When Did The Economist Become Comically Stupid?

By James Kwak

I recently got around to looking at my latest issue of The Economist.  Here’s the cover:

If you can’t make it out, that’s a huge Barack Obama, a small Mitt Romney, and the following caption: “Big government or small? America’s great debate.”

Now, how you could draw a contrast between two men who passed structurally identical health care plans—in which government regulation is used to incent people to buy insurance from private companies—baffled me. The caption, if anything, should have been “Small government or tiny?” So I peeked inside, where things get worse.

The premise of the article is that President Obama has made government bigger. But there’s no intelligent way to make this case, because it just isn’t true by any meaningful measure. There’s a chart in the print edition (which I can’t find online) showing government employment as a percentage of total employment and as a percentage of the potential labor force (correcting for the overall business cycle). The former line went up from 2007 to 2010 (hey! big government!), but the latter line has only gone down since 2002. In other words, government employment is declining as a share of the working-age population, a point also made by Catherine Rampell earlier. And this isn’t a recent phenomenon: the government’s civilian workforce, which was around 1 percent of the population from the 1950s until the early 1990s, is now down around 0.7 percent (see the BLS, Current Employment Statistics).

There’s another chart that purports to show growth in “federal regulatory employment.” But simply glancing at the components of the columns shows that the big increases have been in the TSA and, more recently, “Other Homeland Security.” If Mitt Romney wants to differentiate himself from Barack Obama by slashing homeland security staffing, then The Economist has a point—but I doubt it.

Some of these points are made in the body of the article itself (I suspect the writer knows more or less what’s going on, and the more egregious flaws are due to the editors) , but the only logical conclusion of those caveats is that the article should not have been written in the first place, let alone splashed with a silly graphic on the cover. The only thing the article’s author argues is a meaningful increase in the “size” of government is an increase in regulatory policy-making, notably by the EPA, the Affordable Care Act, and the financial regulatory agencies. But the EPA is only more active by comparison to the George W. Bush years, when the agency was under pressure not to do anything; the Affordable Care Act, as mentioned above, is modeled on Romneycare (which we are pretty happy with here in Massachusetts); and who would argue with a straight face that the laissez-faire financial regulation of the pre-crisis years was a good thing?

It is a major problem that many people do not really understand what the federal government does, let alone whether it is growing or shrinking. (Chapter 4 of White House Burning attempts to clear up these questions.) A goofy Photoshop montage portraying President Obama as a booster of big government only reinforces people’s misconceptions.

47 thoughts on “When Did The Economist Become Comically Stupid?

  1. the problem isn’t the size of government but its role in extracting the US from the economic crisis. we need deficit spending now and deficit cutting later. the size of the bureaucracy is not the problem so much as its inability to do what is needed, like today’s overruling of the FNMA proposal to cut the amount people owe on their under-water homes.
    vivian lews

  2. What, no mention of Federal outlays as a percentage of GDP? (Sure, Bush is to blame for 2009. But remind me again what the number is for 2010, 2011, and 2012?)

    How high would it have to be to count as “large” government in your book, Dr. Kwak? 100%?

  3. How many times have we heard the phrase “We shouldn’t have been here in the first place”. That’s right, we shouldn’t have, that’s the truth of it all, now lets pay the consequences.

  4. I too have noticed a proclivity of The Economist to adhere to Washington conventional wisdom in the recent months.

  5. I became convinced the Economist had gone looney tune ever since they tried to sell their magazine on the Kindle at the same price as print editions.

  6. To answer your question: No later than 1993, by my lights. But I’m only 47. It could have been much earlier.

  7. I get a subscription to The Economist through my work, but when it arrives at home it goes straight to the recycling box. I realized a couple of years ago it’s just a cheerleader for ‘free’ trade and neoliberalism with supporting articles written for readers who already believe the market is always right. Don’t bother to look for any stories that question those beliefs.

  8. I also read this article, and I was a little surprised by the degree of the slant–even for the Economist. The article struck me as disingenuous which is unfortunate, especially during an election year.

  9. The line in the graphics “government employment as a percentage of total employment ” shows an increase because there was a decline in the working force between 2007 and 2010. Looks like everybody forget that there is an economic crisis with unemployment (Officially 8 % and actually, from my experience in such statistics, 16 to 24 %). The ratio used in that graphics has to go up if the divider get smaller.

