How Data Collection Drives State Intervention In Our Lives

by | Oct 18, 2020

How Data Collection Drives State Intervention In Our Lives

by | Oct 18, 2020

Census Bureau Seal Featured

The U.S. Census made the news recently, as a dispute over the deadline for its data collection made it to the U.S. Supreme Court.

The Trump administration successfully lobbied for a deadline of Friday October 16, over the objections of the National Urban League who instead wanted the deadline extended to the end of October due to COVID-related delays.

The traditional census has been conducted every decade since 1790, as mandated in the Constitution. The population count is used to determine representation in congressional districts for the next 10 years.

The data is also “used to distribute billions of dollars in federal funds for health care, housing programs and education,” as ABC News described.

Local communities emphasize high census response rates so that they aren’t “underrepresented” when it comes to the federal government dole.

But that’s not all. Indeed it’s far from it.

As detailed in this Census Bureau document, the census also asks a litany of other questions of households, including income, sex, age, home value, education attainment, kitchen facilities, number of vehicles available, and dozens more.

The census, however, is just the tip of the iceberg when it comes to government data collection.

As Murray Rothbard wrote even decades ago, “The vast bulk of statistics is gathered and disseminated by government. The overall statistics of the economy, the popular ‘gross national product’ data that permits every economist to be a soothsayer of business conditions, come from government.”

In an essay first published in 1961 by the Foundation for Economic Education, and much more recently re-produced at Mises.org, Rothbard argued that the “burgeoning of government statistics offers several obvious evils to the libertarian.”

Steep Compliance Costs

Forced compliance to the government’s massive apparatus of data collection imposes significant costs, especially burdensome on the nations’ small businesses.

“Private industry, and the private consumer, must bear the burdensome costs of record keeping, filing, and the like, that these statistics demand,” Rothbard wrote. “Not only that; these fixed costs impose a relatively great burden on small business firms, which are ill equipped to handle the mountains of red tape.”

Data collection represents yet another means by which big government hurts the little guy.

While it’s impossible to know the severity of the burden, Rothbard did report on a Hoover Commission task force which found “The chemical industry alone reports that each year it spends $8,850,000 to supply statistical reports demanded by three departments of the Government. The utility industry spends $32,000,000 a year in preparing reports for Government agencies.”

Recall that this data is from an article written in 1961, so today’s burden on businesses will be several multiples higher in dollar terms. The millions (or more) in resources devoted to compliance to government data collection schemes diverts scarce resources that could otherwise be devoted to job creation, capital investment that increases productivity which in turn drives up wages, or research and development devoted to developing new products to improve the lives of consumers.

A Precursor to Fovernment Intervention

Even more nefarious, however, is how government data collection serves as the foundation upon which government intervention and control is built. According to Rothbard:

Not only do statistics gathering and producing go beyond the governmental function of defense of persons and property; not only are economic resources wasted and misallocated, and the taxpayers, industry, small business, and the consumer burdened. But, furthermore, statistics are, in a crucial sense, critical to all interventionist and socialist activities of government.

The data and statistics collected by the government, Rothbard argued, serves as a substitute for market data for government planners. Consumers, for instance, have little need of such statistics. Instead, Rothbard wrote, the consumer uses localized knowledge made available “through advertising, through the information of friends, and through his own experience” in order to understand the markets around him and help inform his decisions.

Likewise, business owners “must also size up his particular market, determine the prices he has to pay for what he buys and charge for what he sells, engage in cost accounting to estimate his costs, and so on.”

None of this activity by consumers and businesses, however, is dependent upon the “statistical facts about the economy ingested by the federal government,” Rothbard noted. Instead, “The businessman, like the consumer, knows and learns about his particular market through his daily experience.”

But government bureaucrats, Rothbard continued, “are in a completely different state of affairs.”

They are decidedly outside the market. Therefore, in order to get ‘into’ the situation that they are trying to plan and reform, they must obtain knowledge that is not personal, day-to-day experience; the only form that such knowledge can take is statistics.

As such, only through the mass gathering of statistics can the government make “even a fitful attempt to plan, regulate, control, or reform various industries—or impose central planning and socialization on the entire economic system,” Rothbard wrote.

Without gathering statistics on various industries, how could it even begin to regulate prices or other aspects of their economic activity? How could the government attempt to “regulate” the business cycle without knowing whether business activity was going up or down?

“Statistics, to repeat, are the eyes and ears of the interventionists,” Rothbard declared. “Cut off those eyes and ears, destroy those crucial guidelines to knowledge, and the whole threat of government intervention is almost completely eliminated.”

Lastly, because perhaps the most common pretext for government intervention into the economy is to “correct” for market failures, if the government were deprived of its data collection, there would no longer even be the slightest “pretense of rationality in government intervention” left.

As a result, Rothbard concludes by suggesting that “the simple and unspectacular abolition of government statistics would probably be the most thorough and most effective” check on government intervention. “Statistics, so vital to statism, its namesake, is also the State’s Achilles’ heel.”

Bradley Thomas is creator of the website Erasethestate.com and author of the book “Tweeting Liberty: Libertarian Tweets to Smash Statists and Socialists.” He is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics. You can follow him on Twitter @erasestate.

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