Sunday, October 23, 2011

Stat Heads: How The Progressive Left Adds Up The Numbers

Down in Argentina, President Cristina Kirchner is running for re-election. As is traditional when leftist politicians run for office, she is pulling out all the stops: passing around walking around money, cooking the books, and, of course, using the powers of the state and the media to intimidate anyone who gets in her way: 
As Cristina Kirchner heads for an expected landslide re-election in Sunday's presidential voting, few Argentines are resting more uneasily than 12 economic consultants who face sanctions from her government for contradicting its calculation of the inflation rate.
In a bitter showdown, the 12 consultants are fending off government investigations, accompanied in most cases with fines of 500,000 pesos ($119,000) under an obscure consumer-protection statute called the "commercial loyalty law." Three of the most outspoken consultants have been singled out for additional criminal charges under a financial-speculation law. Their offense, in the eyes of the government, is insisting in press interviews or in their own published reports that Argentina's real inflation rate is between two and three times the official government rate of 9.9% annually.
Needless to say, Argentina's inflation numbers are not credible at all. In fact, there is no agreed upon method for calculating the country's inflation rate because no one believes the Kirchner government:  
The government has announced plans to develop a nationwide inflation index, with some advisory input from the International Monetary Fund, which might eventually supplant the current index, which is compiled based on prices in the Buenos Aires area only. But the relationship between Argentina and the IMF has been stormy for years. Argentine officials were recently angered when an IMF official suggested that, in trying to assess inflation in Argentina, the fund relied partially on estimates of provincial governments and other outside sources—none of which necessarily match the federal government rate. For the IMF to focus such scrutiny on Argentine statistics at a time of grave crisis in Europe and other wealthy countries "seems to me very much like the captain of the Titanic checking to see how the violin plays in the orchestra," Economy Minister Amado Boudou told Argentine reporters.
To protect themselves from government reprisals, many of the consultants have started disseminating their inflation data via opposition members of Congress, who then release the average for what is dubbed the "Congressional Consumer Price Index." The congressional index was 1.89% for September, compared with 0.8% for the official index.
Even some parts of the federal government, as well as groups loyal to it, no longer rely on the official inflation index. Many courts now use private inflation estimates for cases such as worker compensation claims requiring judges to set an indemnization. And even unions that are allied to the government cite the inflation estimates of private consultants during salary negotiations.
The state begs to differ, of course, with its toadies/official economists saying the inflation rate produced by Congress is "unpresentable," whatever that means. This being Argentina, there is a precedent for this sort of thing. Back in President Nestor Kirchner's administration, they raised the manipulation of statistics, and the intimidation of the statisticians, to the level of art. It's no different now. The former First Lady just lacks the subtlety of her husband.

Kirchner, btw, is expected to coast to victory. Partly that's because the opposition is fractured (hear that third partiers?) but mostly it's because the electorate can't resist a glamorous leftist who can get away with all manner of lies and intimidation, so long as she has the media, the trade unions, and the urban poor behind her. There's probably a lesson - not to mention a warning - in that. 

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