    PS : sorry for my english

  10. Anything trying to go up against a percentage of the GDP is comical, but that was sarcastic I know.

  11. Big government started when Reagan tripled national debt in mere 8 years, a feat that Obama will never accomplish, he is too conservative. This picture makes no sense, everybody knows Romney and Obama are the same, the only thing they differ on is liking/hating gays and white/black skin. Actually they are trying to put eachother in a negative spotlight, because they both have almost the same campaign policies.

  12. Government outlays as a percentage of GDP?? What could you expect with the mess Obama inherited? Economy– in the toilet, lower GDP. People are hurting, out of jobs, and underwater and the banks have us in a death grip. Of course gov’t outlays are up, either that or the people in charge (banks and investing cabals) cash out and rip the country to shreds. It’s a government “bubble” in response the the “housing” bubble. Eventually things should equalize once we stop subsidizing the banks and investment communities, oil companies, and all the other rich folks on the government dole.
    Admittedly, I wish Obama would have stood stronger against the banks but he had no choice based on my understanding of just how much the government is owned by the banks…. And there was no bipartisan congressional support for such measures. Unfortuantely the pathetic reporting and edtorial content of the Economist is just a function of it’s ownership. Look deep enough and you’ll see why.

  13. @Simon Johnson “who would argue with a straight face that the laissez-faire financial regulation of the pre-crisis years was a good thing?”

    But who can argue with a straight face that something like the capital requirements for banks, by which bank regulators, thinking themselves the risk managers of the world, assigned risk-weights which decided how much banks were allowed to leverage their equity when lending to different clients or investing in different securities, can in any way shape or form be defined as laissez-faire.

  14. The Economist has been worthless for years. It doesn’t take long before you realize they NEVER report or break news, just feed off of others’ reporting. Once you know an article’s topic, you know what they’ll say. Turns out most of the people who write and edit the magazine are 25-year old “toffs” out of Oxbridge. Really, The Economist is a high-production-value blog in magazine form.

  15. One part of the Economist is normally beautifully written: the Obituary. I always used to turn to that first before I dumped my subscription for the reason other commentators give.

  16. I think it was Chomsky who said that if you wanted the real skinny on the why-to-fors of policy you should read rags like the Economist or Business Week. Unlike the mainstream press, the elites needed resources that weren’t spewing propaganda to make informed decisions.

    Provided Chomsky wasn’t wrong on that analysis, it is just slightly terrifying that they are now drinking their own cool-aid. Disingenuous leadership based on competent analysis is one thing, but when it becomes an echo chamber of the same flawed analyses as usually intended only for the masses, we should all be afraid.

  17. I can’t remember when exactly but they put a butterfly on the cover and declared that the economy trumped the environment. I stopped reading it at that point.

  18. There has NEVER been BIGGER government than Reagan and the Bush dynasty still in process (Royalty replaces democracy under these). The claim to renounce “Big Government” is nothing more that rhetorical double speak and knee jerk conditioning of a political market media/ideological fallacy.

    The real question is how this is continuously used by the gangsters and sociopaths to take over government and seize power for private vested interest…all the while claiming to be working for liberty and freedom as catch words to a control fraud of unprecedented proportion.

  19. When prosecutions for war crimes and crimes against humanity of Cheney et al did not go forward, that was the end of USA. We are just Global Crime, Inc. now and all the years of high-brow bankster yaddayadda was bound to boil down to “comically stupid”.

    NONE of the conversations people are having among themselves in any way shape or form are similar to any of the propaganda being channel 24/7 – no one uses the sacred words of politics and finance because those repetitive made-up in the matrix words are meaningless drivel.

    All that billionaire $$$$ being given to word smiths to continue to manufacture poverty in the real world – yup, LMAO at the stupidity….not.

  20. I used to subscribe to The Economist for their excellent international coverage and their outside-looking-in coverage of the US. No more. While The Economist, like most well-respected publications, seems to employ plenty of good reporters, their editorship seems determined to get in the way. (Not that I mind an editorship with a view, but when the view is “readers are too stupid to understand this without our messing with the headline and the first three paragraphs,” I take exception.) Much of their reporting in Africa and Asia remains excellent. But anything they publish related to the Anglosphere–or to the industrialized West in general–requires too heavy a dose of skepticism to make for pleasant reading. The gunk that rubs off from the editors’ fingers whenever they touch something just muddles things. It’s not simply that I don’t agree with the editors; I read plenty of stuff with which I disagree; it’s that they’re no longer much help thinking through issues.

