Dean Baker on Out of Touch Reporters

Dean BakerI don’t know how many times people have given me the stock market [argument]. Well, that’s great if you own a lot of stock. But that’s almost no one. Invariably, when I say that, reporters are really taken aback, “What do you mean?! I own stock! My friends own stock!” I go, “Yeah! Like I said: almost no one.” You have a lot people who are writing on economic issues that are incredibly out of touch with what the economy is for most of the country.

—Dean Baker
Quoted on The Zero Hour with RJ Eskow

4 thoughts on “Dean Baker on Out of Touch Reporters

  1. About once a year at work, a representative from the company that administered our 401K plans would come out and give a presentation about why we should invest more in our plans. There’s was always the standard graph of the stock market going up and up ever since the Depression. I always wanted to say that that wasn’t the stock market, it was the Dow Jones average and Dow Jones could and did change what companies are included in the average. And one time, our company president introduced the representative by telling us how he (the president) had made something like $50,000 by switching to another fund. Yes, the stock market is great for people who have enough money to afford losing some of it.

    My father got his Ph.D. in economics from MIT after WWII. He and my mother lived in the same graduate student “barracks” as Reagan’s future Secretary of State, George Shultz, and his wife. My father used to tell the story of how Shultz’s father, who was head of the Dow Jones News Service, gave a presentation to the graduate students one day. Shultz’s father bragged that Dow Jones predicted the movement of the market correctly 35% of the time. A hand immediately shot up in the audience and a student said, “You would be better off flipping a coin.” Shultz’s father replied, yes, but Dow’s record was better than that of any other of the stock market news services! (This was the story my father told me, so I can’t vouch for its veracity.)

    • Great story! Maybe they are doing more than providing “up or down” predictions. So the 35% is like when political scientists say that 40% of presidential election outcomes are predicted by GNP growth? Or maybe they are worse than a coin flip. That wouldn’t shock me. They would be selling narratives, not data.

      I do know that I was working in high tech during the dot-com bubble, and I knew it was going to explode. I was working (as head of IT) in real estate during the housing bubble, and I knew it was going to explode. Now maybe it is just that I am a pessimist. But I think it is more than that. I don’t think these events come as a shock to those in the middle of it. It’s just the power elite and the professional cheerleaders who can’t see reality.

      • Someone needs to write a thick heavy tome on the Tulip Mania so we can throw it those people who assume the bubbles cannot burst.

        • What I noticed about the people higher up (the millionaires) was that they just wanted to keep it going as long as possible. I think they too knew. Of course, they know they have little to fear. They’re already rich, after all.

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