The dominance of a highly biased view of the economy in the press is by and large responsible for the ubiquitous adoption of “austerity” measures even when they are demonstrably wrong.
Exhibit A is an interview with Piketty, reported in BoingBoing, in which he criticizes the excesses of austerity policies in the Euro zone and has a very somber assessment of the future of the common currency. But what is really noteworthy, as the commentary points out, is the journalists’ position: “More interesting is the hostility from the interviewers from the generally left-leaning Spiegel, who are practically caricatures of German deficit hawks, seemingly reading from a stern script about ‘personal responsibility’ and Greek ‘mismanagement.‘”
Exhibit B is an article by Paul Krugman, The austerity delusion. While bringing in arguments that demolish the “austerian” thesis, Krugman points out here and there how distorted information disseminated through the press has helped to fudge the debate in the UK. Pardon the lengthy citation, but it’s worth reading it (and the whole article, really):
“[O]n the very same day that the Centre for Macroeconomics revealed that the great majority of British economists disagree with the proposition that austerity is good for growth, the Telegraph published on its front page a letter from 100 business leaders declaring the opposite. Why does big business love austerity and hate Keynesian economics? After all, you might expect corporate leaders to want policies that produce strong sales and hence strong profits.
I’ve already suggested one answer: scare talk about debt and deficits is often used as a cover for a very different agenda, namely an attempt to reduce the overall size of government and especially spending on social insurance. This has been transparently obvious in the United States, where many supposed deficit-reduction plans just happen to include sharp cuts in tax rates on corporations and the wealthy even as they take away healthcare and nutritional aid for the poor. But it’s also a fairly obvious motivation in the UK, if not so crudely expressed. The ‘primary purpose’ of austerity, the Telegraph admitted in 2013, ‘is to shrink the size of government spending’ – or, as Cameron put it in a speech later that year, to make the state ‘leaner … not just now, but permanently’.”
We need more transparency and accountability in economy reporting.