Category Archives: Media

The Deflating Quality of Economic Journalism

Cato’s Jagadeesh Gokhale with an example of the current state of economic journalism:

[NPR reporter Adam] Davidson: “Ladies and gentlemen, I have an amazing investment opportunity for you. Give me $100, just a hundred, and in one year I promise it will be worth 93 bucks. We call it the deflation special.”

My reaction: No, sir! Under deflation, $100 today would increase in value to $107 (assuming your implicit rate of deflation). Help! Stop the car! …Wait, I’m the one driving…what just happened?

Davidson: “All right, seriously, nobody is giving anybody a hundred bucks just so they can lose seven.”

My reaction: No, no, please, please take my money! I’d give you a million dollars if I had that amount. I really would!

It gets worse from there. Davidson completely misunderstands the effects of deflation — and thousands of listeners take him at his word. No wonder public understanding of economics is so poor.

People spend little time learning about economics in the first place because of rational ignorance. Compounding the problem is that in the little time they do spend learning — usually from economically untrained journalists — they get incorrect information from people who know not of what they speak.

I previously wrote about the troubled relationship between economics and journalism here and here.

The Myth of Bush the Deregulator

Here’s a letter I sent recently to The New York Times:

May 14, 2010

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

Your May 12 article “With Obama, Regulations Are Back in Fashion” (page A15) asserts that the Bush administration had a “deregulatory agenda.” If that is true, then President Bush failed miserably in executing it.

His administration added 31,634 new regulations to the books, and repealed hardly any. The cost of complying with federal regulations exceeded $1 trillion for the first time on Bush’s watch. 587,321 new pages were added to Federal Register during the Bush years.*

Even the regulation-intensive Obama administration is passing new regulations at a pace nearly ten percent slower than President Bush.

Contrary to the article, the Bush administration was the best friend regulators have had in a generation or more.

Ryan Young
Warren T. Brookes Journalism Fellow
Competitive Enterprise Institute
Washington, DC

*All data from Wayne Crews, Ten Thousand Commandments.

Tea Parties and Corporations

Milwaukee’s alternative weekly, the Shepherd Express, recently ran a thought-provoking article by Lisa Kaiser criticizing the tea party movement. I haven’t written a whole lot about the tea party movement. But my reaction has been mixed.

The positive is that a large and vocal constituency is agitating for lower spending and lower taxes. That’s been missing from the protest scene since at least Vietnam.

The negative was summed up almost perfectly by Koch Industries VP Richard Fink: “Some of their worries are… more thoughtful, some of them are less thoughtful.”

If you think about it, tea partiers are the right-wing analogue of Bush-era Iraq war protesters. Both of their main causes are true and just. War against a country that never attacked us is wrong. So is the Bush-Obama spending spree.

But both movements attracted a fringe. A loud fringe. A fringe that, because of their volume, their kookiness, their entertainment value – attracted disproportionate press coverage. Tea partiers have their birthers and John Birchers and so on. The anti-war movement has its Code Pink, truthers, and other strange, fascinating, creatures.

Now suppose you’re a journalist covering one of these protests. You’re on a deadline, and you don’t know a whole lot about what you’re covering.

You could write a story about the ordinary people in jeans and t-shirts, kids in tow, holding up their signs with quiet dignity.

Or you could talk to outlandish – and outlandishly quotable! – nutjobs from Code Pink or the John Birch Society. It’s pretty obvious which tactic gets you the more entertaining story in less time.

An economist would point this out as a classic example of the law of demand. If something costs less, people consume more of it. If it costs more, then less. Since writing a story about colorful kooks costs less time and effort than interviewing ordinary people, no wonder so many newspaper stories are of the cheaper-effort variety.

Which brings us to the article in question.

The words “corporate,” “corporations,” and variations of the same appear nine times. And it is not a long article. Each time, the epithet is unsubtly used as shorthand for “I disagree with this.”

This is a mental shortcut — evidence that Kaiser did not give the issue deep thought. If your gut feeling is that you don’t like something, you can research it to find out for sure. But that is very costly in terms of time and effort. It’s mentally cheaper to just blame “the corporations.”

This is not a rigorous line of thought. Arguments are either right or wrong. The presence or absence of corporate funding has nothing to do with whether an argument is right or wrong.

Take the pull quote from the print edition:

“Americans for Prosperity is a corporate-funded front group that is trying to extract as much of our public dollars as they can and then put it (sic) in the hands of the corporations that fund it.”

That isn’t actually true. AFP is against corporate bailouts. Against corporate subsidies. AFP thinks that corporations should compete in the marketplace. Not in Washington. Public dollars should be kept as far away from corporations as possible. The source who Kaiser quotes is factually inaccurate. And she doesn’t correct him. She agrees with him.

He uses the same mental shortcut that Kaiser does. Just use the word “corporate” to stand for that which he disagrees with. Then he attributes those views to AFP, blissfully unaware of AFP’s actual stances on taxpayer-to-corporation wealth transfers.

This is intellectually lazy. If Kaiser and the activist are against government funding of corporations, they actually have a lot in common with AFP.

Kaiser quotes another activist:

“It’s no coincidence that profits from giant corporations are being pumped into front groups like AFP to further those corporate interests.”

This guy doesn’t get it either. Dollars tend to flow to causes that the donors already agree with. The arrow of causality is pointing in the opposite direction that he thinks.

For example, I favor legalizing same-sex marriage. Suppose that I’m planning to donate money to an organization to advance my view on that issue. Will I get better results by giving to a group that already agrees with me, or by giving to Focus on the Family in hopes of changing their mind?

