A key part of my forthcoming book is about mediamacro. Mediamacro is how the macroeconomics of fiscal policy is presented in the media as if the government was a household. It is as if Keynes, and the General Theory that is often said to have begun macroeconomics as a discipline, had never existed. What every first year economics text book tells students is that the government is not like a household.
Mediamacro has become so ingrained in the UK media for two reasons. The first is that one of the two main political parties, and their associated press arm, have pushed it for all its worth, while the other political party has not challenged the idea in any systematic way. But if you ask many Labour MPs why they have not challenged it they will say that doing so is too difficult. This leads to the second reason.
Most political journalists are not economists. How households work they do understand, but the idea of using fiscal policy in a recession to support the economy is more difficult for them. What is true for political journalists is also true for most voters, and journalists wish to keep it simple and understandable only reinforces mediamacro. The same thing influences politicians who listen to focus groups.
I was reminded of all this when the Prime Minister lied in saying I thought Labour’s 2017 manifesto wouldn’t add up. What I actually said was that it would be good if it didn’t because the economy at the time was stuck at the ZLB and needed a fiscal boost. She was not interested in this. For her and her party saying the ‘numbers did not add up’ was sufficient to say that taxes would go up and jobs would be lost. The whole point I was making was that jobs would be gained and taxes wouldn’t need to go up because of simple Keynesian effects,
I had forgotten that the IFS analysis didn’t only say that Labour were being over optimistic on the tax part of their programme. Here is a chart from their presentation.
This chart is based on the IFS’s assessment of what Labour’s tax increases would bring in. Labour’s fiscal rule is to achieve current balance after 5 rolling years. As the chart says, even with their numbers ‘not adding up’ they meet their rule comfortably, with £21 billion to spare.
Do you remember this being widely reported in the media at the time? Of course not: the dominant story from the IFS’s presentation that the media took away was the numbers not adding up. So much simpler and catchy than Labour would easily meet its fiscal rule. The power of this story for the election was somewhat blunted by the fact that the Conservatives did not present any costings at all, but they will not make that mistake again.  But every budget day the focus is on marginal changes in deficits over five years which have an economic importance in themselves of virtually zero.
The problem of keeping economics simple so it is media friendly is not just about mediamacro. Departmental budgets are all about whether amounts are increasing or decreasing when sometimes this is wildly misleading. Education is currently a good example: a constant budget in real terms does not deal with the fact that pupil numbers are increasing so spending per pupil is falling.
The clearest example is the NHS. You hardly ever hear it said that the NHS budget needs to increase over time, even when measured as a share of GDP. Just look at this share over the last half century. That trend is easily explained. Yet it is almost never explained by journalists, who instead fall for the line that keeping real spending fixed ‘protects’ the NHS. You can see this lack of explanation in the public’s attitudes to the NHS.
This is but one illustration of why what the media says matters, because it has a strong influence on public attitudes and opinions. The evidence for this is now overwhelming. Will Jennings talks about a number of studies, and I have mentioned others in my posts.(e.g. here). I talked about a paper looking at the media’s influence on attitudes to austerity and the deficit here. I cannot remember if I included this paper, which looks at the influence of Murdoch’s switch in support before the 1997 election. Similarly for this interesting study, which showed that attitudes towards welfare recipients worsened after the 2011 riots, but only among those who read newspapers. It shows that the print media can be opportunistic in influencing how real world events are interpreted. It helps snake-oil sellers peddle their wares.
Press bias increases the need for the non-print media to educate and explain as well as entertain. It can do that by thinking about economic and other policy issues where abundant evidence exists as if they were like scientific issues rather than political issues, requiring expertise or links to expertise to help explain them. We need to move away from giving priority to Westminster political gossip, and giving political balance priority over facts and evidence.
 I criticised the IFS’s analysis at the time because they only allowed for positive macro effects (using the OBR’s numbers) for the additional public investment, and not for the large balanced budget fiscal expansion (and if they were right, a smaller debt financed expansion).
Of course you are right here but most people are not interested in economics and have no knowledge of even the basics and, as you rightly say, the MSM are hopeless in explaining. It may be that the best course is to adopt Keynes's approach when he said that the General Theory was not addressed to the layman but to policy makers as these were the people that mattered.ReplyDelete
Simon, I love this blog, although I don't always understand the more technical articles.ReplyDelete
As you say, the mediamacro view is so pervasive partly because it is simple to understand, even if it is wrong. Could you help us progressives by presenting some simple homespun analogies for your ideas?
