Chapter 26 Do you know where the official statistics come from?

Just imagine: what we know and feel about the world economy comes entirely from groups of data, and these data are calculated by different people through different channels, from government agencies to international organizations to major companies. Statistical sources and bases vary.How can we form our own conclusions based on other people's statistics rather than our own observations of the world?For example, we will ask: What is the daily oil consumption in the world?The generally acceptable figure is 87 million to 88 million barrels.However, we know that this figure was calculated by some researchers from the Organization of the Petroleum Exporting Countries (OPEC) or the International Energy Agency (IEA), and of course it may be the result of statistics from some major oil companies.We will definitely not count barrels one by one, we can only conduct research and arrange production according to the figures they have counted.Some well-known institutions spend a lot of time and energy and apply complex statistical systems in order to obtain as accurate data as possible.People use this data to set prices, calculate supply and demand, and predict future trends in the industry.Petroleum consumption is just one example, and all statistics we encounter on a daily basis are similar to it.

Some data are basic data, such as oil consumption and steel production.These data are often calculated in aggregate, and statisticians have also made some artificial adjustments to the data.Taking oil consumption as an example, 88 million barrels is not the result of a simple summation calculation, but the statistical department aggregates and processes the data provided by major refineries, state-owned and private oil companies, and government agencies. out the result.Since the initial data sources are not consistent and the statistical time is also different, the final results are often not very accurate.From this we can see that even the most basic economic data such as oil consumption may not be very accurate, and other data derived from it are even more questionable.

Some economic data are relatively abstract, which makes statistical work very complicated.Let's take the inflation rate as an example.We must first give a clear concept of inflation rate, and then create a method of measuring inflation rate.The Bureau of Labor Statistics is currently responsible for statistics of the US inflation rate. The inflation rate is expressed by the growth rate of the CPI, which is what we often call the growth rate of the consumer price index.Statisticians at the Bureau of Labor Statistics survey the prices of a wide variety of goods each month and compare the results to the previous month to arrive at the rate of change.The statistician's selection of survey goods is not "weighted", these goods are usually "important goods" in people's daily life, and their importance does not change with the number of monthly consumption.The weight of these "important commodities" in the CPI is adjusted periodically, but not every month.This means that if the price of gasoline is too high in one month, it will definitely lead to less driving time in the next month, thereby reducing consumption of gasoline.But even if gasoline consumption falls, the weight of gasoline as a "significant commodity" in the consumer price index will not decline.

In addition to the goods included in the CPI, the Bureau of Labor Statistics also tries to take into account what residents spend on housing.Unless there is a real buying and selling relationship in the house, its appreciation and depreciation will not be directly included in the statistics of the inflation rate.In order to include house price changes in the consumer price index, statisticians invented the concept of "owner's equivalent rent", trying to judge the value of houses by evaluating the amount of house rent. "Owner's equivalent rent" now accounts for nearly 30% of the monthly consumer price index.

The CPI was created to represent a complex reality in a relatively simple, synthetic data set.Many other data, such as unemployment rate, gross domestic product, national savings rate, etc., use this calculation method for the same purpose.The statistical results of all these data are inseparable from the three steps of investigation, quantity calculation and manual adjustment.And the end result is also influenced by the ever-enriching data to be further modified.Sometimes, due to the emergence of new problems or changes in the original limiting conditions, statistical methods are bound to face adjustments.Once the method is changed, it becomes very difficult to compare the current data with the original data.The method of calculating inflation today is certainly not the same as that used 20 years ago, which means that comparisons between the CPI in 2009 and the CPI in 1989 are meaningless.It's like comparing two cars produced by Ford Motor Company in 2009 and 1989. Although they are cars produced by the same company, there is no comparison between the two cars because the reality has changed a lot. the value of.