Koch Industries in particular comes under fire for its longtime support of free-market organizations. And they have much to gain from the crony capitalism they are accused of promoting.

But they aren’t actually promoting crony capitalism. If their political giving actually was made in the name of corporate self-interest, they’d be giving to groups like the Center for American Progress, which openly favors giving billions of taxpayers’ dollars to corporations.

Instead, Koch-funded groups believe, across the board, that corporate welfare is wrong. The Koch brothers are free-market ideologues, and it shows in their philanthropy.

Kaiser’s Shepherd Express article is an interesting read. But not for what it says about tea parties and corporations. It’s interesting because of what it says about her, and about how the law of demand partially explains the poor quality of most journalism.

Regulation of the Day 100: Posting YouTube Videos

The Italian government is considering making it illegal for its citizens to post videos on the Internet without a license.

The free speech implications are obvious. But could the proposal also be a move to restrict unwanted economic competition against Italy’s state-dominated media?

Regulation of the Day 87: The Volume of TV Commercials

The House passed the Commercial Advertisement Loudness Mitigation Act on Wednesday. If it becomes law, the FCC would control the volume level of television commercials. Some of them are noticeably louder than regular programming. This is, to put it tactfully, irritating.

Rep. Rick Boucher told the Associated Press that “It’s an annoying experience, and something really should be done about it.”

He was talking about the commercials, though his remarks better fit the regulations he voted for.

Still, he’s right that something needs to be done. Loud commercials are a nuisance. They are also avoidable. For example, I avoid them by watching as little television as possible. Maybe read a book or spend time with loved ones instead. There are other ways, too. Here are a few:

-Use the mute button on your remote.

-If you have DVR and you’re watching a show you recorded, you can fast forward through the commercials.

-Change the channel.

-Let broadcasters know how you feel. Tell them not to run loud commercials. You can contact ABC here; CBS here; Fox here; and NBC here. They’d rather you watch their channel than not, after all. And the best way to prevent a viewer exodus is not alienating them.

Besides, they’d probably rather hear from you than the FCC.

(Hat tip to Fred Smith)

A Lesson in Cause and Effect

Ari Fleischer, President Bush’s former press secretary, has a piece in today’s New York Times that is, to be polite, dumb.

His article is a lament that the Yankees only seem to win championships when Democrats are in the White House. Fleischer is both a Republican and a Yankee fan. What is he to do?

Yes, Fleischer presumably wrote with tongue in cheek. His argument is still stupid.

Correlation does not equal causation. There is no causal relation between the current president’s party afiliation and who wins the World Series. Fleischer has no need to fret about his divided loyalties. Maybe one reason the Times is doing do badly is that it too often uses its scarce op-ed space for fluff instead of substance.

Media Bias: The More, the Better

David Boaz makes an excellent point about media coverage of President Obama’s health care proposal:

The media tendency to refer to the defeat of a big-government scheme as “failure” reflects a possibly unconscious bias toward government action.

Well put. Why not make it conscious, then? Call it truth in advertising.

An objective media would be nice. But we are unlikely to ever see such a thing. Even the very best reporters are human. And humans are biased. Different people are biased in different ways, of course. But objectivity is still a fiction. Being open about this ugly truth could do much to reduce public confusion.

If readers have a clearer idea of what exactly they’re reading, they can run the articles through their liberal and conservative B.S. filters as needed, and more easily get to the heart of the matter.

Few readers seem to bother so long as the liberal Washington Post and conservative Washington Times continue with their objectivity charades. Bias can be harmful and misleading, true. But denying it only avoids the problem. Let’s tackle it instead.

Reporting the Hidden Costs of Stimulus

CNNMoney.com ran a story today about some of the jobs saved or created by the stimulus package. “A civil engineer, Sara Kelley owes her job to President Obama’s $787 billion stimulus package,” it begins. Five other short vignettes follow, each with a name and a face that we can see and identify with. All six are thankful to the stimulus for helping them get through these troubled times.

All of these people clearly benefited from the stimulus package. But where did their free money come from? To help these fortunate people, others had to be hurt. Where are the stories about them?

When will we see a story about a company that was unable to raise job-creating capital because government bonds necessitated by stimulus debt ate up precious investor dollars? When will we see a story about a job that was never created because the government decided to take that money and use it on Sara Kelley’s civil engineering job?

The media is great about reporting on what is seen – Sara Kelley and the others. The media is not so good at reporting on what is not seen – opportunities taken away by the stimulus; opportunities that never came to be because the money they required was instead spent on Joab Gonzalez’s youth training program.

This does present some difficulties. You can’t put a name and a face on a company that was never founded, or a worker who was never hired. Just try and write about something that never happened. It’s hard.

Maybe it is asking too much of our reporters to see the unseen. But we live in a complicated world, and not all of it is visible. To report on that world as it actually is requires an understanding of sometimes-difficult economic concepts such as opportunity costs.

Economic journalists who don’t know basic economics too often write stories that are at best incomplete, and at worst misleading. Reporting only on what is seen leads to the impression that fiscal stimulus is a free lunch; seeing the unseen reminds us that there is no such thing.

Why the Surprise?

The price of oil has been inching up of late, as it does every year about this time. People on the tv are hyperventilating as though this has never happened before.

Newsreaders remind me of goldfish sometimes. Blank stare, mouth agape, and a memory that goes back no farther than a news cycle.

Objective Journalists

A man was arrested today for jumping a ropeline and asking President Obama for his autograph.

You guessed it – he’s a reporter.

Kind of surprising this hasn’t happened before, given the tenor of much presidential media coverage.