This is excellent. I think often of the lesson from George Lakoff's Don't Think of an Elephant. From 2010 I have been disappointed how so many Labour MPs have kept the debate on the deficit elephant and the mess left by labour.ReplyDelete
I initially read the last sentence as:ReplyDelete
We need to move away from giving priority to Westminster political gossip, and instead give political balance priority over facts and evidence.
Presumably you don't mean this; it's the facts and evidence that should get priority.
Hi Simon. I feel this is an important subject, but I wonder about the level of economic understanding among British political journalists. Obviously most are not economists and nor am I. As you say, basic Keynesianism will feature in any first year, or indeed 'A' level textbook. It may be slightly counterintuitive to the layman, but it is not difficult and it is well grounded in terms of evidence. Surely a high proportion of our political journalists will have been taught this at some stage of their career, even if they are not economists? It would be fairly easy to find out. If I'm right, then there are cultural and intellectual problems in that profession that run deeper.ReplyDelete
Thanks for the blog, and the important work in this area.
As you say, countering this message is so difficult, because it is so prevalent. How do we do it? We need short, sharp messages. I know many Labour activists who are uncomfortable making the argument, even though they have heard it and understand it. For many voters the household analogy is just common sense, and they fear Labour will just overspend. This, to me, is probably the most important, and difficult, battle Labour has to fight, and win.ReplyDelete
If the problems are that political journalists don't understand economics, voters don't understand economics and press bias distorts the message anyway, I'm not sure that treating evidenced issues like science will help. Could UK Labour offer economics training for political journalists? In fact, how about some economics training for members? We have over half a million members who could be useful advocates if there was sufficient understanding. Member training is all about technocratic stuff like how to use the canvassing software. We don't even have a national political education officer. It seems remarkable to me that a political party should not have a lead officer for political education.ReplyDelete
Hi! I have been reading your blog for a really long time now and I'm applying to study PPE this year as a degree. I was wondering as to why you never considered being a journalist yourself to be apart of the process which would stop the media from skewing people's ideas of how fiscal policy works. I understand you're writing books, but I wonder whether this would be relatively more effective compared to being an actual journalist. Nonetheless, I really like what you do and I think you're doing great regardless of the position you are in.ReplyDelete
The Bias in the media should not come as a shock, as the 1% own it.ReplyDelete
The BBC is has now been branded the Bullshit broadcasting corporation but that is what it is. Sorry to have to repeat that, but that cuts through all the Hyperbole expressed in the media at large.
Question time has for as long as I can remember packed it's audiences with as many right wingers as they possibly could, their panels usually outnumber left wing politician by 3 to 1, so am I surprised that the right wing bias prevails in the mass media, of course not.
On a personal note, I voted for Tony Blair as leader of the Labour Party back then, because I thought he was more intelligent than he actually was, I thought he was cleverly publicly using Neo-Liberal language as the Tories always do, but then apply macroeconomic policies in contrast to the rhetoric. Sadly he was not that bright, (meaning he actually meant what he said). Indeed after six months in office there was a BBC programme that did an autobiography of him and his career at that time. Interestingly his so called student friends were scathing about him, saying that he didn't have a political idea in his head, which I really thought - was them just being nasty at the time, only later to discover they were right on the money.
As his premiership progressed, it became more and more alarming as things were not progressing, but regressing, and I personally found it confusing because I couldn't understand why a Labour Prime Minister would carry out Thatcherite policies. I constantly wondered whether there was in fact something I did not know about that was driving all of this. Clearly after the crash and I did my own investigations and certain academics started to provide statistical information through social media the picture became as clear as day. The whole history of Neo-Liberalism also became writ large, the connections between Liam Fox the Atlantic Bridge and the American Legislative and exchange Council made it abundantly clear where the direction of travel was coming from.
We have been duped as a nation, and most still don't know the reasons why, Europe has been the latest saga that has sidetracked people - deliberately steering them away from the real ongoing programme of dismantling the state.
The rise of fascism is no coincidence, and any sane person can understand what needs to be done to reverse it, it took a socialist government to rebuild this country after the war, and it has taken Neo-Liberal politicians to do more damage to this country than Hitler ever did.
It really is up to every decent person in this country to recognise the dangers and get solidly behind Jeremy Corbyn. We need only look at the slaughter of our badger population and Fracking to understand the insane mental state driving this Tory Party. Neo-Liberal Right wing Labour Politicians supporting the Tories are also culpable for crashing the economy and transferring wealth and power to the corporate sector.
What I don't understand about the household analogy is that people who use the comparison seem to assume that households don't have access to credit at all.ReplyDelete