Those data are the tools we use to assess the health of the economy, and the word "economy" is changing profoundly as the situation unfolds.Global economic integration is gradually taking shape, and every country, trade group, and regional economic organization will be affected by the global economic situation, either progressing or regressing.This means that a single, global economic system has begun to emerge, and we can also see this from various statistics.We can summarize some characteristics of the current economic system and try to make the most people benefit from this economic system.However, if the economic system is weakened or reversed, most people in the world will be affected, and most businesses, industries and regions of the world will be threatened.

This is not only the case in the world, but also in many countries, different regions also show huge differences, especially some big countries, such as the United States, China, and some member states of the European Union.Omaha in Nebraska is not comparable to Las Vegas in Nevada, nor is Leeds in England to Manchester.There are also Changsha and Beijing in China, Marseille and Paris in France, and Palermo and Rome in Italy. Although they belong to the same country, their development levels are uneven.The same situation can also be seen in the field of high-tech industries. In the 1990s, Pittsburgh, the center of the steel industry in the United States, was in decline. At the same time, Silicon Valley was showing prosperity due to its huge capital investment, high-tech and electronic communication companies.

There is an even bigger problem.Many data are calculated by the government, and its purpose is to measure the management level of the government.The United States created the consumer price index as early as 1919, and many other economic measurement indicators were also created in the late 19th century or the first few decades of the 20th century.For example, our common GDP was created to measure the health of a country's economy.The statistics and application of gross domestic product began in the 1930s. It was established to test the boosting effect of the "New Deal" implemented by the Roosevelt administration on the national economy.Before the implementation of the "New Deal", the U.S. stock market had lost nearly 90% of its market value, nearly 25% of workers had lost their jobs, thousands of banks had gone bankrupt, commodity sales had plummeted, commodity production had shrunk sharply, and the economy was in depression.

The economic indicators we usually use to assess the health of the economy are important to national politics and bureaucracy, and this is true for every country in the world. In the 20th century, many countries became independent one after another. They copied the management system and social system of Western developed countries, established government agencies, and also incorporated some economic indicators into the national management system, such as gross domestic product, inflation rate and unemployment rate.Businesses, investors, politicians, and ordinary people can rely on these data to make plans, evaluate future assets, and determine all economic activities.These economic activities run the gamut from state budgets to corporate employee programs to household travel spending.Some countries have large middle classes who take their investment cues from national economic indicators.At the same time, these economic data also provide an important reference for the daily economic activities or transnational investment of enterprises and individuals engaged in agricultural production, non-governmental organizations and foreign investors.

Many economic indicators are created and applied along with the country's industrial and agricultural development.At the time when these economic indicators were born, the country's economy was production-oriented rather than service-oriented, and this changed in the second half of the 20th century and the beginning of the 21st century. In the 1990s, with the application of computers and the Internet, people's labor methods and labor efficiency have undergone significant changes.Although it's clear to employees working in a given company that computers and the Internet have greatly improved productivity, official statistics don't fully capture these changes.The reason is simple: Although computers are used in work, the statistical methods have not changed. When statistics are carried out according to the traditional method, it is impossible to distinguish which work is done by people sitting in front of the computer and which is done in the factory workshop.Let's take a bank's ATM as an example.ATMs help banks complete more transactions with fewer employees, thereby increasing industry efficiency in the banking industry.Of course, the improvement of bank labor efficiency is at the expense of reducing labor force.However, this fact is not visible in US national and official labor productivity statistics.So, the gains in labor productivity in financial services in the 1990s were not reflected in the statistics.

