This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
2/28/2009
Media…The Source of the Problem.
The article, “Hopes of Quick Rebound in China Start to Fade,” by Andrew Batson in the February 26, 2009 edition of the Wall Street Journal, discusses China’s place in the current global recession. Because China’s stock market has had the best performance this year, hopes were high for them to lead the way out of the global recession. Steel prices have effected the expectations for the country’s growth, probably due to the fact that it consumes the most steel in the world. While steel prices have grown approximately 15% since November, they have declined by close to 9.5% in the past few weeks. Steel is a leading indicator for China’s economy; therefore, many people believe that the data produced in the past couple of weeks mean that the economy is not looking up. Another key indicator for the economy is their trade balance. Exports and imports have both declined. This is because international demand is down as well as domestic demand. A reason for this could be expectations. The title of the article attracts pessimism porn addicts, and disregards some aspects of the economy that are actually positive forces. News, like this article, could really be playing a big part of these plummeting expectations. An extreme solution to this issue could be restricting negative opinions of the economy; however, then it would be an infringement on the right of freedom of speech. Therefore, it seems our media is setting us up for a downward spiral of deteriorating economies.
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3 comments:
I am a longtime advocate of the view that the media presents a pessimistic view of the economy.
Having said that, I don't think they are any worse this time around. That's probably a good thing, if in fact, the economy is worse that the media portrays.
For my part, pessimism porn isn't so much about the media, or about pessimism, but about that pessimism interfering with the normal conduct of life (this is where the porn part comes in). When they find a way to point out that Brangelina can't get jobs because Jennifer Aniston is part of vast right-wing conspiracy to tank the economy, then we'll have to worry more.
I agree with Dr. Tufte concerning "pessimism porn" throwing the market out-of-balance. Because these people are so caught up in how bad the economy is and how poorly the stock market is performing, they refuse to carry on with life’s ebbs and flows which drive the economy. These "pessimistic porn" addicts no longer spend or invest as they once did which is hurting consumer confidence and causing the price of stock to fall. As a result, the addicts are giving themselves more negative news fueling their addiction and further hurting the economy.
I agree that "pessimism porn" is hurting the situation. I do believe, however, that its effects on the economy are limited. If you go back to the Great Depression, there were no internet and television programs (although they had newspapers) constantly ranting about how bad things are, yet they still experienced a massive economic downturn. I'm not implying, nor do I believe, that things are as bad as 1929-1933, but I do believe that things are looking very bleak in the economy, and this downturn would have happened with or without the media. On a side note, the thing Wall Street hates the most is uncertainty, so restricting media would not likely be a viable option.
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