Media Accuracy and Economics

Independent economic analysis and advice

A concerning development in recent years has undoubtedly been the political attacks on the media.  It’s a big issue that deserves to be to the forefront of debates, but that’s not what this post is about.  It’s about media accuracy, not opinion.

The fact is that much of the reporting and commentary on Irish economic issues in Irish media over the past decade or more has been quite superficial and often inaccurate.

I know that journalists need headlines, but it should not be at the cost of accuracy.


A Recent Example

I have no wish to engage in any sort of naming and shaming, but a recent report will illustrate what I mean.

The Governor of the Central Bank, Professor Philip Lane, recently made a speech where he called for fiscal prudence in the upcoming budget.

There’s no great surprise there.  That Ireland is experiencing a strong economic recovery at a time when external threats to ongoing growth are ever more visible makes the call timely.

Philip Lane

Philip Lane is not someone that could ever be accused of seeking headlines and his speeches are always carefully considered, moderate and closely argued.

For the most part, his comments were reasonably well reported.  The headlines generally referred to his call for higher taxes to move towards a budget surplus rather than the deficit that persists.

The inaccuracies were in the detail.  The following short extract from a widely read newspaper illustrates the point:

Mr. Lane specifically identified taxes on spending and investment – such as property taxes and savings – as a way to cool the economy.

While he backed plans for greater public investment, Mr Lane said tax increases should be used to fund them, and to prevent the economy overheating‘.

The way this is written infers that property taxes are a tax on spending and that taxes on savings are a form of a tax on investment.

This is inaccurate.  Property taxes are a form of wealth tax and is only very vaguely related to spending.  And the level of savings is only very distantly related to investment.

Spending taxes can affect savings while property taxes can impact investment.

The Governor was also not advocating that these taxes be increased to fund public infrastructure.  Instead, they might be used to bring about similar effects as would appear if interest rates could be increased.

What the Governor actually said was:

Proxies for national interest rate adjustment include shifting the tax rates on investment and consumption in line with cyclical conditions. During upswings, spending pressures can be alleviated by raising taxes on investment and consumption, with these taxes lowered during slowdowns. Examples include cyclical adjustment of asset taxes in the property sector and a cyclically-sensitive regime for the tax treatment of savings‘.

The full text can be read here.  The point is that taxes can be implemented in an anti-cyclical manner to achieve a surplus in an expanding economy.

It was certainly not a call for taxes to be increased to provide funds for identified expenditure.

However, the reporting loses this meaning entirely.


Media Accuracy is Important

This report appeared on the front page under the main headline of the paper.  This makes the need for accuracy all the more important.

It may seem like a small issue.  But in the current climate of attacks the need for media accuracy is greater than ever.

Inaccuracy and sloppy reporting simply leave journalism more open to attach and less able to mount the necessary defense.