In the coming weeks, a new national statistician will be chosen to replace Professor Danny Pepperman. Ostensibly, this is a technical appointment for a technical position. But history shows that the role of chief statistician is a very political one. So political, that even in an OECD country, his appointment according to the rules can lead to charges of treason.
This happens because, as Yoel Finkel, acting national statistician, told me, “What is done in central bureaus of statistics is not statistics, it is national accounting.” What he was trying to say is that the Central Bureau of Statistics collects data from various sources and compiles them together into estimates that are reported as official statistics. Everyone knows that there is a great distance between the estimates and the real figure. But everyone trusts the central bureaus of statistics, certainly those of countries included in the OECD, which work according to the same rules, so mistakes that are made are made in a similar way everywhere. This uniformity, and not the belief that the data is completely accurate, is what makes it possible to compare data from different countries, and between different periods.
But since the final figure is only an estimate, and since it is very difficult to follow all the processes that have been done until the creation of the final number that is reported to the public, there is a lot of room for “playing” in the data. And such data games can have a great impact on the political situation in the country.
The most famous example is Greece. During the 2000s, GDP in Greece grew more slowly than the government wanted. To meet the demand for workers, the government increased the public sector. Greece’s “fat man” is getting really fat. But the Greek government could not report this, because then it would have become clear that it was violating the rules established in Maastricht for countries that are members of the European Union. To remain a member of the European Union, the Greek government had to maintain a deficit of less than 3% of GDP, and a national debt of less than 60%.
To deal with this limitation, the government made sure that the Bureau of Statistics of Greece would be subordinated to it. In this way, the Bureau of Statistics reported cleaned data. Figures on hospital spending, for example, were shrunk to make the debt appear lower.
The European Union knew that there was a problem with the reports of the Greek Bureau of Statistics. But until the outbreak of the debt crisis in 2008, they contented themselves with warnings, and forcing the Greeks to correct the statistics whenever they were caught in too gross a lie. But even after the corrections, the Greek statistics still seemed to be in the normal range.
After the crisis in Greece started, Greece received a bailout package from the European Union and the International Monetary Fund (IMF). One of the demands that came along with the rescue package was that Greece establish a central bureau for independent statistics. At the head of the newly established bureau, the rescuers placed Andreas Georgiou, a doctor of economics who gained extensive experience at the IMF.
The new Bureau of Statistics has begun to check the data of the previous years, and adjust the reporting to the requirements of the European Union. Dr. Georgiou and his employees thought that in order to get Greece out of the crisis, the first thing that was required was to produce data according to the accepted methods in the world, so that it would be possible to know how Greece’s situation compares to other countries.
They found that Greece’s deficit was double what the government had previously reported. They also found that this is nothing new: for years, the reported deficit has been significantly lower than the actual deficit.
These figures caused an uproar in Greece because they forced the government to make much bigger cuts than it had intended, which greatly increased unemployment. The government did not lay the blame for unemployment on itself (nor on previous governments), but on the chief statistician. From 2011 until today, Dr. Georgiou is facing three different lawsuits filed against him. One, for causing damage to the state due to inflating the debt figures, he came out eligible. He lost the other two: one for acting without authority when he reported to the European Union about data The real debt, and the second that he damaged the good name of the former National Statistician of Greece, because he revealed the way in which the Greek Bureau of Statistics manipulated the data.
So who should be appointed to such a political position? In Israel it is still required that the chief statistician be a professor. Today he is required to be a doctor. I think neither this nor that is needed. We need someone who understands that national accounting is not statistics, but the construction of data according to agreed methods. It is desirable that he understand building databases, so that he puts emphasis on computerized data collection processes. The most important thing: that he knew how to deal with the politicians in order to bring in more money. Otherwise, instead of the data quality improving, it will stay where it is, and even deteriorate, even if no one tries to do anything on purpose.
Dr. Avihai Shanir
Bar-Ilan University