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Home Publications Blogs Beat the Press Bad News for Greece and Us

Bad News for Greece and Us

Thursday, 07 April 2011 04:33

Folks in Greece are being taught Keynesian economics by people who don't believe in it. It seems that when you strangle your economy, budget deficits rise. Greece's shrinking economy is leading to larger deficits (less growth means lower taxes and more transfer payments for things like unemployment insurance) and a rise in its debt to GDP ratio (when GDP falls, the debt to GDP ratio rises).

The news is that the austerity being imposed by the EU and the IMF is making Greece's debt situation worse, not better, just as all of us Keynesian types predicted. While the Greek experience should be a warning against going down the austerity path in the United States, due to the incompetence of the U.S. media it will be taken as a further warning of the need to act on the budget deficit quickly.

This is sort of like pointing to the medical problems of a person suffering from anorexia as evidence of the urgent need to lose weight. That makes no sense, unless you are involved in the national debate over economic policy.  

Comments (15)Add Comment
Incompetence of the Media
written by union member, April 07, 2011 5:58
Incompetent NPR warned this morning of the urgency for austerity or we face becoming like Portugal.
NPR on the U.S. and Portugal
written by Dean, April 07, 2011 6:33
Thanks Union Member,

I missed that one, I must have been out walking the dogs. I am going to pretend that I didn't see your note (arghhhhhhh!).
written by izzatzo, April 07, 2011 7:36
Austerity benefits are a no-brainer. Any economist knows for example that cars get better gas mileage by slowing down which increases the distance range between fuel refills.

The obvious path to economic recovery is to reduce speed limits to 5 miles per hour which increases supply side efficiency so much that all destinations are reached with no refills at all.
written by Mark, April 07, 2011 8:43
I am afraid that I don't listen to NPR any longer. I am just exhausted from listening to incomplete, misleading reports about things that I know about.

My spouse points out that NPR is better than other mainstream media. I think that's true, but where most sentient folks realize that most radio news is a joke, NPR is still perceived as complete and accurate. That's what drives me crazy.
written by Breukelen, April 07, 2011 8:53
"While the Greek experience should be a warning against going down the austerity path in the United States, due to the incompetence of the U.S. media it will be taken as a further warning of the need to act on the budget deficit quickly."


What the media reflect is their concentrated ownership in a society with concentrated wealth, whose wealthy are committed to pushing Free Market fundamentalism, an economic ideology that's helped increase concentration, i.e., a massive upward redistribution of wealth and power.

The threat of plutocracy, not incompetence, is what needs to be highlighted and challenged.
NPR's Value
written by Colin, April 07, 2011 1:00
Union member's comment highlights something important. As many (by many I mean right-wingers) believe NPR is a leftist news-source, a warning from NPR urging austerity shows that they obviously report news and opinion from both sides of the spectrum. Beware the news source that only expresses one side of an argument. I would rather a news source provide two points of view with which a listener can compare and contrast than that news source present one opinion/view as undisputed fact. If only we had an educated populace that enjoyed critically listening to debate...
The Media
written by Jeff Z, April 07, 2011 1:18
And that's the conundrum. The Media as a private market driven entity must provide their audience what they want to hear, or they can't please advertisers and soak them for ad revenue.

They are limited in their ability to provide critical reporting because of the fear of losing ad revenue, because the audience for critical reporting is perceived to be too small. Thus quality public debate on substantive issues is gone and the quality of democracy and our democratic institutions verges on the piss poor. Deregulation only makes the problem worse by allowing for even more concentrated ownership. AS a result, we get fluff and bluff, and the cycle begins again as the audience for quality reporting shrinks even further.

And so it goes. It will affect NPR and PBS as public funding sources are cut. They will seek to replace those funds with those from private foundations, and you know where that leads - to the NPR we have today compared to what it was even 10 years ago.
written by Calgacus, April 07, 2011 3:51
No, the media is not market-driven, but driven by an oligopoly, a ruling class whose ideology has become a metaphysics whose terms people cannot think outside of.

Advertisers boycott non-insane media because they think the audience is too big, and includes too many of the lesser people, who would rise up against them en masse if they were not fed a constant diet of excreta.
written by Jeff Z, April 07, 2011 4:07
An oligopoly is a type of market where all of the things that Calgacus and I describe happen.

The media is market driven because it caters to the preferences and tastes of those with the most money, and those who wish to be like them. Everybody else is just hosed. Money talks - and shouts, in markets. Thus, the media is market driven.

If you want to talk free markets, that is something else again!
written by Union Member, April 07, 2011 10:16

Were I as incompetent at my job as NPR is at theirs, I wouldn't have a job.
..., Low-rated comment [Show]
written by S.D. Jeffries, April 07, 2011 11:27
I believe union member is mistaken. NPR had a guest on to discuss the budget stalemate who stressed the urgency for austerity or we face becoming like Portugal. I was furious that the host didn't call him on such a preposterous statement.
written by fuller schmidt, April 08, 2011 11:35
Taxes are the price you civilized society, Alex - not that patronage and lobbying shouldn't be rooted out to rid ourselves of government waste also. And it doesn't dound like you understand the Keynesian approach.
written by Colin, April 09, 2011 1:35
I agree with fuller schmidt. And Alex - growth from government debt can be real growth, as long as the investments are sound and are capable of paying down debt in the future. It's just fact that an unregulated private sector destabilizes an economy and a society. The purpose of a CEO is to increase profits. The purpose of government is to look out for the interests of its people. Who do you want to have more power?
written by fuller schmidt, April 09, 2011 2:04
Geez - now I'm overlooking entire phrases. The sentence should be "Taxes are the price you pay for a civilized society".

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.