“Prediction is very difficult, particularly about the future.” Journalists would do well to keep in mind that aphorism from influential Danish physicist Nils Bohr when quoting “experts” about the outlook for financial markets, the economy and politics.
That’s a tough adjustment for journalists who are keenly aware that today’s news is already well absorbed by the masses by the time newspapers go to print. Against that background of disintermediation, they become more reliant on printing eyeball-grabbing forecasts to build audiences to flog to advertisers.
And that did seem a pretty good defensive strategy a few years back when the internet started eating the MSM’s lunch. After all, if everyone already knows what happened today, you can bedazzle the punters with the awful prospect of what might happen next. But it doesn’t work so well now that the source information is available in real-time to everyone. And it becomes rather embarrassing for the soothsayers when their previous forecasts are left like dog turds sitting on the giant lawn that is the global internet.
So how did we get here? A couple of decades ago, legions of consultancies, think tanks and investment banks (the BIS Shrapnels and Access Economics) worked out that the media is basically lazy and will run a dire forecast without a second thought. It was a win-win. The consultancy got to brand itself by flogging economic “outlooks” and long-term “trend analysis”; the desperately witless journalists got cheap, prefabricated and authoritative sounding content to fill the gaps between the ads paying their salaries.
Of course, the trick with making forecasts is to ensure the forecast horizon is sufficiently far away (and sufficiently conditional) that no-one will ever remember to check whether you were right or wrong. Indeed, long-range forecasters survive by counting on the short-term memories of the people who report on them.
So it was that we saw the ABC and others this week blandly recycled Access Economics’ latest prediction that the mining boom will be over in two years. Of course, that might well turn out to be true, but it would help if the media pointed out that Access has been issuing essentially the same forecast for the past, oh, eight years:
- May 7, 2003, The Australian Financial Review:‘The investment boom in the resources industry may be coming to an end, according to respected forecaster Access Economics.The Canberra-based group said the rising Australian dollar and sluggish global economic conditions were hurting the mining sector which has invested heavily in new projects in recent years.“The picture 12 months ago looked very strong, like there may be a protracted mining and resources boom, but we’d have to say that now it looks like it might run out of puff,” Access Economics economist David Rumbens said.’
- Sept 29, 2004, The Australian:‘This is as good as it gets — the Australian economy is likely to grow much more slowly over the next financial year than it is growing at present, according to Access Economics.The firm’s latest review of the economy says the election spending will keep consumer spending strong past Christmas and well into 2005.“But we risk a retail reckoning,” the firm says. Lower house prices and the prospect of rising interest rates next year are making consumers nervous.
It is also possible that commodity prices will start falling, with lower world economic growth and many mining investments coming on stream over the next two years.’
- Jan 24, 2005, The Age:‘Australia’s trade woes will continue to plague the economy for years as a flood of mining investment around the world pushes commodity prices down, a leading forecaster has warned.Access Economics is predicting that the current account deficit – now at the highest level since Paul Keating issued his “banana republic” warning – will continue to disappoint, despite the strongest global growth for three decades.Treasury and others have for some time been hopeful that Australia’s pathetic trade run will end as much-needed mining investment begins to yield returns, lifting the volume of commodity exports.But the problem is that other countries such as Canada have also been heavily investing in mining to capitalise on the resources boom. That means lower prices, offsetting the gains from the higher volumes.’
- May 2, 2006, The Australian:
‘Commodity prices are likely to peak this year and are primed for a fall of up to 50 per cent, analysts warned yesterday as resource stocks again jumped sharply higher.The gold price hit a 25-year high at $US661.10 an ounce, sparking fresh buying of mining stocks, despite a warning from Canberra-based Access Economics that metal prices are poised to start dropping steeply from the end of the year.
This year will be as good as it gets in metal markets, according to Access’s latest quarterly survey of 10 forecasters.
Access said it was slightly more pessimistic on the outlook for prices than the forecasters, noting that despite strong demand from China and in the future India, new mine supply is set to catch up with the market.’
Now far be it from me to claim any superior knowledge about the economic outlook than the expert forecasters at Access, but how hard can it be for journalists to do the research that just took this former hack 10 minutes to find? What are journalists bringing to the table if they are only cutting and pasting from the press releases that are freely available on the web anyway?
What is to stop a journalists from going straight to the RBA’s website, calling up the most recent statement on monetary policy and finding this statistic: ‘The value of Australian resource exports rose by 16 per cent over 2011, contributing 2 percentage points of the 5½ per cent growth in nominal GDP over the year to December. Over the year to the September quarter 2011, export prices for iron ore and coal were supported by growth in global steel production and supply disruptions in Australia and elsewhere. This took the terms of trade to their highest level on record.’
And what is to stop a journalist from going straight to the Australian Bureau of Statistics’ website and the latest private capex survey to discover this: ‘Australia is currently experiencing unprecedented levels of investment activity. This is primarily due to the number and size of mining projects currently underway. Investment activity is expected to continue to rise in the coming years as additional mining projects commence.’
So Access got it wrong. And it got it wrong again. And again. And again. But did you hear any of that in today’s news coverage? Did you hear any journalist provide any other source of information, or insert context or ask the forecaster to explain why it should be believed this time when it has got it wrong so often in the past? Crickets….
You see this is the problem. The media is at risk of becoming a gigantic reproduction machine. If journalists are just going to swallow whole everything they are told, what value do they bring? “But it’s just our job to report,” you’ll hear. No, their job is to explain, verify, check, challenge. The source information is all out there. It’s not that hard to put it together yourself. Yet day after day, we hear breathless headlines from under-trained, over-worked hacks who spend no time checking, no time researching and no time asking anyone questions that might yield something other than what is already contained in a self-serving press release.
Is it any wonder the public is giving up on the mainstream media?