It's not just that technology is advancing faster than government statisticians can, there's a deeper problem.The statistical basis for the data is outdated, not just the statistical basis but the economic theory on which they rest. Every principle of economics that we know, and more precisely, every principle of macroeconomics, is based on the assumption that the nation-state is the most basic economic unit in the world economic system.Economics as an independent discipline was formed in the middle and late 19th century, and it developed along with the development of other social sciences (such as sociology, history, and political science).Some pioneers of economics, such as Adam Smith and David Ricardo, created and developed many western economic theories, but it was not until the second half of the 19th century that economics gradually developed and matured. Over the next century, economics continued to develop, drawing on more information and producing more theories, especially more assumptions about human behavior and economic systems.By testing or overturning these assumptions, the status of economics as an independent discipline is continuously strengthened.The core of the scientific method is that repeatable practice is an effective way to prove the correctness of the theory.You can repeat an experiment over and over with the same variables, for example, how does one chemical react with another?To find out, experiment with chemical A and chemical B.In each experiment, the amount of A is equal, while the amount of B is changed, and then record their reaction results.In fact, this is what economics teaches. However, one of the biggest problems with economic measurement is that it is impossible to enclose the entire society within the scope of measurement, and it is also impossible to use different variables to conduct research and judge and observe the results.Was the Great Depression that occurred in the United States in the early 1930s caused by the unfavorable governance of the US government?This question itself is ridiculous. If you can keep repeating the history after 1931 and adopt different coping methods for different situations, you can get reliable research results.Of course, this is obviously impossible. However, economists can verify economic theories involving individual human behavior. For example, are people rational when they pursue their own interests?This is a fundamental question in traditional economics, and economists have conducted countless experiments to answer it.They divide the people who participated in the experiment into several groups, and then constantly change the variables, study people's behavior, and finally draw conclusions.However, the results of research on human individuals and small groups cannot be generalized social conclusions. The belief that economics is a disciplined science deeply shapes economists' understanding of the world.This will affect not only the academic field of economics, but also Wall Street, and at the same time direct the government to pay attention to certain economic phenomena and explain anomalies.As we can see, Sino-US relations are developing steadily, but traditional concepts still remain in the hearts of many people. For example, the nation-state is the most basic economic unit of the world economic system and should be regarded as a closed system. For most of the 20th century, the state gained general acceptance as an economic unit.In the making of economics, the state is the most important independent economy in the world.A country's government needs to redefine and defend its country's borders, issue a single currency in the country, establish a central bank to manage the government's accounts and oversee the domestic financial system, and establish restrictions on the import of foreign goods and the export of domestic goods , to determine how foreign enterprises and individuals engage in commercial activities within the territory. With the pace of development in the 20th century, the state played an increasingly important role in its internal economic activities.Governments of various countries are actively seeking solutions to the economic crisis, so as to avoid social disorder and social turmoil caused by the economic crisis.The Great Depression in history accelerated the outbreak of World War II; the economic ambitions of European countries led to rampant overseas colonial activities, which increased the burden on the country; today, job opportunities in Western Europe and the United States are transferred overseas and outsourced production , which caused dissatisfaction and strikes among the domestic population; inflation and insufficient supplies of necessities became the root causes of domestic chaos in Mexico in the first half of the 20th century and in China between the two world wars. Since economic activities are to a large extent national behavior and limited within the borders of a certain country, economists often use the country as the basic unit when studying macroeconomics.Traditional economics not only regards the country as a closed economic system, but also emphasizes the need to achieve balanced development within this economic system.Equilibrium means the balance between import and export, supply and demand, price level and production capacity.Although the theories of economics and macroeconomics have been maturing, the theory of balanced development has always occupied a central position. Balanced development is particularly evident in the country's foreign trade.In order to maintain the balanced development of trade, the country's total exports cannot exceed the total imports, and the total imports cannot exceed the total exports.Once one side outpaces the other, the country's trade is said to be out of balance.The same is true for the country's current account, where spending and income should balance, as should cash and foreign exchange.If there are overseas arrears, it shows the country's current account deficit; if money is loaned to foreign companies and institutions, it shows the country's current account surplus.Both surpluses and deficits are unbalanced for a country's economic system.If a country's imports are greater than its exports, then only by depreciating its own currency can the value of foreign goods be relatively increased, thereby reducing imports and expanding exports.If the current account deficit widens, indicating rising arrears, inflation can be accelerated to make repayments easier.At the same time, reduce the amount of overseas borrowing until the current account is balanced.