Understanding the Economy: What’s Behind the Numbers

Right From the Start

In the early 1900’s, as modern journalism was taking form, there was a significant debate between Walter Lippman and John Dewey as to the appropriate role of journalism in regard to government. Mr. Lippman advocated that journalism’s role was to act as translator between the decisions of the elites of government and the populace. Mr. Lippman believed that the general public was incapable of understanding the intricacies of public policy or the rationale for political decisions and required the press to translate and reduce the discourse to a layman’s level of intelligence. In doing so Mr. Lippman placed himself amongst the elitists and a confidant of the politicians.

Mr. Dewey, on the other hand, believed that the populace was firmly capable of understanding all of the machinations of government and that the best decisions were made with public involvement and free debate after full disclosure. To that end, Mr. Dewey believed that journalism’s role was to facilitate the public discourse by delivering not just the opinion and actions of the government elites but also the information – all of the information – that effected those opinions and actions. In doing so, Mr. Dewey could be considered a “populist” and an advocate of “watchdog journalism.”

For the most part, at least with regard to the mainstream media, that debate ended by adopting both views. On the one hand, today’s modern newspapers claim to be the watchdogs of government while in practice they have routinely become the media conduits for the government elites. [A more sardonic writer might suggest they practice the former with regard to Republicans and the latter with regard to the Democrats.]

But it is that dichotomy that was on display recently in the pages of The Oregonian.

On Sunday, Oregonian reporter Betsy Hammond delivered a piece the lifted the skirt of the Portland Public School system’s claim to a dramatic improvement in the high school graduation rate as a result of their new “early intervention” initiative. The essence of the story was that most of the claimed “improvement” was due to changing the method of counting students and had nothing to do with the “early intervention” initiative. For years, Portland Public Schools have failed to track students who have left school before graduation because they have moved to private schools, moved to another state or returned to their native country. At the urging of Teil Jackson, the district manager for state reporting the schools mined their existing records and discovered that which was plainly in front of them, but ignored, for years – the fact that when a person did not show up on the graduation rolls of Portland Public Schools, it did not necessarily mean (s)he did not graduate from high school.

In researching and writing this story, Ms. Hammond served the role of “watchdog” and exposed a serious shortcoming in the record keeping and reporting of the Portland Public Schools and debunked a fraudulent claim of success by Portland’s public education elites. Ms. Hammond provided the public the information necessary upon which it can make its own determination of the truth and efficacy of the Portland Public Schools.

But then on Monday, Oregonian reporter Michelle Cole reported that the rolls of Oregonians receiving food stamps had topped 800,000 for the first time – a nearly six percent increase over the previous year. All of that is true but Ms. Cole then had to embellish the story with what can only be described as the clarion call of the political elites. Ms. Cole stated:

“But it does come at a time when Oregon has been seeing some encouraging economic signs, including an unemployment rate that finally dropped below 9 percent.

“Oregon started the year off with an 8.8 percent unemployment rate in January and the state reported 5,400 new jobs were created.”

Despite Ms. Cole’s assertion of “encouraging economic signs” there is virtually nothing that indicates that Oregon’s economy is improving. The drop of the unemployment rate to 8.8 percent reflects not the number of people working, or even the number of people not working – it reflects the number of people receiving welfare payments in the form of unemployment compensation. The rise and fall of that number today is more impacted by the number of people who give up looking for work or exhaust their unemployment benefits than by the number of people actually finding jobs. The number of people receiving unemployment benefits dropped by 2,811 from 179,114 in December to 176,303 in January.

The “5,400 new jobs” reported by Ms. Cole is based on the Oregon Department of Employment’s press release and its number is based upon a “polling” of businesses and an estimation of the number of jobs created. To put that number into context, the Department of Employment previously reported that the number of jobs increased by 5,317 between October and November and by another 1,690 between November and December, Both numbers were false and have been subsequently revised downward to show that the number of jobs actually decreased between October and November by 1,200 and decreased another 300 between November and December. The alleged increase between December and January should be viewed with skepticism based on the fudging of the previous months reporting.

