Who to Believe: Labor or the house spouse?

March 18, 2007 4:09 PM by Jim Fedako | Other posts by Jim Fedako | Comments (6)

According to the Associated Press, "The Labor Department reported Friday that the Consumer Price Index rose by 0.4 percent last month, double the January increase, as energy prices shot up and adverse winter weather in Florida and California sent citrus prices soaring."

When the federal bureaucracy speaks, I am supposed to take notice. Yet in Human Action, Mises wrote:

A judicious housewife knows much more about price changes as far as they affect her own household than the statistical averages can tell.

Mises was right. Though, to be politically correct, and more in-line with the current concept of the helpmate, I would extend the judicious observer of price changes to include the house spouse.

My wife and I are amazed at the increases in food prices over the last few years. While the Labor Department is the supposed authorative source of the rate of price increases, our experience says prices are increasing at a rate much higher than the politically-influenced Labor value.

The CPI has no real meaning in our lives. Mises in Human Action:

In practical life nobody lets himself be fooled by index numbers. Nobody agrees with the fiction that they are to be considered as measurements.

Just looking at the price of our favorite bread and cookies - the few prices we track over the years, it's obvious that my family's CPI far exceeds the reported value. For those who claim our small sample is invalid, let's go back to Mises and Human Action once more. Mises, writing about my wife:

If she 'measures' the changes for her personal appreciation by taking the prices of only two or three commodities as a yardstick, she is no less "scientific" and no more arbitrary than the sophisticated mathematicians in choosing their methods for the manipulation of the data of the market.

The Austrian School sees price increases as a result of inflationary monetary policies, so I'm not truly shocked that our grocery bill has been rising over the years. Moreover, I don't need the Keynesian econometricians at the Labor Department to affirm our reality. Nor do I need them to obfuscate the extent. Prices are indeed rising fast, regardless of what the blob in DC is reporting.