Crawl Across the Ocean

Sunday, December 03, 2006


I was reading this article in the Economist and it struck me as a great example of the kind of writing one often sees where the author doesn't seem to be thinking at all (at least in parts).

Says Buttonwood in paragraph 2:
"They [some economists] argue that profits in America, for example, are at a 40-year high as a percentage of GDP precisely because capital is winning at the expense of labour. Globalisation has brought the Indian and Chinese workforces into the world economy, which has kept the lid on wage costs. That has allowed the economy and profits to grow, without the kind of pay-and-price spiral that occurred in the 1970s."

And then in paragraph 3, the rebuttal:
"That is the theory, at least. But economists have always been tempted to dream up grand theories for trends that are just part of the economic cycle. Profits are very dependent on whether the economy is expanding or contracting: businesses have fixed costs and when demand is strong, revenues rise faster than costs; when demand is weak, they fall faster."

So the argument in paragraph 2 is that we are seeing something we haven't seen in 40 years, a period which spans many economic cycles, with an explanation of how and why things are different than they were in a previous cycle. And then in the very next paragraph this is supposedly rebutted by saying that this is all just the usual economic cycle.

It's as if the writer of the third paragraph never even read the second one. And then in the fourth paragraph we get an excellent point:
"So the reason American profits have been remarkably strong may originate closer to home than in Shanghai. Nick Carn, a strategist at Odey, a hedge-fund group, says it is pretty simple: companies' revenues are determined by the pace of consumer spending; their costs are largely driven by wages. Profits have grown because Americans have borrowed money to spend more than they have been earning. This cannot continue forever."

I wasn't being sarcastic, this is a good point. But again note that it has little to do with the economic cycle, the trend towards increased borrowings has spanned a few economic cycles. Just take that third paragraph out and we have a much stronger article.

Anyway, it's not a big deal, just another sign that even in respected publications like the Economist, there seems to be a general downward drift in the amount of editing and revision which goes into what gets published. Just part of our fast paced world, I suppose.


  • I suspect that there is some unwritten rule (or perhaps a written one in 'Journalism 101'?) that, in order to write a complete article, one must always present a token opposing view.

    Then, with laziness thrown in to boot, you get messy articles like the one you've cited.

    So basically the authors aren't thinking at all, they're simply in professional cruise control (same with editors).

    By Blogger Simon, at 12:59 PM  

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