Brexit and the BBC

Simon Jenkins is completely wrong when he says that the Brexit “campaign was ironically [the BBC’s] finest hour”. The exact opposite is true. The BBC treated the referendum like a general election, with a rule book which said focus on the two campaigns and ensure any coverage is even handed. It mattered not that this produced a blue on blue campaign where opposition politicians were hardly heard. It mattered not that this allowed the Leave campaign to state facts that were simply untrue: by and large journalists kept their head down. It mattered not that their viewers wanted more information about the EU and the BBC has a duty to inform. The BBC had a good campaign only in the sense that they played by rules they designed to keep them out of trouble.

The area where this BBC failure mattered most was the economy. The Remain campaign, for better or worse, focused on the economic costs of leaving. They were on strong ground, with a near unanimous view among economists that Brexit would hurt the UK economy in the longer term. A view that was backed up by international institutions like the OECD or IMF. Yet the BBC’s rules meant that this view had to be treated as just one side’s opinion, to be always and everywhere offset by an opposing opinion from the other side.

In essence the BBC’s key mistake was to not treat the consensus among economists as knowledge. Knowledge that their viewers should be informed about and the reasoning behind it explained. The view that Brexit would reduce average incomes was no more of an opinion than man made climate change is an opinion. They are both almost certain facts. That the BBC did not treat it that way meant that Leave won the vote.

That this lost the referendum is unquestionable. Many surveys pointed to a belief among Leave voters that they would not be worse off after Brexit. Surveys also showed that most Leave voters were not willing to pay anything, in terms of loss of personal income, to reduce immigration. That is not because immigration does not matter to them, but because for many Leave voters it mattered because they believed reducing immigration would improve their access to public services. In that they were completely wrong, but the BBC failed to tell them why they were wrong.

I mention climate change because almost the same fate befell this science. The non-partisan media’s default mode is to treat anything that is politically contentious as a clash of opinions, and with some politicians adopting a climate change denial view, the BBC began to treat climate change as a clash of opinions. But the BBC is open to reason and pressure from scientists. So when scientists complained about the BBC treating climate change as a controversial opinion rather than knowledge, the BBC changed their policy. Debates between climate change scientists and climate change skeptics were largely dropped. When man made climate change was in the news, it was to be treated as a fact: as knowledge.

I have heard no good reason why the consensus views of economists about trade should be treated differently from climate change science. What the BBC’s policy in effect says is this. Forget that society spends large sums of money on research in economics: at the end of the day this research has less worth than a politician’s opinion. Forget we teach large numbers of students about economics in our universities. What is good enough for university students is not good enough for BBC viewers. It is an untenable position for the BBC to have, yet they will continue to hold it until it is challenged, and the only people who can challenge it are economists

The key difference between climate change and economics is that scientists have more institutional clout than economists. The Royal Society in the UK has a staff of over 150. I fear economists have a hopelessly naive and individualistic view about how public policy works. That naive view is that the better ideas will win out. Policy makers will come to economists and choose the policies that most economists think are best. They often don’t. The BBC will represent the consensus view of economists as knowledge: it didn’t.

This is not a one-off, some kind of soon to be forgotten nightmare. I have argued that the 2015 general election was very similar. What I call mediamacro continues to represent austerity as economic common sense, and it represents the government as if it was equivalent to a household. We are now having to tell our students to ignore what they hear in the media.

This is not about individual economists learning media skills. It is about having a collective voice that can, at the very least, speak up for the consensus when it exists. In the UK the Royal Economic Society (RES), rather than the Observer newspaper, could organise polls of academics on key policy issues to establish when a consensus exists. This is better than relying on the selective surveys that already exist. A few angry letters from the RES to the BBC are not enough. We need to force the BBC to defend what they did publicly. If they say they fairly represented academic opinion, we should challenge that by looking at the data. We need to start defending economics, because I do not think anyone else will do it for us.

Misrepresenting academic economists

Brad DeLong entered the debate between myself and Unlearning Economics with a post entitled “The Need for a Reformation of Authority and Hierarchy Among Economists in the Public Sphere”. He writes

“Simon needs to face that fact squarely, rather than to dodge it. The fact is that the "mainstream economists, and most mainstream economists" who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side.”

The dodge, and I think it is a pretty good dodge, is that politicians and a good part of the media choose the economists they publicise. If you accept that austerity came from what I call deficit deceit - an attempt to reduce the size of the state using the false pretext of deficit reduction - then obviously politicians and their supporters in the media would choose those economists whose views were useful in promulgating that deceit. As the UK discovered during the Brexit debate, even a tiny proportion of economists (8!) can appear much larger if the media gives them much more attention than they deserve.

