Far too much economic news for our own good

Ian Macfarlane, the former governor of the Reserve Bank, thinks Australians get too much news about the economy, and this surfeit actually worsens the decisions we make about investments.

At the risk of being drummed out of the economic journalists' union, I suspect he's right. But I'll let him do the talking (he was delivering the Mosman Address at Mosman Art Gallery on Friday night).

Over the past couple of decades the public has been inundated with economic statistics, he says. "The newspapers and magazines are full of economic news, television reporting is saturated with it, there are special radio and television programs devoted to it."

It's true this is a worldwide phenomenon, but it's more pronounced in newspaper coverage in Australia. Foreign visitors often express surprise at how much economic coverage there is in Australian papers, particularly on the front page.

A few years ago the Reserve compared the coverage of central bank monetary policy decisions in three countries: the US, Britain and Australia. It looked at three comparable papers in each country, including The Australian Financial Review, The Australian and The Sydney Morning Herald.

Adding up the number of articles in the three days surrounding two successive monthly monetary policy meetings, it found 35 in the US, 46 in Britain and (wait for it) 131 in Australia. Looking just at articles on the front page, there was one each in the US and Britain, but 14 in Australia.

Why is there so much more economic coverage in Australia than elsewhere? Maybe because there's not much other news to report.

"We are not an international power or trouble spot, we are not engaged in major wars, we do not have racial riots, civil insurrections or sectarian violence. And the private lives of our politicians are not as lurid as British ones (or a recent American president). So instead our newspapers are taken up with recent figures on employment, interest rates, the consumer price index or the budget," Macfarlane says.

[There's an alternative explanation, however. In the US and Britain the link between changes in the official interest rate and changes in mortgage interest rates is quite loose, whereas here it's direct and immediate.]

"With the media competing so strongly against each other, there is inevitably a bias towards sensationalism. While Australia has a few experienced and thoughtful economic commentators who are world class, it also has a multitude of eager beavers who are mainly concerned with tomorrow's headlines," Macfarlane says.

"They try to extract the maximum amount of coverage out of each ephemeral piece of news - monthly or even daily figures are invested with a significance well beyond their actual information content."

Interest rates don't merely rise, they "soar", the exchange rate "dives" or "plunges" and budgets "blow out". The reader is left with the impression of constant action and turmoil. The recurring television image is of people in dealing rooms or on the floors of futures exchanges shouting at each other.

Another feature, he says, is the tendency to concentrate on pessimistic news. It's the nature of all journalism - not just economic - that its practitioners seek to expose a disaster or a conspiracy.

No one ever wins a prize in journalism by pointing out that things are proceeding relatively smoothly and uneventfully, hence the tendency to find bad news and mistakes in policy, and to label every minor glitch as a crisis (the most overworked word in journalism).

"At the margin I believe all this news tends to make us less confident, less secure and less happy than if we had less of it," he says.

But does all this information make us better at doing our jobs or investing our savings? Macfarlane says a broad range of information is better than a narrower one, but more frequent information about a particular thing may stop us seeing the wood for the trees.

More frequent information also exposes us to the "narrative fallacy" - our need to tell a story about why a movement in an economic variable occurred, even if it's just a small daily movement in the exchange rate or the sharemarket. Often the movement is just random noise, but we can't say that.

Macfarlane says several financial advisers have told him that, among their clients, those who spend the most time tracking daily movements in their portfolio do worse on average than those who review their portfolios less frequently.

Research has shown that most people exhibit "loss aversion" - they experience more unhappiness from losing $100 than they gain in happiness from acquiring $100.

So the more often they're made aware of a loss the more unhappy they become.

If the sharemarket rises by 6 per cent a year that, plus dividends, is a reasonable return. But on average the market would fall on about 47 per cent of days and rise on 53 per cent. This suggests a net fall in happiness despite the satisfactory return. Reviewing the market monthly rather than daily would produce a smaller proportion of losses, making us happier.

Behavioural finance research shows that, because we suffer from myopia as well as loss aversion, investors who get the most frequent feedback take the least risk and thus earn the least money.

