Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday 30 November 2017

Mediamacro is alive and well, unfortunately

I didn’t see Andrew Neil’s interview with John McDonnell which seems to have started the media’s obsession with interest on government debt, and how it would increase under Labour. But I did see the Peston interview where he was asked a similar question (see here). McDonnell’s answer was good, but the fact that Peston felt obliged to ask it told me that mediamacro was still alive and well.

But before I come to that, I need to link to the piece I wrote in the New Statesman that tries to explain why the question is a silly one (and what a much better question would be). It wasn’t the first time I had come across the power of this debt interest idea to fool people. I remember I did a debate with Oliver Kamm in Prospect, and the then editor said she thought I was getting the better of the argument but that Kamm’s point about debt interest finally swayed her. I remember thinking what!? How can you be so foolish. That was in my younger days (look at the photo) when I was still learning about mediamacro.

So why did Peston feel he had to follow up on Neil’s question? I think it is pretty simple. When McDonnell did not answer Neil’s question, the reaction of journalists was not to think maybe that was a silly question, but instead here was some weakness that the journalist had found. Journalists love catching politicians out: it means that the interview when it happens gets repeated and repeated and the journalist gets congratulated by their peers. It is just a numerical version of political gaffs. And most of the time it is just as childish.

There may be some point in doing this when there is a real issue involved. If you managed to show, for example, that a politician really didn’t know the difference or relationship between debt and the deficit, that would tell us something meaningful. (I can remember one Chancellor who did need helping through such things.) But that normally requires a knowledge most interviewers, who might talk about paying off the deficit, do not have. (Even fact checking sites can confuse rather than enlighten: in this case here. The BBC's site in the past has made similar errors.) Not being able to remember numbers is a memory test more than testing whether someone is numerically minded. I’m pretty numerically minded, but ask me what the size of UK GDP is on a bad day and I’d get it wrong.

But asking a prospective Chancellor about what the debt interest will be on any borrowing they will do for investment possibly four years ahead is a silly question, as my New Statesman article makes clear. I’m sure Peston knows this, but he nevertheless felt obliged to follow a mediamacro theme. Which is how a lot of journalism works. Attack lines dreamt up by right wing newspapers or journalists become questions of public interest that every journalist feels obliged to ask. Even when they know better, they are not going to upset their colleagues by saying I’m not going to ask that question because it is a nonsense question and instead ask something more intelligent. As a result, the mediocrity that is mediamacro persists.


  1. I think you are far too nice here.

    Neil is a player in Movement Conservatism; see his Wikipedia entry for his quotes on the Iraq War.

    Whereas Peston is a repeat offender in this area, as you must remember from this:

    "Simon Wren-Lewis offers a depressing example: he finds Robert Peston of the BBC continuing to talk about interest rates by invoking the invisible bond vigilantes – when as Wren-Lewis notes, France now pays much lower interest rates on its debt than the UK, and as he doesn’t note, so does Japan, with its very large debt and aging population. Worse still, however, Peston describes his fantasies – OK, I guess you could call them “speculations”, but anyway there is no evidence that they are driven by anything outside his own imagination – as the message being conveyed by “Mr. Market.” Through telepathy?" (Is Our Economic Commentators Learning?, Krugman blog)

    "Nonetheless, Simon Wren-Lewis points us to Robert Peston of the BBC declaring ‘I am simply pointing out that there is a debate here (though Krugman, Wren-Lewis and Portes are utterly persuaded they’ve won this match – and take the somewhat patronising view that voters who think differently are ignorant sheep led astray by a malign or blinkered media).’ (Krugman blog, Views Differ on Shape of Macroeconomics).

    Peston has a new book out and having listened to him plug it, saying how the Trump voters are right and have caused him, Peston, to change his mind about politics because they are the downtrodden, just like the Brexit voters, and they must be listened to for their homespun wisdom.

    I thought Peston, you've arrived right where you logically belong.

  2. It’s fair enough for journalists to ask politicians awkward questions. If a politician cannot answer an awkward question, that indicates he is not fit for high office. In the case of “where do you get the money to pay for public spending (investment or current spending)”, any competent politician ought to be able to answer.

    In the case of interest on debt used to pay for infrastructure, MacDonnell ought to have said that, first, the interest is partly a mirage in that the real (inflation adjusted) rate of interest paid by government on its debt is around zero. Second, he ought to have said that assuming the investments are worthwhile, i.e. pay for themselves, the British public will initially have to make a sacrifice as is normal when sacrificing current consumption so as to make an investment, but that after a year or two, the investments will pay dividends and make us all better off.

    Not difficult that, is it? If MacDonnell cannot work that out, he is not fit for high office.

  3. Wow woundn't it be something if a journalist actually said "won't ask you about that as its a silly question", then explained why and still further to have reasoned arguments. Also of course it would be soooo nice to have politicians answering questions instead of constant evasion and being more worried about gaffs all the time. MPC

  4. You really ought to write in to challenge that explanation on C4's fact checking website, Simon.

    1. I thought the response from McDonnell's team did that quite effectively.

  5. In the 1957 Kentucky Derby William Shoemaker misjudged the finish line, momentarily stopped riding his horse, and lost the race. He admitted his mistake and apologized, but did not explain his psychological failings. Forever after, clever writers would remind him of this one day and try to get him to reveal his true thoughts. They never considered that he might not wish to remember that day. Everyone else accepted his apology was for a mental lapse that he could not now do anything about and had moved on.

    Your "[a]ttack lines dreamt up by right wing newspapers ... ask something more intelligent." should have a very simple response.
    "Well, your question is interesting, but it is also nonsense. May I tell you why?" Doing this often enough will defuse the issue.

  6. On the nice Spectator piece ... I agree with the substance, but the following paragraph (copied below) caught my eye. I am a bit puzzled by this. Just because people are saving more (a higher personal saving rate) this does not imply an increased demand for bonds. Why would it? If I save more, I just end up with more bank deposits in my account, and someone else has correspondingly less. Not obvious to me why that should affect anybody's demand for gilts. There is no more saving in aggregate unless investment is changing (leaving aside the detail that higher savings rates will potentially reduce demand for imports, raising domestic savings for any given level of investment).

    "Those who go on about debt interest are making a similar mistake to those who said we had to reduce the deficit rapidly in 2010, because otherwise the markets would stop buying our debt. Again, they were only looking at one side of the equation. The recession meant people were borrowing less and therefore saving more, so the demand for UK government debt was going up faster than the deficit increased the supply. We know that, because interest rates on UK government debt came down"


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