Medianomics

Historian Humphrey McQueen writes:

In 2001, Secretary of the Treasury Ken Henry spoke of how even releases from the Bureau of Statistics were being sensationalised: “all ‘news’ stories become little more than comment pieces of economists.” In the June issue of Economic Papers, two researchers from the University of Ballarat report on how that phenomenon distorts the media’s representation of the economy.

They begin by pointing out that the economics profession is divided into two tribes, the Academic Economists (AE) and Financial Market Economists (FME). The authors complain that the latter “dominate media commentary on current economic issues.”

Their worry is that opinions from FME are “based on their role as strategists for their own corporations’ rentier and financial interests.” The authors are too polite to add that the promotion of those interests translates into bonuses for the commentators. The FME are more interested in how much they can earn from financing infrastructure than in whether it should be built.

The authors hope that AE might take a longer or broader view. Yet they have to admit that the AE chase promotion by being fixated on abstract and technical questions. Moreover, any alternative from AE is less likely than ever now that Economic History and the History of Economic Thought have been marginalised in the rush to serve the short-term labour market needs of Business.

Hence, the article’s complaints about media dominance by the FMEs seem disingenuous. Who trained the FME, if not the AE? How much dissent is to be heard from AE? Universities are dissolving the distinctions between FME and AE. Indeed, the authors are from a School of Business. The relevant Faculty at the University of Sydney is called Economics and Business but its bias is towards servicing Business. The Political Economy stream is escaping to the Faculty of Arts.

Another article in the same issue of Economic Papers offers a novel viewing point from which to evaluate the economic commentaries. Its author analysed the Australian daily stock returns between 1961 and 2005. He found that those on the first Tuesdays in November were markedly higher than for all other Tuesdays: “the exuberance associated with Australia’s unofficial national day is translated into irrationally positive market behaviour.”

Does this finding mean that the media should interview bookmakers rather than Financial Market Economists? Or is that yet another distinction without a difference?

3 August 2007