The Media and the Public

If you take note of the growing evidence that the partisan media can influence public opinion rather than simply reflect it, then this new book by Mike Berry (full title ‘The Media, The Public and the Great Financial Crisis’) is a must read. At its heart is content analysis (what the media said) and audience studies of two key periods: the Global Financial Crisis (GFC) and Austerity.

There is a wealth of fascinating material here, which I couldn’t possibly summarise with any adequacy in a single post. Instead I want to focus on the two final chapters. The first helps explains why large sections of the public were so receptive to the 'Labour profligacy caused the crisis' myth. The second involves discussions with journalists.

I have written in the past (and also in my own book) about why the suggestion that Labour profligacy caused the deficit is simply untrue. The deficit was unremarkable in 2007, and exploded because of the GFC. I have focused on how this untruth was repeated endlessly by Coalition politicians and the right wing press, and how it was not challenged by the broadcast media or the Labour party.

What Chapter 6 of Mike’s book shows is why this idea of Labour profligacy caught on so easily. Between the early 2000s and 2010 the right wing press (in Mike’s sample the Telegraph, Mail and Sun) began to publish more and more stories about public sector waste. Now defenders of the press might argue that there was more waste because of a Labour government, but the number of stories in these papers increased over the period by 600%. A much more plausible explanation was that these papers were trying to undermine what the Labour government was doing, particularly as it was popular.

In this way readers of these papers were primed for the idea that Labour was being profligate. As a result, something that was clearly false could be sold as true. The idea that the media is ‘only reflecting the views of their readers’ is so obviously false in this case, because any journalist worth their salt could look up deficit figures, see that the recession caused the deficit to rise, and inform their readers. In reality these papers promoted the lies, and the non-partisan media did not bother to correct them.

I found the chapter where prominent journalists were interviewed fascinating. Again I will focus on austerity. One of those interviewed was Kevin Maguire, political editor of the Mirror. He talks about how the real reasons for the deficit were presented in the Mirror, but

“You very rarely saw full appreciation of it on TV or heard it on radio and you felt you were running uphill with heavy boots whenever you made the argument”

So why did the broadcast media start obsessing with the need to reduce the deficit? What is clear from Mike’s interviews with Robert Peston and Evan Davis is that the broadcasters really believed a large deficit was a problem of the utmost importance that needed to be tackled. The book contains extracts from his interview with Evan which I abbreviate here.

Evan: “Simon Wren-Lewis comes with a very strong Keynesian view, which is I think incidentally perfectly sensible …. But that’s quite different from saying that we should just blithely come and just say don’t worry about the deficit”

Interviewer: “Do you think you fairly represented all of these opinions, because he thinks you focused far too much on …

Evan: “Yes, but … people who hold a strong and rigid position on an issue find it very difficult not to see that we’re biased against them on anything, and Simon Wren-Lewis is in that …

Mike then writes

“However as the analysis in Chap. 2 demonstrated during the sample period in 2009 when the deficit became a major political issue there were no sources - outside of Labour - who were given space to put the Keynesian view in comparison to a range of sources who put the case for a faster pace of fiscal consolidation.”

A journalist might say gotcha. So it wasn't the imagination of a 'rigid' Keynesian: the BBC really did promote austerity. You can see why I also treat BBC claims that they told everyone that more than 90% of economists thought Brexit would be harmful with a large pinch of salt.

If you want to understand political developments since the GFC you have to understand the media, and that means collecting and analysing hard data in the way that Mike and others media studies academics do. What Mike does so successfully in this book is show how stories in the press were reflected in people’s attitudes and how this can have a profound influence on the political climate and therefore what politicians do.

How the broadcast media created mediamacro

If you do not watch Carlos Maza’s short commentaries on the US media you should. Here is his latest, on why comparisons between the investigations into Nixon and Trump fall short. The reason, quite simply, is Fox News. With Nixon most Republican voters were getting their information straight from one of the established networks. As a result, Republican politicians were coming under Republican voter pressure to impeach Nixon when the extent of the cover-up became clear. Today, Republican voters get aggressive attacks on the investigations into Trump and his associates, attacks which are completely divorced from reality. And Republican politicians, reflecting the views of their base, repeat the attack lines from Fox News.