But the argument remains a dodge in the following respect. How were people outside economics, including much of the non-partisan media, meant to know that particular academic economists were unrepresentative of the majority? Indeed how can even economists be sure of this? I’ve argued that the majority of academic macroeconomists were always against austerity, particularly once the reason for the Eurozone crisis had been resolved by Paul De Grauwe, but the evidence I use to back this up is piecemeal and indirect (see here, pages 3 to 4).

Part of the problem is a certain disregard for consensus among economists. If you ask most scientists how a particular theory is regarded within their discipline, you will generally get a honest and fairly accurate answer. In contrast economists are less likely to preface a presentation of their work in the media with phrases like ‘untested idea’ or ‘minority view’. In macro it also reflects periods in the past, which still resonate today, when there was deep division and antagonism between different groups. This extends to not being sure what is taught at masters level in the top schools: it turned out, when André Moreira and I did the research, that there was more consensus in one key respect (Chicago excluded) than some had imagined.

Part of Brad’s post it seems to me is simply a lament that Reinhart and Rogoff are not even better economists than they already are. But there is also a very basic information problem: how does any economist, let alone someone who is not an economist, know what the consensus among economists is? How do we know that the people we meet at the conferences we go to are representative or not?

To help fill that gap we have in the US the IGM Economic Experts Panel survey, and in the UK/Europe the CFM survey. (The IGM survey has recently started a European version.) The US IGM survey has asked a question about the Obama stimulus package on more than one occasion, and the latest result is here. It is one key part of the evidence for my claim that most academics were and are against austerity.

However all these surveys share a common feature which I find problematic, and which also reflects on Brad’s concern. They are selective, and deliberately designed to only include the academic elite. IGM writes that panel members are all senior faculty at the most elite research universities in the United States. So they tell us not what academic economists think, but what a chosen sample of ‘elite’ economists think. Now if those samples are well chosen, as I think they mostly are for these surveys, that may not matter too much, but how representative they are can always be questioned. It also gives the impression that it is only this elite that are worth listening to when it comes to policy issues, something I think is simply wrong as well as being elitist.

As part of the build up to the Brexit vote, the Observer newspaper commissioned Ipsos MORI to email all members of the Royal Economic Society. 91% of those who responded thought Brexit would have a negative impact on UK GDP in the longer term. As most UK academic economists are RES members, it was therefore possible to say that there was a clear consensus among academic economists that Brexit was harmful. To be able to say this about all economists, rather than just a select few, in my view strengthens the power of the survey. (Some defend elitist surveys because the elite is ‘influential’, but if they influence their fellow economists that will show up in a larger sample.)

I think the experience with austerity and Brexit suggests it is time for national economics associations (like the RES or AEA) to start representing the opinions of economists by conducting such polls of their members under their own initiative. With email addresses the technology makes it easy to do. It is time these organisations started telling both us and the world about what the consensus (if any) is on key policy issues. It would be an important step towards ending the misrepresentation of economists and economics.

Some concrete proposals for economists and the media

You can now listen to my SPERI/New Statesman prize lecture in full here, or even watch it all here. The talk looks at recent UK history, involving austerity and Brexit, to argue that there are serious problems in how the broadcast media treats economics. [1] The two main problems I talk about are exclusion and balance. Exclusion, where academic economists are simply ignored because they are not part of the Westminster bubble, can lead journalists to assume statements made by politicians are true even though an economist knows they are false or at least highly questionable. I give a number of examples in the talk, including after the 2013/14 floods where Cameron said there had been no cuts in flood prevention when there clearly had been cuts. Balance is where a view that represents a consensus among academic economists is treated as just another opinion, to be balanced by the opposite view. This simply devalues knowledge. The costs of Brexit is a clear example.

Solutions to these problems must start with academic economists themselves. It is asking too much to expect journalists to know whether a view put forward by an economist represents a consensus among academics or an idiosyncratic view. An obvious way to remedy this is through regular, topical polls of as many academic economists as possible. (I prefer this approach to sampling selected academic ‘leaders’ for reasons I may discuss in a later post.) The example I have in mind was the poll of Royal Economic Society members undertaken by the Guardian during the Brexit campaign. What these establish is whether a consensus exists or not on key issues. They are much better at doing this than letters to newspapers.

