Reason for a New Age

How FOX Killed the Recovery

Posted by publius2point0 on 2010/06/05

As I pointed out in the previous two blogs (1 and 2), the attempts taken by the government to correct the economy were acceptable, sane, and possibly the only course of action that could be taken by the government to cause the market to return from its slump. True, there is also a third activity undertaken — boosting the number of government employees via public works projects, to solve for growing unemployment — but again there is most likely only gain to be had by this. At some later point I might examine the topic further.

But, as you will note if you read the descriptions of these measures and how they work, essentially all they do is to set the conditions for people to get back into the market. Whether people do so or not is dependent on their believing that things have been “fixed”.

It certainly is fair to say that going into debt as a method of boosting the economy right after a president had already racked up a record public debt, and then making your political platform all about health care reform — the area of government spending that is the least financially sound — without any particular plans to correct that spending, opens you up to attacks based on financial laxness. But, frankly these things are unrelated. If you have to go into debt to finance something economically sound, that increase in debt is 100% mitigated. If I’m in debt at $10 billion and decide to open a fruit stand for $1 that is guaranteed to make all of its money back, the question of the $10 billion is irrelevant. The fruit stand is self-sufficient. This isn’t a particularly complex idea.

Even with simple concepts however, mankind is quite happy to stay diligently ignorant when it suits its purpose. The mass media, with full access to economists, should have no problem in determining that the government is doing exactly what it would be doing (more or less) regardless of which party was in power, and in determining that the key to the economy returning is entirely in the hands of the mass media focusing on news of economic successes and convincing the populace that it is safe to come back in to the market. Anything else is self-abusive as a poor economy hurts everyone of every political stripe. It hurts the country, lowering our position in the world compared to nations like China, where growth is based on top-down management instead of free-flowing financial speculation.

And of course, when economic stimulus packages and so on fail, then they do contribute to the overall debt and they do become, retroactively, financially unsound. This ends up either prolonging the recovery or even making it impossible to return without taking even larger and riskier steps. The Great Depression, after all, wasn’t able to be corrected by anything smaller than a world war, shocking the people out of their economic limbo. I’m fairly sure I don’t want to get to a position where I have to trust that the government is capable of independently creating a psychological shock of that size if I want things to recover.

Now I don’t believe that FOX news or other Conservative or Libertarian news sources were actively malicious. Even the Left-side of the newsstand was hardly the propagandist center of financial recovery. Sensationalism sells newspapers and, frankly, many reporters are idiots who don’t understand nor have any desire to understand economics. But the point remains that the blame for the next 3-5 years of economic turmoil — which I think is a safe presumption to make at this point — can be squarely laid upon the backs of the mass media, and particularly those on the Right.

Note that I’m not saying that the news needed to have been actively propagandist. Simply saying the truth — that what steps were recommended for recovery were being taken, and that this was independent of all other financial considerations — would suffice. Saying the truth is, theoretically, the very job of news reporters.

Overall, I do think that President Obama himself should have been able to predict this result, which is why I’ve personally advocated the use of educating the public on economics and the fundamental strength of the US economy, but I can’t say that I blame him terribly for taking the tried and true attack of economic recovery. Perhaps he simply had more faith in his ability to sell the idea without the need of further aid from the rest of the media than was reasonable.


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