>As an economist, I figure this guy is a pretty good technical
>writer. Any comments on him as an economic thinker?
>http://news.com.com/2061-10786_3-5663927.html?part=rss&tag=5663927&subj=news
The critique of the CPI is a bit overheated. "Heavily manipulated" sounds sinister, but the BLS has a very hard job to do, assembling thousands of prices of constantly changing products into a single comprehensive index. They probably went too far in accommodating their critics, who said that they were overstating inflation by not taking sufficient account of product improvements. But they're neither liars nor hacks.
The examples he cites are pretty odd. Gas prices weren't up 47.5% from Nov '03 to Nov '04 - they were up 30.1%. And the CPI's gasoline subindex was up 31% over the same period. But it only has a 3% weight in the total index (because that's about the share of household budgets devoted to gasoline). Dunno where the 13% increase in housing costs comes from either; the National Association of Realtors price index was up 7.6% over the same period. But not everyone buys a new house every year, so the actual increase in housing costs would be much much lower. Etc.
McCullagh gives himself away at the end by quoting Ludwig von Mises, who was, among other things, a wacko gold bug who thought that the price level should generally be falling. What was the Fed supposed to do instead of lowering rates after the stock market fell apart in 2000? Let the economy fall into depression?
Doug