Posted by: Doug Henwood | January 15, 2012

NPR hack apologizes for Wall Street

For a while, I’ve been thinking about writing a piece on how NPR is more toxic than Fox News. Fox preaches to the choir. NPR, though, confuses and misinforms people who might otherwise know better. Its “liberal” reputation makes palatable a deeply orthodox message for a demographic that could be open to a more critical message.

The full critique will take some time. But a nice warm-up opportunity has just presented itself: a truly wretched piece of apologetic hackery by Adam Davidson, co-founder of NPR’s Planet Money economics reporting team, that appears in today’s New York Times magazine.

In the print edition, the thing is called “A World Without Wall Street.” For some reason, the paper’s web editors decided to call it  “What Does Wall Street Do For You?” Maybe they thought that the question would draw in readers, who might find the declarative title of the print edition an appealing little fantasy and just turn the page.

Davidson concedes, with a mocking tone (that’s part of his straining at cool), that Americans have long hated Wall Street. But he rejects the usual complaints—that financiers are a bunch of bloodsucking parasites who periodically drive the real economy into a ditch—with the disclosure that finance is “a fundamentally beneficial business.” It brings together borrowers and lenders, a task that it does “extremely well”—“most of the time.”

Now I will be the first to argue that critiques of finance that let the “real” sector off the hook are incomplete, and even dangerous. (For more: “How to misunderstand money.”) The world of production can be a very nasty place. Corporations make money by paying workers less than the value of what they produce. They’re constantly maneuvering to cut costs, which means cutting pay, speeding up the line, dumping toxic waste in rivers, and a host of other familiar misdeeds. Like financiers, they’re in business to make money, and they’ll do nothing that doesn’t make money unless they’re forced to. Yes, they often provide useful products in the course of their pursuit of money. But it’s wrong to get carried away in painting them as the Good Guys, by contrast with the moneychanging Bad Guys.

But Davidson’s defense brief is incredibly wrong. I’d say “dishonest,” but I suspect he really doesn’t know better. He’s just picking this stuff out of the air. His points, in turn. Without Wall Street…

…the poor would stay poor. Without credit cards, poor people would have no money to buy stuff. Thanks to Wall Street, now they do—a contrast with benighted other countries, where they don’t. He seems to forget that the borrowers have to pay the money back, and at often usurious interest rates. Borrowing money at 18% or more is a poor substitute for a decent job and a civilized welfare state. Besides, the poor are not as well endowed with credit cards as Davidson seems to think—only 28% of the poorest fifth of the population carries a balance on its credit cards. That’s about half the share of the middle- and upper-middle income brackets. (See: FRB: 2009P SCF, especially the Excel file.)

…there would be no middle class. Davidson once again seems to think that borrowed money is the same as income. There’s no doubt that easy credit over the last 30 years has made class warfare from above more palatable, economically and politically. But neither admirable nor sustainable. Also, Davidson apparently hasn’t read up on the comparative international mobility stats (e.g.,this).  He writes: “One of the most striking facts of life in countries without a modern financial system is the near total absence of upward mobility.” In fact, the U.S. has a middling-to-poor standing on mobility in the international league tables. A country like Germany, where consumer finance is relatively underdeveloped, is more mobile than the U.S. The Nordic social democracies show the most mobility of all. Oh, and student debt, now breaking the trillion dollar mark? Nothing to worry about, says Davidson: it’s “largely changed America for the better.” Actually, the rising price of higher ed is making it harder all the time for the working class to go to college. Watching millions graduate with five figures of debt into a miserable job market doesn’t evoke a better America. College should be free.

…lots of awesome things would never happen. Wall Street, because it loves risk and innovation,  is responsible for all sorts of wondrous novelties, like lifesaving drugs and artisanal goat cheeses. In fact, financiers long been shy about funding risky ventures. Henry Ford couldn’t get a dime out of them when he was revolutionizing auto production. Financiers weren’t at all interested in computers from the late 1940s through the mid-1960s—the Pentagon and Census Bureau funded the industry in its early stages. Ditto the Internet, which was initially a project of the military. Basic pharmaceutical research is funded by the National Institutes of Health. Wall Street is more interested in things that have been proven. And I doubt that Goldman Sachs has much to do with funding artisanal cheese production, though its employees probably buy a lot of the stuff.

