign conditions. Not even Democratic partisans bought into the index because it was more likely to highlight Kerry’s intellectual dishonesty than it was to persuade people that Carter’s economic experience of the 1970’s was to be preferred. Voters were not convinced in 1980 that the economy was doing well when they dumped Carter in a landslide and they were not likely to be convinced that conditions are worse now.
While the employment rate, the traditional measure of unemployment, has been steadily declining, Democrats reverted to citing to everyone who would listen, the payroll survey numbers. This employment index shows a net decrease of 1.1 million jobs since Bush assumed office. Now, in fairness the peak in employment in the payroll survey data came in late 2000 and the downward trend began before Bush took office. Indeed, during the first year of the Bush term, which included not only an inherited recession but the September 11 attacks the total employment as measured by the payroll survey dropped by 1.7 million. The employment bottomed out in August 2003. With fits and starts, the payroll employment survey indicates that 1.5 million jobs have been added in the last year.
However, the payroll survey is not the only measure of employment published by the Bureau of Labor Statistics. The Bureau also computes an employment index based on household surveys. They literally call 60,000 households and ask them if they are employed. This last month, the payroll survey showed just a 32,000 increase in employment, while the household survey showed a 600,000 person employment increase. Indeed, this latter measure has show a significant increase of 1.8 million in total employment over the last four years. This represents an over 3 million person disparity between the two employment indices. This clearly represents more than statistical fluctuations between the two surveys. Thise recent divergence between the surveys has puzzled economists.
Economists have generally preferred to use the payroll survey because the sample size (400,000) is larger, reducing the month-to-month sampling variability and the two surveys have tracked reasonably well in the past. However, there is more to accuracy than statistical sampling errors. Part of the problem may be associated with the fact that the press has been focusing primarily on the preliminary rather than revised monthly numbers. The payroll survey is often revised months even years later. These revisions have often been dramatic. The payroll employment survey for 1992 was adjusted so many times in the following two years that 1992 (the last recovery) went from showing a net job loss to a net gain. Hence, the payroll survey is a much better retrospective tool than when considered in “real-time.”
It is also well known that certain corrections have to be made to the payroll survey data. If during a single month a person moves from one job to another, that employee is counted twice. This will tend to inflate the payroll survey data. Attempts are made to adjust for this. However, if during different parts of the business cycle, employed people are more or less apt to switch jobs than average, it can introduce biases in the survey. In addition, self employment and employment in new firms is often missed in the preliminary payroll survey measurements, but caught in the household survey. However, unemployed people may report themselves a “self-employed” perhaps out of denial.
All these are rather technical issues and there is not doubt that the Bureau of Labor Statistics does a professional and credible job attempting to capture snapshots of the state of the dynamic and diverse economy. However, the question must be asked why an esoteric and heretofore little known statistic has gained such prominence. One cannot blame Democrats for trying to use it because, of the three employment measures: the employment rate, the payroll survey, and the household survey, the payroll survery was the single most politically exploitable. Partisans often pick and choose indices to suit their purposes. However, one can blame the press for grasping on to this particular index, downplaying the more traditional unemployment rate without a clear reason why.
At the very least, attention should have been given the different measures of employment and their respective advantages and disadvantages. These indices must be considered in the light of other measures like the number of unemployment claims, withholding tax receipts, and indices of real earnings. One wishes that the national media would devote the same level of professionalism to covering economic statistics as the Bureau of Labor Statistics exhibits in their creation and maintenance. In the end of course, reporting on the economy can only effect perceptions at the margins. Though the margins can be important in close elections, by-and-large, people vote based on their personal economic experiences not on indices.
References
- US Bureau of Labor Statistics.
- Kane, T., Diverging Employment Data, The Heritage Foundation, March 4, 2004.
Destructive Anger
Sunday, August 22nd, 2004To even the inattentive or preoccupied, Ronald Prescott Reagan, the son of former President Ronald Wilson Reagan, is outwardly his father’s son. You can see it in their shared confident gate. You can see it in their famous and endearing Reagan smiles. You can even appreciate it in the same way they shake their head and say, “Well.” However, on a more fundamental level, in their world views, in their personalities, in their decency, they could not be more radically different.
Ron Junior is not only a liberal, but radically so. He has been active in the “Creative Coalition,” a Left-wing group to politically organize artists. Ron Junior voted for Ralph Nader in 2000; Gore was not liberal enough for him. The elder Reagan was not only a Conservative, but “Mr. Conservative.” Ron Junior is a self-proclaimed atheist, while his father was a quietly religious man. These are important intellectual and essential spiritual differences. Though such differences can vastly separate two people, the hope can remain that through honest dialog some differences might be bridged and those that remain may at least not be the source of prolonged bitterness. But unfortunately, there are ironic and sad dissimilarities in the temperament and dispositions of the former president and his namesake.