  21. Mr. Kwak, do you ever get invited to appear on CNBC? What you said about The Economist magazine here is doubly true for the commentary I hear on CNBC. Yesterday some 30 year old was explaining the sideways move of the markets by saying that in addition to some sort of sign from the larger economy itself, traders and hedge fund managers (one had just said he was returning 2 billion to investors and the commentariat was bemoaning the lack of a free market), but, that, “he (the 30 something guy) wasn’t being political, but the markets were waiting to see how the elections would turn out in the fall” and then everyone started talking about Dodd-Frank and how onerous it was.

    The consensus among all the 4 commenters was that Dodd and Frank had pampered the GSE’s and stuck it to Wall Street. Why can’t we hear a countervailing message to that on our airwaves.? That’s where we need some traction and we need it now to influence the message between now and November.

    I personally think we can blame it all on huge anonymous super pacs, thanks to Citizens United. As a long time student of history the greed and arrogance of Wall Street and corporate executives just continues to leave me gob-smacked.

  22. You have to remember that the Economist is house propaganda magazine to Neoliberalisms-r-us PLC, and therefore simply has to to see all economic and political issues through the same tired, jaded old orthodox lenses that made it so blind to the looming global economic crisis. Thus, democrats=big government, GOP=small; state sector=bad, private sector=good, etc. etc.

  23. The answer to your question is, “It was always pretty bad, but when Bush got elected, it just got awful and unreadable.”

  24. ‘Government outlays as a percentage of GDP?? What could you expect with the mess Obama inherited?’

    Something like the Reagan (who also inherited a mess) years? The economy turned around in pretty good order (some quarters with 7% RGDP growth).

    From a peak of 23.5% of GDP during the 81-82 recession, the Federal Govt. share started to steadily decline (and Reagan was spending 6% of GDP on Defense), and the country prospered. Resulting in a landslide re-election for Reagan in 2004.

    This recession officially ended three years ago. Anyone expecting a landslide for Obama this November?

  25. Totally agree. I saw that yesterday and couldn’t figure out how they could arrive at that comparison. What they should have done was you US Coin of some kind with the busts on either side. That’s kind of my impression of our political choices this time round. Same coin, just different sides.

  26. If The Economist is anything like the standard middling to poor media organ (say, The New York Times or CNN), then it is certainly the editors who are to blame. They know that most people — ‘even’ those reading The Economist — only skim and derive a lot of their takeaway from headlines and images. It was the editors at The Times who kept Judith Miller on, many years after numerous reporters (but, importantly, _not_ Ethan Bronner or Thomas Friedman) had warned she was lying. It was editors like Walter Isaacson, when he was at CNN, who allowed Army psy-ops trolls into the newsroom to masquerade as journalists.

    I’ve heard many journalists express the frustrations of reporting to editors whose interests are aligned with publishers and advertisers. And the editorial comments of The Economist make clear how conservative its editors are. The vast majority of British and American conservatives in the past 30 years (with a few notable exceptions) have demonstrated a remarkable indifference to truth or fact.

  27. I recently dropped my subscription to The Economist. Some years ago they had decent international coverage but now even that is fading. Of course the demise of The Economist is slight compared to Murdock’s destruction of the Wall Street Journal which is looking more like USA Today all the time.

  28. “Big government or small? America’s great debate.”
    A FALLACY OF DISTINCTION ! Mesmerized by cognitive dissonance.
    from Peter Radford August 2, 2012
    “In our case the new technology or set of ideas that undergirds the modern enclosure movement is that of economics. Particularly neoclassical economics. Whether we like it of not modern America is increasingly being re-shaped to conform with the notions of society that form the basis of that theory. Variants of it infest modern business management theory; they underpin the explosion in the share of our economy diverted into finance; they inform the media’s attitude towards policy; they form the basis of common discussion about the economy; and they provide an intellectual backdrop for the dominance of post-Reagan right wing political positions. There has been no effective reaction from the left over the past four decades because its elite too has been captured.

  29. “….they underpin the explosion in the share of our economy diverted into finance….”

    crazy – when it is FIAT $$$ in a fractional reserve scheme, GDP share of the “economy” being diverted from “government” to “finance” means what?

  30. Hey Mr. Kwak,
    When Did The Economist Become Comically Stupid?

    Answer: A long long time ago. At least 2 years.

