Let’s Debate How Best to Measure Inflation

By Phil Gramm and John Early. 

"U.S. Bureau of Labor Statistics Commissioner William Beach’s response (Letters, Aug. 30) to our “Americans Are Richer Than We Think” (op-ed, Aug. 22) is instructive. He rightly notes that the Consumer-Price Index is widely used, that the BLS is impartial and transparent, that both measurement and operational errors are minimized, that the BLS conducts rigorous research and that many improvements have been made since 1978. We know all that because one of us was the assistant commissioner in charge of many of those improvements and even co-authored a paper in the Journal of the American Statistical Association with former Commissioner Janet Norwood analyzing them.

It is really striking that Mr. Beach’s response doesn’t directly address either of the two substantive points of our paper.

First, at no point does he contradict our conclusion that the chained CPI-U would be a better choice for inflation adjustments to all economic indicators, government transfer payments and taxes. This index was developed and published by the BLS and is a perfect example of the research he praises. We would have expected him to welcome the wider application of this important breakthrough from the BLS.

Second, he offers no evidence refuting the findings that significant research continues to show an upward bias from the introduction of new items. Much of the relevant research has been done by he BLS, and we urge the administration and Congress to support greater efforts to make improvements. Many researchers in academia, business and the BLS itself know how to do this. What is missing is the will and direction to get it done.

We welcome his invitation for detailed technical discussions and eagerly accept.

Phil Gramm
Helotes, Texas
John Early
Ridgefield, Conn.
Mr. Gramm is a former chairman of the Senate Banking Committee. Mr. Early is a former assistant commissioner of labor statistics for consumer prices and price indexes."