And how does Wall Street do all this? By matching investors and borrowers, of course. In fact, most corporate investment is funded internally, through profits. Very little comes from the stock market. Venture capitalists are crucial to funding startup firms, for sure, but VC is actually a relative speck on the financial landscape. Trading in existing assets, the bulk of what Wall Street does, has almost nothing to do with real activity.

But Davidson concludes with an absolution: it’s still ok to hate Wall Street. They did lots of reckless stuff during the bubble and then got bailed out. But that’s ok, really, we had no choice. And there’s not much we can do to prevent problems in the future: “regulation—no matter how well intended—cannot be trusted to rein in Wall Street.” So the real reason to hate Wall Street is that they’re indispensable.

No wonder NPR’s list of corporate sponsors takes up four pages of its Annual Report.


Responses

  1. The “full critique” has been done: Manufacturing Consent. The slop that passes for economics reporting at NPR (Dean Baker provided a fine takedown of a Morning Edition piece on PE firms on Friday) fits exactly Chomsky and Herman’s propaganda model. Chomsky often describes them as having more doctrinal constraints than any other news outlet, and while their general reporting indeed reeks of establishment/status-quo liberalism, they are truly heinous on economic matters. It makes perfect sense: give the appearance of “thus far, and no further” on all matters of identity politics, save class, where you then drive the nail home that there are no antagonisms.

  2. On a parallel note, I recently heard an NPR story exposing alleged horrors of daily life in Iran that reminded me of the ways liberal outrage was stoked re: Afghanistan and Iraq before the wars there. The content of the story might’ve been fairly objective for all I know, but the fact of how it was constructed and timed and placed seemed to me like a barely disguised part of the drumbeat towards war, very much intended to convince NPR’s demographic that “something has to be done” about Iran. Because of its relatively better range of coverage on many issues, when it serves a propagandistic function it is all the more insidious.

  3. Doug writes, “Corporations make money by paying workers less than the value of what they produce. They’re constantly maneuvering to cut costs, which means cutting pay, speeding up the line, dumping toxic waste in rivers, and a host of other familiar misdeeds. ”

    Thank-you for saying this in public. So many ‘economists’ obscure this fundamental dynamic. I’ll share your blog at my FB page now.

  4. I think Adam Davidson learnt everything he knows about economics from pop economics books written by Chicago types. I think he believes it too – not that that absolves him. Lousy fact checker as well.

  5. Not only is equity finance totally irrelevant to US capital formation (see Doug’s “Wall Street”), but debt dwarfs equity as a source of external finance. What’s more, according to yesterday’s WSJ (p. B7), long-term US Treasury bonds returned 11.03% per year from 1981-2011, beating the S&P 500 by 0.05 percentage points (take that new FRB Board member and “Stocks for the Long Run” author Jeremy Siegel!). What’s more, US bonds returned 28% in 2011 and 26% in 2008 (bond prices move inversely to interest rates So I ask: where’s the “dead cat” in the “bounce” that Peter Schiff, Ron Paul, and every other “gold bug” has been railing against government debt? Now I’ll admit that Friday’s 30-year T-Bond yield of 2.98% looks way too rich (in price terms), but there may be some more juice on the way to 2.50%. And, if you missed the gold move from $300 to $1800, don’t worry, gold is still well below its 1981 inflation-adjusted peak, of about $2,100 an oz. (in today’s $’s). Adam Davidson should learn to read the Wall Street Journal – god knows they would never hire him!

  6. Wall Street firms have intimate connections to what Howard Karger calls the “fringe economy” in his book, Shortchanged. Something I noted in a review of it:

    “The players in the fringe economy are no longer mom-and-pop operations. New corporate giants have been built, and old “mainline” companies are deeply involved in taking poor people’s money. How many readers know about ACE Cash Express (serving more than 38 million customers a year—more than 11,000 a minute—in more than 1,230 stores and doing $8 billion worth of transactions); or Advance America, Cash Advance Centers, Inc. (more than 2,800 stores, 5,300 employees, and at least $500 million in sales); or Cash America International, EZ Pawn, and First Cash (the pawn industry’s big three, each with revenues of more than $15 million); or Rent-A-Center (with worldwide operations employing more than 15,000 workers, 3,000 stores, and $2.3 billion in sales). Of course, we have all heard of H&R Block, Wells Fargo, JP Morgan Chase, Morgan Stanley, Bank of America, Wachovia, Well Fargo, Citigroup, and Lehman Brothers, all blue chip corporations, and all either doing business independently in the fringe economy or partnered up with the fringe operators just mentioned.”

