The myth about what’s behind the numbers

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Economists and businesspeople alike claim that numbers tell all.

You can hide a problem, you can rationalize around it, you can even pretend it isn’t there.

By the end of the month or the quarter, the numbers will tell the truth, the whole, truth, and nothing but the truth — unless you cook the books.

I recall years ago having a problem with my brewery (Palmer Lake Brewing Co.). The beer was good, but I was losing money. The assumption was that a pint cost about $1 to produce and it can be sold for $4 — even with all associated costs for the pint, a profit should be at hand. My accountant called me in and plainly said: either someone is stealing from you or you are stealing from yourself!

This indictment was harsh, no matter how thick-skinned you are as a businessman. And how does an accountant, a nice one at that, figure out from a distance something I should know myself? How does he dare know more than I do about my own business?

Incidentally, manufacturing accounting is quite complex because product-in-process must be valued differently at different times of the process. Instead of asking my brewmaster if he was a thief, and instead of bringing in lie-detectors for the entire staff, I decided to spend a day watching every aspect of the brewing process.

In short time I realized that out every tome the 600 gallons travelled from one stage (and tank) to another some liquid was left behind or had spilled. When the brew was boiled, some of it evaporated. In short, the original 600 gallons lost as much as 5-10 percent in the process of one day (not to mention spillage when transferring to fermenting vats or when filling kegs).

Numbers don’t lie, people do. An accountant figured out how to calculate the brewing process more accurately than a brewmaster and an owner. He looked at the figures, not at the tasty pint of hand-crafted beer in front of him. He saw through the façade.

And indeed, we are faced with façades all day long, whether in business or in politics. We just went through a mayoral election that produced a new “strong” mayor, Steve Bach. On the face of it he won with 57 percent of the votes, a landslide by all standards of democracy.

He therefore represents the majority of the population’s desire to have him lead the city rather than the other candidate who received only 43 percent of the votes. A comfortable margin indeed, and one that sanctions him to claim he has the mandate of the majority of the citizens. But just like my accountant said, let’s look at the numbers more carefully.

Colorado Springs is a city with more than 500,000 people. Some say there are more, some less, depending if the county is counted. Apparently about 95,000 people voted in the second-round of the mayoral election, and 57 percent of this number is about 54,000 people. This number of people, though quite large, is in fact only about 10 percent of the population…I know we should subtract children from this fuzzy math (not in its technical meaning), and those ineligible to vote or simply those not registered to vote. But still, only 10 percent of the citizens of our great city endorse our newly elected mayor. What mandate is this, if at all?

Before we start feeling awkward about this straight-forward way of looking behind the façades of business and politics, as qualified economists will remind us, it should be noted that on the state or federal level the same is true.

Twenty years ago, when I went to academic conferences on the new media — personal computers and the Internet — the main questions were about the use of the new medium and the extent to which it would enhance democracy. Yes, academics worry about these esoteric things until they actually get tested on the streets of Cairo, for example. The worry has always been to get new technologies to the hands of everyone and thereby undermine the existing power-relations between the rich and poor. If Facebook can help disseminate revolutionary ideals by organizing people to demonstrate, why can we not use the Internet to vote for our mayor? Just as consumers have to go through a few steps to buy anything from a website, we can establish a city voting-website that would test eligibility and allow us to vote — without expensive mail-ballots. I’m confident the technology is at hand, and I’m confident that tech-smart people can put it together. We’d save money, get greater participation, and strengthen the ideals of democracy all at once.

Raphael Sassower is professor of philosophy at UCCS and a committed democrat in the philosophical and not partisan sense.