At the annual town hall meeting of the Bureau of Labor Statistics’ Office of Prices and Living Conditions (OPLC), Andrew Reamer discussed the need to expand OPLC’s traditional mission of serving federal economic policymakers to also serve the needs of non-federal decisionmakers, public and private.
Good morning. Thanks, Commissioner, for the introduction, and Mike, for the invitation. I’m glad to be here. I’ll be discussing the traditional role of federal economic statistics programs, including those in OPLC, and my belief about how that role needs to expand and change to address current economic issues and opportunities.
The health of the U.S. economy is highly reliant on OPLC data products, for
- macroeconomic policy
- trade policy
- adjustments in payments
- going out – from governments and businesses
- coming in – taxes
to keep them on a real basis.
OPLC’s importance came about as a result of institutional innovations in economic policy made in the 20-year period between the mid-40s and the mid-60s. These innovations emerged, in turn, from the development of modern social science, which rested on the notion that if we understand how the society works, we can create programs and structures to manage it.
The nation’s approach to public policy was based on the image of the economy as a machine, controlled by levers and informed by dials.
- Two of those levers, fiscal and monetary policy, were institutionalized in federal policy with the Employment Act of 1946.
- Coming out the Depression, the concern was taming the economic cycle.
- The price indices you produce are essential dials determining the use of the monetary policy lever by the Fed.
- A third type of lever seeks to facilitate equity and fairness. These values came to the fore in the 1960s and 70s.
- There was a shared belief that social policy should put a floor under those less well off, through AFDC, food stamps, Medicaid, Medicare, and the like. And that recipients should not lose purchasing power due to inflation.
- Further, in business transactions and union contracts, there was a notion that market actors, particularly workers, should not experience unearned losses due to inflation.
- The notions of equity and fairness are relatively new social concepts and our ability to put these values into practice, based in part on your work on prices and expenditures, is even more recent.
So you get the image, price data are a key input for the management of our economic machine, for the masters of the economic universe and as a form of automatic stabilizer.
To continue with the metaphor, BLS was organized a half century ago along the lines of a production shop to feed the dials on the machine. The principles of statistical sciences provided the basis for setting up a highly structured operation. When you think about where the science and practice of price index development was in the 1920s and where it has come to today, the whole process—technical and organizational—is quite remarkable and a testament to the dedication, creativity, and discipline of BLS price and expenditures staff over time.
For this approach to public policy to work, it requires that the economic machine behave in response, to actually provide economic stability and well-being. But in fact, we can see, it hasn’t, particularly of late.