By Jane Duncan · 8 Sep 2014
We warned you! Business journalist Rob Rose made this claim recently about the media’s reporting on the collapse of African Bank Investment Limited (ABIL). He argued that the business press locally and globally have been “calling it right for ages” when it came to the financial crisis that swept the world from 2008 onwards.
Rose also took issue with economist Trudi Makhaya’s recent warning that South Africa lacked meaningful economics journalism. He disagreed with her argument that the media were missing in action when it came to important debates, including failing to warn the public about the pending credit bubble that led to the 2008 crisis.
Academics still need to undertake the content analyses that either confirm or refute Rose’s claims about the ABIL reporting. Rose is a highly-experienced, award winning economics journalist: one of the few who has been willing to take on the corporate sector with as much vigour as the government.
But what should also make warning lights flash in readers’ heads about his claim, is that he cites the University of Maryland’s American Journalism Review (AJR) analysis in support of his argument that the business media warned the public before the 2008 crisis that a bubble was developing.
Dean Starkman conducted a much more extensive content analysis of the agenda-setting financial media, for the Columbia Journalism Review, and found the AJR’s analysis wanting. Their more comprehensive analysis showed that there was a general system failure in the reporting on factors that led up to the financial crisis.
Starkman found that there were hard-hitting articles warning about a possible sub-prime crisis in the early 2000’s. But in the crucial years just before the 2008 crisis, the business media shifted their focus to consumer and investor-orientated stories that missed the bigger picture. When the media did wake up to the enormity of the problem, it was too late.
According to Starkman, “With all due respect to our cousins in Maryland, I find AJR’s approach—in effect, sticking a thumb into several years of coverage and pulling out some plums—inadequate…[Missing are] investigative stories that confront directly powerful institutions about basic business practices while those institutions were still powerful. This is not a detail. This is the watchdog that didn’t bark.”
This salutary lesson in the dangers of journalistic self-judgement should warn us against taking Rose’s argument at face value. The failings of the media before the 2008 recession is a symptom of a far more serious myopia in reporting on the economy. Perhaps the most serious problem is the reduction of economics journalism to business journalism.
This myopia was on full display in Rose’s own publication recently, the Sunday Times Business Times, which devoted a page to analysing the fact that South Africa’s economy was so fragile that it had only just averted a recession. The lead article blamed rising consumer costs and unemployment, as well as the strikes, as key contributors to the economy’s weakness, as these factors apparently led to contractions in both production and consumption.
The paper also profiled the views of three economists from Stanlib, Cannon Asset Management and Econometrix, who it described as ‘three of the country’s leading economic thinkers’. One recommendation made was that South Africa needed to make it easier for companies to do business.
The reduction of economics journalism to business journalism is problematic, as it fails to understand the economy as a system of social relations and the abuse of power, including but not limited to crony capitalism. Business and labour journalism are pursued in silos, with the business silo being the much bigger and more well-resourced of the two. This silo-isation has led to economics journalism becoming skewed towards the business case.
Economic actors who are outside the business realm, but who hold bodies of knowledge that may problematize or even contradict the business case, can easily be branded as ‘non-expert’, and therefore incapable of making meaningful judgements on the overall state of the economy. Furthermore, specialist bodies of knowledge about the labour movement and its contribution to society and the economy have been lost from many newsrooms.
Mainstream economists tend to focus on the circulation of money as their main unit of analysis, without considering the social conditions in which commodities are produced and exchanged. The narrowness of their focus allows them to ignore the fundamentally exploitative nature of the system, seen in the fact that the price of commodities does not represent the labour that went into them. There can be little doubt that labour in South Africa is grossly undervalued.
The assumption that strikes are driving South Africa to near-recession is problematic, yet it is parroted by the ‘experts’ favoured by the business media. In making these arguments, they blame the victim. Workers cannot subsist on starvation wages. The rising cost of living is creating a layer of workers who are, quite simply, too poor to work. Their organic experiential knowledge tells them that the current system is unworkable: to that extent, they too could be considered ‘experts’, albeit of a different type.
The business media are also awash with arguments that the costs of South Africa’s labour force are too high, which makes the country’s economy uncompetitive and unattractive to investors. These arguments ignore the massive contributions of women to the economy, through the unwaged work they perform in the home to bring up the next generation of labourers, and care for the elderly. When workers are underpaid, women are forced to increase their unpaid labour to compensate, as the family is less able to afford basic services. But the business case for a more competitive workforce, and a deregulated labour market, is gender-blind.
One reason is that economists measure Gross Domestic Product without any reference at all to women’s unpaid labour, to community work or other social activity. This kind of studied ignorance should be penalised.
If workers were paid fairly, then domestic demand would increase; but recently many business analysts have portrayed them as being unpatriotic hot-heads intent on damaging the economy. This message is dangerous, as it plays into the hands of more securocratically-minded government officials who can use the portrayal of strikers as destabilising actors to clamp down on strikes and protests to protect the ‘national interest’.
Granted, the business media have often criticised the financial sector harshly for this misdemeanour or that, but there has been scant focus on the systemic factors that give the banks and financiers so much power in South Africa and beyond. Economic financialisation per se is rarely criticised, even though there is evidence of financialisation having degraded our economy. Neither is the external orientation of South Africa’s economy: factors that created a toxic mix of massive capital flight combined with speculative inflows of ‘hot money’. As a result, the conditions that allow bank managers to sneer “fuck the poor” when their house of cards collapses, remain unchallenged.
The property media have talked housing up as an investment prospect, and a source of speculation, rather than simply being a place to live. In the process they have contributed to a housing bubble in South Africa that has yet to blow. Few voices of sanity have prevailed in housing journalism, with journalist-turned-media academic Reg Rumney being one of them.
Another ‘given’ that shines through in so much of what passes for economics journalism is that growth is assumed, unproblematically, to lead to redistribution. In reality, though, growth rarely trickles down to the extent that is needed; so rising tides do not necessarily lift all boats.
Even though our currency has crashed over a short period, somehow the business media consider the economic fundamentals to be sound. These fundamentals stand above ideology, while criticisms of these fundamentals by those who lie outside this finance house – business journalism nexus, are considered to be ‘ideological’. Neo-liberal, financialised capitalism is taken to be the only game in town.
However, the political landscape is changing. The emergence of the Economic Freedom Fighters (EFF), the five month strike of the Association of Mineworkers and Construction Union (AMCU), and the National Union of Metalworkers’ of South Africa’s (NUMSA) movement for socialism, as well as community protests for cheaper and more accessible state services, offer the beginnings of a genuine ideological contest in South Africa. But there is a mismatch between the ideas that circulate in society and the ideas that circulate in the media, and nowhere is this more evident than in economics journalism.
Economics journalism needs to wake up and smell the coffee. As things stand, the profession and its practitioners are apparently ill-equipped to relate to these recent developments, just as were professional economists when the crash of 2008 stunned the discipline. It is not enough to sneer at left-wing organisations, and to accuse them of attempting to destroy the economy. For too many South Africans, the economy is already destroyed, including for those who – via Coronation with its massive pensioner account holders – inadvertently put their trust in ABIL as the supposed bank for the unbanked.
Unless the media recognises the need for a genuine contest of ideas and diversity of opinions, and starts to speak to the economic experiences of the majority of South Africans, then its future could be bleak indeed. After all, relevance is the most important guarantor of sustainability, not closeness to where the wealth lies in society at this current moment.