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EYE ON THE PIE: Can policymakers take the truth?

July 11, 2005

We met across the street from the Statehouse, a place where smokers are still welcome. In a deep doorway, unseen from office windows or by pedestrians, stood my friend, Sore Throat.

"After Deep Throat was unveiled, I didn't know if you would show up," I said.

He gave a guttural laugh. "Hey, I'm still here. You can change the parties, but the Webees remain."

"The Webees?" I queried.

"Yeah," he growled. "They put in their new people at the top, but the folks who do the work, we be here nonetheless."

"Is this administration any different from those of the past?" I asked.

"Maybe in their minds," Sore Throat responded. "Until they prove they want the truth, I'll feed them what I've always fed them. I can always find some data to make them feel as if Indiana's among the leaders in something. I've been doing it for decades; that's why they never fire me."

"So what have you given them recently?" I said.

"Just a week ago," Sore Throat replied with rehearsed boredom, "the U.S Bureau of Economic Analysis came out with its quarterly estimates of personal income. I passed them along. Seems Indiana was 13th in growth of personal income in the first quarter of this year. That's almost in the top quartile of all states. Over the past year, we ranked only 28th, nothing outstanding, but as long as we are higher than Kentucky, Illinois, Michigan and Ohio, Hoosiers seem to think it's just fine.

"Since all these guys, new and old, put so much emphasis on personal income in their speeches, this hits them as happy talk. And," he continued, "Indiana was seventh in the nation in its percentage change in the rate of growth of personal income from the preceding quarter."

"Wow," I said, "those figures do sound good."

"Sure they do," Sore Throat said, "if you don't get into the numbers. What we had was a growth rate of 1.2 percent in personal income compared with a U.S. figure of 0.7 percent. But that U.S. figure is a fake. Well, not a fake, but a fluke. You have to take out Microsoft's one-time dividend payment in the fourth quarter last year that ballooned the numbers. If you do that, the U.S. grew 1.7 percent (not 0.7 percent) in the first quarter of this year and our 1.2 percent doesn't look so hot."

"Golly," I said. "Microsoft sure does carry a lot of weight."

"You're telling me?" Sore Throat said, chuckling. "And that seventh-place ranking in the United States? Want to know what that means? It means the slowdown in our personal income growth rate was less than the slowdown that hit other states.

"We went from 2.4-percent growth to 1.2-percent growth. But if you have a slow rate of growth, and drop just a bit, it doesn't show up as much of a percentage change."

"I don't understand," I confessed.

"Neither do they," he said, grinning. "Look at it this way: We went from 2.4 percent to 1.2 percent; that's a 49-percent drop in the rate of growth. Maryland went from 3.6 percent to 1.2 percent; that's a 67-percent drop. We look better, but who's actually better off? Maryland is, because it had the higher growth rate to begin with.

"But why do you feed deceptive numbers to our policymakers?" I demanded.

"Dummy," he said, "they want to be deceived so they can deceive others. They're content and I keep my job. They feel virtuous because they are getting happy numbers from a reliable source and I get a paycheck the bank honors."

I gave Sore Throat a disappointed look. He gave me a blank stare, stubbed out his cigarette, and went back to work for the people of Indiana.



Marcus taught economics more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mortonjmarcus@yahoo.com.
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