Newswatch by Madan Sabnavis: In media showbiz, real figures take a backseat

21 Dec,2011

By Madan Sabnavis

 

Media is not unlike showbiz. Everybody wants to be a part of the action and the media is the vehicle to fame. Given the intense competition, it is but natural that every newspaper wants to be one up and every television channel would like to be the first to flash breaking news. Suddenly, even a standard release from the government becomes breaking news for the first channel that flashes the story. From politics to economics, it is the same story.

 

The economic travails that we are facing today have grabbed headlines as well as eyeballs, thanks to the media, which is a powerful tool for conveying an idea, as we have witnessed in 2011.

 

The media’s main focus has been on the policymakers and critics, which added zing to otherwise insipid developments. It is not thatIndiais crawling this year. Growth is reasonable, inflation is high, though not unusual as we have had such patterns in the past and the entire hullabaloo on exchange rate is again not really happening for the first time. But all this has come to the fore due to incessant media attention, and in a way, has gotten exaggerated. How fair has this exposure been?

 

The interesting fact here has been the prevalence of the same basic laws of economics – demand and supply of such views in the media industry. TV channels have hours dedicated to business and economy. As every economic indicator is supposed to affect the stock market, it merits fixed hours of discussion. There are time spaces to fill in with views which get in the big names. This has led to constant interactions with government officials, policy makers, bureaucrats, ex-bureaucrats, economists, CEOs, CFOs, journalists, academicians, journalists, and so on.

 

More importantly everybody wants the top names in the field, though the rather amusing outcome is that we have the same set of 10-20 experts in each of the fields who circulate the same, standard views.

 

There is, in a way, nothing really wrong here, but there may have been a tendency to over-react at times as we have started viewing every economic detail on a realtime basis.

 

Today, economic data in India comes with lags. There is a two-week lag for wholesale prices, a month for exports, consumer prices and industrial data. The lag becomes almost a quarter for GDP numbers. To top it all, there are revisions which can be quite horrendous, since the experts look like having contradicted themselves as they comment based on the information provided at that particular point of time. Now the broader question is whether we should believe such data.

 

Why do we want to minutely dissect such high frequency data when we know that there will be changes subsequently? This is important because all such data and interpretations invariably affect stock market and investment decisions. If all experts say that interest rates will rise, then individuals will shift to bank deposits, just like how mutual funds may become attractive in case the majority view is that the economy is on track and booming.

 

With a tendency for over-exposure and the willingness or over-enthusiasm of experts to come online, there may have been a situation of overstating cases. Generally speaking, theory will say that economies do not function in one week or month, but on a cumulative basis during a year. This being the case, in the past we have been looking only at cumulative numbers.

 

But today if one channel looks at month-over-month numbers, all have to do it to stay in the race. This means forcing the speakers to comment or give their forecasts which they have to do once they are on the phone or on camera.

 

This has led to a proliferation in the numbers being given on each and every economic indicator by the same person in a short span of time, say one month. When queried on reactions to a dismal number, which is actually a tautological question, the answer has to be that the person is dismayed or surprised or shocked or concerned. But actually, they may not really know why the number turned out to be abysmal.

 

The official stance always talks of recoveries in the rest of the year while the corporates will always paint a doomsday picture when interest rates have risen. This, in turn, can drive an opinion.

 

Things have hence been magnified throughout the media on account of relatively higher frequency of economic releases which still are subject to revisions.

 

Unfortunately there has been a tendency for single numbers to be blown up and the complete picture obfuscated to drive home a point. We have not really had any novel solutions offered in this plethora of debates.

 

Let us see some of them: We need to have reforms. But did we not have a good economic picture without these reforms in the past? We need to lower interest rates to help industry. Is industry the only sector driving the economy and is this the only constituency that matters? We should stop predatory competition fromChinawhich affects us. But if the product is an import going into your product, would the stance be the same? There is policy paralysis. But this cannot be a solution when the world is going through a slowdown and everyone has to adjust.

 

Surprisingly, we do not hear western critics saying that there is policy paralysis in the Eurozone which is holding back growth – there as it is understood that all crisis situations take time to resolve as there are various constituencies involved.

 

How then does one evaluate the performance of the media in bringing to the fore the economic crisis that we are living with? There is a plethora of views, with few interpretations. The viewer or reader has to make a choice and often times, by virtue of selection of the commentators or experts, ends up getting confused.

 

As the media invariably represents a single view in a market economy, it has helped to bring to the fore the issues, though admittedly, government action is based on a larger public concerns and hence has remained susceptible to media bashing.

 

We have not really had workable solutions coming forth in these discussions. But, nonetheless it has helped to stoke a lot of debate and create awareness of issues which hitherto would have been confined to only a certain section of people. To this extent, it is a job well done. What about the experts who keep giving their views relentlessly on the same lines? To quote Oscar Wilde, to be in it is merely a bore. But to be out of it is simply a tragedy. It’s showbiz after all.

 

Madan Sabnavis is Chief Economist, CARE Ratings. The views expressed are personal.

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