In listing the false signals given by the rule that two successive quarters of falling real gross domestic product constitute a "technical" recession last Monday, I missed one. No one knew it at the time, but the Bureau of Statistics' latest estimates show the economy contracting by 0.02 per cent in the September quarter of 2000 and then by 0.4 per cent in the December quarter. So, a recession on John Howard and Peter Costello's watch? No, just a stupid rule.

Read more >>

Claims of stimulus waste were greatly exaggerated

Media reporting and opposition politicking have left many people with the impression much, if not most, and maybe even all of the billions spent on school buildings under the Rudd government's stimulus package has been wasted.

It's an impression based on the piling up of unproved anecdotes about waste or rorting of particular school building projects. Which means it's an impression that's not genuinely "evidence-based".

Enough anecdotes have been produced to demonstrate that some degree of waste has occurred. But that's hardly surprising: there's a degree of waste involved in most spending, public or private.

The real question is how significant that waste has been. And no amount of piling up of unproved allegations can satisfactorily answer that question. Only a thorough investigation of the complaints can determine the extent of the waste and the reasons for it.

It's important to understand - as most people don't - that news reporting practices aren't intended to give us a representative picture of what's happening. Indeed, what's "newsworthy" is often quite unrepresentative.

News focuses on the unusual not the usual, the bad news not the good, the contentious not the widely accepted. (That's why climate change-denying scientists get a degree of media publicity out of proportion to the relevance of their qualifications or how representative they are of scientific opinion.)

This is why you wouldn't expect the media to do justice to the reassuring conclusions of the independent taskforce established to investigate complaints about the Building the Education Revolution spending.

For one thing, reassurance isn't very newsworthy. For another, any critical comments will be given more prominence than generally approving comments.

But there's more to the school building issue than just the limitations of news reporting. The complaints have been seized upon and played up by elements of the media and others with either partisan or ideological motives for seeking to discredit the use of budgetary stimulus in response to the downturn in our economy prompted by the global financial crisis and the world recession.

These people want us to conclude there was never any threat to the economy, thus making the stimulus spending unnecessary and, as it turned out, quite wasteful. Those with an ideological opposition to fiscal stimulus want us to conclude it NEVER works.

That's why I've read for myself the interim report of the taskforce, chaired by Brad Orgill, and want to give you a balanced account of its findings.

The taskforce was established to receive and investigate complaints about the school building program and to determine whether schools are achieving value for money. So far it has received complaints affecting 254 schools, representing only 2.7 per cent of all schools involved in the program.

Almost all the complaints relate to the part of the program that promised to build and upgrade infrastructure in all the nation's primary schools. The $14 billion cost of this element accounts for almost 90 per cent of the total cost of the program.

It will have delivered more than 10,500 construction projects to more than 7900 primary schools by late next year. About a third of the money is going on multi-purpose halls, almost 30 per cent on classrooms and a quarter on libraries, with the remainder going on covered outdoor learning areas and other things.

Spending of the money is being administered by 22 state government, Catholic and independent school authorities. Although the NSW government accounts for 22 per cent of the projects, it attracted 56 per cent of the complaints. The Victorian government, with a 12 per cent share of projects, attracted 20 per cent of the complaints.

More than half the complaints relate to value for money. "From our investigations to date, the majority of complaints raise very valid concerns, particularly about value for money and the approach to school-level involvement in decision making," the report says.

The report acknowledges - as many of the critics don't - that the primary reason for spending the money was to help counter the downturn in the economy by providing employment for building and construction workers throughout the country. It was also hoped the new buildings would improve the quality of our kids' education.

The report finds the stimulus "prevented many construction organisations from reducing staff or the size of their operations to match an otherwise decreasing workload resulting from the global financial crisis".

But the stimulus motive meant it was important to get the money spent quickly and this involved a trade-off. It meant less time for consultation with individual schools and less choice and customising of projects. That meant a degree of waste and, certainly, dissatisfaction on the part of some schools.

Cost per square metre was very much higher in NSW government projects, mainly because of big project management fees, which were 5 percentage points higher than normal. But these fees are partly explained by the high priority the NSW government gave to getting its projects completed quickly. Those states in less of a hurry incurred lower costs per metre.