    Just some of what Wall Street does for the poor, even those who are “unbanked.”

  7. It’s agreed: Straining at ‘cool’ leads to humorrhoids! Sorry. Couldn’t resist.

  8. I enjoy these takedowns, much as I never listen to NPR, and wonder only how it is that the “US Department of Education,” an allegedly government operation, is listed as a donor to NPR, another allegedly government operation.
    Yet, as with all political matters, there is the underside where our own associations lie – I wonder how it is that “my” public sector pension funds, are invested in the gambling operations of Wall street under the names of Exxon-mobil, Alcoa, etc., and were no doubt larded into the sub-prime derivatives LBO superscam, and, I also wonder what it is like to be sponsored by the Hoover Institute, which is the intellectual godfather of our fully misbegotten Rent-A-Center world.

  9. Here is Planet Money’s “Must Read” list on economics, which mistakes market liberalism as the only way to think about the economy:

    http://www.nakedcapitalism.com/2011/01/nprs-must-read-as-in-orthodoxy-promoting-economics-books.html

    Here is a rejoinder to Planet Money’s attack on Elizabeth Warren:

    http://www.nakedcapitalism.com/2009/05/thought-police-i-more-analysis-of-npr.html

    Dean Baker and Paul Krugman also had some takedowns of Planet Money’s dipshit history of Argentina’s debt crisis. Davidson’s show is one reason (among many) that NPR deserves to be defunded.

  10. And don’t ever worry about NPR or PBS ever going dark due to a lack of donations from members. Their corporate sponsors will never let front outfits like these, trading on long abondoned principals, go silent. Sit back and watch the classics and oldies concerts without guilt and with the assurance they don’t really need your membership check to remain the corporate puppets they are.

  11. The joke was intentional!

  12. Doug wrote:
    “The world of production can be a very nasty place. Corporations make money by paying workers less than the value of what they produce. They’re constantly maneuvering to cut costs, which means cutting pay, speeding up the line, dumping toxic waste in rivers, and a host of other familiar misdeeds. Like financiers, they’re in business to make money, and they’ll do nothing that doesn’t make money unless they’re forced to. Yes, they often provide useful products in the course of their pursuit of money. But it’s wrong to get carried away in painting them as the Good Guys, by contrast with the moneychanging Bad Guys.”

    I’m confused and very tired of the meme that has been flowing particularly hard this past year or two that business is bad. Corporations are creatures of greed. That making a profit is a bad thing and that businesses achieving profitability is always done on the backs of oppressed ‘minions’.

    I’ve started several companies, and worked a one of the largest corporations in the world. Every one of these companies gave every employee in the company stock options or stock grants, giving every employee the chance to benefit if the company was successful.

    Corporations are made up of groups of individual humans. You categorize these corporations as sociopaths. That has been very far from my experience. Every company I’ve ever worked at has done a lot for its employees, and for the communities they live in. Not just to satisfy some blood lust for greed. For real, human reasons.

  13. Planet Money is sponsored by Ally Bank, a division of Fannie May, I believe. I used to listen to podcasts of PM until they just got too stupid. Never heard them do a story on Fannie or Freddie. Always happy to hear stories breaking down NPR. They have basically the same message as Fox only with voices that sound like trained nurses — working to be comforting when you’re in pain.

    And have you ever looked into the growing movement to create “public banks,” like South Dakota’s? Especially as promoted by Ellen Brown, also a 911 truther. This is sort of going wild in California.

  14. […] Doug’s post is not so much about NPR, but a response to Adam Davidson who is co-host of the show Planet Money. His recent piece in the New York Times Magazine argues for the benefits of American-style finance. […]

  15. “Corporations make money by paying workers less than the value of what they produce. They’re constantly maneuvering to cut costs, which means cutting pay, speeding up the line, dumping toxic waste in rivers, and a host of other familiar misdeeds. Like financiers, they’re in business to make money, and they’ll do nothing that doesn’t make money unless they’re forced to.”
    I also thank you for this. Main example that comes to my mind is BP, which allowed everything to happen because it wanted to save a few measly bucks on the equipment — while it was making huge profits, and so that particular penny-pinching was completely unnecessary (besides being stupid and destructive).

  16. NPR probably understands their demographic pretty well. I’ve probably become bitter from living in a college town for so long, but the middle class liberals that I have encountered around here are often quite right wing when it comes to issues of economics and class.

