The Media’s Top 10 Economic Myths of 2007

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10. Airlines are solely to blame for the unfriendly skies.
Media myth: Blame the airlines for all those flight delays; never mind the obsolete government-run agency creating the gridlock.

     “Do you fly to San Francisco by any chance?” the host of NBC’s “Today” show asked Northwest’s Douglas Steenland on the August 15 program. “OK, I have to go out there, are you going to promise me, guarantee me, that if I buy a ticket at the end of August you won’t cancel that flight?”

      Vieira phrased the outrageous question as though it were Steenland’s fault that a high number of flights had been cancelled earlier in the summer.

      Charles Gibson blasted companies’ bottom line on September 17: “And new airline industry numbers out today show that while millions of passengers suffer through record delays, cancellations and lost baggage – airline profits have been soaring,” said the ABC “World News” anchor. Never mind that some airlines had barely made it out of bankruptcy protection and were finally turning a profit.

     Truth: The Boyd Group, an aviation consulting company that has been quoted by The Wall Street Journal, BusinessWeek and other media, faults the government-run FAA and ATC system for flight delays in particular. 

     “The main cause of delays is the decades-long inability of the FAA to construct an ATC system that meets the demands of the air transportation system. The ATC system is not a static set-piece to which we must adjust our aviation system. Instead, it is a vital part of our infrastructure which the FAA has repeatedly failed to keep updated,” states the Boyd Group Web site.

     The Boyd Group continued: “The FAA has consistently wasted billions over the past 25 years, often on programs that only get so far and are then cancelled.” 

      Wired magazine also acknowledged serious flaws with the outdated ATC in October saying, “Built on World War II technology, the system is showing its age. Planes move quickly, and radar takes anywhere from three to 12 seconds to accurately read a position.”

9. Consumer spending is the be-all, end-all of the economy.
Media myth: Without excessive consumer spending – especially at Christmastime – the U.S. economy will collapse.

     On November 6, Erin Burnett of CNBC was concerned about gas prices impacting retail sales this Christmas: “Consumers like us account for two-thirds of the economy, and if we don’t spend all of our money at the department stores and Target and Wal-Mart this shopping season, we could have a recession. So gas prices are a crucial part of that,” Burnett said on NBC’s “Today.”

     Just a couple weeks later, Burnett warned that “if consumers really start to pull back, that is what will turn us from the r-word of resilience to the r-word of recession,” on November 26 “NBC Nightly News.” Now reporters have even invented the term “consumer recession” and have warned about that too.

     But it wasn’t just Burnett. It was ABC’s Dan Harris, Chris Cuomo and others. 

     Truth: Holiday spending wasn’t as ho-hum as journalists had worried. Despite predictions of a “gray Friday,” Black Friday and Saturday sales combined saw a 7.2-percent sales increase, rising to $16.4 billion. 

     But what happens if we don’t “spend all of our money,” as Burnett warned?

     According to Kling, “The idea that the economy needs consumer profligacy is not nearly as entrenched among scholars as it is among journalists, politicians, and other citizens. In fact, there is a strong case to be made that we would be better off if we had less consumer spending and more saving.” 

     As for a “consumer recession,” Dr. Gary Wolfram, a Hillsdale College professor of economics, tackled that question.  

     “I suspect what they mean is that the economy will slow because consumers stop buying,” Wolfram told BMI. “But if they stop buying, then they must be saving. And the bears have been complaining that consumers are in too much debt, so they should be happy that consumers are reducing their debt.”  

     And if money not spent on Christmas, for example, were put in banks – that’s good for the economy, too.  

8. The stock market is trouble, whether it goes up or down.
Media myth: One day the stock market can’t sustain growth; the next, we’re just one drop away from another crash.

     Around the 20^th anniversary of the Black Monday stock market crash, a nosedive that cost investors 22.6 percent in one day, reporters were warning “it could” happen again. 

     After explaining some reasons why a crash was unlikely, Barron’s Andrew Bary wrote, “Despite all this, a decline of 1987 proportions, while unlikely isn’t impossible.” Bary then made the case for a huge stock decline, even saying “the optimists’ case has some big flaws.” 

     CBS’s Alexis Christoforous worried that such a crash could happen again based on comparisons between 1987 and 2007. 

