August 14, 2002

Communications Gap

Alan Krueger reports that Paul Krugman had a good line last night on the Charlie Rose show. Paul Krugman was trying to illustrate how large the gaps are in how our statistical system covers the economy:

If you look closely at the numbers, the U.S. is the world's leading exporter of errors and omissions...

Of course, Rose had no clue about the point Paul was trying to make. Communication--especially on TV, where the sound bites are so short--is really, really hard.

Posted by DeLong at August 14, 2002 09:45 AM | TrackBack


Please explain. What was the point Paul Krugman was trying to make to Charlie Rose? Are the streams of revisions in national accounts statistics simply due to the complexity of gathering data or could we do a better job of collection from the beginning of a period.

Krugman recently referred to DeLong "marking beliefs to market." Do you agree with Krugman about questions on our advice to Latin America on development?

A decade ago Washington confidently assured Latin American nations that if they opened themselves to foreign goods and capital and privatized their state enterprises they would experience a great surge of economic growth. But it hasn't happened. Argentina is a catastrophe. Both Mexico and Brazil were, a few months ago, regarded as success stories, but in both countries per capita income today is only slightly higher than it was in 1980. And because inequality has increased sharply, most people are probably worse off than they were 20 years ago. Is it any wonder that the public is weary of yet more calls for austerity and market discipline?

Why hasn't reform worked as promised? That's a difficult and disturbing question. I, too, bought into much though not all of the Washington consensus; but now it's time, as Berkeley's Brad DeLong puts it, to mark my beliefs to market. And my confidence that we've been giving good advice is way down. One has to sympathize with Latin political leaders who want to temper enthusiasm for free markets with more efforts to protect workers and the poor.


Posted by: randall on August 14, 2002 10:04 AM

The streams of revisions in US economic data, of course, reflect the effort to provide timely data, based on initial surveys, and over time the most accurate data (once revised). It's imperfect, because the information that firms provide the Census Bureau (which collects it and produces some economic measures) and the Bureau of Economic Analysis (which takes the data to produce the national accounts or GDP) changes over time -- i.e., more firms answer the surveys, and firms that have answered revise their disclosures. Unhappily, accurate data is not a high priority for Congress. Congress cut BEA's real budget seven consecutive years in the 1990s, until BEA announced that without more funds it would not be able to issue monthly GDP revisions. Even Census was cut regularly for all activities except the decennial census. Nevertheless, for all its shortcomings, the US economic statistics system is universally recognized as the most professional and accurate in the world.

Posted by: Robert Shapiro on August 15, 2002 06:40 AM

Heard Krugman - he was referring to where the money is coming to finance our balance of payments deficit and joked about not knowing but we may be exporting errors and omissions....

Posted by: on August 15, 2002 08:50 AM

Thanks Robert Shapiro....

Posted by: on August 15, 2002 09:33 AM

"Errors and omissions" are literally an item in the balance of payments; it's whatever is needed to make the current and capital accounts balance each other after having counted everything visible. That is what Krugman was referring to, I guess.

Posted by: Daniel Lam on August 15, 2002 12:04 PM

"If you look closely at the numbers, the U.S. is the world's leading exporter of errors and omissions... "

Well, if Fox News and the NY Times would both shut down, that would have to help.


Posted by: Tom on August 15, 2002 03:23 PM
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