When officials try to ban economic truth
A mandate on Chinese media not to report a credit crunch is the latest example of governments trying to keep bad news under wraps. But the forces for honest financial data are too strong to defy.
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Argentina, too, continues to issue inaccurate figures on inflation, claiming it is only about 10 percent when private economists estimate the rate at above 25 percent. The government fired its statisticians who reported the right figures and pursued them in court, claiming they were hurting national security. Meanwhile, the International Monetary Fund (IMF) got so fed up that it issued an ultimatum to the government in February to come clean on its data by September.Skip to next paragraph
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The United States is not immune to such debates over honest accounting. The Congressional Budget Office, which is supposed to provide US lawmakers with “nonpartisan” analysis of proposed bills and fiscal trends, is restricted in how it conducts its accounting. The political party in power can sometimes influence how the CBO performs an analysis in order to slant the results.
Sometimes the agency occasionally defies a mandate. In a report last month on the impact of interest-rate increases under a federal student loan law, the CBO stated that the law’s “accounting does not consider some costs borne by the government.” That’s not what many Democrats wanted to hear.
GOP lawmakers also question the Obama administration’s accuracy in coming up with figures on the “social cost” of carbon emissions – in, for example, the impact of rising sea levels. The White House’s estimates of such costs have more than doubled in three years, causing Republicans to demand a full disclosure of the accounting methods.
Fortunately, most countries have enough free media, as well as the pressure from markets and institutions like the IMF to hold officials to account for lying about data. In China, Internet users had a field day with the latest mandate to ignore the “credit crunch.” Chinese journalists leaked the order to foreign journalists.
Some secrets like spy programs are worth keeping. But governments cannot make secret that with which people live every day, whether it is a credit crunch, inflation, or other economic realities.