The report says that, overall, delivering the projects within the short time-frame to achieve the economic-stimulus objective may have added a premium to normal costs of 5 to 6 per cent.

"Notwithstanding the validity of issues raised in the complaints, our overall observation is that this Australia-wide program is delivering much-needed infrastructure to school communities while achieving the primary goal of economic activity across the nation," the report concludes.

So the impression of widespread waste the media and people with axes to grind have left us with is greatly exaggerated.

Read more >>

HISTORY, MEMORY AND TRUTH

Talk to Independent Scholars Association, Sydney
July 24, 2010

I’m not a historian, philosopher or even an independent scholar, so I confess I find today’s topic rather daunting. So I’ll make a few general observations and then comment on the topic very much from a journalist’s perspective, which I imagine is the most useful contribution I can make.

I’m old enough to believe there is such a thing as objective truth, if only we could find it. But the truth is elusive. It’s known to God, but we mere mortals merely seek it, never knowing for certain how close we’ve come to it. Of course, in the search for truth some people try harder than others. Plenty of people are happy to give us ‘the truth as I see it’ without making any great attempt to offer a balanced account. It’s often a safe bet that such accounts are far from even-handed. And some of us are happy to repeat that version - sometimes unadorned, sometimes as part of a more conscientious attempt to discern the truth of the matter.

As for memory, it’s highly fallible. Last year I was invited to speak to the annual dinner of the old boys’ association of my school, Newcastle Boys’ High. I did a lot of thinking back to my time at school in the early 1960s, and mentioned to a friend that one of the things I planned to mention was my memory of being in the school playground when the news came through that President Kennedy had been shot. My friend said I’d better check it because he was sure the news came through on a Saturday. I checked and he was right. So what it is that I have such a clear memory of I now have no idea.

The illustrious psychologist Daniel Kahneman, who won the Nobel Prize in economics for discovering behavioural economics, has more recently turned his mind to the study of happiness, particularly the definition and measurement of it. His recent research - too recent to be included in my new book, The Happy Economist - draws a distinction between experienced happiness and remembered happiness. He found that when you ask people how happy they are during an event - a holiday, for instance - you get a different answer to the one you get if you ask them after the event how happy it was. People are generally happier about things in retrospect than they were at the time. Which of the two perspectives represents the truth?

Earlier, Kahneman did a famous experiment that asked people how they felt about their colonoscopy examination, which in those days seems to have been a lot more painful than it is today. What emerged from this was the psychologists’ ‘peak-end rule’. How people felt about their experience was determined by two factors: how it felt at its worst, and how it felt at the end. This meant that doctors could influence how painful people remembered the procedure as being simply by leaving the scope in for an extra minute or so without moving it and making it painful. I think this tells us something about the fallibility and susceptibility of memory.

It’s often said that newspapers provide ‘the first draft of history’. I guess that’s true, but since I imagine many of you refer to newspapers in your research, I want to stress what a rough and ready first draft it is. Newspapers - and the media more generally - offer only the roughest and potentially quite misleading first draft for many reasons. One is the haste with which the first draft is prepared. Media outlets are increasingly understaffed these days and, in any case, journalists are required to produce their reports in only a few hours. Economic and political journalists, for instance, have to summarise the purport of lengthy government reports or budget documents before they could possibly have had time to read them properly.

The more the media turn to ‘breaking news’ - as even the morning newspapers are now doing on their websites - the more they’ll be telling us things that are undigested, ill-considered, incomplete and probably wrong in some respects. That’s true almost by definition. With breaking news, the highest priority goes to getting the news out within minutes of it occurring. In the case of a set-piece event (such as the announcement of a change in interest rates) it has be on the site within seconds. It’s all about racing your competitors, and accuracy runs a very poor second. An editor once said to me that the only way you could produce breaking news was to use the principle: ‘Never wrong for long’. Trouble is, the media are reluctant to admit and correct their mistakes. More generally, they pass judgment too quickly and are reluctant to return to stories they regard as old hat. They’re weak on follow up, often not following stories to their conclusion.

