Posts Tagged ‘newspapers’

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Short-Fuses  Embedded Journalists

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This week, we taught The Great Gatsby and the so-called Great Gatsby curve in our course, A Tale of Two Depressions.

The next day, Raj Chetty et al. went public with their own study of income mobility. The corresponding newspaper headline was “Upward Mobility Has Not Declined.”

And that was a bit of a surprise, since the original Great Gatsby curve studies had found a positive relationship (across countries) between income inequality and income immobility. Clearly, inequality has increased in the United States since the mid-1980s but income mobility hasn’t much changed.

For example, the probability that a child reaches the top fifth of the income distribution given parents in the bottom fifth of the income distribution is 8.4% for children born in 1971, compared with 9.0% for those born in 1986. Children born to the highest-income families in 1984 were 74.5 percentage points more likely to attend college than those from the lowest-income families. The corresponding gap for children born in 1993 is 69.2 percentage points, suggesting that if anything intergenerational mobility may have increased slightly in recent cohorts.

However, what the study does reveal—which is missing from the headline accounts of the study—is that (a) income inequality did in fact increase over time in the sample (which means the consequences of the “birth lottery” are larger today than in the past) and (b) the major source of inequality over the course of the past three decades is the growing gap between the top 1 percent and everyone else (which is not, in fact, correlated with intergenerational immobility among quintiles).

And so, unless and until things change, we remain pretty much where F. Scott Fitzgerald left us back in 1925: falling further and further behind the “careless people,” who

smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made. . . .

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David Cay Johnston notes that all the major networks and newspapers, including the New York Times, failed to report the fact that, according to the Bureau of Labor Statistics, wages fell at the fastest rate ever recorded during the first quarter of this year.

My former employer, The New York Times, not only failed to report this awful news affecting the vast majority of Americans who work, but gave a misleading account in both a news report and a blog post:

Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department.

That is true, by the way. Misleading and incomplete, but true. It is also in line with that paper’s tradition of focusing readers on any silver lining in an economic storm.

What the Times reports matters a great deal, as every other news organization turns to it first because of its unmatched resources and talent. But that also means that when that newspaper misses, or muffs, a story, so does everyone else.

That’s why they missed the fact that the labor share (technically, the share of income going to labor in nonfinancial corporations) continues its downward spiral since the crash of 2007-08.

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And why they also missed the fact that the labor share remains (after a slight uptick) lower than at any point since 1947.

As Johnston explains,

Today’s news organizations focus much more on investors than workers or consumers. They tend to view banking through the eyes of the few who invest in banks rather than the vastly larger audience who have bank accounts. But then mutual funds and banks buy ads and the investors in them tend to have high incomes, which in turn helps them afford the $25 to $65 monthly cost of newspaper home delivery.

For TV and radio, advertisers also want younger people in the top half — and preferably top quarter — of the income distribution, not the half of workers making less than $518 a week.

Concern about falling wages is also influenced by the heavily marketed idea that we need lower pay to have a strong economy. That may explain why falling wages have been reported as news by Drudge, the website of Fox, the libertarian California newspaper The Orange County Register and the like.

Higher minimum wages, the corporate economists and right-wing news organizations say, destroy jobs. The Chicago School sect of neoclassical economics, which dominates in America, teaches that as dogma.

And mainstream networks and newspapers are doing absolutely nothing to counter that dogma.