Commentary: What if “alternative facts” spread to economic data?

Donald Trump’s inability to accept news that disagrees with the view he has of himself and what his administration can accomplish was on display on his first two days as president. He, and those speaking on his behalf, claimed falsely that “This was the largest audience ever to witness an inauguration, period, both in person and around the globe,” and then doubled down even when presented with solid evidence it wasn’t true. 

Americans were told the new administration relies on “alternative facts,” which seems to mean whatever numbers it can come up with to support Mr. Trump’s claims.

What worries me, among other things, is how the president will react to bad news about the economy. In the next four years, it will have its ups and downs -- that’s inevitable. The fluctuations could be relatively mild, or they could be severe, but at times the economic news will definitely be disappointing.

When this happens, Mr. Trump can respond in several ways. He can accept the bad news, which seems unlikely. He can also undermine the news by claiming the numbers are fixed by people in government working against him, that the numbers are misleading, or false, and then present his own “alternative facts.” If he does this, many people will believe him.

He might even try to underfund or actually eliminate agencies that report things that suggest his administration isn’t the best economic machine to ever come to Washington.

But the worst thing he could do -- and I see this as a real danger -- would be to politicize the agencies that produce government economic data, to put people in place that will skew the numbers in his favor. If that happens, the data will be useless, and we’ll essentially be flying blind when it comes to the true state of the economy.

It would also bring a lot of economic research to a screeching halt. Both macro- and microconomists depend greatly on government data for their research. 

Unlike the physical sciences, economists for the most part cannot do laboratory experiments to generate the data needed for their research. They must rely on government-produced data. Any degradation in the quality and availability of these data would be a setback to economists’ ability to generate new and important knowledge. And remember that microeconomists, who have made important contributions in areas such as health care, social insurance, labor policy and all sorts of other important areas have been far more successful than macroeconomists.

It would also hinder economists’ ability to characterize the current state of the economy (what’s the true unemployment rate?), which is essential for formulating monetary and fiscal policy.

Third-world dictators manipulate data about the economy to make themselves look good. But even if President Trump doesn’t go that far, undermining public confidence in government data and the research derived from it, cutting funding for data-collection and data-reporting agencies or, in the worst case, politicizing these agencies, would simply be a disaster for economic research. And, perhaps more important, it would destroy Americans’ ability to understand what’s happening in the economy, where it might be headed next and what it could mean for their own lives and ambitions.

Government-generated data isn’t perfect, but it’s an honest attempt to provide the best possible window into the state of the economy now and in the past. Although it would be helpful to have more data, not less, the information we have does a great job of informing us about how the economy is performing and helping settle important policy questions, not to mention its value in economic research. 

Let’s hope that President Trump’s need for “alternative facts” to support his ego doesn’t result in the loss or obfuscation of this crucial information. 

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