Author
The following is a shortened version of the keynote address presented at the June Supply, Demand & Deadlines workshop.
Introduction
I'm delighted to be here today, not least because it seems to me that journalists and economists have many things in common. Most important, perhaps, is that both professions tend to be the subject of considerable public suspicion—and, as a result, we tend also to be the butt of many jokes. Long before the troubles of Arthur Andersen, it used to be said that economists made accountants look interesting. And Ronald Reagan once argued that an economist was somebody who saw something that worked in practice—and then wondered if it would work in theory. So we economists have quite a bit of fellow-feeling for you journalists.
Don't be disheartened by the occasional insult—it was ever thus. Generations of distinguished thinkers have indulged in press-baiting. You must see that as a challenge, one worth rising to. And reporting economics is challenging and often disheartening. It requires a capacity for hard work, a clear mind and persistence in the face of skepticism. But it can also be rewarding, both for you—and, perhaps more importantly, for your readers, listeners and viewers.
So I congratulate you for taking up that challenge. But I'd better qualify what I've just said. Reporting economics well is what brings those challenges and those rewards.
Almost anybody can write about economic issues in a slapdash, ill-informed way, paying little attention to the main facts, let alone the underlying arguments. Long ago, Adlai Stevenson said that accuracy to a newspaper was like virtue to a lady—but that a newspaper could always print a retraction.
I'm sure you understand the importance of accuracy—and balance, I should add—because you're here. You've chosen to come to this workshop because you want to raise your game.
Economics
So what do I mean by reporting economics well? You might already be suspicious. After all, I'm a policymaker with a message to get across. What are my motives? How do I judge what makes good reporting? Do I give higher marks to those journalists who say what I want them to say, who report my message uncritically?
Rest assured the answer is an emphatic no. Of course, I wouldn't be human—nor would you believe me—if I didn't admit to a certain satisfaction when someone sees an issue in the same way as I do, or when someone credits the International Monetary Fund for getting something right. I like to think we often get things right—but getting the credit for it is, let me tell you, a very rare experience.
. . . But my main focus today is much broader than that. I'm concerned with the coverage of fundamental issues-issues that are central to everybody's everyday life. We are constantly making economic decisions in our personal life, in our life as citizens and voters, and often in our professional life: and far-reaching decisions at that.
Understanding economics is key to understanding so many other important issues—poverty, at the local, national and global level; health care; education; conservation of the environment. Less obviously, but no less true, it also helps us understand much about the nature of relationships between countries-between governments, but also between companies and individuals.
Every time you use your credit card, take out a loan, decide whether to rent or buy a home, think about refinancing your mortgage, you are making an economic decision—and one which will affect your future financial health. Every time you cast your vote, whether it be in a federal, state or local election you are making an economic decision—even if you don't always recognize it as such. Which candidate will raise your taxes, and what will you get in return for those taxes? As an individual the only control you can exert over decisions that will have a significant impact on your life—on your health and wealth—is your vote.
Moving home, from one district to another, or from one state to another, even one country to another—you might think of it as a lifestyle choice. But it is fundamentally an economic decision. It will affect your income and your wealth, now and in the future. There is almost nothing that we do that doesn't have economic consequences. An understanding of economic issues is fundamental to every aspect of our life.
Dull?
But some of you will already know only too well how difficult it can be to persuade news editors that economic issues are important. Their eyes glaze over. They will tell you that, yes, of course what you are talking about is important. But then they might go on to ask what the personal angle is. Who's arguing with whom; what rivalry might be driving the policy debate?
Sugar tax
Yet getting the facts of a story right and marshaling all those facts—providing a complete picture—can illuminate debates that might, on the face of it, be about local politics. Let me give you an example that will also illustrate what a minefield policy issues can be.
The debate in Florida over a sugar tax is exactly the sort of state-level issue that many of you will suddenly be called upon to write knowledgeably about—and in a hurry.
Let me summarize briefly. The pressure for a sugar tax came mainly from environmentalists concerned about the damage that sugar farming was inflicting on the Florida Everglades. It was simple in concept: a small tax on sugar output, the proceeds of which would be used to fund conservation and repair work in the Everglades.
