More Data or Less?
By David Henderson
My friend and Hoover colleague John Cochrane has signed a letter to four members of Congress that calls on Congress to spend more money on getting better economic data. John argues at his blog:
Few public goods are as cheap or important as good economic data. Much of our national policy discussion is based on government-collected data. Changes in inequality, wage growth or stagnation, employment and unemployment, growth, inflation… none of these are readily visible walking down the street.
Free, openly accessible, well-documented data, allowing comparisons over long periods of time, such as provided by the Bureau of Labor Statistics, is especially valuable.
That’s all true. But the big question is: how will these data be used?
Another Hoover friend and colleague, Alvin Rabushka, writes:
What are economists likely to do with better data if their letter succeeds?
My guess is to advocate more funding to fight poverty, not more efficient use of existing appropriations.
More government funding to support greater participation in labor markets, not removing regulations, high taxes, and other impediments to labor market participation.
More stimulus to increase GDP, not less government interference in the economy.
More redistribution to reduce income inequality.
Here’s someone else at Hoover who seems to agree, at least in part, with Alvin. In a moving story about a business hounded out of existence by government regulation, he writes:
The anecdote has two larger implications, in my view. First, many people including myself have a sense that this kind of regulatory persecution is harming economic growth. But there are no good estimates of the total number of companies put out of business, jobs destroyed, investment made worthless by regulatory persecution, or, even harder, projects not started from fear of such persecution. For the moment, we can only collect anecdotes, which is why I pass this one on. But the measurement question is vital. Inequality is only a big policy issue because we have statistics on it.
Here, this Hoover colleague makes a case both for more data, presumably collected by government, and, given his views on inequality, less government data. Who is this Hoover colleague? The above mentioned John Cochrane.