Ron Junior had it right when he said of his father when eulogizing him, “He was the most plainly decent man you could ever hope to meet Dad treated everyone with the same unfailing courtesy.” It would have been out of character for President Reagan to have descended into the personal vituperative attacks of a political adversary in the same way that Ron Junior has done with respect to President George W. Bush. When exasperated, a smile would crawl across the elder Reagan’s face as he would light up and lament, “There you go again.” By contrast, most are repelled by the single-minded bitterness of the younger Reagan when he says of the current Administration, “they traffic in big lies, indulge in any number of symptomatic small lies, and, ultimately, have come to embody dishonesty itself. They are a lie.”
Upon what evidence does the younger Reagan assert this pervasive mendacity? In a recent opinion piece, “The Case Against George W. Bush,” that appears in Esquire, Ron Junior cites George Bush’s presidential 2000 campaign when Bush eschewed an activist foreign policy, with the US actively confronting adversaries across the world. Now, Bush has deployed troops to Afghanistan and then Iraq. This might suggest to a reasonable person a dishonest election campaign by a closet internationalist, that is, if the United States had not been attacked on September 11, 2001. The one most crucial event in the twenty-first century and the younger Reagan seems to have ignored the obvious explanation for the change in Bush’s approach.
Then, of course, there is the shop-worn argument that since we have not yet accounted for large stock piles weapons of mass destruction [1] that the Administration was deceitful. However, this ignores the fact that the former President Bill Clinton [2], the Senator from New York, Hillary Clinton [3], the Democratic Presidential candidate John Kerry [4], and the British, French, German, and Russian intelligence services had all reached the same conclusion. Indeed, the evidence for WMD in Iraq was stronger and clearer than the evidence that there would be an attack on 9/11 that Ron Junior criticizes Bush for missing.
Some of the younger Reagan’s claims are so demonstrably false and misleading that one wonders why he could not be a more skilled polemicist. For example, Ron Junior writes, “If you are dead center on the earning scale in real-world twenty-first-century America, you make a bit less than $32,000 a year, and $32,000 is not a sum that Mr. Bush has ever associated with getting by in his world.” What specifically is the complaint that justifies the ad hominem attack? That level of income is comparable to the incomes during the previous Administration. Moreover the $32,000 number represents a median wage, including teenagers living at home. The median household income in the country is closer to $50,000 and actually rises to $62,000 for a 4-person household. The $32,000 figure alone is not false, but certainly does not provide a real context and the single use of this number does not suggest a person who wishes to seriously debate.
Does Ron Junior mean to imply that George Bush is some rich kid with no concern for those who have had a harder life? Surely, young Ron has also benefited from an affluent upbringing in a famous family. Does that make Ron Junior unsympathetic to those who are less fortunate? Does it make Senator John Kerry, whose economic fortunes have been enhanced by marrying two heiresses, a mean-spirited multi-millionaire unable to recognize the challenges that face those of lesser means? One can be rich and cold-hearted, but Ron Junior certainly does not offer evidence to smear George Bush with that charge.
Ron Junior believes the Bush mendacity began during the 2000 election because Gore “would spend valuable weeks explaining away statements `I invented the Internet’ that he never made in the first place.” What Gore actually said was “During my service in the United States Congress, I took the initiative in creating the Internet.” Close enough.
Surely, Ron Junior should be a little more careful in making charges that are so easily refuted. Of Fox News he says, “…a staff member at Fox News the cable-TV outlet of the Bush White House told me a year ago that mere mention of bin Laden’s name was forbidden within the company, lest we be reminded that the actual bad guy remained at large.” A quick online check refutes this notion. Fox had many stories about bin Laden from September 11, 2001 to the present, even an interview with his mistress almost exactly a year ago. This is hardly the activity of a network that does not mention bin Laden’s name. Ron Junior would not have made this simple and embarrassing mistake, if he had simply watched Fox News as opposed to relying on an unnamed staff member.
Some day we may grow weary of pointing out the fundamental inaccuracy employed by Ron Junior and almost daily by others about the 2000 elections, but not today. The false assertion is that in the words of Ron Junior a “cabal of right-wing justices” delivered the White House to Bush. It seems that “denial” is not just a river in Egypt. The local Florida judges, the determiners of fact in election cases, all denied Gore additional recounts. It was a highly partisan Florida Supreme Court made up entirely of Democrats, who made up new deadlines and election rules along the way. But even if one disagrees with the Supreme Court’s ultimate decision in the Bush v. Gore case, subsequent recounts by US Today and by the Miami Herald confirm that an additional recount as requested by Gore would have still resulted in a Bush electoral victory [5]. Get over it.
Of course, the greatest irony of all is that Ron Junior has aligned himself with that part of the political spectrum that treated his father with the same anger and disdain he now reserves for George W. Bush. It was President Ronald Reagan that was originally portrayed as the “amiable dunce” who was the pawn of nefarious people behind the scenes, like Bush is now. It was President Ronald Reagan who was called a liar by the Left for the Iran-Contra scandal, like Bush is now. It was President Ronald Reagan that the Left accused of war crimes for his support of the Contras, much as Bush is now. But then perhaps the younger Reagan is not totally inconsistent. He did not vote for his own father in 1984.
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