In a recent episode of my podcast, Mostly Free Podcast, I was going to give an updated economic analysis when my cohost expressed his complete distrust of government provided economic statistics and the field of macroeconomics, in general. All of that is understandable, of course, but his opinion was that all government provided economic statistics were useless and the study of macroeconomics is basically a waste of time.

First, in a free market, macroeconomics would be a waste of time, since a free market s made up of a myriad of independently functioning economic entities, like individuals acting on their own behalf, and firms in which individuals pursue a common goal. In a situation like that, there wouldn’t be any forces that affected an entire regional economy, outside of “acts of god”. But this ain’t no free market. Governments are heavily influential across entire regional economies and they have a very strong effect on economic outcomes. The study of macroeconomics is the study of the effects of governments across entire economies. In my opinion that is by no means a waste of time.

Second, and this what I want to focus on, it’s certainly true that government provided economic statistics are propaganda, designed to direct public opinion in a certain way for the benefit of political interests. Despite that, I do think government provided economic statistics are useful. They probably aren’t particularly useful in determining actual economic conditions, but they are useful in analyzing macroeconomic trends.

Before we go any further, let’s talk about the moon landing. In July of 1969, as the story goes, a crew of astronauts were the first humans to set foot on the moon. A lot of people, and I’m certainly sympathetic to this, don’t believe that happened. The reason they don’t believe it comes down to trust; we only have one source of data and that source is an organization known for and often defined by its lies. They could tell us anything (and they have) and we’d have no way of verifying whether it was true or false. There is one thing we can know for sure, and that’s that the political elite will do literally anything they think they need to do in order to promote or achieve their goals. How hard would it be to build and launch an empty Saturn V and film a moon landing scene in a studio like the Air Force’s secret film studio, Lookout Mountain Laboratory, and then use the rest of the money allocated to the mission for some other covert operations? If there’s one thing any five-year-old should understand about the world it’s that you can’t trust governments. Let’s assume, for the sake of argument, that the moon landings didn’t happen and the whole thing was nothing more than a propaganda operation. Moon landing propaganda is pretty straightforward, however, the government didn’t say that the astronauts hopped onto a magic elephant who teleported to the moon where the astronauts swam in the moon’s warm oceans and partied with the moon people. Maybe obviously, they didn’t say that because no one would buy it. It’s absurd. The point is that they had to tell a lie that would fit with the realities most people are aware of. The lie had to be close enough to known truths for people to buy it. They are somewhat restricted in the lies they can tell that people will believe.

Back to government provided economic statistics…

Economic numbers are a different sort of propaganda, but governments are restricted by the same constraints as the moon landing; they can’t deviate too much from reality without damaging their credibility. They know about how much they can get away with. That’s one reason they don’t tell us that the unemployment rate is zero; we all know people who don’t have jobs. Another reason is that normies don’t even know these numbers exist or are only vaguely aware. The people who watch these numbers are smarter and more knowledgeable than your average person. They have a stronger grasp on economic realities. They can’t be fooled as easily. The propagandists know this and they know about how much truth-bending they can get away with. So, they go about putting out the numbers that get money flowing in the direction they want. But that’s only half of the story. Less well-known is the fact that, after the numbers are released, the previously released numbers are quietly revised to more closely resemble reality. They do this seemingly unnecessary correction because they know very few people are looking and, in the future, they’ll be able to point at these revised numbers and say, “See? Look how accurate our numbers have been!”. No one will remember what the numbers were, originally and they won’t bother to check. Lying while maintaining credibility. That’s the holy grail.

So, these government numbers are useful in two ways: 1) they’re likely to follow the same trends in the actual economy and, 2) the revisions give some insight into what kinds of deviations the headline numbers are likely to have, which helps us evaluate what the data sets the numbers represent actually are in reality.