People are always claiming to have been misquoted or misrepresented by the media. The media’s attitude is generally ‘they would say that, wouldn’t they’. And it is true that people say things then, when they see them in the paper for all the world to see (including their boss), have second thoughts and claim to have been misreported. But I’ve been interviewed and reported on by print journalists a few times in my life, and I’ve been quite unimpressed by the results. They’ve not understood what I was on about, they’ve misquoted me or taken me out of context, or they’ve filled in facts without asking me and not got them right.

There may have been a time when newspapers took a pride in being ‘journals of record’, but those days are long gone, even for the broadsheets. Much that transpires - even government decisions - is these days regarded as too boring to waste space on. Newspapers face a lot more competition from the electronic media - radio, television and now the internet - which means they’re often bring their readers news the readers have already heard. They compensate for this by search for new ‘angles’, reporting reaction and by ‘taking the story forward’ - which means they assume their readers already know the basic facts of the story and don’t bother repeating them, or allude to them only well down in the fine print of the story.

But the main thing I want to say to you is that the media simply aren’t in the truth business. You may be seeking the truth, but we aren’t. You’re entitled to expect us to be truthful - that is, to get our facts right and resist the temptation to distort - but not to imagine we’re seeking the truth. We’re not in the truth business, we’re in the news business. We’re literally in the business of selling news. That is, our primary motivation is commercial - to make a profit - not ideological or scholarly. What’s more, humans’ evolutionary drive to compete means that, despite its lack of commercial motivation, the ABC behaves much the same way as its profit-motivated rivals do.

Why aren’t we seeking the truth? Because much of the time the truth is dull. Media owners are dedicated to profit maximisation, and their minions seek to do this by selling a product called ‘news’. What is news? Whatever sells. What sells - what’s ‘newsworthy’ as journos say? Anything happening out there that our audience will find interesting or important, although the interesting will always trump the important. Paris Hilton is interesting but of no importance; the latest change in the superannuation rules is important but deadly dull - guess which one gets more media coverage?


Maybe 99 per cent of what happens in the world is of little interest: it’s the old, not the new; the good, not the bad; the usual, not the unusual. It’s dog bites man, not man bites dog. Much of the criticism of the media rests on the unspoken assumption that the media’s role is to give us an accurate picture of the world around us. We don’t have first-hand experience of much of what’s happening around us and we need the media to inform us.

Sorry, but that’s just not what we do - because we don’t think there’s much of a market for it. Let me tell you a story or two to demonstrate how we select news - how what we do bears no relation to the scientific method that guides so much of what scholars do. Once when I was answering a question at a Treasury seminar in Canberra it occurred to me to say this: when social scientists take a random sample they may examine the sample and discard any outliers that could distort their survey, throwing them on the floor. A journalist is someone who comes along, finds them on the floor and says, ‘these would make a great story’.

Final story: I happened to be in the Herald’s daily news conference in February 2009 on the day Kevin Rudd’s $42 billion stimulus package was announced, with all its (then) $950 cash handouts. We discussed searching for a farmer who’d get $950 because he was in exceptional circumstances, $950 because he paid tax last year, $950 because his wife also works, $4750 because he has five school-age kids, and maybe another $950 because one of the kids is doing a training course. And, of course, he’d have a big mortgage, meaning he’d also save $250 a month because of the 1 per cent cut in interest rates announced the same day. Had we found such a person and taken a good photo of him he’d have been all over our front page. The point is that we were search for the most unrepresentative person we could find. Why? Because our readers would have been fascinated to read about him. It’s reasonable to expect the media to be accurate in the facts they report but, even if they are, it’s idle to expect them to give us a representative picture of the world. They’re not in that business.

Read more >>

TALK TO UNIVERSITY OF SYDNEY PROFESSORS DINNER

Sydney University
October 6, 2009

You may know that about once a month I appear on the Journos’ Forum segment on Richard Glover’s drive time program on ABC Radio 702. I usually appear with Greg Sheridan, foreign editor of The Australian, and Jennifer Byrne of the First Tuesday Book Club on ABC TV. Greg is a terribly right wing character but, in person, a really nice bloke with a great sense of humour. My role is to act as straight man for Greg’s jokes. Whenever Jennifer can’t make it, Richard hunts around for another token female and once a few years ago he came up with Jana Wendt. I was beside myself with excitement: at last l was getting to meet the great, the beautiful Jana. But when the great day came and I walked into the room, she instantly greeted me with, ‘G’day Ross, how’s it going?’. How come we were so well acquainted when we’d never before clapped eyes on each other?

