Dollars & Nonsense: Correcting the News Media's Top Economic Myths debunks several economic myths that have gained respectability in recent years, and it also provides readers with a deeper understanding and appreciation of the free market system in general.
America's free market system is responsible for our great prosperity and national strength, but news coverage often gives citizens a negative view of our country's basic economic system. In Dollars & Nonsense, ten distinguished economists clearly and concisely present the truth about some of the media's most common misrepresentations of economic fact and theory, and show reporters how to do a better job in the future.
Experts such as Milton Friedman, Lawerence Kudlow and Arthur Laffer explain that, contrary to what you may see on television, government spending does not promote economic expansion, economic growth does not fuel inflation, and lower tax rates often create more government revenues.
Mark Twain once quipped to an adversary he was debating: “It’s not what you don’t know that’s so dangerous. It’s the things you think you know that just ain’t so.”
Twain could easily have been talking about the modern-day news media who are responsible for informing the public about economics and finances in America.
It is a strange paradox that while the U.S. economy has performed better than ever during the past two decades, the media’s coverage of the economy is in some ways worse than ever. With the exception of a few outstanding financial reporters, there exists what can only be described as a state of widespread economic illiteracy in journalism today. And all of this at the same time when the quality of financial news should be excellent.
After all, the public’s demand for first-rate economic and financial news and analysis has never been greater, thanks to the burgeoning new investor class of Americans. Twenty years ago, only about one in six American households owned stock. Today more than half do. The real financial wealth of the typical American household has more than doubled in the past 15 years. Business ownership rates, especially among women, have tripled since 1980.
The news media do a respectable job of reporting the hard facts – the Federal Reserve’s interest-rate changes, unemployment reports, and stock market updates. But economic journalism is deficient in explaining and analyzing the how and why of our modern market economy. Perhaps the most pervasive and infuriating fallacy is that good economic news is portrayed as bad news and bad economic news is seen as good news. The public is force-fed this crazy, upside-down storyline virtually every day. We are inundated with nonsensical headlines like the following:
- Economy Creates a Record Number of New Jobs; Report Sends Jitters Through Wall Street
- Wages Rise; Economists Warn of a Rekindling of Inflation
- Consumer Spending Soars; Fed Worries Economy Is Overheating
- Surge in the Dollar Has Economists Nervous About Trade Deficit
- Fall in the Dollar Welcome Sign that Torrid Economy Is Slowing Down
- Slowdown in Manufacturing May Allow Fed to Keep Interest Rates Low
- New Home Sales Fall to Lowest Level in Five Years; Relieved Analysts See Soft Landing for Economy
- Tax Cuts Could Do More Harm Than Good for U.S. Economy
The public reacts to such “news” by scratching their heads in total bafflement, as well it should. None of the above headlines makes any sense whatsoever. For the past 15
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