All of this information was available to Ms. Cole and the Oregonian. The fact that the number of people receiving food stamps reached an all time high should have triggered doubt as to the assertion of “encouraging economic signs.” In choosing to transmit uncritically information delivered by the political elites, Ms. Cole and the Oregonian chose to follow the Walter Lippman model and assume that the public was incapable of understanding the intricacies of public policy and the truth and veracity of the political elites.

For my part, I prefer the John Dewey model. The advent of the internet and the sophisticated search engines designed by Yahoo, Google, and Bing have democratized the delivery of information and, in essence, fulfilled Mr. Dewey’s view of the proper responsibility of journalism. The continued adherence to the Lippman model by the mainstream press is the primary reason for its rapidly advancing demise.

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Posted by at 05:00 | Posted in Economy, Leadership, Portland Politics, Portland Schools, Uncategorized, Unemployment | 17 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    Betsy Hammond does a pretty good job at the Oregonian, and she seems to carry good experience and skills in doing her job.  Beth Slovic (Oregonian reporter) also played the watchdog role a Sunday ago when she lifted the veil on spending (mis-) priorities of the Portland Department of Transportation which leaves roads go unpaved while spending on other high profile items surges (she may have been prompted by a study of Dr. Eric Fruits).  In this same Sunday edition, though, the Oregonian also plays the “local government mouthpiece” role by running its editorial opinion against changing the federal government’s transportation funding formula which restricts a state and local government’s use of these monies to only transit projects rather than a choice between road construction and transit construction.  As it stands now under the current formula, local leaders like Sam Adams are allowed political cover for spending public monies on money losing street cars and pedestrian-only-bridges while ignoring basic infrastructure repair which is essential to moving the region’s freight, handling essential services like garbage and emergency services; and providing more efficient rides for car travelers, bus riders, and bicyclists.

    As for the Oregon economy, it’s improving despite poor governance in the Governor’s office and Portland city hall.  There’s still enough free enterprise left in us to get back on our feet again.  If Oregon were to take a more free enterprise direction by, for instance, keeping tax rates constant and making land development easier; it would no doubt actually see a great surge in its economy as it would become very much more attractive for export business relative to Califorina and even Washington state.  A greater adoption of free enterprise principles would actually result in higher government revenues, allowing for greater public services.  But I am not too optimistic the Multnomah county electorate can break out of its central planning mindset, especially with such institutions as PSU and Portland Public Schools continuing to dismiss unfettered American engineering in favor of centralized planning of everything that moves.

  • valley person

    ” Despite Ms. Cole’s assertion of “encouraging economic signs” there is
    virtually nothing that indicates that Oregon’s economy is improving.”

    Other than every major economic indicator that is.

    • marvinmcconoughey

      Your comments are encouraging, valley person.  Perhaps the closed store fronts in downtown Corvallis will now reopen, the moribund new shopping center development up on ninth street will restart, and the 38 percent of children here receiving free or reduced price meals will undergo a dramatic drop. 

      • valley person

         Those are micro indicators Marvin, not macro. GDP is up, the stock market is up, employment is up, unemployment is down, business investment is up, car sales are up, personal savings are up, personal debt is down, and inflation is still near zero. All of this has to be sustained for a while  to fill vacant storefronts, assuming retail can compete with etail. As for the number of poor kids, that is a whole different issue. I’m just glad we are able to offer them those meals.

        • marvinmcconoughey

          Actually, I agree with you valley person. What little I know about economics suggests that we are rebounding off the bottom. I am a bit doubtful that inflation is low, but the numbers do so claim. I think, though, of the very low returns on savings, the rising price of petroleum products, and certain food cost increases as harbingers of a broader inflation.

  • Rupert in Springfield

    The fact that you can tell what the press is going to put out before it does should tell you all you need to know. Virtually every pundit had predicted we would all of a sudden start seeing falling unemployment numbers in the months leading up to the election. Rush started around last November as I recall.

    What else will be in the news? Well, two things we are already starting to see already.

    First, complete unquestioning acceptance of any statement Obama makes about opening up oil drilling.

    Second, we will see relentless explination, editorial and in depth reports on TV – “Oil, what really causes the price to go up”. All of what causes the price to go up will be beyond Obamas control, none of it will be related to his policies, such as opposition to drilling four years ago when a lot of those wells might very well be coming online right now.

    What else will we see?

