On 23 Dec 96 at 9:01, Michael Perelman wrote: > Does anybody have a good feel for the history of the cpi struggle? I > remember during the early Reagan years, the administration was arguing > that housing prices were overestimated because the price of rents was not > increasing as fast as the price of houses. An economist named John Weicher did some work in the early 1980's regarding housing and the CPI. He had been at the American Enterprise Institute. There may have been others but I wouldn't know since I didn't follow the issue closely. The reason I took note of Weicher's work, however, is that his revised CPI indicated that poverty fell during the 1970's to a much greater extent than implied by the official measure. At the time, the Charles Murray book Losing Ground had set off the welfare debate and Weicher's result was evidence AGAINST the Murray thesis, since the fall in poverty tracked well with the increase in means-tested transfers. Weicher wrote a little paper to that effect, "Mismeasuring Poverty and Progress." He's actually a pretty moderate Republican, especially by contemporary standards. He did serve in HUD at some point during Reagan/Bush, and has also been connected with the Hudson Institute and Indiana Univ. I have no idea if he was right about housing, but in the early 1980's context Social Security did not loom as large as welfare. Reagan's people at OMB did make a foray to cut the disability insurance part of Social Security and got smoked. Reagan didn't go near OASDI or Medicare after that, if memory serves, and actually signed off on an expansion of Medicare which some right-wing old-folks organizations caused to be repealed within months. Gee I'm old. I'd better go and lie down for a while. > Was that the first salvo? Hasn't Heritage been cooking this project ever > since? No. Nobody at Heritage is sufficiently skilled to handle issues of this complexity, even with malign intent. You might be thinking of a fellow named Robert Rector who has been making mud pies with the definition of poverty to suggest that people aren't as poor as you think they are. > Why did Robert Gordon sign on? I know he has been pushing the idea that > the computer price index was overstated. Larry Mishel did work relating to this which caused the BLS to change the way they measured productivity. One needs to be careful in sorting out analytical and political motives. > Why hasn't Doug Henwood published this scoop? As I've suggested, this was not one of the innumerable scoops he slept through. It should be kept in mind that historical revisionism arising from changes in measurement can easily have politically diverse policy implications. Dean has shown that if Boskin is right, the following premises follow (I summarize): There is no long-run Social Security problem; tomorrow's workers will much better off; Investment and productivity has been much higher than thought, despite deficits in the 1980's, so the latter cannot be a cause of reduced economic growth; The war on poverty ended in victory: the current poverty rate is really 7.5 percent, not 14, so Federal spending to reduce poverty was a howling success. I'm sure list followers will be able to think of others. As I mentioned in another post, if you redo some leading macro models with a revised CPI, you might be able to disprove major pillars of the current orthodoxy. Hurry up before Paul Krugman beats you to it. The Post ran a piece a few days ago titled "Experts Attack CPI Report" or something like that. Dean wan't mentioned but Barry Bosworth, among others, was prominently quoted rejecting the Boskin finding. To me this was a sign that the Boskin report is dead in the water. Once you have a critical mass of experts behind a position, that opens up the field for political forces to make hay on the issue, which in this case means Gephardt, Bonior, and Teddy K. Dean deserves most of the credit however, since he has been the one deconstructing the Boskin report to the edification of others who might otherwise not pay close attention or be willing to do the analytical muckraking necessary to uncover what's real. Sometimes good stuff happens. MBS =================================================== Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] 1660 L Street, NW 202-775-8810 (voice) Ste. 1200 202-775-0819 (fax) Washington, DC 20036 Opinions above do not necessarily reflect the views of anyone associated with the Economic Policy Institute. ===================================================