Well, since that wasn’t the first time it had happened to me when meeting a celebrity TV journalist, I think I know. Big-name TV journalists are infinitely more famous - and more highly paid - than someone like me. But there’s something a broadsheet newspaper columnist has that they haven’t got and really envy - professional gravitas. So they want to be able to think of themselves as close colleagues of all the top journos in the profession.

The moral of the story is that many people crave intellectual recognition. So when I was asked to speak to a room full of Sydney University professors, there was no way I was going to say no. Of course, once the gratification had worn off, it’s also a bit daunting. No matter what topic you choose to speak about, there’ll be people in the audience who know a lot more about it than you do. Were I to speak on any economic topic - the weaknesses of economics, for instance, or the economists’ failure to forewarn of the global financial crisis - there’d be sure to be someone furiously arguing the toss. But not to worry: I’ve thought of a topic I know a lot about and, particularly since my mate Rod Tiffen isn’t here, none of you know much about: journalism. I want to make some comparisons between journalists and academics and explain a few things about journalism that improve your understanding of it.

I used to feel sorry for professors. All of them think they’re a lot smarter than I am, but I earn far more than they do - unless they’re doing a mighty lot of consulting work. And the fact that you guys have got time to come here tonight suggests you’re not doing a lot of consulting. Whenever I write about the money-grubbing ways of the medical profession I get indignant letters from doctor’s wives arguing that their husband deserves his high income because of all the years of study he had to put in. I’m often tempted to ask whether they think an academic who spent eight years getting a PhD in Italian deserves to be paid as much as a doctor. The link between years of study and salary seems a tenuous one, with the explanation for the weak correlation embodied somewhere in the words ‘market forces’. But I stopped feeling sorry for professors: they may be as poor as church mice, but their employment gets them at least 10 times more overseas travel than I get. You can never find them when you want them because they’re always away delivering a paper to a conference in Seoul. And all their frequent flyer miles get them regular overseas holidays, to boot. I console myself with the knowledge that they have to travel steerage (unless they’re on a consulting job, of course).

Actually, I quite like professors. That’s to say, I don’t dis-like them as much as I dislike lecturers and senior lecturers and even aspros. I long ago formed the theory that only when academics gain a chair do they feel licensed to express an opinion. Until they’ve attained that point they’re not game to say anything they can’t reference to someone’s paper. Just why they feel it’s poor form to express an opinion but perfect form to quote someone else’s opinion is something I’ve never understood.

There’s a lot of rivalry and professional jealousy in journalism, something I’ve used to my advantage. The great thing is that, when you’re first to get on to a new topic, or to think of a slightly different way to write a column, no matter how successful it is your competitors simply won’t abase themselves by copying you - nor give you the satisfaction of being copied. This, of course, is quite contrary to what’s predicted by the economists’ neoclassical model. But the rivalry in journalism is nothing to the rivalry and jealousy in academia. They say that the less there is to fight over, the more furiously academics battle. Sometimes the fights are ideological, but the trouble with academics is that, though they love to argue, they tend to take things personally (which is a mark of the introvert). And that can end up meaning the fights aren’t about rival theories. It’s been a great disappointment to me that, in this university, Political Economy and straight economics never boxed it out intellectually, but sat in opposite corners of the faculty hating each other’s guts, until finally PE was cast into the outer darkness of the Arts faculty. This absence of engagement was to the great disadvantage of both sides’ students because, in my never-humble opinion, each side was incomplete without the other.