  17. A solid look at what’s behind the NPR “nurse voices.” I heard a wrinkle in the facade listening a year or two ago. There was a guest on discussing fabric that made a comment something along the lines of “We all know what a polyester shirt feels like,” and instead of letting it pass the NPR voice insisted, “Well no, no I don’t, I have in my life felt such a thing.”

    And then it got awkward because this wasn’t intended to get the guest to be more descriptive. Instead of letting her continue with her point the NPR voice had to let the audience know that he was not the type of person that had possibly ever interacted with polyester.

    Strange, and seemingly underlying the perspectives being looked at here.

  18. —Its “liberal” reputation makes palatable a deeply orthodox message for a demographic that could be open to a more critical message.—

    I don’t think that’s true. The folks I know who listen to NPR are upper-middle class types quite smug in their elitism and ability to regurgitate accepted dogma using 99 percentile GRE/SAT words. (basic traits necessary to ‘succeed’ in high school and go on to an elite college).

    I’d rather debate the guys at the service station who have some relationship with reality.

  19. NPR/PBS proves that glibness and terminal self-importance in reporting do not make the journalism the country sorely needs.

    I’m delighted that I have been “off” NPR/PBS for almost a decade now. Otherwise, if I had heard the report in question, I may have barfed up my entire alimentary canal. As it was, the BS your article relates has given me a severe stomach ache.

    I distinctly remember Gingrich’s first (mid 90’s) salvo at demanding congressional defunding of NPR/PBS. At the time I thought he was reprehensible. Now I appreciate how vile the bastard really was/is. He knew the (allegedly) “liberal” fans would tie themselves in political knots defending their “own” network and be distracted from any legitimate political action.

    Newtie knew that, even if defunding efforts failed, having NPR/PBS remain on the air in NO way interfered with his agenda and generally promoted it in a palatable way to many who would otherwise not give him the time of day.

  20. @ John Puma. I recently read somewhere where someone said, “If journalists/the media were doing their job, no one would even remember Newt Gingrich’s name, except as a footnote.”

  21. […] profess an interest in the welfare of every American and at the same time defend the status quo. Doug Henwood writes: For a while, I’ve been thinking about writing a piece on how NPR is more toxic than Fox News. […]

  22. […] is more toxic than Fox NewsBob Morris, on Jan 19, 2012, 5:40 pmDoug Henwood explains why.For a while, I’ve been thinking about writing a piece on how NPR is more toxic than Fox News. Fox […]

  23. […] An excellent take down of NPR’s Planet Money piece on Wall Street. For a while, I’ve been thinking about writing […]

  24. […] Doug Henwood is thinking along the same lines in a piece on Planet Money contributor Adam Davidson. I’d love to read a longer piece from him on the […]

  25. Kim Kaufman:

    http://www.npr.org/blogs/money/2011/04/22/134863603/kill-them-bury-them-the-rise-of-fannie-and-freddie

    Planet Money being very negative about Fannie and Freddie.

    It’s part of a series, and more can be found by googling [planet money fannie freddie]

  26. Couldn’t agree more with this analysis. I remember listening to a This American Life show which featured Davidson discussing the GFC. It started with some very interesting details about how the shit hit the fan but then basically became a slightly snarky apologia for the banks and the regulators; “hey, it’s a complex world! Do you really expect us to get every detail right all the time!?”

    Totally vomitous and much more insidious given that it is not simply ‘liberal’ but that it is the ‘serious’ yet ‘funky’ show on the ‘serious’ yet ‘funky’ network

  27. […] Davidson, economics journalist and Wall Street apologist, turned his attention to dairy farming in today’s New York […]

  28. […] January Doug Henwood, one of my favorite lefty blogger-radio people, wrote a nasty response to Adam Davidson’s New York Times Magazine article on Wall […]

  29. Doug, this is a fine piece. Related to this criticism, remember a while back when NPR/PBS stated that they were no longer going to engage in he said/she said journalism! It’s still the same old crap, and just more proof that I was correct in refusing to listen/watch them for years now. Aside from criticism of their content, I never could stand that know it all voice of the ever so hip journalist, who often turned out to be just another know nothing talking within the accepted range of opinion of today’s mainstream media.

  30. […] and the fact that they’re on  NPR and PBS just makes them more offensive. I agree with Doug Henwood […]

  31. […] the segment actually argues  the opposite: the piece give a ton of time to the stock traders and the spiteful liberals from NPR’s Planet Money to apologize for Wall Street. They argue that we all actually benefit […]


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