In the UK we have our equivalent of Fox News, but because our aggressively partisan media is the press there is a chance for the broadcast media to modify its impact. That it did not do so over Brexit because it failed to call out the lies of the Leave campaign is why the vote went the way it did. But Brexit was not the first time this happened. As some of the essays in a new book show, austerity was also an occasion where the broadcast media reinforced rather than countered the lies of the right wing press.

Laura Basu and Mike Berry show how virtual hysteria about the UK budget deficit was strongest in the right wing press, but as Mike Berry writes:

“Whilst BBC coverage lacked the strident editorialising seen in the press, it still operated within a framework which stressed the necessity of pre-emptive austerity to placate the financial markets.”

Historians will find this extraordinary. It is standard textbook macroeconomics that tells you not to try and counteract the deficits that arise when taxes fall and spending rises as output growth declines in a business cycle: that is why they are called automatic stabilisers. Keynes taught us and modern theory confirms you particularly do not do this when interest rates are stuck at their effective lower bound. It was natural to expect record deficits because it was a record recession and because conventional monetary policy was impotent.

So why did the BBC and other broadcasters largely ignore this point of view, and instead promoted what I call mediamacro? This is the subject of my own contribution, and here is a very brief and partial summary

1. Journalists typically had no direct contacts with academic macroeconomists, with just one or two exceptions. The economists you tend to hear in the broadcast media are City economists, who for various reasons over-exaggerated the deficit problem.
   
   
2. The IFS do appear regularly in the broadcast media. But the IFS do not do macroeconomics, and there is no equivalent of the IFS for macroeconomics. Initially the IMF supported fiscal stimulus, but they became spooked by the Eurozone crisis.
   
   
3. The main way that academic expertise about the macroeconomy was filtered through to journalists was via the Bank of England. It should have been they who warned of the danger of austerity at the interest rate lower bound. However, in a then very hierarchical set-up, its governor Mervyn King was a strong supporter of austerity.
   
   
4. The message of probably a majority of academic economists, which was to focus on the recovery and stop worrying about the deficit in the short term, ran counter to journalist’s intuition, particularly after a financial crisis where financial panic had just brought down the economy.
   
   

There is a more conventional radical political economy point of view, which is set out in another essay by Aeron Davis. That is that the media, including the broadcast media, has a default position that supports an essentially neoliberal, financialised order. That position was disrupted by the financial crisis, but once that crisis had stabilised the media took the opportunity to return to where it was comfortable.

I do not think these two accounts are incompatible, as long as you do not see this political economy view as some kind of neoliberal conspiracy. Davis certainly does not see it that way. He describes, for example, why journalists often depend on City expertise: not because someone tells them that is what they have to do, but because they need readily available expertise that they themselves often lack. Try asking most academic economists to explain the latest retail sales data with virtually no notice. The fact that the expertise they receive is often presented as fact when the reason for market moves are generally unknowable is similar to the media’s attitude to macro forecasts.

We can make the same point about the role of central banks. There was no inevitability that they supported austerity, as the US experience under Ben Bernanke showed. Bernanke’s view made little difference in a highly polarised Congress, but I have often wondered whether a Bank of England warning of the dangers of austerity might have made a difference to the media’s coverage of austerity in the UK.

I was reminded of all this by the recent TUC march. After austerity we had the 2015 election, which I argued mediamacro won for the Conservatives. They did so by tending to affirm rather than critique the idea that the economy was ‘strong’, despite the fact that the data said quite clearly that it was in fact very weak. Once again we had a huge gulf between what workers and academic economists were saying and the message journalists were getting from City economists, and how journalists generally went with the latter. The BBC really needs to hold an inquiry into how they handle economics, similar to their inquiry into statistics, but I doubt it will happen under this government.

Why Corbyn’s Brexit campaign matters

I sometimes think discussions with Corbyn supporters is a bit like talking to one half of a couple going through a bad patch in their relationship. Let’s call them PLP and LPM. There is no doubt that for many years PLP had taken LPM for granted. And as a friend to both you can wholeheartedly agree that PLP’s flirtation with austerity in recent years was a serious breach of trust, and more generally a very foolish thing to do. You agree that in those circumstances LPM getting into bed with Corbyn was quite understandable.

