Privatizing Economy Could Invite Problems

The privatization of econometric statistics is not the least bit similar to deregulating airlines, communications, trucking or banking (“U.S. Should Privatize Economic Statistics,” July 27).

First, deregulation is not the answer to all the nation’s evils--look at the savings and loan bailout. The power to influence the U.S. economy creates an enticement for corruption. This will “boost innovation and productivity”--but to what end? Is there a product to improve such as telephone or airline service, or just the incentive to improve short-term profits or to increase wages.

The consequences of privatizing econometrics are severe. For instance, economists agree that the economy is influenced by expectations. Labor unions have an interest in predicting inflation to bargain for higher wages. Business also has the same shortsighted incentive to boost prices. The paradox is that the expectation of inflation creates inflation for the simple reason that as inflation increases, businesses and labor unions hedge against inflation by increasing prices and wages accordingly. Will the government have to step in again to bail the economy out of another inflation?

Government plays a crucial role in balancing interests, especially when it comes to sensitive issues such as the economy. If government does not adequately predict economic statistics, then let’s fix it. In times of trouble, we should not immediately jump to the conclusion that the private sector can do a better job. For all its responsibility, our government actually performs quite well.

TONY VELLECA

Hermosa Beach