Saturday, 19 May 2012

Increasing the specific gravity of the news

Globally, as of this year, more people live
in cities than in rural areas.
European countries like Greece and Spain have severe debt burdens and high unemployment and the EU and the IMF have imposed austerity measures to bring debt under control. But then in recent elections the Greek people rejected these measures by voting for parties that oppose them. Then there's a run on a major bank in Spain. Global share markets plummet, destroying part of the wealth of millions of individuals. And this is 2012, five years after the GFC. So are we seeing a rerun of that crisis? Is it going to be a double-dip recession, worldwide? How can we know?

One of the best studies of the 2007 GFC was by Michael Lewis, an American journalist who writes books. Books are fine, in their way, but they have the problem that they take a long time to put together. They come out after the fact. They're mostly retrospective. People, on the other hand, need news now, today. They need to know what's going on. But they also need the type of analysis that they can rely on to signpost future possibilities. In the case of the GFC, they didn't get any advance warning, and so many people suffered. Lewis points this out in his book. To put it one way, journalists let the public down.

It's not the first time. The Greek crisis seems to me to be a product of not one but two major policy changes that took place in the US over a decade ago under Clinton. Tell me if you think I'm wrong. One was the loosening of trading regulations that enabled trading houses to act more independently. (Someone might be able to put a more comprehensive lens to work on this for me; feel free to comment.) The second was the granting of MFN status to China. Let's look at the second of these first. China's government was set on economic growth, following the Tiananmen protests of 1989. Clinton said that granting MFN status would produce jobs in the US but the opposite happened. Jobs may have been produced in the US due to China trade prior to his 2000 announcement but following that China's game plan involved setting up manufacturing companies in China that would export to foreign countries. Western companies signed manufacturing agreements with Chinese companies. Jobs fled from the US and from places in Europe that had until then functioned as low-wage production bases for global companies.

The crisis in the PIGS countries in Europe now is a result of these two policy decisions, as I see it. Now journalists are mostly tasked with reporting what is happening now. This is what's called "news". But is this good enough? And do we need to wait until books can be published before we get that future-facing analysis that can help individuals and countries avoid major crises? Who can do it?

Beat journalists develop expertise in an area of human endeavour. By doing this they are able to recognise what is news, so that they can report on it. But they also get to know people. These people work in government and in corporations and they have a lot of knowledge. A beat journalist is ideally placed to review past events and extrapolate that into analyses of future trends. These types of stories can take time to put together, but not as long as a book. The guy who writes the book is one of the guys the journalist will want to talk with to write his article. Then there's the analyst in the government department whose job it is to know everything about a subject. Getting information out of companies is harder, but there might be a stock analyst who has relevant knowledge. And there are university employees such as lecturers and professors who possess scads of knowledge.

The thing is that none of these people has an interest in making what they know public. But it's most definitely in the public interest that this occurs. It's really a matter of knowing what questions to ask. Not every question will get answered as fully as the journalist desires, that's a given. But the journalist will be able to put together these threads of information and weave them into a convincing story. People read the story. They talk. There might be a major public debate for a few days or a week. The government sees a political benefit in announcing a policy change. The crisis is averted. See how knowledge from many sources published through a single, long story can turn into a significant public good?

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