    Well – In the debates the last time around Obama made hay over Bush’s handling in Afghanistan. Supposedly Bush had taken his eye off the ball there, concentrated on Iraq, and thus endangered our winning of “The War We Must Win” as Obama termed it. Well, I dont think anyone can say Obama is winning there, certainly not any better than Bush. This will be an issue the media will studiously avoid connecting to Obama.

    What about some predictions that have come true?

    Well, virtually everyone predicted BO care would wind up being way off on the numbers. Just a few years in we are seeing initial estimates were wildly off. Looks like the CBO was wrong, natch. Much reporting on it? Nope. Will there be questions for BO about this as we get closer to the election? Not on your life.

    The bottom line is this:

    When you can predict what the reporters will write before they write it, that’s not news, that’s propaganda.

    • valley person

       In your case Rupert, its called delusion of grandeur. Unemployment is dropping because the economy is recovering.  And in fact, it is recovering much faster than the “pundits’ were predicting a few months ago. We are now averaging 250,000 net new jobs a month, have the best stock market in many years, and have improved GDP growth. I know you were hoping for worse, but too bad.

      Oil is a global commodity priced by supply, demand, and the cost of exploration, extraction, processing and transport. And yes, pretty much all of that is beyond any president’s control.

      We may not be “wining” in Afghanistan. But we are out of Iraq, bin Laden is dead, and al Queda is pretty much al Kaput. That son, is real progress.   

      You are confused on the CBO. The new public net cost is LOWER by $50B, not higher. Medicare savings, for one, are coming in ahead of expectations.

      https://cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf

      • Rupert in Springfield

        >Unemployment is dropping because the economy is recovering.

        Actually a significant portion of the unemployment drop is due to  not counting those actively seeking work and having them fall off the unemployment roles. You simply are wrong on this.

        The economy is recovering, but it is the worst recovery since WW2.

        >We are now averaging 250,000 net new jobs a month,

        Um, in case you dont know, that is not a figure to brag about. Its incredibly anemic. Worst recovery in most peoples lifetime.

        >Have the best stock
        market in many years, and have improved GDP growth.

        Improved GDP growth is the definition of a recovery, just so you know. Having improved GDP growth coming out of a recession isnt anything notable, its simply the definition of a recovery.

        Lets face it, you are the guy who called Bush’s 3% growth rate horrible. At least until you saw Obamas. Now Obama would kill for a 3% growth rate, which would be still abysmal coming out of a recession.

        >Oil is a global commodity priced by supply, demand, and the cost of
        exploration, extraction, processing and transport. And yes, pretty much
        all of that is beyond any president’s control.

        And attacking Libya, making a hash of middle east policy to the extent Obama is being burned in effigy, and curtailing domestic oil production doesn’t affect supply?

        What are you smoking?

        >We may not be “wining” in Afghanistan. But we are out of Iraq, bin Laden
        is dead, and al Queda is pretty much al Kaput. That son, is real
        progress.   

        Funny, this is just about the response Bush gave after the surge, minus the Bin Ladin thing, and Obama called it a failed policy because we weren’t winning “the war that must be won” in Afghanistan as BO put it.

        Interesting, you slammed Bush for that which you now champion BO.

        That Son is not progress, that’s hypocrisy, and I think you know it.

        >You are confused on the CBO. The new public net cost is LOWER by $50B, not higher.

        Wrong, when BO care was signed, we were all told it would cost $1T or less.

        The CBO at that time projected the cost at $940B

        At that time I, and virtually everyone else, said the CBO would be wrong, and it would wind up costing way more.

        Well, looks like I was right. The projected cost is now close to double that – $1.76T

        Gee, who would have thunkit?

        Lol, not you that’s for sure. You bought the $1T thing hook line and sinker.

        • David Appell

          Actually the nominal GDP growth rate under Obama has been 3.6%; under Bush it was 4.0%. That’s not bad, considering Obama inherited an economy in free fall.
          GDP data are here:
          https://www.bea.gov/national/index.htm#gdp 

          1Q2001: $10,165.1 B
          1Q2009: $13,893.7 B
          4Q2011: $15,320.8 B

        • David Appell

          And when you adjust for inflation by using chained dollars, the annual GDP growth rate under Bush was 1.4%. 

          Under Obama, it has so far been 2.2%.