But you can see that Corbyn is no good for LPM. Their relationship is going nowhere. What is more PLP is, perhaps as a result, full of remorse. Austerity has long gone, and PLP is promising almost everything LPM wants. You know that when LPM and PLP work together they are a great couple, perhaps even a winning couple. Yet when you try to say this to LPM you either get the hurt of an aggrieved party (how can I ever trust them again), or worse still the poisoned words of despair (that even at their best as a couple they were no better than anyone else).

So when I ask how can you expect Corbyn with only the confidence of 20% of his MPs to get many votes, I’m told that the PLP should not be able to dictate who the leader is, as if that somehow negates my point. [1] Life with Corbyn may be going nowhere, but it is all PLP’s fault. When I point out Corbyn’s major mistake during the Brexit campaign, I’m told it probably had no effect so why should it matter.

But it does matter. What Corbyn and his team decided to do as part of their Brexit campaign was to rubbish Osborne’s claims about the economic harm Brexit could do. They were rubbishing the key part of the Remain campaign. That decision was certainly an embarrassment for that campaign, and for his own PLP colleagues. It was a slap in the face for academic economists, 90% of whom did think that Brexit would be harmful.

Not only was it the wrong thing to do for those reasons, but it also puts Corbyn in a far weaker position after the Brexit vote. Let me quote a comment from that earlier post from Mike Berry, who knows a thing or two about the media. He says it was

“a gargantuan, colossal and highly stupid strategic error. If Corbyn, McDonnell and the rest of the shadow cabinet had repeated endlessly the warnings of economists about what would happen and continued this after the results, day after day after day on all the main media outlets they would now be in a very strong position because they would be able to conclusively pin the responsibility for the negative economic consequences of Brexit on the Tories. They could have forced the Tories to own the slump and shredded their deserved reputation for economic competence for a generation. Deeply disappointing.”

So why did they make such a big error? According to this report, “the Shadow Treasury team vetoed a story developed by Labour’s policy team for Shadow Chief Secretary Seema Malhotra, which warned of the effect of Brexit on the value of sterling.” It goes on: “Those close to the Shadow Chancellor felt that the independence referendum in Scotland had shown how Project Fear went down badly with Labour voters. McDonnell’s Economic Advisory Council (EAC) would have felt the sterling crisis idea was counter-productive too, one source said.”

It was blindingly obvious, from either macro theory or from market reaction to polls, that sterling would depreciate sharply if the UK voted Brexit. Mike Berry’s point continues to apply. But the reason given for not going with this is bizarre. Leaving the EU, as with Scottish independence, will have serious economic consequences for the UK and Scotland respectively. To not mention this, or worse still trash others that do, because it might not be believed is extraordinary logic. (It is like saying a lot of people do not believe in man made climate change, so let’s start supporting climate change denial.)

It is fine to talk about some of the issues the Remain campaign was ignoring, like workers rights, but you can do that without rubbishing what other people on the same side are saying.

What added insult to injury when I read this account was the reference to the EAC. The EAC certainly did not say that Corbyn should discount economists claims about economic costs, or that the likely exchange rate depreciation should not be mentioned. Some of us may have said that talk of some kind of financial crisis similar to 2008 was going over the top, but that is completely different. (A substantial depreciation is not a financial crisis.) It’s not good to misrepresent the EAC as a cover for bad decisions. You do not need to take my word for this. To quote from the statement five of us made after Brexit and Danny Blanchflower’s resignation: “we have felt unhappy that the Labour leadership has not campaigned more strongly to avoid this outcome”.

The reaction of Corbyn’s supporters to all this is to respond to a very different accusation, which is that Corbyn helped lose the Brexit vote. But that is something that is virtually impossible to decide. The issue for me is not whether Corbyn in undermining the Remain campaign influenced the final vote, but that he did it in the first place.

One possibility of course was that he was quite happy to undermine that campaign because of his own ambivalence towards the EU. After all, he did take a holiday during the campaign (imagine if Cameron had done that), and he didn’t actually campaign that hard. But let us instead take him at his word. What we have then is a major strategic failure by him and his team, a failure that will have consequences for the future.

