Rubbery Numbers Show the 'Con' in Econometric

By Guebert, Alan | Telegraph - Herald (Dubuque), June 5, 2016 | Go to article overview

Rubbery Numbers Show the 'Con' in Econometric


Guebert, Alan, Telegraph - Herald (Dubuque)


While American farmers and ranchers were eyeball-deep in spring planting and first-cutting hay, their commodity groups and federal government were knee-deep in narrowly focused studies filled with meaningless numbers and unchallenged econometric puffery.

For example, the National Corn Growers Association (NCGA) and U.S. Grains Council (USGC) released a privately "commissioned" report May 24 that proclaimed the 2014 "export of corn and corn products increased the U.S. gross domestic product GDP by $29.8 billion over what would have occurred without such exports."

While no one would argue that $29.8 billion isn't real money, it is, by comparison, the proverbial drop in the ocean when measured against 2014 U.S. GDP, a staggering $17.42 trillion.

Neither that number nor that comparison, however, is included in the tidy, 28-page report prepared by Informa Economics IEG. The reason is simple: If included, corn's almost $30 billion export kick to U.S. GDP - an unverifiable number determined only by Informa's unreviewed econometric model - shrinks to insignificance, or less than 0.2 of 1 percent of overall GDP that year.

But it's more than insignificant; it's irrelevant because no one anywhere - not in Congress, not any U.S. farm or commodity group, not one American farmer or rancher - has suggested any policy shift that might cut U.S. corn exports.

So why would your farm groups spend your money with a Beltway report-for-hire company to gin up rubbery numbers that have no bearing on current or future farm policy?

Because, Informa explains on Page 2 of its report, the numbers do have real political value as Congress looks to take up the Obama administration's major pending trade deal, the Trans-Pacific Partnership.

"The objective of this work," the report notes, "is to clearly demonstrate the degree to which individual states and congressional districts benefit from exports of agricultural products that are produced within their borders" and "this study quantifies & (that value) to selected congressional districts in those states."

Not by chance the 52 "selected congressional districts" singled out in the report include every corn-dominant House district that, arguably, has never and will never elect an anti-ag trade member to Congress. …

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