You may not know that there are two broad classes of journalist: writers (mainly reporters, but also opinion writers such as me) and sub-editors (better understood by their American name, copy editors). So reporters and writers write the copy and subs sub it - check it for spelling, grammar and libel, then write a headline for it and find it a hole to fill in the paper. So writers and subs have the same status, but different roles. Every young person entering journalism starts as a reporter, but some stay as reporters, where they get out and about, while others gravitate to the office-bound desk job that is subbing. What drives this sorting process? It’s long been clear to me that extroverts stay as reporters and writers, whereas introverts become subs (provided they can spell). Subs are supposed to consult reporters before they change their copy, but they often don’t because they’re so desperately afraid of possible confrontation.

I mention this because it’s long been clear to me that the people who become academics tend also to be introverts - they prefer reading books to talking to people. Reporters, by contrast, love talking to people. My mate Rod Tiffen says it’s just as hard to persuade an academic to talk to someone as it is to persuade a journo to read a book. I remember once, long before the internet, a reporter asked me how much the inflation rate was. I said I didn’t know, but gave him very detailed instructions of where to find the CPI press release a few steps away in the Herald library. When I asked him about it later he said: ‘Oh it was OK. I rang the Bureau of Stats and asked them what it was’. When young economic journalist recruits come to me - usually from this university; from Political Economy, in fact - I lose no time in telling them: in journalism we never do Research, we phone experts and ask them what they think. Eventually, of course, they learn that it’s often a waste of time to phone academic experts. Why? Because journalists are always dealing with some new development, but many academics don’t keep up with the latest news in their field and, being academics, they’re not willing to give an on-the-record reaction to the latest development the journo has just summarised for them. If you hate being pestered by phone calls from journalists, this is a great way to ensure you aren’t.

Academics are often highly critical of the things they read or see in the media. I don’t want to shock you, but journos are often just as critical of academics. Much of this criticism is unfair and, more to the point, uninformed. Each side judges the other by its own standards and finds the other wanting. What both sides fail to understand is that they’re playing different games, with different rules and different objectives. Both sides are involved in writing, but they write in very different genres. When I go into the budget lockup each year I get five hours to read and digest a stack of budget papers a foot high and write a punchy comment for the front page of the next morning’s paper. The very purpose of the lockup is to ensure I get no time to consult experts independent of the government before deadline. Not surprisingly, I sometimes misjudge the budget’s objectives and motivations and have to modify my views in subsequent days. Sometimes I even get some of the facts wrong. By contrast, for many years the leading economic academic journal in Australia used to publish a budget review in which leading macroeconomics professors delivered a carefully considered and measured (and possibly refereed) judgment. Just one problem: this review appeared at least six months after budget night. Journalism is said to be the first draft of history, but it’s a very rough draft. The public can’t wait six months to be told what the budget adds up to. Even so, there’s a useful place for the academics’ carefully researched and considered judgment on the budget. Each profession has a different role to play; there’s little to be gained by each judging the other by standards inappropriate to the role the other plays. The reason journos use the phone rather than a library is the extreme time pressures they’re under.

I’ve always been contemptuous of the Marxist theory of the press, that the media is an integral means by which the capitalists keep the workers in thrall. If this implies some sort of conspiracy by the media barons, it’s rubbish. Even so, I’ve come to believe that in many ways the media do help keep the wheels of the capitalist economy turning. It took me years in journalism to realise I was part of the fashion business - we deal with the latest, not just in clothes, but in movies, TV shows, restaurants, discos and much else, including ideas. But the paradox is that this Marxist approach seems to blind many academics to our capitalist motivation. They love to try to explain our behaviour in ideological terms and can’t see the bleeding obvious: the main reason we do what we do the way we do it is because we’re trying to make a quid. Our primary motive isn’t ideological, it’s commercial. What’s more, humans’ evolutionary drive to compete means that, despite its lack of commercial motivation, the ABC behaves much the same way as its profit-motivated rivals do.

Academia is - supposedly, hopefully - dedicated to the search for truth. But contrary to what many academics and media-users imagine, the news media isn’t. Although we’re supposed to be truthful in what we say, and many journalists are anxious to reveal an unexpected truth in some area, it’s a mistake to think the news media is on about the search for truth. Why not? Because much of the time the truth is dull. Media owners are dedicated to profit maximisation, and their minions seek to do this by selling a product called ‘news’. What is news? Whatever sells. What sells - what’s ‘newsworthy’ as journos say? Anything happening out there that our audience will find interesting or important, although the interesting will always trump the important. Paris Hilton is interesting but of no importance; the latest change in the superannuation rules is important but deadly dull - guess which one gets more media coverage?

