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Home Publications Op-Eds & Columns The US Economy, Pravda Style

The US Economy, Pravda Style

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Dean Baker
The Guardian Unlimited, January 28, 2008

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"The Washington Post and the rest of the DC establishment are willing to blithely airbrush history to conceal their economic policy errors."

In the bad old days of the Cold War, the Soviet press often provided a source of amusement. It would slavishly follow the official pronouncements of top party apparatchiks, never pointing out that one week's pronouncements contradicted the clearly-stated pronouncements of the previous week.

With the demise of the Soviet Union, we have to rely on our own press to provide the amusement. The Washington Post has eagerly embraced this task.

For example, we know from a recent Washington Post editorial that "everyone agrees the economy needs a government boost." However, just eights days earlier, the lead editorial in the Post told readers that "fiscal stimulus may eventually be needed," but warned against jumping the gun. The editorial pointed out that "there is not yet any proof of a recession," adding that there is no "consensus that a recession, if one comes, will be severe."

The Post offered no explanation for this sudden change in positions. There were no surprising data releases in the eight days between editorials. The Post just jumped from a position of watchful waiting to full-speed ahead, as though it had never expressed any reservations about stimulus.

This matters because the Post's position closely reflects the views in top policy circles in Washington. At the time of the first editorial, the inner circle of top economists and policy people were undecided about the state of the economy. They saw clouds on the horizon, but were still not sure that a storm was imminent. By the time of the second editorial, this crew had finally come to grips with the fact that the collapsing housing bubble was virtually certain to sink the economy.

Rather than acknowledge that the experts on whom they rely had badly misunderstood the problems facing the economy, the Post just acted as though nothing had changed. "Everyone agrees we need stimulus." Isn't that simple?

This refusal to acknowledge fallibility stems from the same sort of anti-democratic impulse displayed by the Soviet-era press. Just as the Soviet press wanted the public to trust the wisdom of the party bosses, the Post and other pillars of the elite media want the public to believe that the experts who are the insiders on the decision-making process in Washington are uniquely qualified to craft policy.

Of course this is true for all areas of public policy, not just economic policy. Does anyone who failed to recognize that invading Iraq would lead to a long and costly occupation deserve to be viewed as an expert on Middle East policy? But the Post and other elite media outlets perform a beautification process whereby even the most enormous mistakes are conveniently swept under the rug.

Misunderstanding the economy's weakness earlier this month is trivial compared to the much more grandiose mistake of failing to recognize the $8 trillion housing bubble, or before that, a $10 trillion stock bubble. If performance mattered, then the experts who got things so hugely wrong would no longer be the ones shaping public policy. Instead, with the Washington Post style beautification process, experts can jump from policy disaster to policy disaster and never have their failures affect their standing.

If we are ever to have an open debate on economics, or any other area of public policy, we will need media that honestly discuss policy failures and that hold those in charge accountable. In the current situation, the economic disaster facing the economy was entirely preventable, but the Federal Reserve and the rest of the inside crew were either too incompetent to recognize the housing bubble or felt the short-term benefits outweighed the costs that the country would inevitably face when the bubble burst. The Post and most other major news outlets chose to hide any serious debate on the problems posed by the bubble on the way up, and they would like to prevent any discussion of this massive policy failure even in retrospect.

The good news is that the monopoly of the Washington Post clique is rapidly fading due to technology and economics. Readership of the Post and other established newspapers is plummeting, as is the audience of the evening news shows. With the audience for these news outlets dwindling, their ability to restrict public debate will diminish.

However, a democratized media is still a goal for the future. For now, the views presented in the mainstream media will disproportionately be from those who belong to the right fraternity rather than those who get things right. Unfortunately we can look forward to many more columns from the Dow 36,000 crew and their ilk.


Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (www.conservativenannystate.org). He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.
 

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