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CJ Commentary: Official data understate growth rate

In his latest Carolina Journal commentary, political analyst John Hood argues the world is actually doing better than people think it is. Hood writes:

When it comes to public affairs, bad news is good and good news is bad. That is, political speeches and media pieces that describe a problem as big and getting worse tend to attract more attention, so more are produced. That, in turns, fuels more public disaffection. It’s a vicious cycle.

But the world is, for the most part, getting better. Hood says being constantly fed stories focusing on these few discouraging facts makes us cynical about the world. Not only that, but often times those discouraging facts are not so factual. Hood explains:

While I wish journalists, politicians, and activists would resist the impulse to talk incessantly in gloom-and-doom terms, a big part of the problem is that the very statistics used to track social problems often have built-in biases towards pessimism.

For example, Hood explains the poverty index:

Lots of people think the current poverty rate is high and little changed from what it was decades ago. That’s because the standard measurement of poverty is deeply, fatally flawed. It only measures money income reported to government authorities, and relies on inflation adjustments that significantly exaggerate changes in consumer prices over time.

According to the standard statistic, if the government gives families free food, free shelter, and free health care, there is no effect on their poverty status. That’s clearly silly. Federal, state, and local governments spend vast sums on non-cash benefits. When adjusted for these and other factors, America’s true poverty rate has fallen from about 14 percent as recently as 1982 to less than 4 percent today.

In addition, Hood writes:

More generally, real economic growth in North Carolina and the rest of the country has become increasingly disconnected from how it is measured. One problem is, again, that inflation measures are inaccurate. They don’t fully adjust for substitutions — as the price of one product goes up, people buy something else — or for changes in quality, especially when it comes to high-tech devices and professional services.

If Americans were to step back and look at the bigger picture, Hood believes they would see a very different story:

Past generations of human beings would view our lives — for all but the most impoverished among us — as safe, comfortable, and fulfilling to an almost unimaginable degree. They’d be puzzled at our foul moods. And they’d urge us to be appreciative and reformist, not rancorous and revolutionary.

Read the full story here. Read more opinion pieces like this one here.

Brenee Goforth / Marketing and Communications Associate

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