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Misleading Economic Indicators

Economists love numbers, and use certain "statistics" to point toward future trends and as indicators of the economy. One such number is Gross Domestic Product, also known as GDP. It's simple enough as statistics go to calculate, as it's made up of 3 things. Consumer Consumption, Business Investments and Government Spending. You just add the three of them up for say, the first 3 months of 2009, and you have the "First Quarter GDP for 2009 for America".

Simple, right?

What if you wanted to artificially bolster the number, for say, political gain? No accusations here, just a "what if" question. Say you had some political clout, and wanted to modify some rules so that GDP would go up to make you and your friends look good, or at least look better. How would you do that?

Well, I can think of several ways. The easiest one that comes to mind is just raise government spending. If you greatly increase that number, you pretty much force GDP to be artificially raised. I say artificially, and that's unfair. Any government INVESTMENT in the infrastructure will in fact result in a long-term improved GDP as it helps the economic interaction between people and companies, so over time it will raise it. But ANY government SPENDING will boost the number, even if it is wasteful, foolish spending.

Now, don't pick on government for that, after all, how many of us have also foolishly spent money of our own if we look back honestly at our own lives? I would guess most of us.

So, what's another way? Boost Consumer Consumption. But can you make or force consumer's to spend more money to consume goods? No, in a free country you can't … or can you?

If you wanted to truly raise Consumer Consumption in a long-term way, you'd help stimulate sales of all kinds of goods, so that no matter what people want, they will boost the economy by spending their money. You'd have a wide-reaching program, without catering to any one special interest group or industry, nor would you select a certain type of consumer. You would want all consumers and all industries to benefit. Maybe you'd lobby for the FairTax! (www.fairtax.org)

But if you wanted to just artificially boost the numbers, you'd make it on boosting sales of items of much higher value, that people buy less often. Some of the biggest consumables we buy, are our vehicles. Cars, trucks or SUV's all cost a lot, all get consumed over time.

Why, if you could come up with a program, where you stimulate the sales of vehicles, so that people would go out and buy cars, a lot of them, over a short period of time, you'd boost the GDP.

Wait, wait .. I got a better idea. Why not have the government FUND this stimulus? That way, you get a double whammy. You can claim that the expensive SUV sold, then you can also claim the added money that the government spent on that vehicle, and viola! Improved, short-term GDP.

Forget what that would do to the used-car market, or what it would do to car sales only a few months later when your "Government-Funded Buy a Car Party" ended. You just put cars in the hands of people that wouldn't have bought them otherwise, either because they had decided that they didn’t' really need them or could not afford them.

Oh, wait … you better hide what you're doing. Make believe it's a well-intentioned program, not just an obvious ploy to artificially raise GDP. Maybe sell it as a program to clean the air? To replace older vehicles that have higher emissions and gas mileage with newer, cleaner and more fuel-efficient models? Wait, that would give even more good press because you can hide what you are really doing with good intentions! After all, what good, honest, decent American would be against cleaner are and reduced fuel consumption? We could call it … "Gold for Oldies" or something like that.

Wow, if this idea works so good for cars, maybe we can do the same thing for houses, you know, with some kind of tax credit? Wow, we could really "crunch the numbers" then!

So forget real "change", forget creating policies that have any real "hope" about improving the economy by helping hard-working people get more use out of their paychecks. Just find ways to manipulate the "Leading Economic Indicators" because everybody knows that when it comes to political elections … "it's the economy, stupid!"

Oh, one more thing, if you really, really believe that certain "pro-education" legislators really want to have smarter voters, remember the biggest complaint stated about slavery back in the early 1800's in America. Back then, many people that wanted slavery to continue, made sure that there was no real education available for slaves. They knew back then … that the "educated slave" would help bring about the end to slavery, and a great rise to freedom.

So, if you really support those "pro-government education" legislators, who also happen to be against vouchers, you better not go to www.fairtax.org, because you may learn things, you may become more educated and they wouldn't want you to do that. Plantation owners back then didn't want "educated slaves" and today some politicians don't want "educated voters"!