The reason why this is far better than getting more academics on programmes like Newsnight (not that I have any problem with that) is that it can then prevent the problem of balance. I use in the talk the example of climate change to show how the broadcast media could treat a consensus view among economists (90% or more agreement) as knowledge, not as simply an opinion to be balanced against another. Getting the broadcasters to do that will not be easy, but academics first need to remove the objection that journalists cannot know what economic knowledge is. Our target audience should not be Newsnight but the 6pm or 10pm news programmes, which may be the only non-partisan news that readers of the right wing press ever see. We need political correspondents to routinely say what the economic consensus is, and use it to interrogate politicians when they deviate from it.

Economists could learn a great deal from the physical and medical sciences on how to use collective pressure to ensure media policy is changed. Climate change is the obvious example where the media began to treat knowledge as just contested opinion (because that is the media’s preferred format), but it was changed as a result of pressure from the scientific community, working through existing institutions that represent scientists. This can be effective not just with the big ticket issues like Brexit, but also where an individual piece of research is misrepresented in the media.

Only once this pressure is brought to bear on the media will we see the media begin to improve its own capability in the area of economics. As I note at the end of my talk, the BBC trust recently commissioned a report on the use of statistics, and most of its recommendations could equally well be applied to economics. To achieve that requires pressure and help from economists as a collective.

The broadcast media should be a defense against populism, not the means by which populism takes hold. If you treat knowledge as just an opinion, of course people will vote for whatever sounds good to their ears. Let’s cut government spending: we should all tighten our belts. Let’s keep immigrants out so there will be more jobs for natives and better access to the NHS. As I explained in my lecture, this was not just a problem involving the EU referendum: because the broadcast media accepted the Conservative narrative on austerity by excluding the views of the majority of academic macroeconomists they helped them win an election. [2]

The referendum story is far from over: key decisions on issues like the Single Market have still to be made. We cannot expect people to make sensible decisions about these issues if expertise on these issues (not just economic, but legal, constitutional etc) is kept locked away in specialist programmes they will never see, or ignored altogether. We must stop allowing politicians to dictate what is knowledge and what is just an opinion.

[1] The lecture and this post are about the UK. Although the general points I make about expertise are universal, my specific recommendations only apply to a broadcast media that is not under government control and is regulated to prevent partisan broadcasting. Although my knowledge of the US is far less, it seems to me the problems there are deeper still, particularly now we have a POTUS and Congress who show no respect for truth.

[2] Someone asked me recently what had gone wrong with the media, but as I say in my talk this problem has been there for decades (see this post on Jay/Birt in the 1970s). What has happened is that, because of underlying social and economic trends, and simply because politicians have learnt how to play the media, media rules that kind of worked when politicians played by the rules and respected truth fall apart when they do not.

Brexit despair

Among everyone and everything I read at the moment there is a mixture of disbelief and despair over the now distinct possibility that the UK will vote for Brexit. Obviously that is partly because I tend to read other economists, and as Chris Giles notes economists are virtually united in believing Brexit will be bad for the economy. (If you cannot access the FT, read Paul Johnson.) But it is also because there is a clear educational divide in support for Brexit, and I suspect most of what I read comes from one side of that divide. The only other event that I can imagine causing an equal degree of unanimous disbelief and despair would be if Trump looked like becoming President.

There is disbelief because it makes no sense. Of course there is a minority who hate the idea of sharing sovereignty, and another minority that really hate immigrants. But these two groups combined would not be enough to win a referendum. Instead we have a much larger group that are concerned about immigration, but their concern appears to be not worth very much to them. This was something I noted some time ago, but it seems to be a robust result: in a recent ComRes poll 68% say they would not be happy to lose any income to secure less immigration (perhaps because they believe less immigration will raise their income).

It makes no sense because economists are as sure as they ever are that people will on average be worse off with Brexit. But a large section of the population have either not got the memo or have ignored it. This will be an important point when it comes to what happens after Brexit: for many Brexit will have been a vote to control immigration, but only because a lot of those same people think that immigration can be controlled without making them worse off. In other words it will not be a clear mandate for voting against a Norway/Switzerland option, because anything else will make people worse off (as most MPs know).

There is despair because economists and others who think Brexit will make people worse off have no way of getting their message across to those that really need that information. I know Gove has said he is fed up with experts, but I’m not convinced most people are (for reasons given here and reiterated here). But writing articles in the Guardian or letters to the Times will not get through to those we need to hear the message (see final chart here). It is why I wrote this. For academic economists I think it is part of a general problem that the media are losing interest in what we think, which is why I wrote this for the Royal Economic Society newsletter.

