Friday, January 25, 2013

Lies, damned lies and Greek statistics

by Tim Harford

Financial Times

January 25, 2013

Greece has brought criminal charges against the official responsible for measuring the country’s debt, thereby calling into question the validity of its €172bn second bailout by the EU and International Monetary Fund.
Financial Times, January 23

Could be worse. When Andreas Georgiou, who was head of Greece’s independent statistical agency Elstat last time I looked, was first placed under investigation in late 2011, there was talk of him facing life in prison for a kind of statistical treason. As it is, he and two of his senior staff are facing charges of corruption and making false statements, with a mere five to 10 years if found guilty.

But what’s behind all this?

Mr Georgiou was brought into Elstat in 2010, and although he’s a Greek citizen he worked for the IMF for a few decades. He thus represents the global forces of technocracy. The case against Mr Georgiou is that, as Greece was negotiating a bailout from the international community, he deliberately exaggerated the country’s deficit statistics in a way that weakened its negotiating position. His motive, presumably, would have been to strengthen technocrats in the IMF and Eurostat, the EU’s statistical agency.

Not much of a motive.

Mr Georgiou says he is being prosecuted not for cooking the books but for failing to cook them. Greece’s budget deficit doubled overnight in late 2009 shortly after a new government was elected and announced that the previous deficit had been massively underreported. So there was a lot of statistical horseplay going on before Mr Georgiou showed up. It would certainly be comforting for some Greeks to believe that it was Mr Georgiou, not his predecessors, who were producing inaccurate numbers; Eurostat, however, has blessed Mr Georgiou’s figures as accurate.


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