Month: February 2008

Misquoted or badly edited?

John Quiggin18 Comments

As anyone who’s dealt with the mainstream media knows, any time you’re directly involved in a story, you’re likely to see that it’s been misreported.

I was interviewed recently about the economic problems facing the new government and said, several times, that we would be better off if both parties had not committed themselves to large tax cuts on the basis of optimistic projections but that, having made the commitment, the Rudd government should honour it. This is how it came out in the news.com story

Some economists believe the promised $31 billion tax cuts should be abandoned.

“The country would be much better if we hadn’t had these tax-cut promises from both sides in the election campaign,” University of Queensland professor John Quiggin said.

“It was irresponsible to promise such large tax cuts where the fiscal situation needed more flexibility than that allowed.”

But Mr Swan insisted the tax cuts would be delivered.

You could argue that the report is accurate. Some economists do believe the tax cuts should be abandoned and I did make the remarks quoted. Perhaps the reporter submitted a story in which these two facts weren’t run together as they have been here, and it was cut in a way that produced this misleading impression. Or maybe the original report was wrong.

Either way, it confirms negative impressions about the mainstream media. Of course, bloggers make plenty of mistakes too, but it would be nice to think the professionals could do better.

Update I got a phone call this morning from news.com.au and I’m happy to say the story has been rewritten with my views reported correctly. Blogging gets results!

The Great Australian Dream

John Quiggin42 Comments

I’ve been meaning for ages to write a post about house prices, but haven’t come up with an analysis that satisfies me. Still, here goes.

On most standard measures. Australian house prices have been far above their long-run equilibrium value for at least five years, and the gap seems to be widening. But the length of the strength of the boom has convinced most people that high prices are here to stay, at least until they are replaced by even higher prices.

If this belief were suddenly reversed, and the prices returned to say, 2000 levels (even adjusted for changes in prices and incomes since then) there would be an awful lot of financial distress, with hundreds of thousands of households having negative equity.

This is already happening in the US and to some extent the UK. Compared to the US we have nothing like the volume of bogus subprime loans. On the other hand, price increases have been even greater, so there’s more room to fall.

If there is a really dire economic scenario facing the Rudd government over the next few years, this is it. By contrast, a slowdown in the export boom and a gradual deflation of the housing bubble would be a much better outcome.

Weekend reflections (Rudd edition)

John Quiggin24 Comments

It’s time once again for weekend reflections. I’d be interested in views on how the Rudd government has performed in its first couple of months. My short answer: Very well, all things considered. Anyway, feel free to write at greater length than for a standard comment thread. As always, civilised discussion and no coarse language.