That the BBC doesn’t quite understand economics - as the claim is - shouldn’t be all that much of a surprise. For many others don’t either. Here, from a report on the report:
How different might the last decade of British politics have been if the public had been better informed about economics? It’s the inescapable thought I had when reading through the BBC’s newly published “thematic review” into its coverage of “taxation, public spending, government borrowing and debt output”.
Would a public not spoon-fed mush about the supposed perils of government borrowing have been so ready to accept David Cameron and George Osborne’s austerity in the early 2010s?
But what austerity? In 2008 public spending was 40.1% of GDP. In 2016 it was 40.4%. Government spending went up in nominal, real and proportional terms.
The actual meaning of austerity being employed here is “less than I want of other peoples’ money spent on things I like” which is entirely understandable of course but not exactly a great basis for public policy. Or this:
There are reputable economic arguments for austerity. “Expansionary fiscal contraction”, as developed by the political economist Alberto Alesina and others, was one of them. A decade of experience suggests that it was terribly wrong, but this was at least a coherent argument, based on a recognisable economic logic.
But it wasn’t wrong nor was it even austerity. The “expansionary” there shows that it’s not austerity. The logic is - and it’s irrefutable too - that it is the combination of monetary and fiscal policy which determines whether overall conditions are expansionary or not. It is thus possible to restrict the growth of - note not cut - public spending, or taxation, to produce less fiscal stimulus than otherwise would be the case. At the same time so loosen monetary policy that the overall effect is expansionary. Which is what was done - all that QE - and also how Britain came out of recession in 1932/3, by actually cutting spending, raising taxes but also coming off the gold standard.
Still we look forward to this:
The BBC says its director general will be drawing up an “action plan”. At a minimum, this should address the lack of training for its journalists in economics issues, and encourage broader range of expertise in reporting.
Who is going to be doing that training? The people who write Guardian columns? We’d not think that a grand advance in economic understanding to be honest. There’s obviously no hope at all that grounded realists like us would be allowed to shape the understanding of the nation. Of course not, we all know that.