          • valley person

             David, dragging facts into this won’t help with Rupert. But good try.

          • David Appell

            You’re right. But even if Rupert won’t admit it here, he’ll still read them and there’s a chance he’ll realize, at least for a few seconds, that his claim is wrong. 

            Plus at least others will see it.

            The reality is, history is not going to be very kind to George W Bush. His term included:

            1) the worst incident of terrorism in the history of the world
            2) the destruction of a major US city due to a natural disaster
            3) a war fought based on a lie, with hundreds of thousands of people dead and maimed as a result
            4) the worst financial collapse since the Great Depression
            5) anemic economic growth
            6) large increases in inequality, by design
            7) unwise tax cuts in the face of enormous new spending on wars and health care
            8) a severe pullback in Constitutional protections from US citizens
            9) the addition of torture and kidnapping as instruments of US policy, and with it the moral collapse of the US as a standard of human rights
            10) an election where he lost the popular vote and gained the Presidency only by one of the worst decisions in Supreme Court history.

            There is a good reason none of the current Republican presidential candidates so much as breathe the words “George W Bush,” and that Bush himself is virtually absent from the scene. 

        • David Appell

          > curtailing domestic oil production > doesn’t affect supply?

          Curtailing domestic production? Oil production is up 22% since Obama took office. During Bush’s terms it increased 2%. 

        • 3H

          You are using the figure for the gross cost, not the net cost.   VP is right..  the net figures from the CBO are now 48B lower than last year’s.  The net cost is estimated by the CBO to be at 1,083B.  Which is closer to 940B than it is to your 1,760B.  Perhaps you should have been alerted by his use of the term, “net cost”.  

          https://cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf 

        • valley person

           “Actually a significant portion of the unemployment drop is due to  not
          counting those actively seeking work and having them fall off the
          unemployment roles. You simply are wrong on this.”

          Not really. Those who are not actively seeking work, and its for many different reasons, were not counted in the previous unemployment figures, so the measured drop is apples to apples, all those seeking but unable to find employment. If you want to bring in the oranges, then compare the previous unemployment estimate that adds in those not seeking work who supposedly really want work, and you will find that number also has dropped.

          “Um, in case you dont know, that is not a figure to brag about. Its incredibly anemic. Worst recovery in most peoples lifetime.”

          It is much better than Bush averaged across his term, and is high enough to gradually reduce the number of unemployed. The “worst recovery” in our lifetimes beats the heck out of the declining economy Obama started with. So yes, for many it is worth celebrating.

          “Improved GDP growth is the definition of a recovery, just so you know.”

          Gee thanks Rupert. You must have a point there somewhere.

          “Lets face it, you are the guy who called Bush’s 3% growth rate horrible.”

          Bush didn’t have a 3% growth rate. Measured across his 2 terms he had a net 1% GDP growth rate. This is because most of the “growth” experienced under Bush was the rise in home equity, which was subsequently lost. The stock market was lower when bush left than it was when he arrived. Quite an achievement. 

          But keep hoping for a return of the good old days.

          “And attacking Libya, making a hash of middle east policy to the extent
          Obama is being burned in effigy, and curtailing domestic oil production
          doesn’t affect supply?”

          Oy vez. Obama did not attack Libya dude. There was a civil war, and he helped one side win. Oil production in Libya resumed as a consequence. Being burned in effigy in the Middle East is par for the course for any US president. At least nobody has thrown shoes at him. US oil production is at its highest point in 8 years, so it has hardly been curtailed.

          Do you have any actual facts to share?

           “Funny, this is just about the response Bush gave after the surge, minus the Bin Ladin thing”

          Yes that is funny. You are saying Bush claimed we were no longer in Iraq after he surged troop levels there? Fascinating. And I like the “minus the bin Laden thing” as a dismissive point. Wasn’t bin Laden the whole reason we got into Bush war 1 in the first place? And wasn’t he also the excuse for Bush war 2? Yet you make him sound like an afterthought. “Oh yeah…and then there was that Hitler guy.” Geesh.

          “Wrong, when BO care was signed, we were all told it would cost $1T or less. ”

          Read the latest CBO estimate for Gods sake. You are off by orders of magnitude.

  • NAFTA Refugee

    Well written.

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