Day: July 17, 2002

Greenspan’s Spin Free Numbers?

John Robb and Dave Winer take at face value Alan Greenspan’s assertion that his data are free of spin. Winer writes,

Very interesting note on John Robb’s weblog about Alan Greenspan’s number crunching that routes around the noise added by corrupt management. “We do have a set of profits data which, for all practical purposes, are free of spin,” says the Federal Reserve chief.

Not. In fact the quarterly estimates of National Income and Product Accounts — which Greenspan is referring to — are as often just as much smoke and mirrors as are corporate profits. The bottom line is that once you get past a certain point, finding a way to measure things like earnings or productivity that everyone agrees on becomes very difficult.

As Joseph Ritter, a researcher with the Federal Reserve Bank of St. Louis, noted in a report on the NIPA numbers,

Second, the data BEA uses to construct the NIPA are generally reliable, but they are far from perfect. They may be inaccurate, or they may not be precisely what are needed. Indeed, for quarterly estimates of some components, no source data are available, and BEA must substitute judgment and statistical methods. This is especially true of quarterly estimates published shortly after the end of the quarter, as data collection and processing often take more than one or two months. Furthermore, since the NIPA are the result of a complex process based on many inputs, it is impossible to construct formal measures of their statistical reliability, as is done for the unemployment rate, for example.

Just imagine a CEO stepping forward today to say that he is going to start estimating his company’s earnings based on a method that he knows is not accurate and, moreover, a method whose accuracy cannot be reliably tested. Oy.

Which is not to trivialize what NIPA attempts to do. That they can put together a “best guess” for measuring one of the largest economies in world history on a quarterly basis is amazing. But NIPA numbers are not the end all be all when it comes to routing around errors in other sectors.

Source:

Feeding the National Accounts. Joseph A. Ritter, Federal Reserve Bank of St. Louis, March/April 2000.

Contradictory Messages to the CIA in Post-9/11 Blame Game

For the past several months I’ve maintained that the problem with all of the post-9/11 analyses seek to blame this or that agency for failing to stop the terrorist attacks is that Americans are being hypocritical about what they want law enforcement and intelligence agencies to do and how to act. So, for example, as a nation we’re outraged by racial profiling but we’re also angry that the FBI didn’t start hauling in Arab flight students for questioning after a Phoenix FBI agent warned of the possibility of terrorists training in such schools.

Nothing illustrates this sort of problem than a new report which actually criticizes the Central Intelligence Agency for, get this, being unwilling to work with “unsavory characters.” Here’s CNN’s report,

The subcommittee’s chairman also said CIA officials are not doing enough to allow field officers to recruit unsavory characters to infiltrate terrorist organizations, the chairman of a House homeland security panel said Tuesday.

Congress last year ordered the CIA to do business with these sorts of people, but it is apparently angry that the CIA is not being active enough in recruiting unsavory characters.

Now the CIA used to regularly work with the scum of the earth. Latin American torturers, people with ties to organized crime, people who themselves engaged in terrorist attacks against America’s enemies. And when that sordid past was well-documented in books published in the 1960s and 1970s, a hue and cry went up to stop the CIA from recruiting and protecting such despicable people.

In fact, one of the themes of the post-9/11 blame game was how and why the United States helped fund and train Afghanistan’s Mujahadeen fighters, including cooperating with Osama bin Laden, before he became so obsessively anti-America.

And yet, here we are in 2002 with a member of Congress complaining that the CIA doesn’t do enough to go out and recruit people who themselves have criminal and, in many cases, terrorist pasts.

My prediction: sometime within the next 10-15 years there will be a major scandal involving the CIA’s cooperation with an “unsavory individual” and Americans and Congress will all wonder how the CIA could have possibly gotten so far off track.