The photo above comes from a January 29, 2024, story in the Daily Post, about gasoline prices. People were meeting at the library to complain about the price of gasoline, and one of our County commissioners had even written a letter to the Colorado Attorney General.
$3.09 for unleaded. We didn’t know how good we had it.
We probably still don’t. Just this past June, in Argentina, President Javier Milei was celebrating his achievement in bringing the annual inflation down to a mere 276 percent.
I learned this little fact about Argentina from an essay by journalist John Lanchester, published in The Washington Post on September 24. Reading about financial disasters in South America helps us feel better about inflated gas prices in Pagosa Springs.
Most of Mr. Lanchester’s op-ed did not concern Argentina, however. The main subject of his 7,800-word essay was the U.S. Consumer Price Index. The CPI. The number that supposedly tells us whether to stop buying steak and settle for chicken drumsticks on sale. But the number has an even more important use, because a lot of government programs — like, for example, Social Security benefits and Veterans benefits — adjust their payments based on inflation, which is calculated based on the CPI.
If I were getting Social Security, I would want the CPI to be going up, so my benefits could increase. But unfortunately, that would be counter-productive because the price of everything would be going up. Especially, steak. Sometimes you can’t win.
Lately, the CPI shows the inflation rate is falling. But that’s the inflation rate. Prices aren’t falling. Only the rate of increase is slowed down. We still have to run as fast as we can, just to keep from going backwards.
The CPI is calculated by the Bureau of Labor Statistics, better known as the “BLS” — an acronym dangerously close to “BS” if you accidentally left out the “L”. That similarity may be part of the reason so many people think the CPI is a made-up number.
But the fact is, the CPI is a made-up number.
Mr. Lanchester gave an example in his op-ed about just how inventive the CPI actually is.
He asked us to consider the price of cheese. Going up? Going down? And should cheese be part of the CPI calculation? I don’t buy cheese, myself. It already comes on my pizza. Would BLS get a more realistic CPI number if they just ignored the cheese and watched the price of pizza?
But apparently, BLS includes cheese in their calculation, probably to make the dairy industry happy.
So, if we are going to include cheese, what kind of cheese? Hopefully not American cheese, because that’s not even real cheese. It’s a “cheese food product”. Most people who buy real cheese, buy Cheddar cheese, to make grilled cheese sandwiches. But Cheddar cheese tastes terrible on pizza.
BLS could base their CPI calculations on the price of Mozzarella, if they wanted, because it’s traditionally used on pizza. But then, which brand of Mozzarella? Kroger? Kraft? Great Value? Tillamook? Natural Grocers? The price varies depending on where you shop. And where you live.
And because we want to promote diversity, we need to include Mexican Blend.
Figuring out the price of cheese every month is incredibly complicated, so BLS has hundreds of employees working pricing cheese. But there are literally thousands of other products that also ought to be considered. Gasoline: unleaded or medium or diesel? Fire insurance? Internet service? Netflix? Socks? Monopoly games? The latest Barbie doll? Scotch tape? Airplane tickets? College tuition?
Beer. Don’t forget beer.
To create a CPI that truly reflects the “average American household” we also need to know, are most households “grilled cheese households” or “pizza households”? And what beer are we drinking?
BLS needs hundreds more employeees just to figure out what the “average American household is eating, this month. And drinking. And watching. And wearing. And throwing away because it’s broken, or we wanted to upgrade.
We can’t even imagine how many workers BLS employs to collect the data that goes into the monthly CPI. And they still get it wrong. Because it’s impossible to get it right.
But they have to do it, anyway, because… did I mention Social Security benefits and Veterans benefits?
Strangely enough, this whole thing started with the Founding Fathers. They wanted a democratic republic. So they had to know how many people there were, and where they lived. They put it right there in the U.S. Constitution.
Article I, Section 2, Clause 3.
Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons. The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct…
They started out counting the people, and then they couldn’t stop counting. Now they’re trying to count everything, and how much it costs.
Which, like I said, is impossible.