[PEN-L:28171] Re: RE: summary of credit bubble

[Doug Henwood <dhenwood@xxxxxxxxx>]

Devine, James wrote:

> Third, the author says that in the late 1990s, "Profit growth was
> below normal and the product of fraudulent accounting. The miracle
> economic numbers were the result of manipulated government
> statistics." It's true that profit growth was below normal (as the
> rate of profit fell), but how much was due to fraudulent accounting
> if we look at the total. Is there any evidence that the government
> deliberately manipulated statistics to make businesses look more
> profitable?

And it's pretty much exactly backwards. The BEA relies on corporate
reports for initial estimates of profits, adjusting for the tax
code's generous depreciation schedules, but uses more accurate tax
data when it becomes available, which takes a couple of years. These
are reflected in their annual benchmark revisions, which cover the
previous three years of data. For the past few years, these have
invovled substantial markdowns of profits figures. More of the same
(and much else) is likely when the 1999-2001 benchmark revisions are
released on July 31.

Right-wingers ritually denounce government statistics as sloppy or
fraudulent, which is almost pathognomonic of a kind of boneheaded
antistatism. So when lefties do similar things, I'm crushed with
disappointment.

Doug