Republican War On Economic Data is Anti-Business and Anti-Growth

The House Republicans appear to be conducting a war on economic data. They seem to think that defunding data collection is all gain and no loss.

In fact, the anti-data Republicans are really anti-business and anti-growth. Government spending on economic data collection should be thought of as fully equivalent to investment in long-lasting infrastructure. When we build highways or airports, we expect them to be used by the private sector for economically-valuable activities. Highways facilitate the sale and use of automobiles, the construction of homes, the transportation of goods. Airports make air transportation possible, fostering all sorts of jobs and growth.

Just like spending on highways and airports, government investment in economic data collection provides a long-lasting boost to private sector economic activity and to private sector growth. To give one very simple example: Political polling would be much more expensive and less accurate if the pollsters did not have access to government economic and demographic data. The government data enables the pollers to make sure their sample correctly represents the actual population.

Another example: Many big investors take economic and demographic trends into account when deciding how to allocate their funds. The foundational data for these trends comes from the federal government. Less reliable data means more investing mistakes.

Sometimes governments and politicians might rather hide data. The ACS tells businesses which areas of the country are doing well and which are falling behind, helping them make fewer errors in investment. This is not such good news for the weak areas, but presumably does improve economic efficiency. A company such as Walt Disney, for example, would rather locate its theme parks in growing, high-income areas (FYI Walt Disney World is located in the Florida district represented by Daniel Webster, who has been one of the main ACS bashers).

Like highways and trucks, public sector data and private sector data are complementary, not substitutes. A company can invest in as many trucks as it wants, but those investments will be much more valuable if the government has put into place well-maintained highways. Similarly, private sector data collection and analysis–say, on the state of the computer industry–almost invariably builds on the foundation of the public data.

One of the big economic advantages of the U.S. may be the quality of our economic data, and more generally the transparency of our economic system. That’s not a competitive edge we should cede easily.

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About Michael Mandel 126 Articles

Michael Mandel was BusinessWeek's chief economist from 1989-2009, where he helped direct the magazine's coverage of the domestic and global economies.

Since joining BusinessWeek in 1989, he has received multiple awards for his work, including being honored as one of the 100 top U.S. business journalists of the 20th century for his coverage of the New Economy. In 2006 Mandel was named "Best Economic Journalist" by the World Leadership Forum.

Mandel is the author of several books, including Rational Exuberance, The Coming Internet Depression, and The High Risk Society.

Mandel holds a Ph.D. in economics from Harvard University.

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