I was once asked by a businessman about the validity of business information. He preferred to think that he could rely on his gut instincts. I told him that what we aim to achieve is something better than a guess. In today’s highly competitive world, the margins are too fine to rely solely on gut instinct, we need all the help we can get. We’ll win some, we’ll lose some but if we can win slightly more that we lose, often that’s the best we can hope for. This fine line between winning and losing is what so many businesses today count on to survive.
You can imagine the pressure when having to present a board of directors with information that may not be what they wish to hear. Diplomacy is called for and the temptation to massage the data, something that is too easy to do, is overwhelming for some. Putting the correct interpretation on data, though, is what you get paid the big bucks for if you’re consistently right.
If a client spent millions on your advice and lost the lot, not only would you lose a client that probably had taken year to develop but word would get around. I have seen this happen but fortunately not to me.
What, though, about the pressures on perhaps an academic, researching something like global warming, perhaps having his whole career based on this field of research and with clients like the European Union with pots of money for funding?
What about a politician or political party with an election or referendum to win and able to call upon an army of civil servants, perhaps even the Office for National Statistics, to provide information and analysis?
Let’s look at a very simple example:
Around 20 years ago, just for interest, I did an analysis of the housing market. People talk about trends, indeed sometimes things are trendy but in statistical terms it’s something that we calculate. I discovered that historically property wasn’t a particularly good investment, the trend over two hundred years was for price increases of around one percent above inflation. Here then we can start to analyse these trends and ask if they’ll continue or has something fundamentally changed to affect the trend.
Of course in recent years we’ve had a dramatic increase in immigration and population increases beyond anything we’ve seen in the last 200 years. We must have all had presentations from Life Assurance salesmen where they tell us that their funds have achieved 50 percent growth in a year. They’re just very particular about which year they pick; sometimes you have to look at a longer term trends to see the reality.
Simply by calculating trends over different time periods we can get dramatically different results, but it gets even more complicated. Property sales are seasonal and prone to periods of boom and bust. The trends don’t show this and so we use mathematical or statistical weightings based on past figures to try and calculate future projections and there are many different models to choose from. If we don’t like the look of these projections we can simply choose a different model or just tweak some of the variables in these models.
People talk about supply and demand but it is more complicated than that. There is potentially endless demand for property given the rapid population growth on our islands, but it is often tempered by the availability of credit. This makes it a highly leveraged investment and it has become very speculative. People have enjoyed spectacular returns on property but as with any speculative investment, the losses to the downside are equally to the downside – just ask any options trader.
The hype of politicians and the mainstream media would have us believe that property only ever goes up but I’ll leave this analysis here as I don’t have space. The point is though (I’m not making any predictions here), if you know what you are doing you can make numbers mean anything you want them to mean. Unfortunately a large part of the population doesn’t understand this. Most people believe the lies and reassurances that come out of the mouths of politicians and civil servants.
Like the Life Assurance salesman that I mentioned above, politicians, civil servants and academics alike manipulate data and information and are very selective in the information that they use, only presenting you with the information that seems to support their latest fob off. Much of this information is only a little better than a guess and often much worse, just plain manipulated propaganda.
The run up to Brexit has seen this kind of selective, gerrymandering approach to the presentation of information reach extraordinary levels of deceit and deception. We’re told that we must have a trade deal with the EU but we never hear about the massive trade deficit that results from free trade with the EU.
When our government tells us about the benefits of a free trade deal with the EU, they never tell us about who exactly this benefits, because it certainly is of no economic benefit to the majority of we the people. It seems that we must pay to subsidise the profits of a select few. Perhaps it would be simpler to cut out the middle men, the EU, and give our money directly to these privileged few.
We were never told that Donald Tusk had offered the UK a comprehensive trade deal but that Theresa May and her cronies turned it down, preferring a Brexit in Name Only.
It frightens me when talking to lefties and remainers, just how ignorant they are of facts, their complete inability to perform any kind of analysis of their own, seemingly only able to regurgitate media sound bites and the lies of politicians.
As for Theresa May, I’d feel far more confident about buying a used car from Arthur Daley than buying her dreadfully deceptive and despicable Withdrawal Agreement.
Our current Prime Minister is a disgrace; her arguments don’t stand up to much scrutiny and it’s well past time to shed some light on her lies and deceit.