Thursday, May 17, 2012

I can run a country with my eyes shut?

Now that we're in the information age it's more than a bit ironic that the House voted to cut funding for the American Community Survey and the Economic Census in its latest appropriations bill.  As the old military phrase, "the fog of war" suggests, the military needs good information to be effective.  Not surprisingly it turns out that government, business, and society in general needs information to be effective.

From Businessweek ...
Tom Beers, executive director of the National Association of Business Economists, says that without good economic data, businesses would be “flying blind.” He adds: “You end up in a guessing game about what’s going on in the economy. The types of losses that result are far worse than what you end up spending to fund these surveys.”
More strikingly, from the same article ...
Contacted last week, economists at conservative think tanks Cato Institute, American Enterprise Institute, and the Heritage Foundation all expressed support for the data-gathering agencies since all three rely heavily on the statistics they produce to study the economy. “Those agencies are essential,” says Phillip Swagel, an economist and nonresident scholar at AEI. “The data they provide really tell us what’s going on in the economy. This shouldn’t be a political issue.”
Some people have suggested that state or local government agencies or private organizations might be able to fulfill the data gathering and processing responsibilities of the ACS and Economic Census.  The resources needed to design, organize, and execute effective surveys is nontrivial.  The science of survey design -- large surveys often have complex designs to realize large savings for a given precision -- as well as developing/maintaining an organization to implement it strongly suggests that there would be large economics of scale/scope with centralizing its function.  Moreover the alternative overlooks that data fits aspects of a public good quite nicely: (1) while you can impede people's access with some effort, it would be hard to exclude people from its results and costly to prevent people from sharing it and (2) one person's use of data does not impede another person's use of data.  So in a classical economic sense, it is something that government should do.

Theodor Geisel, Dr. Suess, once wrote I Can Read with My Eyes Shut! to encourage children to read.  But even my little boy knows that this is just a jest not to be taken seriously.  Let's not run a country with our "eyes" shut.

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