2 + 2 = 5: Georgia's Official Statistics and an Unfolding Greek Tragedy

24 March, 2010

Mark Twain once famously said, “there are three kinds of lies: lies, damn lies and statistics.” It’s a truth known to us all, with data manipulation and survey figures presented out of context one day purporting to show that a glass of wine is good for your heart, and the next day conclusively proving that we should never touch any alcohol if we want to avoid all manner of horrible heart diseases. Of course, when one survey is sponsored by the wine industry and the other is commissioned by a pressure group making its case in the hope of raising government funding, nether conclusion seems all that conclusive at all. As George Orwell foresaw, two plus two truly can be made to equal five, not, however, because of totalitarian control as he thought, but rather because of spin and the need for favourable public perception. Such massaging of the figures – like any lie – has, however, only short term and at best medium term advantage, gaining the liar some breathing space perhaps, but invariably leaving him open to exposure and ridicule, and ultimately, having to pick up the pieces at a later stage, when doing it earlier would have been so much easier. Nowhere was this demonstrated more graphically than in Greece, with the markets exposing and pouncing on fundamental economic and financial weaknesses despite years of masking the problems with cooked financial books and straight out financial fraud. Even the EU – through Eurostat – normally by default reticent to point the finger, lambasted Greek accounting practices, saying effectively that the Greeks had been engaged in a massive cover-up, “falsifying data about its public finances and allowing political pressures to obstruct the collection of accurate statistics.” Of course, for a while, the cover-up worked with crooked accountancy getting Greece into the Eurozone, making the Germans think that Greece’s economic and financial fundamentals were sound and hence allowing the country to meet the entry criteria. Now, however, with one of the largest debt to GDP burdens in the world, the country is facing imminent default, and credit agencies are downgrading its credit rating, making further borrowing prohibitively expensive. With some German politicians calling for the Greeks to sell off the Acropolis to pay for years of prolificacy, the whole facade has finally come crumbling down. The statistics – like some Greek Potyomkin village – were a lie, presenting a Greece to the outside world that never was. While very few people would suggest that the work done at the Georgian Statistics Department is comparable to the dodgy goings-on in the Greek counterpart, there is nonetheless a danger that figures are also being used to present “a reality” that just doesn’t exist in reality. For example, according to the Statistics Department, Georgia has a 16.3% unemployment rate. Yet, when asked to define themselves – as was done in an NDI survey recently – 68% of the population said they had no job, 43% of whom are actively looking for work. By this measure, Georgia has an unemployment rate of 29.24%. Given that the Statistics Department doesn’t actually register people, but instead also relies on a survey to ascertain the unemployment figure, NDI’s figure is as valid as the official one, perhaps even more so, as the government has an obvious interest in minimizing the extent of the problem. The discrepancy is not because the statistics agency is inventing the figure, but rather from the fact that what it classifies as “self-employed” are in many cases, really unemployed, or best case scenario, under-employed. This category is mostly constituted by subsistence-level farmers, whose numbers add up to 50% of total employment. Yet they account for a mere 10% of GDP output. By this reckoning, 80% of them are producing little or nothing, an observation confirmed by a visit to any Georgian village, where productive activity is hard to see. So while a 16.3% unemployment rate is not necessarily an untruth, it certainly is not the whole truth. Like in Greece, there are short and medium term gains from having a rosy picture presented to the world. For one thing, to acknowledge the realty would be politically suicidal. It would be a brave – or foolhardy – minister of economic development that would come out and say, “well, actually, half of our people are without a job.” Acknowledging that economic policy and business climate reform have failed to generate employment, saying in effect that the country is an economic basket-case and that the government’s agenda has done nothing to turn this around, would at the very least lead to the minister joining the unemployment queue, too. Long term though, not facing up to reality means that the measures required to deal with the problem are not adopted and tough choices are deferred. If, however, we refuse to face the reality that eating sesame seeds all day in the village does not in fact constitute gainful employment, then someday soon, we may see a For Sale sign on Svetitskhoveli.

Author: Ti Georgia