     “[Black Monday] was made worse by computer program trading, but the things that triggered it were overvalued stocks, a weak dollar, a period of extreme market volatility and a summer of worrying economic news. Sound familiar? Some market strategists are warning investors now to strap in,” said Christoforous on October 14. 

     Susan McGinnis complained on “Early Show” about a 100 point-drop in the Dow on October 15, but without mentioning the record high for the Dow on October 11 and record close of 14,164 on October 9. Meredith Vieira on NBC and Chris Cuomo on ABC both worried about a crash in September as the market saw ups and downs. 

     Ironically, the same downbeat view about the stock market surfaced as the market was climbing to record highs. 

     “Even as investors are making money in the market, Anthony Mason reports there are concerns tonight about the rest of the U.S. economy,” complained “CBS Evening News” anchor Katie Couric on the day the Dow closed above 13,000 for the very first time. 

     Truth: According to the October 15 Wall Street Journal, a stock market crash is unlikely and investors “see stocks continuing their rebound.” 

      Unlike some in the media, “Hardly anyone is thinking about” the crash of 1987, according to Phil Roth (quoted by The Wall Street Journal on October 15). Roth is a chief technical market analyst at the brokerage firm Miller Tabak. 

     That Wall Street Journal article by E. S. Browning also disagreed with the “Evening News” assertion that stocks are “overvalued.” 

     “Stocks don’t look as overpriced today as they did in 1987. Today, the companies in the Standard & Poor's 500-stock index trade only a little above the historical average of 16 times profits for the past 12 months. In 1987, the S&P 500 was at more than 20 times profits.” 

In contrast to many other reports, CNN’s Ali Velshi was optimistic about the stock market – because of the facts – on “American Morning” December 10. 

7. Anyone who ‘denies’ global warming shouldn’t be taken seriously.
Media myth: Global warming could cause a ‘century of fires,’ just as it has created allergies and ended winter fashion. If we don’t do something now (i.e. spend hundreds of billions of dollars), it’s only going to get worse.

     CNN exploited a national tragedy on October 23 by finding a way to blame global warming for wildfires, then went on to suggest even more fires due to climate change. 

     "Climatologists say, while we can't blame on fire on climate change, we can say that these factors are combining in that area [Southern California] to set up what could be a century of fires just like what we're seeing now," said Tom Foreman during “Anderson Cooper 360: In the Line of Fire.” 

     NBC’s Dr. Nancy Snyderman suggested on October 25 that “Even global warming may play a role” in food allergies. And Marie Claire magazine stretched even further in its October issue. The magazine called for global cooling “so we get a chance to wear winter’s hot new coats.” The 14-page segment on “hot” winter coats was more media activism against global warming and even included a staged protest photograph. 

     In 2007, comparisons between global warming skeptics and holocaust deniers went mainstream. ABC’s “20/20” did it and so did CBS’s Scott Pelley. 

     Pelley responded to criticism of not including global warming skeptics in his reporting by saying, “If I do an interview with [Holocaust survivor] Elie Wiesel, am I required as a journalist to find a Holocaust denier?”  

     Newsweek magazine took the “denier” comparison in another direction, comparing them to moon-landing deniers on August 13. When asked if journalists should be more interpretive or analytical in their climate change reporting, Newsweek editor Sharon Begley said, “It depends …When you cover the history of the space program, you don't quote the percentage of Americans who think the moon landings took place on a stage in Arizona.” 

     A number of journalists supported activism over objectivity on the climate change issue, including Editor & Publisher columnist Steve Outing. 

     “I’ve also been thinking about the newspaper industry and global warming. And frankly, I don't think newspapers are doing enough,” Outing wrote. “Indeed, newspapers’ fabled commitment to ‘objectivity’ has been a detriment to efforts to combat global warming.”  

     Truth: Dissent against the “consensus” on global warming gets the cold shoulder from the media, but there is disagreement.

     "Neither can be attributed to climate change," said the UC Merced professor.

     When it comes to warming stories, the media typically downplayed extremes: No offense, “No Impact Man,” but we won’t be going without toilet paper for a year. Journalists also shied away from complaining about the huge costs of taking action.

     Variations on global warming legislation have been proposed, none of them cheap. The Lieberman-Warner bill could cost $4 trillion to $6 trillion over the next 40 years – or roughly $500 for every American man, woman and child every year.

