Economic journalism – an international perspective

Speech to the Australian Conference of Economists 2011, Canberra, 13 July 2011
Published in Economic Papers (Canberra), 13 December 2011

It is a pleasure and an honour to share a panel at this economics conference with such distinguished academics and journalists. I am not quite sure what I am doing here. As a think tanker I am not a real academic and as a columnist I am not a real journalist, either. In fact, you may not even think that I am real economist since I did my PhD at a law faculty. At least it was a thesis in law and economics.

But be all that as it may, after three years in the country I may still pass as a real international observer of Australian affairs and so I was asked to add an international perspective to the discussion of economic journalism in Australia.

I like comparative studies because they can reveal national peculiarities that might otherwise go unnoticed. There is a wonderful anecdote about the late Lord Alexander of Weedon who, as chairman of the British bank NatWest, visited the German Bundesbank. Lord Alexander was carrying a copy of an English newspaper that displayed a headline to the effect: ‘‘Good news – another rise in house prices,’’ on which the legendary Bundesbank president Karl-Otto Pöhl commented: ‘‘Over here, that would be bad news.’’

It is quite a telling anecdote because different countries have different economic narratives. Not only that in Germany rising house prices would be bad news. In fact, house prices in Germany are not really a news story at all. Maybe that is because they never change. In contrast, in the English speaking world few other things are followed with as much passion as the ups and downs of the property market.

It is other things that really excite the Germans, for example, inflation. Not that inflation in post-War Germany has ever really been a big problem. Compared to other industrialised nations, inflation has always been low in Germany. But distant memories of hyperinflation and two monetary reforms are still very much alive. And so whether the German CPI is up 1.2 or 1.5 per cent, it is always enormously important, front page stuff.

So countries are very different when it comes to reporting economic developments. I have certainly noticed it in the three countries in which I have lived – Germany, Britain and Australia. Each nation has its own economic obsessions, its own fears and its own quirks.

If you accept them without demur, you will usually get by. But try telling the British that they are not living on an overcrowded island, or dare explain to the Germans that being the world’s greatest exporter is not necessarily all positive, or mention to the Australians that local government can be a force for good, and you get into trouble.

So every nation has its stories that it likes to hear over and over again. And sometimes reading the Australian, British and German press, as I do most mornings, it can all get a bit tiring. In a way, it often seems as if you have heard it all before. There are very few economic commentators that still manage to say something new every now and then – present company excepted, of course.

In a way, Australian newspapers are thus not that different from newspapers in other countries. There are some predominant ideas and motifs that are taken as a given, like the house price issue. I am still waiting for the day on which I read in an Australian newspaper that rising house prices are just another kind of inflation.

Instead, Australian newspapers have invented a very elegant phraseology to gloss over this very elementary economic discovery. So rising house prices mean that ‘‘the market is doing well,’’ ‘‘the market displays confidence’’ or ‘‘the market is gaining momentum.’’ Such expressions sound so much nicer than ‘‘fewer and fewer Australians can afford their homes.’’

The same newspapers are also eager to report stories about low vacancy rates; they give room to real estate lobbyists calling for an extension of first-time buyer grants; and they do not miss out on any opportunity to talk up the market in general. You sometimes cannot help but wonder whether any of this implies that maybe the newspapers themselves have an interest in a booming property market. But I will leave this question unanswered here.

There is another feature of Australian journalism that I find quite astonishing. But maybe it is not just a feature of Australian journalism but a wider phenomenon.

You probably remember Prime Minister Julia Gillard’s first international trip as leader. At the time she said that she would rather be in a school watching children learn to read than attending international diplomatic talks (quote: ‘‘Foreign policy is not my passion.’’).

In a way, it was unfortunate that nobody had told her before moving into the Lodge what the job description entails. But at least she was honest about her lack of interest in international developments.

Reading Australian newspapers, I sometimes think that a similar insularity has become a feature of public debates. To commentators and columnists, it is infinitely more interesting to elaborate for the umpteenth time on the intricate details of the Howard–Costello, Rudd–Gillard or Turnbull– Abbott relationships than dealing with economic and political developments happening elsewhere.

Australia’s inward-looking attitude is odd for a country that is a major trading nation. Exports account for 17 per cent of Australia’s GDP. Australia is a great country but it is certainly no economic giant. And as such, Australia depends on international developments.

It may seem bizarre but when a small country like Greece has fiscal problems, the effects of it can be felt in Australia. This is not so much chaos theory – you know, butterfly flaps causing tornados and the like – but the reality of globalised, interconnected markets.

In light of this, I find it astonishing how little attention is paid to international developments. Of course, we would have all heard by now that much of Europe is facing a sovereign debt crisis. Nevertheless, even usually well informed people would not be too familiar with the details of it.

The same is true for Australia’s relationship with New Zealand. Australian exports to New Zealand are worth about $8.6 billion annually; only $2 billion shy of the value exported to America. Australia is the number one tourist destination for Kiwis and vice versa. And about a tenth of New Zealanders now permanently live in Australia. By all accounts, Australia and New Zealand are extremely closely connected.

Yet, how much of this trans-Tasman integration is reflected in the media? How much do we know about New Zealand and its economy? To the average reader of Australian newspapers, New Zealand would be almost as foreign a country as Namibia or Peru.

As similar as Australian and European newspapers are in sticking to their preferred national narratives, I still think that Australian newspapers tend to be more focused on domestic issues than their European counterparts. Perhaps this is only natural because Europe is now a much more integrated continent and therefore Europeans simply have to care more about things happening in neighbouring countries. But as I said, Australia is also a country closely integrated into the world economy. So it should be in our own best interest to be better informed about developments that happen abroad.

To finish on a more positive note, one of the best features of journalism in Australia is the high degree of economic literacy among commentators, not just on the business pages of our newspapers. When I compare the editorials of Australian and especially German newspapers, I notice that economic arguments feature more often in the former than in the latter. Perhaps, this is a result of many debates around economic reforms fought in the past.

So to sum it up, I think Australian economic journalism does not have to be afraid of a comparison with the kind of journalism that is practiced abroad. But a greater focus on international developments could make it better still.