Thank you for clarifying. However, some points in this reply, I observe, are in contrast to your previous posts.
What I understand from your previous posts is that you (a)consider that the unemployment figure reported is correct or not grossly misrepresented (b) hold the opinion that the top management of the banks are blameless and has nothing to do with the failure of these banks e.g. GS, F&F, AIG (c) hold the opinion that the govenment is responsible for the failure of the banks (This is not an attempt to put words into your mouth, do correct me if I am wrong)
TopQuark wrote “It shows specifically how a collusiuon may occur. But I never argued that it cannot occur”
First through numerous posts you attempted to convince the members that there is no collusion on part of the BLS top level (in this case) or the top management in case of F&F, AIG, GS etc then you said you are open to the idea that, in the general environment, collusion can occur (may I add that this general environment includes BLS, F&F, AIG, etc)
I explained to you how collusion takes place in order to suggest that the BLS is not immune to any sort of collusion taking place (I will be glad to debate this)
Sticking to the unemployment bit, you say “ Indeed, all people, all those thousands do not have common knowledge of how aggregation was done. However, at each level where aggregation is performed, there are some people that perform that aggregation. Moreover, people providing input into a given level of aggregation do have a feel for the aggregate (there are series that historically covary, etc.)”
As far as unemploment, inflation (and even census!) figures are concerned the thousands providing input, I am sorry to say, do not have a feel for the whole. Why so? you may ask, because, they are as I said earlier, fragmented. Calculations are done on a regional basis. Those calculating unemployment for the state of California have no clue (officially) of the rate of unemployment in Alabama or the US as a whole entity. The link is broken here itself and hence no question arises of them having a feel of the aggregate.
You further wrote “In sum, (i) a collusion would still be necessary at any given level where stepwise aggregation takes place, and (ii) it is quite detectable by those that provide inputs”
Only if it was so simple. It is as good as saying that the accounts head (statistician reporting for California) at a branch of a conglomerate (California) has the idea of the profit at the group level (United States). Rates of every state are reported by the statistical head of that state to a central location and this central location is where distortions are permeated. Nobody is daft enough to do it in a way that invites attention. There are ‘politically correct’ tricks. For example, a higher level of confidence (confidence interval), statistical significance, t-values ... almost anything can be manipulated to get the results that the BLS wants the public to believe.
This cannot be reported to the Fed can it? What would the poor officer say...
Officer to Fed: The rate of unemploment is 14% not 8%. I am here to report Mr. X who has deliberately taken a higher confidence level.
Fed to Officer: Get lost!
As you say, in practice the statistical experts have to ‘put up or shut up’
My only request to you is to refrain from attempting to convince people that the figure of unemployment at 8.9% is correct. In doing so, I have also provided reasonable explanation why I do not believe it is the correct figure.
P.S: I trust you are also aware of the numerous political motivations behind distorting critical figures like unemployment rate.
you (a)consider that the unemployment figure reported is correct or not grossly misrepresented
No, please reread my numerous posts on this thread to confirm that I never said such thing. Firstly, an estimate may lack accuracy but be unbiased (I too trust that you know what an estimator and its bias are). Secondly, when an estimate is indeed biased it may be such for reasons other than deliberate misrepresentation. If the language I use does not suffice, ask an attorney why it is so much harder to prove fraud than negligence, and why a judge would throw out an allegation of fraud if intent is not demonstrated by the accuser.
(b) hold the opinion that the top management of the banks are blameless and has nothing to do with the failure of these banks e.g. GS, F&F, AIG
This begins to be really disturbing: where have I said that or anything remotely close? What I said was that it has become a hunting game wherein people (i) pin on the banks all, even nonexistent or someone else's sins, and (ii) do not bother to support their allegations with evidence.
Please reflect on the difference between this and your supposition.
(c) hold the opinion that the government is responsible for the failure of the banks (This is not an attempt to put words into your mouth, do correct me if I am wrong).
We had not one crisis but two related crises: a credit crisis and a housing bubble. No, the government has nothing to do with the failure of Lehman, which then startled lenders so much (reversal of too-big-to-fail) that they froze lending.
At the same time, yes, the entire housing bubble was created by the Community Reinvestment Act of 1998 and its implementation by Barney Frank and Maxine Waters.
you attempted to convince the members that there is no collusion on part of the BLS top level (in this case) or the top management in case of F&F,
No, (i) I explained why I personally do not believe in such collusion, and (ii) requested accusers of such collusion to provide evidence of it.
Why so? you may ask, because, they are as I said earlier, fragmented. Calculations are done on a regional basis.
You are absolutely correct. As I mentioned earlier, there are statistical methods to detect bias during aggregation (sorry I do not recall specific sources now to refer you to them). I expressed doubt that they would not be used in this case.
This cannot be reported to the Feds can it? What would the poor officer say... Officer to Feds: The rate of unemployment is 14% not 8%. I am here to report Mr. X who has deliberately taken a higher confidence level. Fed to Officer: Get lost
This is an exaggeration, but not too far from the truth. . One can indeed say and back up with documents: "At such an such meeting, A proposed to me that number X would not reflect well on administration's efforts and it would be better if we changed it to 0.95X."
That's how things are uncovered and proved in the court of law in the case of pharmaceutical, tobaco, asbestos companies --- dozens of times. Yes, people talk in the courtroom in terms of confidence levels, Student distributions, etc. Similar degree of technicality and sieving through e-mails to demonstrate intent was done in the case of Enron. You have seen how e-mails recently blew up into the faces of global-warming "scientists:" their owm, leaked e-mails condemned them. It's difficult to conspire for too long without being detected.
My only request to you is to refrain from attempting to convince people that the figure of unemployment at 8.9% is correct.
It is an absolutely justifiable request, and I am only happy to comply. I think I complied with it in the past. I personally would laugh if someone suggested that any figure is correct: it is nothing but an approximation, and most people (at least professionals in the economics, finance and policy fields) understand it as such.
To give an example: is 3.14 a correct figure for Pi? Of course not. Is 3.1415 a correct one? Of course not: it is a better approximation but not a correct value. As you know, I am sure, no decimal expression of finite length would be correct in this case. When someone says Pi = 3.14, most people understand what that means, and nobody is misled.
I trust you are also aware of the numerous political motivations behind distorting critical figures like unemployment rate.
Yes, of course. The question is whether they can and do get away with it, not whether they are motivated to do so.