2007 was also the year of “carbon neutrality.” Even the Oscars claimed to be carbon-neutral and gave away carbon credits as swag. But the truth according to some experts is that carbon credits do no more to limit CO2 emissions than your salad lowers the calories from your double cheeseburger, fries and milkshake. 

     Jutta Kill of the Forests and the European Union Resource Network (FERN) said carbon offsetting does not reduce emissions and the public is being seriously misled. Kill and several other environmentalists explained that offset payments often go to tree planting and other projects, but “they are not actually neutralising their impact on the global environment.” The system is harmful, they said, because people believe action is being taken to reduce greenhouse gas emissions when they buy offsets.

     Former Federal Reserve Chairman Alan Greenspan warned about the cost of another carbon scheme – carbon caps – in his book, “The Age of Turbulence”:

      “There is not effective way to meaningfully reduce emissions without negatively impacting a large part of the economy. Net, it is a tax. If the cap is low enough to make a meaningful inroad into CO₂ emissions, permits will become expensive and large numbers of companies will experience cost increases that make them less competitive. Jobs will be lost and real incomes of workers constrained,” wrote Greenspan. 

     Meanwhile, Time magazine declared the “case closed on global warming” on February 19. But the March 5 “Hannity & Colmes” scrolled a list of more than 70 scientists who “indeed do question” global warming.

6. You’d better not eat/drink that!
Media myth: Forget the right to eat as you please; the nanny-state knows better.

     “Today” warned about the dangers of grilling just before Memorial Day weekend. “We can’t broil and grill anymore?” replied “Today” co-host Ann Curry on April 5 after a nutritionist said grilling is dangerous. She was talking to Joy Bauer, who said people need to avoid salty foods, grilling, frying and whole milk dairy products. 

     Thus far in December, no warning about the dangers of Christmas cookies. 

      Journalists constantly attack the foods Americans eat and the companies that make them – Oscar Mayer, Tyson, Spence & Co. Ltd. and others. Reporters hype food dangers, complaining about the obesity “epidemic” and bringing on “consumer” experts who try to scare viewers from eating just about everything. They also rarely include any comments from the very companies or industries they attack, or even from health experts with a different view. 

      According to the media, red meat “that’s an issue, isn’t it, for cancer.” Barbequed chicken is a no-no thanks to fat and calories. 

     Instead of serving up balance on food issues, the media served a heaping order of pro-regulation stories, attacking caffeinated energy drinks and casual dining chains like Ruby Tuesday and UNO Chicago Grill but praising bottled water bans because of the environmental impact. 

     Truth: Moderation is the answer and personal choice is better than government intervention. A pro-regulation slant came as no surprise from the same media that constantly repeat claims from the left-wing Center for Science in the Public Interest. 

Whelan, who is also the president of the American Council on Science and Health, wrote an open letter to CSPI in 1992 pointing out flaws in the group’s methods and claims and a general lack of common sense. 

     “There are no good or bad foods, only good or bad diets,” Whelan wrote as a response to CSPI’s “10 Foods You Should NEVER Eat.” 

     “The word ‘moderation’ does not seem to be part of this movement’s vocabulary,” concluded Whelan. It may not exist in the media’s vocabulary either.

      Occasionally the media quoted a dissenter, such as Onkar Ghate of the Ayn Rand Institute. Ghate told “CBS Evening News,” “I don’t think the government should ever be in the position of a parent, in effect, and telling people, ‘You’re eating too many hamburgers. Stop doing that. Eat more vegetables,’” on November 7.

5. Most Americans are losing their homes.
Media myth: Americans everywhere are losing their homes to foreclosure, and the housing bust is going to ruin the economy.

     Heart-tugging victim stories highlighted housing coverage, showing those facing foreclosure as everyman. CNN talked to one homeowner in December who said he did not know he had an adjustable-rate mortgage. Anchor John Roberts asked the man whether he thought President Bush’s plan to freeze “teaser” rates was “fair.” Naturally the homeowner, who was already three months behind in his payments, didn’t think so – because the rate freeze didn’t apply to him.  

     Foreclosure seemed imminent for much of America, as reporters continually proclaimed “record-high foreclosures.”  