    I think we had decided a couple summers ago that “Buttonwood” is almost exclusively the only good writer over at The Economist, yes??? I am not 100% sure but rumor has it that “Buttonwood” is in fact Philip Coggan.(The Economist likes their writers to have nicknames because The Economist editors have a Venn diagram that shows there is some heavy crossover between their subscribers and people who are into pro wrestling and watch Sesame Street). My apologies to both “Buttonwood” and Philip Coggan IF this rumor is false. But it seems to have semi-decent sources.

    Moral of the story: Do NOT subscribe to The Economist magazine or pick it up at the newsstand. Go directly to the Buttonwood blog, http://www.economist.com/blogs/buttonwood and wait for other blogs to put up the 1 in 1000 good article, Example here:

  31. Hear, hear for this article. A friend, now a journalist, who used to intern there thought much the same, but reckoned that Philip Coggan, who writes the Buttonwood column, was, or is, the best journalist there and a nice guy too. Having spoken alongside Coggan, he knew his stuff and seemed a decent bloke.

  32. Patrick R. Sullivan:

    Those numbers look great, but how can they be “real” when the cost of producing those numbers was huge deficits and debt? I mean how can anyone claim to have done a good job in any economic sense when if you add up the numbers, the end result is they are in the red?

    Cutting taxes and deficit spending is a great way to create the appearance of real economic progress, but it is all just a giant illusion, with a cost to be paid later on down the road.

  33. What publication hasn’t become comically stupid? Scientific American has turned into popular science, Newsweek and US News and World Report are written for people with third grade reading levels. The country is awash in the comically stupid and the mediocre.

  34. Unfortunately the Reagan years are a poor example of what Obama has had to deal with (whether he’s done well or not). When reagan was president, the 6 largest banks had maybe 20% of the gdp. When obama came into office they were holding 80%. Housing costs in the 10 years leading up to 09 increased by 60% over a normalized level that been nearly static since 1950. No one had even heard of a credit default swap and Glass Steagal Act had been in place since 1933 in addition to other sensible financial regulation measures–a lot of it in response to the great depression, which lasted nearly 10 years. Regulation was in place to protect us from being taken over by the megabanks. Given this huge contrast, it’s a stretch to say anything of note happened in Reagan’s terms compared to the economic firestorm since 2007. His largest concerns ended up as being shot, rectal polyps, and iran-contra. Admitted he dimly embraced the “Efficient Market Hypothesis” and began the dismantling of the government as well as financial regulation, but his largest failures and problems were brought on by his own stupidity and embracing the conservative ‘utopia’– (and didn’t occur during his tenure). He and his fellows said lets try the new dereg ideas on the S&Ls and show everyone how well it works. The results are history and hundreds were arrested and charged for what you could call generally willful financial misconduct and deception. The product of the new deregulation mentality. Why they didn’t recant their position with this, the worst bank failure sinc the 20s, we can’t say. Maybe they thought if they did it again they might get it right. Thus the housing crisis, the huge bank bubble, and a democrat to clean up the mess…again. Reagan saw nothing like was Obama has had to deal with. Nothing.

  35. “What, no mention of Federal outlays as a percentage of GDP?”

    Let’s do more than mention it — let’s look at some actual numbers (all from the most recent BEA data):

    Federal government consumption expenditure as a % of GDP peaked at just over 10% in Q3 1986. It bottomed out at 5.7% in Q4 2000. It was over 7% again by Q3 2007 (before the recession), and 7.9% by Q4 2008 (last quarter of the Bush presidency).

    Following which it peaked at 8.5% in Q3 2010, falling since then to 7.7% in Q2 2012.

    What on earth are people pointing at here? Am I missing something? There has been no massive increase in Federal expenditure. Even if I exclude defense expenditure there is only a modest (and declining) bump up, from 2.25% in Q4 2007 to a peak of 2.84% in Q2 2010 (Porkulus!) falling to 2.58% in Q2 2012.

    – Or is the argument about transfers? Here you can see a very long-term upward trend, punctuated by temporary rises during periods of recession. We just had the worst recession since the 1930s, so it’s no surprise that the jump was substantial: from 12.1% in Q4 2007 to a peak of 15.5% in Q1 2010 (it has since fallen to 14.8%). About one-fourth of that was for unemployment payments, which have since fallen by nearly half from their peak. There was a comparable rise in Social Security transfers, due to a surge in applications for early retirement, and in Medicare/Medicaid payments. None of this can be ascribed to deliberate policy aimed at increasing the size of government.

    So, seriously, what is the claim here? And why doesn’t anyone use actual data to back it up?

