“When the facts change, I change my mind” is a putative quotation of John Maynard Keynes, the renowned Depression era British economist. However, it appears that many people, in particular political partisans, are unmoved by evidence that they are wrong and the Internet or their existing beliefs will always deliver an affirmation that they are right. I've had that experience on Irish jobs data.
According to Sir Samuel Brittan, the former Financial Times economics columnist, there is no evidence that Keynes used the banality about facts as facts don't change.
A half century ago scientists commonly believed that they had to find as many examples as possible confirmed by research to support their theories. However, Sir Karl Popper (1902–1994), an Austro-British philosopher and professor at the London School of Economics, famously wrote: "No number of sightings of white swans can prove the theory that all swans are white. The sighting of just one black one may disprove it." New evidence can thus overturn an existing fact.
Alexander Pope (1688 – 1744) was an English poet and his poetic line "A little learning is a dangerous thing" was confirmed in 2008 by a US PEW Research Center poll which found that "for Republicans, unlike Democrats, higher education is associated with greater skepticism that human activity is causing global warming."
On the other side of the argument are some environmentalists who accept the science of climate change but reject the scientific evidence on genetically modified foods that they are not a risk to health despite the consumption of billions of meals containing GM ingredients, in the most litigious country on earth
Joe Keohane, editor of Esquire magazine, wrote in 2010:
Keohane added: "They already have beliefs, and a set of facts lodged in their minds. The problem is that sometimes the things they think they know are objectively, provably false. And in the presence of the correct information, such people react very, very differently than the merely uninformed. Instead of changing their minds to reflect the correct information, they can entrench themselves even deeper.
In a 2011 issue of the popular American liberal magazine Mother Jones, Chris Mooney, who recently joined The Washington Post, has a long article on how our brains fool us on for example climate, creationism, and the vaccine-autism link.
Mooney added that "our preexisting beliefs, far more than any new facts, can skew our thoughts and even colour what we consider our most dispassionate and logical conclusions. This tendency toward so-called 'motivated reasoning' helps explain why we find groups so polarized over matters where the evidence is so unequivocal."
This motivated reasoning is why a political partisan can do a 180 degree flip on an issue when his/her party is in power, without seeing any inconsistency.
Anthony Gottlieb, a former executive editor of The Economist, wrote in Intelligent Life in 2010 that plenty of today’s scientific theories will one day be discredited. So should we be sceptical of science itself?
In his New York Times column of January 18, 2015, Prof Paul Krugman wrote:
Irish jobs data
Germany publishes two monthly unemployment rates 1) the federal employment agency (BA - Bundesagentur für Arbeit) bases its rate on what's called the Social Code 2) Destatis, the federal statistics office uses the International Labour Organisation standard for international comparisons. The ILO defines employment as paid work of at least one hour per week.
Destatis says that the "most prominent figure in public awareness in Germany generally is the number of registered unemployed as published by the BA."
In October 2014 unemployment as measured by the BA was more than 700,000 or 35% greater than the Destatis measure.
During Ireland's international bailout (2010-2013), the International Monetary Fund (IMF) in its surveillance reports used what is termed a "broad" rate of unemployment similar to what has been produced by the US Bureau of Labor Statistics since 1994. In November 2014, the US rate was 11.4% compared with the main rate of 5.8%.
In April 2013 the IMF said: "the underemployment rate in Ireland stands at a staggering 23%" [pdf; page 26] - which included part-time employees seeking full-time work and the unemployed in what the CSO term "Live Register Activation Schemes." In that month the total in schemes amounted to 86,000 people.
In October 2014, 26,000 of the 83,000 unemployed were receiving Back to Education Allowances (BTEA) while 57,000 were counted as employed.
In respect of November 2014 Finfacts estimated the broad rate at 21% based on adding the number on the Live Register and the number in activation schemes. It can alternatively be arrived at by adding the number of part-time staff seeking full-time work, numbers in activation schemes and the ILO level of unemployed which had a rate of 10.7% in November.
UK researchers in a 2012 paper [pdf] estimated that 900,000 unemployed people had been diverted onto incapacity benefits.
For the UK as a whole in April 2012, "the new figures point to more than 3.4m unemployed. This compares to just 1.5m on the claimant count and 2.5m according to the Labour Force Survey – the government’s two official measures of unemployment. The difference is attributable to extensive hidden unemployment."
It's important in particular for regional policy to know the level of hidden unemployment and in 2006, the craziest year of the Irish property bubble, Ballina in County Mayo had the highest unemployment rate among large Irish towns, with 15.8% of its labour force out of work. Tralee (14.2%) and Dundalk (13.9%) also had high unemployment while at the other end of the scale Malahide (4.3%) and Leixlip (4.4%) had the lowest rates.
The unemployment rate was calculated using the responses to the question on Principal Economic Status in the 2006 Census. The national rate was 8.5%, with urban areas (9.5%) having higher unemployment than rural areas (6.9%).
Meanwhile, the official unemployment rate in the second quarter of 2006 as measured by the Quarterly National Household Survey using the ILO standard was 4.3%.
So here we had a Census 2006 rate that was double the ILO rate.
This information is contained in Census 2006 Volume 7 - Principal Economic Status and Industries, which gives further detailed results of the census conducted on 23 April 2006.
Ireland had the highest rate of jobless households (no family member working) in the Eurozone in 2007, according to ESRI research [pdf]. Among all 27 members of the EU, only Bulgaria had a higher rate in that year.
On both January 13 and 14, 2015, Enda Kenny, taoiseach/prime minister, said that jobs lost in the Irish recession had amounted to 250,000.
On March 13, 2014 he said the total was 330,000 and there was no explanation this month on where the 80,000 had gone.
Ireland: Kenny gets sums wrong on jobs - missing 60,000 - we calculated that the actual difference was almost 60,000.
The bitter facts
Of course ministers and some of their supporters do not like to focus on the broad rate and in recent months an enthusiastic supporter of the Fine Gael - Labour coalition has been actively posting comments on Irish Times op-eds promoting the official line.
The individual is clearly not an economist as there is no recognition of the impact of accelerating corporate tax avoidance since 1999 on national accounts data: "For you to raise issues like the structure of GDP or GNP as being inflated is entirely irrelevant; the same method of measuring these figures has been in play for over 20 years."
However, the greatest abuse is triggered by the idea of including the unemployed in activation schemes in a broad rate of unemployment as the IMF did.
It's wrong to include a JobBridge intern as unemployed in a broad measure - even though they are in receipt of unemployment benefits!!
Recipients of BTEA allowances have to be unemployed or in receipt of other welfare payments and during 52 weeks of the year, they switch between BTEA allowances and dole payments. At the end of April 2013, there were 27,830 people engaged with BTEA, 91% of whom originated from unemployment payments. According to the Department of Social Protection (Word doc), "60% of those who completed or dropped out of a course under BTEA at the end of 2010-11 academic year had returned to the LR by September 2012."
Spending by the Department of Social Protection was €127m above target in 2013 despite a fall in the official rate of unemployment.
In a system addicted to spin, motivated reasoning of course should be countered, despite the abuse transparency generates, and a key metric of employment is the growth in full-time employees.
The modern pub-stool "economist" with access to Google can be a potent force of delusion.