Tax brackets, Social Security, Medicare, and various indexed payments, together affecting tens of millions of Americans, are pegged to the Consumer Price Index as a measure of inflation.
The fiscal cliff deal that the White House and Congress reached a month ago was almost derailed by a proposal to change the formula for the CPI, which Matthew Yglesias characterized as “a sneaky plan to cut Social Security and raise taxes by changing how inflation is calculated.” That plan was scrapped at the last minute. But what most people don’t realize is that something similar had already happened in the past. A new book, “The Physics of Wall Street” by James Weatherall, tells that story: In 1996, five economists, known as the Boskin Commission, were tasked with saving the government $1 trillion. They observed that if the CPI were lowered by 1.1%, then a $1 trillion could indeed be saved over the coming decade. So what did they do? They proposed a way to alter the formula that would lower the CPI by exactly that amount!
This raises a question: Is economics being used as science or as after-the-fact justification, much like economic statistics were manipulated in the Soviet Union? More importantly, is anyone paying attention?
Ironically, in a recent op-ed in the New York Times, social scientist Andrew Hacker suggested eliminating algebra from the school curriculum as an “onerous stumbling block.”
Politicians are still eager to exploit backdoor mathematical formulas for their political needs, and economists are still willing to play along. And the public — well, very few people are paying attention. And if we follow Hacker’s prescriptions and further dumb down our math education, there won’t be anyone left to understand what’s happening behind closed doors.
Slate.com