Would the Enron or World Comm stories have been different if reporters had probed beyond news releases coming from official sources or company releases that touted their own glowing performances?
Would public policy play out differently if reporters take a different tack or talk to different sources?
Would public funding for our new hospital have been supported by taxpayers had the hidden costs been uncovered at an earlier stage?
One American university which is taking very seriously this matter of public economic literacy is the University of Minnesota. They make it their business to regularly invite print and broadcast journalists to learn more about economics and, ultimately, how to better report business and public policy news.
A joint project of the university’s Minnesota Journalism Centre and the Federal Reserve Bank of Minnesota has developed into an annual event about the nuts and bolts of writing business and public policy stories. Add to that topics like where to find data and information, developing sources and, above all, that always fraught-with-perils exercise of understanding economists and the way their minds work.
Over the past six summers I have been working on a new book that presents (appositely in the Maltese language to make it more popularly accessible) economics dressed in a ‘suit’ which — it being not essentially what many would think as its own — would hopefully attract more people to its way of thinking and rigours. This Economics in the language of science and philosophy is also an effort to explain what economists think.
Journalists who write about economic and business topics without being comfortable when handling numbers will always verge onto a dangerous political road. Sooner than they know, their writing will start reeking of politics and this is simply because mathematics is not an opinion. Figures will not lie, or give a slant, as much as figuresless reports will always end up doing.
I am always shocked by so many news reports that clearly show reporters as failing to dig deeply enough. A new hotel here, a new sports centre there, a new ‘social’ service, so many more tourists or hospital operations, or even students in this or that level of studies, whatever the topic reporters always need to ask: what’s the hidden cost? Or whether whoever is using them is providing more smoke and mirrors, especially whenever anyone is giving them an interview.
Would public policy play out differently if reporters take a different tack or talk to different sources?
But before reporters can get to the bottom of a story they need to have a grasp of basic economic principles. These, for example, are eight principles of economics that reporters absolutely need to keep in mind:
On average people behave in their own best interest. There is rational expectations academic literature about this, and I keep wondering how many reporters have ever bothered to read at least one book fromthat group.
There is no such thing as a free lunch: ‘Why was our paper, or our station, invited to this business breakfast?’
The cost of something is what you give up to get it... that is the essence of the big rumpuses we have been lately having about ODZ projects, whether coming from the private or the public sector (it’s ‘opportunity cost’, writ large).
A country’s standard of living depends on its ability to produce jobs, goods, and services.
Markets are usually a good way to organise economic activity.
Trade can make everyone better off, unless that involves illicit goods or services.
Governments can sometimes improve market outcomes... perhaps this is one way we should be looking at the touted Transatlantic Trade and Investment Partnership.
Money in essence causes inflation... and too much of it causes too much inflation.
Every reporter can twist any story: he does it either unwittingly or intentionally. It is an ongoing process, this ‘twisting’, within the possibly inevitable situation where the selection and interpretation of stories is the inevitable role of the media.
Alan Blinder, professor of macroeconomics and monetary policy at Princeton, former vice president of the Federal Reserve Board and former chairman of the US President’s Council of Economic Advisers, holds that “even when reporters are scrupulous in reporting, they often can alter the policy outcome. Leaking stories to the media is a way of life in Washington”.
In describing the ‘leak game’, Blinder urges reporters to learn to discriminate and to ask: ‘Am I being used by the leaker?’
All this leads to a summary view that both society and its media houses or publications are not well served by writers who are bereft of competent economic knowledge as well as that sense of acumen that enables them to ponder over whether the ‘story’ (now couldn’t the journalistic profession have found a better word for its reporting outpours) is suitably grounded in terms of economic knowledge as well as selectivity.
John Consiglio teaches economics at the University of Malta.