Penny wise and pound foolish

The institutions of government and the politicians who run them have–rightly–been criticized for many mistakes during the past few years.   The Congressional budget deadlock this past summer is a case in point.  The mismanagement at Walter Reed Army Medical Center, first publicized by the Washington Post in 2007, is another.

No wonder why Gallup reports that trust in the government is low–so low that the national mood can probably be summed up by paraphrasing the Robin Williams’ character in Good Morning, Vietnam: “If it is being done correctly, here or abroad, it’s probably not being done by the government.”

The government actually does a number of things quite well.  Among the things it does superbly well is collect economic data.

Is hard to overstate the importance of accurate and comprehensive data for conducting economic analysis.

Without good data, it is impossible to assess where the economy has been, how it is currently doing, and to make concrete recommendations for economic policy.

Which is why it was so disappointing to read in yesterday’s Wall Street Journal that cuts to the Census Bureau budget proposed by House Republicans may endanger the Bureau’s Economic Census.

The Economic Census, which takes place every five years, is scheduled to survey five million US firms starting in late 2012.  This survey provides a gold mine of data on the size, location, and competitiveness of US business.  It provides, in the Census Department’s words, “consistent, comparable, and comprehensive measures” of business activity by region and industry.

It also provides important benchmark data for constructing a host of important indices of economic activity, including GDP.  According to Steve Landefeld, director of the Bureau of Economic Analysis, without the census, “You would find that the GDP estimates would get progressively off.”

Economists have been rightly criticized for our performance during the financial and economic meltdown of the past few years.

We won’t do any better if the data get worse.