Bill Bonner: Why Statistical Numbers are a Scam

Agora Publishing’s Bill Bonner explains at the Daily Reckoning why relying on aggregate statistics can be misleading

I’ve always been especially suspicious of the zero. It is a number. But a number is ‘something.’ The zero, on the other hand, is supposed to represent nothing. Well, which is it? Something or nothing? Nothing, right? But how can something be nothing? You say you have zero tomatoes. And you tell me zero is a number, used for counting. But how can you count tomatoes that aren’t there? You’ve either got tomatoes or you don’t. Zero tomatoes is a contradiction. It’s oxymoronic.

And if the zero is actually nothing, how come you can put it after a number…and suddenly you have 10 times as much? Or, put it in front of a number…and you have 1/10 as much. How can nothing do all that?

Now if I have 3 tomatoes and I add zero tomatoes, I have done nothing. I still have three tomatoes. But if I multiply my 3 tomatoes by zero, suddenly, I don’t have any tomatoes. If zero is nothing, I want to know what happened to my tomatoes.

We didn’t have the zero for thousands of years. As far as I know, we got along fine without it.

Numbers are a trap for economists. They make it look like science, but it is not science. Far from it. Initial conditions can never been controlled or fully understood. Instead, they are infinitely complex. Nor can results be reproduced. Nor can hypotheses ever be disproven. That’s why economists can cling to dopey ideas for centuries — they can never be disproven.

Using numbers, economists pretend to tell you something they don’t really tell you, often something they can’t possibly tell you.

How GDP numbers are not only unreliable but vulnerable to manipulation:

GDP numbers are a complete scam. They don’t tell you if you’re coming or going. They don’t tell you if you’re getting richer or poorer. This is another way that numbers fail. They can only measure quantity. Or speed. Here’s an example. An article ran in the Wall Street Journal last month. It explained how Italy’s economic growth was retarded by strong family attachments. Half the young children in Italy are raised by their grandparents — their ‘nonni’ — while their parents work. Instead of going to day care centers, the kids go to their grandparents.

How does this affect an economy? There is no exchange of money when the grandparents do the day care. So, it doesn’t register in the GDP. No exchange of money, no ‘growth.’ The article also went on to say that people were reluctant to leave their hometowns to seek work elsewhere because they relied on the family for childcare. Theoretically, a mobile population increases GDP too…GDP increases when people take new jobs, move, buy houses and furniture, sign up for health clubs, day care and so forth. All these things add to GDP growth, even though they do nothing to really increase quality of life. They are a kind of phony growth. GDP looks only at the quantity and velocity of money transactions, not the quality of them…nor the quality of life they produce…nor the real wealth of the people in an economy.

I cut your lawn. You mow my lawn. We pay each other. The GDP goes up. The more transactions per person per year — the greater the GDP of a country.

Is anybody better off? What really have the numbers told us? Has one single extra lawn been mowed? One single extra blade of grass cut down?

No, right? So, if a number…the GDP growth number…tells you that you’re growing…and you’re not really growing…what good is the number? It’s a flimflam. An empty number. There’s no good information in it. It’s like the unemployment number. Empty. Hollow. A zero. And so are almost all the compound, formula-driven numbers used by economists. They are dishonest. Their only role is to tart up economists’ confections and make it appear that they can do things they can’t really do. They are designed to make economics look like engineers, working on the economy as though they were real technicians preparing a moon launch.

But if these guys were building a bridge, none of us would want to drive over it. If they were building cars, we wouldn’t buy them. And if they were running the phone company, and we needed a telephone number, we could call “Directory Information;” they’d estimate it for us.

Easy to understand lesson for the layman