All is not what it seems. Sometimes that’s because the powers-that-be conspire to withhold information. Rarely does a Wikileaks come along to spill the beans. But then there are those cases which are very much like a conspiracy, but need to be treated as if they were conspiracies.
The depression in the western economy is an examples. It need not have happened. Read Boom Bust (2005) for all the evidence. So why did governments allow it to happen?
According to the International Monetary Fund’s independent evaluation office, the Washington-based guardian of the integrity of the global financial system failed in its duty because of something called “group think”. This describes the way a group of people convince themselves that “a major financial crisis in large, advanced economies was unlikely. Weak internal governance and an institutional culture that discourages contrarian views also played an important role”.
According to a 50-page assessment of the IMF’s failure, “the risks associated with housing booms and financial innovations were downplayed, as was the need for stronger regulation”.
There may have been no individual or group that malevolently closed down the mindsets of politicians. But that was the outcome of the failure to deal honestly with the evidence.
Blinkered by Statistics
Governments can close down their thinking – and destroy our jobs – by their selection of statistics. An example is the official measure of inflation. Britain is on the verge of runaway price rises, but the measure used to chronicle this understates the facts.
A conspiracy by government? Not according to the authors of a report which warns that the public is being misled. A report in the authoritative International Association for Official Statistics does concede that the rigged inflation numbers undermines public faith in the official data. The report states:
“The official price indices currently available for the UK are misleading the general public and [are] of doubtful relevance for policy purposes.”
Significantly, the Consumer Price Index does not include the cost of housing. Who gains?
The Vested Interest
The UK’s Office for National Statistics claims it abides by “best practice”. As for the new report on inflation, the authors concede that statisticians or politicians are not “deliberately misleading the British public about inflation”. Even so, they note that governments have a vested interest in defusing disquiet by “showing slower price increases”.
This is convoluted, right? Who’s pulling the wool over whose eyes? The three facts that cannot be contested are these:
- The experts don’t know what they are doing.
- Housing is always at the centre of the smoke-and-mirrors manipulation of statistics.
- By using the housing sector as proxy for the land market, we can get a good idea of what is really likely to happen in the economy – and how to prevent boom/busts.
No “Silver Bullet”?
Britain’s Deputy Prime Minister claims that there is no magic lever for economic growth. So his government is driving the UK faster towards catastrophe sponsored by its austerity strategy – cutting public spending on the services people need.
How would he know? His information comes from the IMF and the UK’s economic statisticians…