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Home Publications Blogs Beat the Press NYT Condemns French for Believing In Economics

NYT Condemns French for Believing In Economics

Thursday, 21 August 2014 04:16

There are tens of millions of people in the United States who completely reject the theory of evolution and believe that humans were created more or less in their current form in the recent past. Similarly, there are many people who completely reject modern economics and insist that countries cannot suffer due to a lack of demand. In their creationist economics view, the main reason that economies experience economic stagnation is government protections for ordinary workers. These economic creationists apparently control reporting on the French economy in the New York Times.

A piece headlined "France acknowledges economic malaise, blames austerity," effectively dismisses the idea that the economic malaise actually is attributable to austerity as a large body of economic research would suggest. While it does note that there is reason for believing that austerity has contributed to slow growth it concludes by telling readers that the real problem is France's rigid labor market.

"On Wednesday, Mr. Hollande called on European Union leaders to make growth their priority, saying that the focus on raising taxes and slashing spending amid downturns had proved a disaster for the European recovery.

"But some saw his move as little more than a public relations ploy.

"'Even though they’re taking so many painful measures, they have to explain to the French why the economy is not doing well and in fact is doing worse,' said Famke Krumbmüller, a Europe analyst at the Eurasia Group in London.

"As a result, Ms. Krumbmüller said, Mr. Hollande appeared to be trying to shift blame to Europe, rather than trying to tackle more difficult overhauls in areas like France’s notoriously rigid labor market, which employers say constrains hiring and investment.

"'The message is, we’ve done our job, now Europe needs to do its job, which is favoring growth,' Ms. Krumbmüller said. 'The interpretation is that is we’ve done everything we can do in the current political circumstances, and we won’t go further.'"

France's weak growth is exactly what would be expected given the spending cuts and tax increases that have been demanded by the European Union. It is difficult to see why anyone familiar with economics would differ with the view put forward by Mr. Hollande. It will be very difficult for the country to sustain much growth in a context where it is making large cutbacks to spending and also increasing taxes. The weakness of the economy is compounded by the slow growth of its major trading partners, many of whom are also practicing austerity.

It really should not be hard for Mr. Hollande to explain this reality to the French people. It would be expected that a country that cuts its budget deficit in a weak economy would further weaken its economy. This is not an effort to "shift blame" as asserted by the NYT's source, it is an effort to describe reality.

The piece also needlessly confused many readers by reporting quarterly growth rates instead of annualized growth rates. It told readers that Germany's economy contracted 0.2 percent in the second quarter. It is standard practice in the United States to report growth at annual rates. (The figure would be 0.8 percent as an annual rate.) It is likely that most readers thought this figure was an annual rate since it was never identified as a quarterly growth rate.

Comments (9)Add Comment
It's not economic creationism...
written by LSTB, August 21, 2014 7:44
...It's Intelligent Demand Theory.

Jeez Dean, get with the program.
The Original Sin of Liberalism in All of Us
written by Last Mover, August 21, 2014 8:58
There are tens of millions of people in the United States who completely reject the theory of evolution and believe that humans were created more or less in their current form in the recent past.

If this were true most humans in America would not be around by now, the "current form" representing a "recent past" of their created "origin" with such viscious hostility they would have killed each other off.

Of course creationists wouldn't explain it that way, in evolutionary terms that is. Humans couldn't possibly evolve through naturally random selected features that gave them such competitive advantage over other animals they could wipe them out at will - including other humans.

No sireee America, that widespread rage you see all about you simmering just under the surface of so many of the economic down and out, is held under control by well, you know, good old fashion "do unto others ... " religious values isn't it.

And that of course explains why economics is what it is to so many Americans, about Adam and Eve partaking of the apple from the tree only to be condemned for life with original sin.

There is a stupid liberal in all of us that wants to take all the apples from the tree and leave none for the others. In the beginning original sin to take more than one makes was curbed by divine intervention based on austerity to starve such destructive appetites wielded by the sinners.

Seek out your inner creationist and tame original sin America by spending less, so others can have more. If everyone spends less everyone will have less because there is more to go around. The Bible says so.
Political Double Talk
written by Ellis, August 21, 2014 10:23
It's really not that complicated. If Hollande was serious about "increasing demand," he would use his position at the head of the government to raise salaries, pensions, and benefits. And he would stop companies from throwing workers out in the street.

That is, he would take the side of labor against capital.

But who really believes that he would ever do that?
written by skeptonomist, August 21, 2014 10:33
Much the same applies to the US. Total real government expenditures have continued to decline since 2010:

A decline in government spending like what we have seen since 2010 has really never happened before except for contractions in military spending after major wars and the end of the cold war (see FRED:GCECA). There was a major increase in federal spending in 2008 and 2009, but most of this actually occurred before the 2009 stimulus and everything was on the decline by mid-2010.

Extrapolating the trend of spending 2000-2009 (red line) gives a current annual deficiency of about $700B, which is about 4% of current GDP.

The US economy has actually been performing pretty well considering this and the devastation of housing. But at least housing starts have been recovering - federal spending has just kept going down.
written by skeptonomist, August 21, 2014 10:40
Diagram didn't work - try again:

written by skeptonomist, August 21, 2014 10:50
With all the money
written by Ben, August 21, 2014 12:44
I have sent the Times over the years you would think they could afford to hire More decent economics reporters for Europe.
Austerity in principle doesn't work
written by joe, August 21, 2014 2:46
It's just simple arithmetic. Austerity can't work. You cut govt spending, by accounting identity, you cut non-govt income. You're forced to try to export, and if you're neighbors are also doing austerity, well....

Break up the eurozone now. It was a flawed project to begin with.
RIght wingers: "We killed the economy and we're not relenting, so go chase phantoms!"
written by Dave, August 21, 2014 5:17
It is so odd how these conversations turn:

Right wingers shut down policies that can help. Then they demand that economists and liberals fix unfixable problems instead. They essentially demand government interference in ways that it can't be helpful while shutting down the ways it can be helpful.

All of it caused by illegitimate Wall Street profits, even in Europe. Yes, German banks and London banks profited too. But I'm convinced they were the followers rather than the leaders in this mess.

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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.