Quality and Funding in Economics and Finance Reporting

Executive Summary

• Who Can You Trust?
• Good Versus Bad Sources
• So Many Bad Sources of Financial Information

Quality and Funding in Economics and Finance Reporting

Conventional and wealthy media outlets are a good place to find out what Goldman Sachs and Morgan Stanley would like you to believe. In these magazines you can learn how the bailout is necessary to save “Main Street” and how executives and Wall Street stars deserve their exorbitant compensation. However, not all sources are corrupt stenographers for concentrated power. Some small media outlets are and have been fighting against this.

Good vs. Bad Sources

I have lauded three sources a number of times on this blog. I have gone through their past statements and predictions (some going back to 1995) and found them to be remarkably accurate. However, it took us some time to find these sources. When I was younger presented with information sources such as Business Week, Fortune and the Wall Street Journal.

I originally figured out The Wall Street Journal was filled with false information when I began working in companies and the articles written by the Journal that covered the companies I was actually consulting in were completely inaccurate. It took me longer to figure out that Fortune and Business Week are also nothing but stenographers for the ultra wealthy and executive class. In addition to being consistently wrong, these magazines don’t really understand the concept of guilt. That is past errors, do not interfere with future forecasts, always produced with great confidence. For instance, Fortune named Enron the most innovative company in the country….6 times in a row. They recently had a cover that discussed how the Social Security System (which is in perfectly fine financial shape as the CEPR has written about and demonstrated, as well as the Office of Management and Budget multiple times) will need to be bailed out.

How curious, as Social Security is backed by the US government and has a .07% administration cost. It is the most efficient financial program in the country bar none. However, its administrators also don’t own Ferraris or date supermodels, and they don’t pay for expensive advertisements in business magazines like the big investment banks and mutual funds do. Wall Street wants all that Social Security money to pump up the stock market, so they can skim it. Therefore, Fortune goes ahead and publishes a false article on the topic. Forbes, Fortune, etc…will publish any article for concentrated power because concentrated power will reduce their advertising and their access if they don’t.

Why Can You Trust?

It’s easy to see which media outlets are friends of concentrated power because they have all the money. They are also wrong most of the time. They are actually paid to mislead because if you can get the masses betting one way, and you are pulling the strings, then you can bet the other, and make a fortune. Think about who was behind all the propaganda surrounding how housing pricing always increases, or how the stock market over time always goes up. It’s quite obvious who, the same institutions who benefit from these myths. This is why your cousin, grandmother, niece and nephew all have so many incorrect economic concepts running around in their heads. They have been explicitly placed there by our media system, and unless each of them begins to perform independent research or find the right sources, they will continue to believe false thinks and make bad decisions.

The best quality economic and financial reporting comes from non-corrupt sources. After 15 years or so of being exposed to all a wide variety of economic/business information outlets, I have found three that are consistently right.

These sources and a rough estimate of their revenues are as follows:

• Center for Economic Policy Research: $1.2 Million
• Michael Hudson N/A (i.e one person)
• Dollars and Sense $400,000

The combined revenues of these outlets, along with Michael Hudson who is part of The Institute for the Study of Long-Term Economic Trends, but also works independently is most likely somewhere around $2,000,000. (with Dollars and Sense producing an amazing output for their yearly revenues)

Total = $2,000,000

When compared to several of the media outlets that consistently get it wrong, the results are telling.

• Forbes: $700 Million
• Business Week: $500 Million
• Wall Street Journal: $1 Billion

Total $2,000,000,000

That is 1000 times more revenue for corrupt reporting, that pumps up asset bubbles as well as stock options on command, over those principled outfits performing real reporting and investigation. The combined revenues of the bad economic and financial reporting is tremendous. Clearly, if you were in it just for the money, there is a much higher demand for false information (both on the part of consumers and advertisers) than for accurate information. Furthermore, the good sources go beyond basic reporting and question the underlying structure of our systems. This is a big no-no. Chevron, Chase, and GM are not paying good money for advertising in media outlets so readers can be made to question things or think outside the box.

So Many Bad Sources of Information

The situation is even more extreme when one considers that there are few quality sources of information, but many more corrupted sources. (Economist, Money, etc..). A detailed analysis on this topic would list all the corrupt sources vs. all the trustworthy sources and perform a division between the two to obtain a proportion. If that were done, the proportion would be even higher than the 1000 to 1 ratio I have listed above.

Conclusion

If you want to find accurate information on economics and business, look for the smaller sources that I have listed above. This is not simply a matter of ideology. Dollars and Sense, CEPR and Michael Hudson all saw and predicted the housing bubble, while other outlets were pumping up the bubble and getting rich off of real estate based advertising dollars. There are at least two reasons to patronize these sources. One is on the basis of their values. However, if you don’t care about that, then read them because they can help protect you from being victimized by institutional propaganda.

Reference

https://www.btobonline.com/apps/pbcs.dll/article?AID=/20090504/FREE/305049963/1109/FREE

This excerpt goes on to explain how the economics profession benefits people who take the opinion of elite power. It is taken from The Nation online. Perelman, who is there for the EPI reception, works at the margins of the discipline; he is one of a few hundred self-described “heterodox” economists at the conference. His last book, Railroading Economics, was about the creation of the “free market mythology,” and his next book is titled The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. I ask him about how he relates to the so-called mainstream of his profession. “It’s a mafia,” he says quietly, his eyes roving over to the suits spilling out of the Freedom to Choose room. Mafia is probably a tad hyperbolic, but there is undoubtedly something of a code of omertà within the discipline. Just ask Alan Blinder and David Card. Blinder, a renowned Princeton economist and former Clinton economic adviser, has long been a zealous advocate of trade liberalization. But this past March, the Wall Street Journal ran a front-page article on Blinder’s concerns about the massive dislocations that the current trade regime and outsourcing trends might bring for American workers. He suddenly found himself under fire from fellow economists for stepping out of line. Card, a highly esteemed economist at the University of California, Berkeley, caught flak for his heresy not on trade but on the minimum wage. In 1994 he conducted a study to see whether an increase in the minimum wage in New Jersey had the negative effect on employment that basic neoclassical theory would predict. He found it didn’t. In fact, his regression analysis showed that, controlling for other factors, New Jersey gained fast-food jobs after increasing its minimum wage, compared with Pennsylvania, which hadn’t raised wages. The paper attracted a tremendous amount of attention and criticism, and Card himself largely abandoned working on the minimum wage. In a 2006 interview, he explained his decision to leave the topic behind this way: “I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.” https://www.thenation.com/doc/20070611/hayes