CEPR - Center for Economic and Policy Research


En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Is Keynesian Economics Prohibited In NYT Discussions of the ECB?

Is Keynesian Economics Prohibited In NYT Discussions of the ECB?

Sunday, 30 October 2011 09:55

The NYT had a discussion of the Mario Draghi and the situation he faces as he prepares to take over as head of the European Central Bank (ECB). The piece does not even mention the argument that the ECB is creating a downward spiral in euro zone economies by requiring deficit reductions, which have the effect of slowing growth, which thereby causes countries to miss deficit targets. It then demands more stringent cuts.

This is the logic that led to a second recession in the United States in 1937. If Draghi maintains the path pursued by his predecessor, then the euro zone economies face a real risk of a second recession and quite possibly the collapse of the euro. It is remarkable that this issue is not addressed in this piece.

Comments (11)Add Comment
written by Charley James, October 30, 2011 12:20
As I've noted several times in comments at Paul Krugman's blog, the fundamental problem in coverage of the Eurocrisis - as well as the economy in the US and efforts to stir us out of the recession - is that it's being covered mostly by political reporters rather than by journalists who understand the fundamentals of economics. Major media around the world are all guilty of this, from the New York Times and The Independent to the BBC.

The problem is that while there definitely are political ramifications to economic policy, far too few journalists and editors have any background in the subject they're covering. It started w-a-y back with covering Reagan's disastrous economic policies and hasn't gotten any better since.
Hear Hear
written by David Mussington, October 30, 2011 1:48
Totally agree! Paul Krugman is a voice in the wilderness as the Washington Post and the New York Times abdicate their responsibility to report with intellectual rigor and integrity.
Draghi is a Descendant of the Medici
written by Paul, October 30, 2011 2:04
Italians invented modern finance and accounting 700 years ago. Long before Keynes wrote his first word, the Medici had invented modern banking and the Medici Bank was the most powerful in Europe.

Unlike the idiot Trichet, a French civil servant who graduated from a mining school, Draghi is no fool. Trichet should have been in jail for the Credit Lyonnais scandal; instead, he was appointed to head the ECB!
Agreed but the question is why austerity?
written by Abu al-Sous, October 30, 2011 7:55
You make the point however I don't think you articulated why?

The ECB and northern Europeans are asking for that austerity measures and liberalization for the PIIGS economies because they are terrified of the moral hazards; they don't like to be taken for granted, and I believe they have a point.

Imagine financing Berlusconi (who spends most of his time brothels) out of recession or depression; that will be a German nightmare!!!
written by Roger Bloyce, October 30, 2011 10:11
Charley James has nailed it for me. A nine-year-old child can understand that when private spending lags, public spending should pick up the slack. So what's with today's NYT economics reporters?
..., Low-rated comment [Show]
written by Pedro Dias, October 31, 2011 12:45
That is why this conversation is about Draghi, who is poised to become head of the ECB. Which is failing miserably as a lender of last resort for the Eurozone crisis. You are absolutely correct that Greece cannot finance deficit spending by borrowing on the open market. That, of course, is why a different alternative is needed. That, I believe, is assumed in this discussion.

On the other hand, you'd seem to have all the needed qualifications for a promising career covering economic affairs for the NYT.
written by sven, October 31, 2011 12:50

Alex, I am not going to convince you of anything with anonymous comments to a blog post. Perhaps I can ask this of you. Your statement reveals that you are familiar with a common caricature of Keynesian Economics. Before you pass judgment, please spend some time reading actual works by the economists who advocate these models. You might be surprised to learn that the policies which got us into this mess aren't particularly Keynesian. (for example: I'm not certain 'that hyping growth with borrowed money' accurately describes the European response to this crisis.... where did the deficits come from?)

written by urban legend, October 31, 2011 1:13
Dean, why start out with one propaganda arm tied behind your back? Be assertive. Don't identify your school of economics as Keynesian economics -- at least not when you are in commentary mode -- but as "real economics." That's what you and many other prominent economists believe, and the evidence supports your belief. The second you say "Keynesian," the journalists know the right-wing message machine -- and every other DC and NYC pundit who cower before it -- has their backs. Subject them to the ridicule they deserve and maybe you'll at least put them on the defensive a little.
Hate to agree, but there is a moral hazard
written by dr2chase, October 31, 2011 9:06
Austerity's the wrong response, but Abu al-Sous above makes a good point about Berlusconi. He's certainly not the sort of guy I'd want to send my money to (though in fact here in the US we have exactly that situation, where high-income blue-state taxpayers like me subsidize red-state buffoons who then whine about their taxes).

Bailouts (of banks and nations) demand some sort of regulation going forward to counteract this. The banks need it more, because they are precisely the sort of amoral actors you would expect to push the envelope.
written by Maynard, October 31, 2011 11:14
Alex? What Alex?

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.


Support this blog, donate
Combined Federal Campaign #79613

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.