osewalrus (osewalrus) wrote,
osewalrus
osewalrus

The Long Term Damage of Delegitimation and Today's Job Numbers

It is perhaps not surprising that folks normally regarded as "sensible" like former GE CEO Jack Welch are making claims that would have been dismissed as made by the tin-foil hat conspiracy crowd. In the case, that they are "suspicious" of the Department of Labor's modestly favorable jobs report this morning.



As a preliminary matter, I will note that the outcome is in fact in line with the various predictions of private sector economists made prior to release. Also, as the Romney campaign properly points out, much of the growth comes from part-time job creation and the drop in unemployment is also partially attributable to people giving up looking/rebranding themselves consultants. In other words, if this were not coming right before the election and did not also happen to drop the magic unemployment number below 8% (after months of flirting with the magic number), no one would raise an eyebrow because this would be totally in line with expectation.

But, of course, none of that matters to those who spent last week explaining that polling is rigged (apparently across all firms, even those with historic Republican "house effects"), but found the insta-polls conducted by the same companies following the debate utterly trustworthy. Mind you, they are merely raising questions. They report and you decide, after all. But since we all know that under Obama the economy should be going into a death spiral, the failure of proof is proof of conspiracy to hide failure. How convenient that all the trend lines working in a predictable way drop the unemployment rate just before the election! Whatever contrary evidence exists, it is clearly outweighed by the coincidence of timing.

Meanwhile, two oil refinery fires in the U.S. are predicted to drive up the price of gasoline astronomically in the weeks before the election. This, of course, is mere coincidence. To even suggest that the oil industry would engage in deliberate sabotage of its own facilities to squeeze the American people immediately before the election is clear evidence that you are a liberal Obama-supporting Socialist desperate to prop up your dictator with lies that undermine our economy and insult job creators.

Here's the real problem, from my perspective. The systemic undermining of trust in every single institution that makes it possible for us to resolve disputes without violence or engage in useful economic activity has real, long term consequences. If you look at dysfunctional societies, you will find that one of the biggest obstacles to economic advancement and political stability is that people absolutely don't trust the institutions that are supposed to provide a common set of rules and a common set of facts so that cooperative societies can do stuff other than negotiate with each other over guns. So conspiracy theories fill the gap.

The belief that every contrary fact is either the result of willful error or conspiracy prevents people from learning critical facts they need for self-government and economic activity. If we can't trust statistics to tell us about unemployment, then whether our economic policies are working is a matter of pure conjecture. If I believe the sub-prime market will remain vital forever, then I will ignore every single indicator that warns me of impending collapse. In my own line of work, the belief by AT&T and others that the Obama Administration could be bullied politically into approving any merger, no matter how significantly it violates existing antitrust law, caused them to make a major blunder in the effort to acquire T-Mobile.

But the damage is not limited to the core believers. If I finally gain control of the Labor Department, then I'm going to want to influence its statistics "the same way they did." So the system breaks down. Meanwhile, the constant repetition in the media that these institutions are untrustworthy makes it harder for those who want to believe in their integrity. Like Akerlof's classic "The Market for Lemons," once a sufficient number of people believe the statistics (and other institutions) are politically motivated, it doesn't matter if you are actually trustworthy. Everyone behaves as if you aren't. So over time, the only thing in the market is untrustworthy information.

What is wonderful about this, if it does all come crashing down, no one will learn anything.
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