     “Listen to this number on mortgage foreclosures in this country,” said NBC “Nightly News” anchor Brian Williams on August 23. “They’re up 93 percent nationwide last month from the same period last year. This situation is dire. It’s creating a lot of anxiety about how that’s going to affect a great many homeowners and the economy as a whole.” 

     Truth: The foreclosure figures most stories used came from RealtyTrac, a source that counts each filing in the foreclosure process. One house has to go through several steps in the process, so counting each one as a separate foreclosure is inaccurate. Rick Sharga, the organization’s president, said it is misleading to call the number total foreclosures – which is what the media kept doing.  

     In the case of the Brian Williams report above, “It was a 93-percent increase of total foreclosure activity, and when I see the headline foreclosures up 93 percent, I cringe just like you do,” Sharga told the Business & Media Institute (emphasis added).  

     Amidst all the talk of housing busts, too, you might be surprised to learn that the national average home price is actually up – way up from seven years ago. 

4. “Going Green” is good for America and business.
Media myth: Businesses are much better off if they go green, and that’s what people really want anyway.

     The media have created all sorts of lists of things for individuals to do, from Time magazine’s “51 Things You Can Do to Make a Difference” for the planet to Marie Claire’s judging of carbon “sins.”  

     But businesses are also under media pressure to take big steps in the name of the environment. Just read what Time magazine had to say on June 7: “The business case for going green is increasingly clear, even without Al Gore droning on and on and on about it: where green goes, so does the bottom line.” When companies go green, the media tend to follow with positive coverage. But journalists often ignore the higher cost of “eco-friendly” choices. 

     Truth: BusinessWeek deserves credit for revealing the “Little Green Lies” corporate sustainability advocates have been telling. Its profile of environmentalist Auden Schendler showed the futility of his quest to “green” his company. Contrary to what Schendler once thought, and what the media say, “many major initiatives simply aren’t money-savers. They come with daunting price tags that undercut the conviction that environmental salvation can be had on the cheap,” wrote BusinessWeek.  

     Schendler discovered the purchase of “renewable energy credits,” a source of many companies’ green boasting, was a hollow claim. Though his company said it “offset 100 percent of its electricity use” through the credits, he found he had been deceived.  

     Other businesses have made green promises, only to see red problems result. According to BusinessWeek, in 2003 FedEx announced plans to begin using 3,000 clean-burning hybrid trucks a year and even won a prize in 2004 from the Environmental Protection Agency. 

3. Lenders are responsible for everyone’s debts.
Media myth: Drowning in red ink isn’t your fault; blame the guy who loaned you the money.

     ABC “World News” anchor Charles Gibson teased a story about foreclosures on March 26 saying, “The Home Wreckers. Locking families out of the American dream by offering mortgages too good to be true.” 

     A Business & Media Institute and Culture and Media Institute analysis of evening news programs on ABC, CBS and NBC found that between Nov. 28, 2006, and Aug. 31, 2007, businesses were blamed for borrowers’ debt six times as often as the borrowers themselves. The study also found that 62 percent of stories ignored the consumer’s responsibility and portrayed borrowers as victims. 

     Victims presented by the media included a North Carolina family struggling to make the mortgage payment who “lived off peanut butter and jelly,” a college student who was charged fees by the bank for overdrawing her account, and a Miami condo flipper. 

     “They’re some of the most spectacular views in Miami, but those storm clouds over this city’s condo market are now symbolic of gloomy values,” said Kerry Sanders on the July 26 “Nightly News.” “In some buildings half the units were purchased by investors. Natalie and David Luongo got caught up in the hysteria. In eight months, they pocketed $130,000 flipping an unbuilt condo. But now they’re stuck, three other condos, a quarter million dollars down, closing set for the end of the month.” 

     Talking about her “misfortune,” the featured condo flipper Natalie Luongo said: “It’s very hard to deal with. I mean it’s literally my whole life savings, and it’s going to be now living paycheck to paycheck.” 

      “You ought to kind of have a clue in your own life. If you’re behind in your bills, you have no money, your income is not great, you’re probably not getting the best mortgage,” Ramsey said on the April 3 “Early Show.”  

2. Free health care would be great!
Media myth: To save our children and the 47 million uninsured Americans, and to keep up with the rest of the world, we must have government-run health care.

