The Immorality—and Impracticality—of Government Statistics

Under capitalism, private entities produce statistics demanded by the marketplace without violating individual rights.

A couple of months ago, Donald Trump fired the Bureau of Labor Statistics (BLS) commissioner, Erica McEntarfer, when the revised past employment numbers weren’t to his liking. We’ll see if her replacement will be able to appease the president—and, if yes, survive the potential ire of the next Oval Office occupant.

But the president is right that the quality of government statistics is a problem in a world where so much depends on it: from the Federal Reserve setting interest rates to Congress making laws and regulatory agencies prioritizing resources. They need reliable data to make informed decisions.

But the fundamental question is not how to improve government statistics, but if it should exist in the first place. I’d argue that, for both moral and practical reasons, it should not.

Morally, the moment you are forced to pay a slice of your taxes for the sprawling, bureaucratic apparatus that crunches numbers and tells you, among other things, how much stuff costs and how many people are looking for jobs, your individual rights are being violated. Forcing you to fund a service, even one as seemingly innocuous as labor statistics, is a coercive act. It is in comparison to many others an admittedly small, but nonetheless real, violation of the principle that individuals should be free to engage in voluntary transactions for goods and services they actually want.

Practically, government statistics is unavoidably subject to political interference as demonstrated by the recent firing; it is not necessarily used to pursue the truth, but to reach political goals. And as a government monopoly not exposed to market forces, the quality and timing of the data leave a lot to be desired.

So, if we kick the government’s statisticians out of office (with some but not unlimited severance pay) and let them become consultants (which, probably is more lucrative anyway), what happens to all those numbers? The market would fill the vacuum. In fact, it’s already doing it, and doing it better. Why? Because market participants are driven by incentives that lead to accuracy, not political posturing. The motivation is profit, which is fueled by a reputation for reliability. If you’re selling bad numbers, you’re not selling numbers for long.

Consider the financial data providers, the Bloombergs and Reuters of the world. Wall Street traders and big-time investors pay a pretty penny for real-time, highly granular data. Their business model is built entirely on the trust that their information is faster and more accurate than anyone else’s. If they mess up, they don’t just get a slap on the wrist; they lose clients and their stock takes a hit. It’s a market driven system of checks and balances. Contrast that with a government agency that releases data on a schedule that’s about as flexible as a brick. If they’re late, or a bit off, what’s the worst that happens? A few headlines and a Congressional committee meeting (or presidential firing)? The stakes are simply not the same.

But wait, you say, what about data that’s too broad or complex for one company to gather, like housing statistics? The market has already shown it can handle this. During the foreclosure crisis, for instance, private entities like ATTOM and Cotality were providing timely, granular data that offered insights months ahead of official, and more sluggish, government data. And the demand for viable labor statistics is also met by private actors in a much speedier fashion than the BLS. This wasn’t some public-spirited gesture; it was a market response to a clear and present demand for critical information. Entrepreneurs saw a need, and they filled it, without coercing a single taxpayer. This demonstrates how market incentives can lead to faster and more responsive data collection while respecting the individual rights of everyone.

Some will argue that government data is a “public good” that wouldn’t be provided privately. This is incorrect. Data, like any other product, can be sold, packaged, and monetized in creative ways. A firm might sell premium, in-depth reports, while offering summary data for free as a marketing tool. Industry associations, academic institutions, and non-profits also collect and disseminate data, further dismantling the notion that only the state can serve this purpose. The market isn’t a single, monolithic entity; it’s a decentralized network of individuals and organizations, all acting in their own rational self-interest.

Ultimately, the most reliable data comes from independent actors whose commercial success is directly tied to the accuracy of their product. The alternative—a system that relies on state-produced statistics funded by compulsory taxation—inevitably sacrifices the integrity of information for political expediency and violates the rights of individuals. It’s the difference between a capitalist system where individuals freely trade information and a statist system where a central authority imposes its demands. In fact, in a truly capitalist system the limited government’s demand for statistics would be reduced to the needs of the military, law enforcement and the judiciary.¹ No more demands from sprawling regulatory and welfare agencies at any level of government—federal, state and local.

The pursuit of rational self-interest by private entities guarantees as high-quality data as possible in practice. And the absence of individual rights violating government interference makes the system moral. Tell your congress representatives I said so.

1. Under capitalism, to the extent valid government entities (the military, law enforcement and the judiciary/court system) need statistics to support their decision making, they would contract with private actors for a fee.