  36. The Economist has reduced itself to being just another mouthpiece for the neo-liberal Washington Consensus. Robama vs Obamney is a false choice and the kids at E want to make it look meaningful. Both believe the US can run out of money so they are both pushing a Eurozone style austerity for the foreseeable future, imagining like good neo-libs that if the poor can just be made poor enough investment opportunities will magically arise as demand manifests itself in markets from, where? They do not understand that the Federal “deficit” is a misnomer. The “deficit” would more usefully be thought of as the inventory of dollar denominated wealth held privately or abroad: http://www.forbes.com/sites/johntharvey/2012/07/18/why-you-should-love-government-deficits/

    Because the dollar trade zone now encompasses most of the world, the “leakages” from the circular flow of dollar expenditures are augmented by the needs and anxieties of all our trading partners: http://cobblehillbilly.blogspot.com/2011/06/marginal-propensity-to-hoard.html

    Which in the context of open international trade means the US must run a large structural deficit to accommodate both the savings desires of our trading partners and their currency balance desires which they impose through treasury purchases. The Economist would have you believe that this entire system must be liquidated to “pay off the national debt”.

  37. ‘So, seriously, what is the claim here? And why doesn’t anyone use actual data to back it up?’

    Click to access Third_Way_Report_-_Collision_Course_Why_Democrats_Must_Back_Entitlement_Reform.pdf

    ‘Entitlement costs are consuming an ever-increasing portion of our federal
    dollars. The budget share of major mandatory spending programs—Social
    Security, Medicare, and health care programs for the poor—has more than
    tripled since the 1960s. And an aging population will lead entitlement spending to skyrocket even further—in ten years, Social Security alone will occupy almost one-fourth of our budget.

    ‘The result of this dramatic expansion? Entitlements are squeezing out public investments. In 1962, spending on investments was two and a half times that of entitlements. But today, as a result of this Great Inversion, entitlement spending is three times that of investments.’

  38. @paddy – yup, the pesky boomers are too well educated and you can’t get them to give up Social Security and Medicare to fund perpetual war in the Middle East – go figure.

    That IS what you were talking about when you say “investment”? In USA, more drones, elite Jem Hadar, gleaming new cities in Virginia filled with sociopaths and the best gizmos tracking the not-dead-broke-yet “poor”…?

    From moon-walking to walking on necks and faces – yeah, you’re a GEM of a leader in social engineering through STEALING….

    Why is slamming the Middle Class of USA who MADE THIS COUNTRY THE POWER IT IS below the financial futures and fortunes of sadistic and savage global war/drug/slave lords not MORAL enough for your monkey brain “ism”?

    Seriously – it’s HELL on earth – planet trashed and dying, people deciding how psycho can they become before killing their soul in order to have a “job”, bona-fide paycho predators stalking the GENETICALLY NORMAL to torture and rob them because of some delusion that they deserved to be targeted for revenge-seeking, and we can’t fight back because the predators seeking revenge for god-knows-what are “homeland security”….what’s not going your glorious come-to-jesus way yet, Paddy?

  39. Judging from the employment of our students, the Federal Government has sub-contracted a large amount of federal regulatory employment to consultants, such as Booz-Allen-Hamilton, etc. How large is this sub-contracted federal employment relative to primary agency employment?

  40. http://www.huffingtonpost.com/2012/08/08/mitt-romney-death-squads-bain_n_1710133.html?utm_hp_ref=mostpopular

    Middle Class of USA was slammed down financially, via predatory crap like the hooliganism of Bain, below the future and fortunes of GLOBAL War/Drug/Slave Lords.

    Every Human Being has the right to make their lives less miserable through honest work. But not on Planet Romney….

    And what does Romney “owe” his SandonistaTerrorista inwestors – a couple billion extracted out of Social Security and Medicare?

    USA is gone – elvis left the building when we did not haul the neocons into court for lying to start a war…

    Biggest Welfare Queens on the Planet…TBTF my arse….

  41. I must have read a different article. You say “The premise of the article is that President Obama has made government bigger.” The article I read said that “much of the expansion in government is a direct consequence of the weak economy.” That’s how it explained the labor statistics that trouble you so much. Also, the leader that previewed the piece mentioned the rise in govt spending as a pctg of GDP from 34% in 1980 to over 40% today – guess you missed that. And the leader decried the quality of today’s debate as “comically shallow” – guess you saw enough of that headline to crib from it! Sure, the Economist covers are often silly – but this one made a solid enough point – Obama and the left believe in a bigger role for government than Romney and the right. What’s so hard to understand about that?

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