Big subject, but only a small point I want to make about the misuse of statistics. First, a debate has raged on for years about globalization, interdependence, and whether developing countries are so reliant on export markets that they are stuck with whatever business cycle problems afflict the developed world.

The debate took a new turn when the recession struck, with some folks admitting that well, with the huge drops in exports and plummeting GDP in many developing countries, it appeared as though some of these economies were not, after all, decoupled from the U.S. and EU.

The latest concerns the economic recovery:

Some argue that emerging markets will emerge from the global crisis sooner and faster than advanced economies, as the former are now the so-called “new engines of global growth”.

This should sound familiar. Lots of folks talking up China these days as the land of opportunity amidst a world of pain. Look at that real estate market! Check out the stock market! (But don’t look at non-performing loans, and whatever you do, the use of the word “bubble” is absolutely verboten.)

But I don’t really want to talk about whether China is decoupled or not. I already firmly believe that it is not, although it is trying to be.

No, much more interesting is this bit of fun from the economist commenting on this issue:

The bottom line is that any assessment of the decoupling hypothesis should not focus on actual growth rates, but rather on deviations from trend. Looking at actual growth rates can be misleading. Saying that China has decoupled from the US because China grows at 5% while the US experience an output decline of 2% is wrong. If the trend growth rate is 9% in China and 2% in the US, both countries are 4 percentage points below trend and their business cycles are therefore perfectly in tune.

I was quite surprised to read this. Why would he even waste time mentioning this? Isn’t that a rather obvious and simple point?

As I thought about it, this really got to me. The fact that this guy felt the need to say this suggests that some whack jobs out there are (dishonestly, in my mind) using the simple fact that China’s growth rate is much higher than that of the U.S. to argue something about decoupling.

I guess my cynicism is just a thin veneer that covers my deep idealism. People would actually use transparently irrelevant data in this manner? Oh, the outrage.

Why would anyone do this? Well, for one thing, there are a lot of cheerleaders out there in the market these days talking up China to drum up business. Yes, I’m looking at you, investment bankers.

I know, caveat emptor. If someone is stupid enough to buy into any sales pitch that begins with “China is growing x% more than the U.S., you gotta get into the market ASAP,” then they deserve whatever losses they end up with.

So much for my hidden idealism. Now there’s nothing left but the crusty old cynic.