A large part of politics over the next few years will be about Brexit. The Prime Minister is extremely vulnerable on this issue given the splits in her party. There is a huge difference between the various forms of Brexit, and a united Labour party with a passionate advocate of European engagement leading it could help influence events. If there is an economic downturn as a result of the uncertainty over Brexit the government must be made to own that downturn in voters eyes. You cannot do that if the leader of the opposition said the downturn wouldn’t happen.

Let me end with a quote from a recent article by Martin Jacques. While I disagreed with his unqualified description of New Labour as neoliberal, I think he gets Corbyn exactly right in this quote.

“He is uncontaminated by the New Labour legacy because he has never accepted it. But nor, it would seem, does he understand the nature of the new era. The danger is that he is possessed of feet of clay in what is a highly fluid and unpredictable political environment”

I know it has only been a year. I know recent betrayals still hurt. But the road Labour is currently on leads nowhere, and the longer it takes for the membership to realise that the more damage is done. Once you stop seeing the alternative through jaundiced eyes it is so much better.

[1] Logical consistency often goes out of the window in such discussions. I’m asked how can I know that this no confidence vote will damage Labour in a General Election by the same people who tell me Corbyn’s current unpopularity in the polls is because Labour is split.

Postscript [07/09/2016] It now looks like the reason why the explanation given for not supporting (or indeed trashing) economists analysis of the benefits of the single market reported and discussed above were bizarre is because they were a diversion. This report and this from George Eaton show clearly that Corbyn and McDonnell do not support membership of the single market. 

Economics reporting without any economics

Mike Berry explains in this article how the UK media began to see the increase in the deficit in 2009 as a serious problem, and sometimes as a crisis. The government were “court[ing] disaster by borrowing too much”. In terms of basic economics - the economics that anyone doing Econ101 (a first year undergraduate course) would know - there was nothing surprising or problematic about a rising deficit in a recession. It is what you expect to happen. The UK deficit hit record levels because it was a record recession. There was no evidence whatsoever that financing this deficit might be a problem: again basic Keynesian economics shows how in a recession an increase in the supply of government debt is accompanied by an increase in the private sector’s demand for financial assets. [1]

It was a case of economics reporting without any economics. It is a bit like a weather forecaster who reports the weather without any reference to the time of year. (In the Autumn they say ‘Its getting colder and colder - at this rate in nine months time all the rivers will freeze over’) Add politics and you have a dangerous mix, particularly when the partisan press has a significant influence on the non-partisan media.

I have sometimes put this down to a lack of economic knowledge among most political journalists. Of course political journalists talk about economics a lot, yet there seems to be a curious lack of interest in what those that study the subject have to say. I find the story of our ‘lost’ Brexit letter, which I summarised in this piece for The Conversation yesterday, rather scandalous: the mission to educate and inform thrown out of the window. [2]

Which I guess is one reason I started writing a blog. I say I guess because it all happened rather accidentally, so I never had any clear plan. Its success really did surprise me, and I soon realised that I had multiple audiences: many economists in the big economic institutions, but also many interested non-economists. It makes writing challenging and I know I often fail to adequately explain, but I was encouraged by whoever wrote the commentary on my blog in this knowledgeable list of the 100 top economics blogs.

But the people who most need to read economics blogs are I suspect one group that fail to do so: political journalists who talk about economics all the time, and the people who write and research economic news. It is not who appears on Newsnight debates that concerns me, but the unwritten assumptions of those who decide what is news, and write news bulletins. It was these people who decided that the growing deficit in 2009 was ‘courting disaster’, and made the tragedy of austerity possible.

[1] One comment I often get when I say this is that a good part of that deficit has proved to be structural. But if that is the case it is because a large part of the fall in GDP relative to trend following the recession seems to have been permanent. That means you do need to worry about the deficit at some point (after the recession is over), but your immediate focus should be on why GDP has departed from previous trends.

[2] In case you are unconvinced of this: the economic cost of Brexit is critical for most voters, the Remain campaign says this cost will be large but Leave dispute this, and who knows most about the basis and validity of the large cost claim?