Whether we do or do not leave the EU, I hope one result of this referendum will be that otherwise sensible people will stop saying that our tabloid press is not that much of a problem. It might not be if our broadcast media were brave enough to report facts, but instead it is obsessed with balance, as well as being heavily influenced by what some tabloids say. How else can you account for 58% of people thinking that Turkey is likely to join the EU within ten years, which in reality is close to a zero probability event. Democracy can become dangerous when a few people have so much control over the means of information.

Osborne's RES speech and proposed new fiscal rule

I suppose I should say something about this, even though I find it painful reading his speeches. Not because they are so partisan - what would you expect? Perhaps I can describe it by comparing it to an academic reading a student’s essay. With something like Vince Cable’s speech last year, you can read whole paragraphs quite happily, and then make a comment at the end like ‘yes, but you have ignored this etc’. With Osborne’s speeches, you feel the need to get the red pen out after every sentence. Each sentence seems as if it is crafted to mislead.

Take, for example, the issue about whether high debt inhibits growth. Now I happen to think that there are good theoretical reasons why high debt might reduce growth. However my reading of the empirical evidence - exhaustively examined following the critique of Reinhart and Rogoff - is that while there may be some (rather weak) correlation between high debt and low growth, there is no evidence of causality running from debt to growth, and more evidence that causality goes the other way. This is what Osborne speech says:

“And the conclusion of the academic literature is that high debt is undoubtedly correlated with lower growth. Even the possibility should give us cause for concern given the huge impact that small growth differentials can have over time.”

Does this give a rather different impression? But read it carefully - does he say anything that is clearly wrong? As I say, it is calculated to mislead, and the speech is full of this stuff. You may think that just means he has very good speech writers, but this makes it hard for an academic to read, and maybe an odd thing to do in an academic lecture. If the invitation was given because the RES was hoping to get something more substantial than the usual Osborne fare, I fear they will have been disappointed.

Still, let’s put that aside and talk about fiscal rules. I have argued that the form of Osborne’s original rule - achieve a particular deficit target over a 5 year rolling horizon - is very sensible for normal times. Here he proposes something that seems different - to start operating once the budget has got to a surplus. He distinguishes between good times and bad times. In good times the budget should be in surplus. In bad times, as called by the OBR, the budget can go into deficit.

How to compare new and old? Could we reframe the new rule in terms of the old, by simply replacing the target of current balance with a new target of overall surplus? I’m honestly not sure - the speech is vague. What he may be doing is thinking about bad times not as your typical economic downturn, but something much worse, like the recent recession. In other words, he may be thinking about the kind of exercise I did here. If he was, we can make the following points:

1)    To allow debt to GDP to go up substantially when there are occasional large negative shocks (which are not followed by large positive shocks), it makes sense to have debt to GDP falling in more normal times. I recommended such an approach in 2009.

2)    This can be done without going for a surplus in normal times, just because of GDP growth. The exercise I did showed that. What is optimal obviously depends on the size and frequency of shocks, and the extent that fiscal policy is actively used to offset the shock. In my exercise, I allowed for another Great Recession in 2040, and thereafter every 40 years. I also allowed for much more fiscal stimulus than occurred under Obama. I assume Osborne would not allow any fiscal stimulus. Despite this, I still had debt to GDP trending downwards, with a target in normal times that was always a deficit.

3)    One interesting and clear difference between his new and old rules is the focus on the overall deficit rather than the current balance. This is also something that Jonathan Portes and I recommended in our paper. It has to be combined with a separate target for public investment as a share of GDP, and in his lecture Osborne said that in the next Parliament capital investment will grow at least in line with GDP.

4)    His proposal appears to give rather more influence to the OBR during these negative shocks. Jonathan and I also suggested an enhanced role for the OBR. In our proposal large shocks would be identified by the central bank suggesting interest rates might hit their zero lower bound, but we also said the OBR should be involved in thinking how deficits might evolve after the shock.

So there are some sensible ideas here, although the failure to acknowledge the problem of liquidity traps remains. There also seems to be an unnecessary obsession with surpluses, but I expect that is just a consequence of his short term goal of shrinking the state.

OK, one last piece of Osborne speak from the speech with relevance to my last post:

“Core inflation ... remains relatively stable and indeed rose slightly in yesterday’s data.”

And here is the data.