     “There’s something different about this Michael Moore movie,” said ABC’s Terry Moran on the June 13 “Nightline.” “For all the laughs, it’s very serious and laced with qualities not usually associated with his films: pity, compassion, generosity, sorrow.” Journalists considered government health care the compassionate, generous choice, overlooking the massive taxpayer-funded cost behind it.  

     And where there’s compassion, there are children. The media assumption seemed to be when the story’s got children, who needs facts? In the midst of all the concerned parents and cute kids pulling wagons of petitions, the media missed out on the crucial problem of enough tax increases to fund a $35-billion expansion of the State Children’s Health Insurance Program (SCHIP).

     Not only did journalists downplay the initial tax increase, but they failed to realize the legislation was “a budget sleight-of-hand,” as The Wall Street Journal explained September 28. “Known as a ‘funding cliff,’ the yearly Schip layout increases to $13.9 billion in 2011, then abruptly cuts spending by 65% below current funding levels. This helps ‘score’ the bill as costing only $35 billion over the five-year budget window, but it also means that come 2012 Congress will either have to pass new spending or kick kids off the rolls.”  

     Coverage of any health care policy was boosted with the figure of “47 million uninsured Americans.” But the Business & Media Institute dug into that number and found several sources debunking it.  

     Truth: Politicians and journalists alike have touted health care plans based on the assumption of “47 million uninsured Americans.” That number is off by 10 million at a minimum. There are millions who should be excluded from an accurate total, including: those who aren’t American citizens; people who can afford their own insurance but don’t purchase it; and people who already qualify for government coverage but haven’t signed up.

     Accounting for all those factors, one prominent study places the total for the long-term uninsured as low as 8.2 million – a very different reality than the media and national health care advocates claim.

     In addition to faulty numbers, health care coverage suffered from a lack of numbers when it came to costs. The type of health care Clinton and Moore were pushing for is hardly “free.” USA Today’s Richard Wolf provided some refreshing honesty in his June 22 piece, reporting the drastic difference in tax rates for countries that provide “free” health care.

     “In France and Britain, the tax burden is 42% and 27% respectively, as opposed to 12% in the USA, according to the Organization for Economic Cooperation and Development,” he wrote. Wolf also noted Moore’s exclusion of insurance industry and U.S. health care representatives from his film and said “‘Sicko’ uses omission, exaggeration and cinematic sleight of hand to make its points.”

1. The U.S. Economy is in recession.
Media myth: The U.S. economy is nearly in, or is in, a recession.

     They turned to several “economic indicators” to evaluate the economy’s health. In addition to sweater sales, which was an early call from “Good Morning America,” they used other sophisticated measures like Starbucks coffee and mobile homes.

     “Starbucks is also an economic indicator, and the news on that front isn’t all good,” said anchor Brian Williams on the November 16 “NBC Nightly News.”

     Trish Regan worried that consumers were feeling the pinch of gas prices and other expenses and cutting back. However, later she included the facts that Starbucks had raised its prices, while Dunkin’ Donuts offered cheaper lattes.

     In years past, it’s been oil prices, hurricanes, global warming and terrorism that were supposed to plunge the U.S. economy into recession. Instead, the economy has been robust, and unemployment has stayed low – currently just 4.7 percent. That hasn’t stopped journalists from mentioning “recession” more than 100 times since the 2003 recovery began.  

     Truth: The U.S. economy is NOT in a recession and has experienced strong growth.

     Instead, the economy has had 51 consecutive months of job growth. The third quarter of 2007 was revised upward to 4.9 percent GDP growth – very strong indeed. Yet the media have remained negative throughout four straight years of job growth.  

     And the economy has weathered oil prices. On the June 12, 2004, “CBS Evening News,” Tony Guida reported a dire prediction. “Some oil analysts see economic disaster if oil hangs around $40 a barrel,” Guida said. Oil as of early December 2007 was in the high $80s after rising above $90 per barrel, and still no recession.  

     Add to all that an increase in workers’ earnings, documented by Rea Hederman and James Sherk of The Heritage Foundation.  

     “The economy created 94,000 jobs in November, and the unemployment rate remained unchanged from October at 4.7 percent,” Hederman and Sherk wrote. “Wages grew at their sharpest rate since the middle of the summer, which will fatten the wallets of workers during the Christmas shopping season. The economy faces real challenges, but the evidence so far refutes the notion that it is sliding into a recession.”