The sugar industry was up in arms, complaining that a tax would threaten the livelihood of sugar farmers. Farmers, or their lobbyists, also argued that the environmentalists were ignoring other threats to the Everglades and were instead using them as an easy target. The debate was polarized between big business and the environment. Yet it was difficult to get a clear picture of what the argument was about, partly because both sides were anxious to present their case in a favorable light.
From an economist's point of view, the issues are unusually clear-cut. The overwhelming balance of economic evidence would argue against any sort of producer tax. It distorts economic behavior. A tax on one group of producers means they have to raise their prices (or accept lower profits). In this case sugar farmers would be worse off than, say, orange growers in Florida or sugar farmers overseas.
The environmentalists did have a point when they accused sugar farmers of damaging the Everglades. But to the extent that the farmers were doing harm, the sensible and efficient way of dealing with it would be to make them pay directly, not impose a tax. That way, those farmers who had invested effort in trying to minimize incidental damage would not be penalized equally with those who had paid no attention to environmental effects.
Producer taxes are misguided because they interfere with the market. But producer subsidies are also wrong. A bit of investigative work would have revealed that Florida's sugar farmers were receiving massive subsidies, even as they were resisting taxation. Their prices were higher than the world market price, and they could get away with that because they were protected from import competition. In fact, you would have to work hard to find a more distorted market.
Of course, if the farmers had seen their subsidies withdrawn and been made to face competition from foreign imports, then many of them would have ceased farming; in turn, much less damage would be done to the Everglades. The natural instinct of the environmentalist lobby was to argue for more intervention—the tax—rather than less, by withdrawing subsidies and producer protection. But interference with the market rarely makes economic sense.
I think the lessons of this example are pretty clear. Never take what you are told at face value. Even in a straight two-sided argument, both parties might have their own reasons for not wanting to draw attention to the full picture.
One of your most important tasks is to fill in the gaps in the story, so that ordinary citizens, who will be voting on these issues, can make an informed judgment. They might in the end decide that they wanted to keep subsidies for farmers and have a sugar tax. That is their democratic right. It is my job as an economist to try to persuade them of what makes economic sense. It is your job to make sure they see the whole picture.
The first challenge
Getting the facts right and understanding the issues is the crucial first challenge. Doing that in a confident but accessible manner will help you break down some of the barriers that you so often encounter when you mention the word economics.
The polite boredom you can so often encounter is often disguised fear. Numbers make many people nervous—and there's no doubt that economics does rely heavily on numbers. People are often baffled by statistics. They're afraid because they do not understand. And nobody wants to admit their ignorance: That's human nature.
You know how important economics is to all of us. But you are also journalists. You want to get your copy in the paper—and sometimes on the front page—or on air. So your job is to bridge the divide between the technician and the technophobe. If you want to show why economic issues are important and you want your story to be given prominence, it is worth the effort to strip away the jargon and sift through the numbers to find the ones that matter most.
Easier said than done, of course, but certainly not impossible. Do not be afraid to ask the dumb question. Economists can be notoriously unhelpful when it comes to simplifying facts and arguments. Too many of them only want to talk to other economists. Do not be put off, though. If somebody cannot explain their case clearly, it can often mean that they are not wholly sure of their facts.
Remember that it is easy to hide behind jargon—it can be a camouflage for ignorance. If your exposition isn't clear, though, the story will lose its impact, and its interest.
The second challenge
But beware. The search for clarity is praiseworthy, but it is not without dangers of its own. It can be all too easy to be drawn to those who present the clearest but not necessarily the most accurate or balanced case. It is easy to marshal facts selectively without people realizing it. It is not just a matter of getting the facts right, but of choosing which facts to present-as the sugar tax debate shows only too clearly.
Conclusion
I started out by saying that economics is important-and that so is reporting economics well. I hope what I have said has helped convince you, if you had any lingering doubts, that your task is a difficult but worthwhile challenge.
But if economics is important in a domestic context, how much more so is it in global terms. We've seen in recent years that poverty and a sense of exclusion from the world economy have helped create "failed states"—countries that have been breeding ground for dissent and terrorism. The IMF's role—acting alongside the World Bank, the United Nations, and national governments—is to help all countries participate in the world economy by encouraging them to pursue sensible economic policies and, where needed, to provide the financial support to help them do so.
The more people understand what we do, the easier our task will be, and the more everybody can benefit from a prosperous international economy.
The entire speech
is available at the International Monetary Fund.
See the December 2002
