Jewish World Review April 20, 2004 / 30 Nissan 5764
Kerry's Misery Index is just sad
John Kerry is working hard to emulate the successful Democrats who preceded him. He utters so many Kennedy-esque imperatives that the listener half expects him to put forward a real one ("Ask not what your country can do for you; ask what you can do for your country"). Kerry has also developed a few presidential data points. His latest is a "misery index," an update of the one deployed by Jimmy Carter in his successful 1976 campaign against Gerald Ford. The Kerry version tracks seven factors to evaluate the quality of middle-class life: Healthcare costs, gas prices, college tuition, median wage, homeownership rate, bankruptcy rate and private-sector job growth. Up is good. Down is bad. Under Bill Clinton things were up spectacularly; George W. Bush's rating shows him erasing Clinton's gains.
It is worthwhile, however, to look back at that original index. It was devised by the late economist Arthur Okun, who added the inflation rate to the unemployment rate to arrive at his number. A high figure was bad (the opposite of the Kerry system). In 1975, this misery index hit 16, the highest rate in a quarter of a century. In 1980, it hit 20.
In fact, the 1970s and the early 1980s together were a purgatory. U.S. unemployment was in the 7% and 8% range, so far above Japan's and Germany's percentages that the difference looked permanent. Inflation combined with high taxes to scare the American innovator, so that many good ideas stayed on the shelf. Borrowing became a challenge, especially when Federal Reserve Chairman Paul Volcker pushed interest rates up to record levels; retailers keeled over for want of credit. It no longer seemed certain that enterprise generally would be rewarded. Looking at the U.S., the world saw decline.
Against that backdrop, Kerry's decision to speak of misery seems a bit of a stretch. As the nonpartisan website fact check.org points out, today the original misery index stands at 7.4, less than half of what it was in Carter's last year in office. The measure is only a smidgen worse than where it stood during Clinton's second term. This despite a recession and 9/11. Citizens today may be dissatisfied, but the majority aren't miserable.
Kerry's index provides a big contrast with the classic misery measure. It shows Bush failing on six of seven counts. How does Kerry work that magic? He fiddles with the categories. Instead of using straightforward unemployment rates, for example, the Kerry index considers a much more amorphous notion, new job creation. (Face it: If unemployment is heading south, does the party affiliated with organized labor really care whether those are old jobs or new?) As for tuition increases, factcheck.org notes that Kerry uses only data from public universities because including increases from private colleges would yield a less drastic number. Regarding wages: Sure, they are down. But when we measure the wage level after taxes and include the Bush tax cuts, the slight decline Kerry finds erodes to the point of insignificance. It has been said before: If you torture numbers enough, they will confess to anything.
But there are two other problems with the Kerry index.
The first is that, for a multifactor economic index, it misses quite a bit. What about America's crazy rate of litigation? What about the heavy burden of the payroll tax? These factors are slowing growth. The reason Kerry doesn't take them up is that it would be politically inconvenient for him to do so. Democrats need trial lawyers to fund them; lightening the payroll-tax burden means leading the charge on Social Security reform, not something that seems to interest Kerry.
The last problem with the Kerry index is more subtle. The old 1970s index had only two components. They were, arguably, about freedom and individual responsibility: the freedom to work and to trade in a relatively stable currency. Gas prices, for example, were not included, even though they were the great shock of the decade. Kerry's seven-category index represents a proliferation of wants. It says, essentially, that it used to take two things to make me happy, but now it takes seven.
It also suggests that government should have a role in satisfying those wants. What's more, many of the items in the Kerry index are about affordability — the right to, say, cheap healthcare — which is not the same as an outright entitlement but is close to it.
In short, the new JFK is saying government owes the people more. "Ask not what your country can do for you," indeed.
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