STATISTICUFFS
Mike Schüssler vs Stats SA
‘CONFIRMED. Will shave.”
That’s how economist Mike Schüssler confirmed the details of this week’s lunch appointment and that it was okay if a photographer joined the meeting. All in 21 characters of an SMS.
The boss of Economists.co.za might be a man of few words when planning lunch, but on topics such as South Africa, wine, food and statistics he gushes forth in full sentences that overlap and interrupt each other.
For the past few weeks, readers of Moneyweb have witnessed a war of words between Schüssler and Statistics South Africa’s statistician-general, Pali Lehohla, about the apparent underestimation of South Africa’s GDP and inflation numbers.
Schüssler says that for 16 of the past 17 years, the GDP growth number was adjusted upwards, which means it was initially underestimated. This added up to an average upwards adjustment of 0.6 percentage points to the initial growth number that is published. For example, the GDP growth number for 2006 was first published in February 2007 as 5%. This was later revised upwards to 5.6%. The 2007 growth figure went up from 5.1% to 5.5%
Inflation is also underestimated, according to Schüssler, with fewer items in the inflation basket. And inflation is not responding to the weaker currency like it did in the past, he says. “The thing is that you make projections today based on today’s data. And if today’s data is underestimated, then my projection will also be an underestimation — and on those grounds someone has to decide if they invest in South Africa or somewhere else.”
When it comes to wine Schüssler invests in South Africa without hes- itation. At lunch, he picks a bottle of Ken Forrester’s Petit chenin blanc off the wine list of Plaka in Cresta shopping centre in Johannesburg.
“Some of the cheaper South African wines really are world class. There are things such as Darling Cellars or Orange River Cellars and another favourite of mine is [Checkers] Odd Bins. You pay R35 or R45 and you can really get top-quality red wine.
“South Africa’s food and wine definitely are worth it. And you get good restaurants in most places. Some of the franchises’ quality is not consistent, but I really like independent restaurants like this.”
Schüssler started his career at Transnet, but he has for years been an independent voice on many topics in the economy.
“I have been working with economics for more than two decades. I know what it is to work with statistics and I have made mistakes. I use a lot of those statistics [of Stats SA] and everybody in the market uses those statistics. If those statistics are wrong, this country will, firstly, take the wrong decisions. Secondly, we will not attract the investments we should [if GDP is stated too low] and everybody will be worse off.”
The tone of exchanges between Schüssler and Lehohla was far from cordial. After Schüssler’s first critique of the numbers, Lehohla responded: “The silly yawning by Mr Schüssler does not do the intellectual progress any good and it is a construct that exhibits serious aspect [sic] of being eclectically unscholarly on a component of our society and one wonders why that is the case.”
Lehohla accused Schüssler of having joined an “abysmal and incoherent chorus” and recommended that he should “go and learn”.
Despite the heated exchanges, Schüssler says he thinks that, in general, Stats SA does a good job.
“But there are gaps and someone has to say it. And if the statistician-general wants to argue with me about it and insult me, then I am willing to accept it and say fine, let’s talk. I can say in the media come, test me, and if I am wrong then I am wrong, but I know I am right.”
The economist also has the right ideas on ordering food and after a “Will you trust me with one or two things? You do eat meat?” he compiles a meze platter of Mediterranean snacks.
“I hope the meat balls are lamb. I am a bit afraid of lamb because of the fat, but after what Tim Noakes said . . .”
Schüssler’s criticism of Stats SA is not the only fire the statistician-general has had to douse in the past year. Questions about the accuracy of the R3-billion census the statistics body conducted in 2011 are not quieting down.
“It’s neither here nor there for me and you. But imagine being poor and dependent on state services that do not come to you because they go to the wrong place. That cannot be good for a governing party or for government overall.
“You have to get your statistics right, especially if you spent huge amounts.”
Although underestimating the population presents some clear problems, some would say the underestimation of growth figures is not necessarily that bad — at least we are not overestimating GDP and selling a false product.
Schüssler says there are times when one prefers an overestimation and times when one prefers an underestimation — but the important thing is that one prefers accuracy.
“If the first quarter’s growth of 0.9% was a typical underestimation, then [it could] eventually be lifted by 0.6 percentage points to 1.5% in three years’ time. [If the underestimation was smaller], then we would not have the kind of panic about our country that we see now.”
Incorrect data showing growth lower than it actually is can create a perception that South Africa’s economy is doing badly, and that flows through to the CEOs of the country. These CEOs believe the data and make faulty decisions, Schüssler says.
“People talk about ‘lies, damned lies and statistics’. If you have the right statistics, it should help you to make the right decisions and create the right risk profile for a client, or give the right investment advice to a firm, or put the right products on the shelf because you know what the consumer has in spending power.
“We use statistics every day. We divide the government’s money using census statistics on the population. Short-term interest rates are partly based on inflations statistics — longterm interest rates also, because they give you an indication of risk. Wage negotiations are about statistics and based on inflation. If the inflation numbers are too low, the worker is done in.
“And then statistics do become damned lies.”