Maybe 99 per cent of what happens in the world is of little interest: it’s the old, not the new; the good, not the bad; the usual, not the unusual. It’s dog bites man, not man bites dog. Much of the criticism of the media rests on the unspoken assumption that the media’s role is to give us an accurate picture of the world around us. We don’t have first hand experience of much of what’s happening around us and we need the media to inform us.

Sorry, but that’s just not what we do - because we don’t think there’s much of a market for it. Let me tell you two stories and then I’ll stop. Stories to demonstrate how we select news - how what we do bears no relation to the scientific method that guides so much of what academics do. Once when I was answering a question at a Treasury seminar in Canberra it occurred to me to say this: when social scientists take a random sample they may examine the sample and discard any outliers that could distort their survey, throwing them on the floor. A journalist is someone who comes along, finds them on the floor and says, ‘these would make a great story’.

Final story: I happened to be in the Herald’s daily news conference in February this year on the day Kevin Rudd’s $42 billion stimulus package was announced, with all its (then) $950 cash handouts. We discussed searching for a farmer who’d get $950 because he was in exceptional circumstances, $950 because he paid tax last year, $950 because his wife also works, $4750 because he has five school-age kids, and maybe another $950 because one of the kids is doing a training course. And, of course, he’d have a big mortgage, meaning he’d also save $250 a month because of the 1 per cent cut in interest rates announced the same day. Had we found such a person and taken a good photo of him he’d have been all over our front page. The point is that we were search for the most unrepresentative person we could find. Why? Because our readers would have been fascinated to read about him. It’s reasonable to expect the media to be accurate in the facts they report but, even if they are, it’s idle to expect them to give us a representative picture of the world. We’re not in that business.

Read more >>

SOME TIPS ON WRITING

Talk to English students, Westfield Sports High School
March 27, 2008

I have to tell you that I’ve talked to economics students more times than I can remember and talked to journalism students occasionally, but this is the first time I’ve spoken to English students. I used to struggle with English when I was at school. I actually failed it at what you’d call the School Certificate, though I managed to pull up by the time I got to the HSC.

I’ve been a journalist on the Herald for 34 years and before that I was a chartered accountant. Journalism is much better. Journalism is quite creative. You start with a blank screen and you write something that’s interesting and informative and maybe even a little entertaining. Every piece you write is different and how good what you write is depends on how skilled you are and how hard you try. It’s maybe not as creative as painting pictures, but it’s very create compared with accounting and most of the things people do in offices. Journalism is quite well paid; not as well paid as being a lawyer or a medical specialist, but better paid than being a teacher or university lecturer or an economist.

One thing that makes journalism a quite exciting job is that you’re always dealing with important or famous people - people who are far more important or famous than you are. You’re not necessarily dealing with celebrities, but you are dealing with powerful politicians, public servants and the bosses of big companies. When I was at high school years ago we had the minister for education come to the school one day. The principal and all the teachers were in a tizz for about a week before he came. Lots of things were painted and fixed up. They found all these pot plants which they put along the corridors. The school was cleaned from top to bottom and, on the day he was coming, no one was allowed inside the school in case we got it dirty. Now, if you were a young journalist working in the press gallery in State Parliament in Macquarie Street, you’d probably know the minister for education and his/her staff quite well. You wouldn’t be in the least awe of him, and you’d probably know he was a bit of a pisspot.

Another thing that makes journalism a quite exciting job is that you’re never far from the centre of the action. When you’re in a newsroom you’re in touch with all the interesting and important things happening that day in Sydney, in Australia and a fair bit of the world. You won’t be covering every interesting thing, but you will be covering one interesting thing and the people around you will be covering the others. When something big is happening, newsrooms develop a real buzz. There’s a lot of adrenalin pumping.

The trouble is, journalism is exceptionally hard to get in to. Far more young people want to be journalists than the media need to hire. This year the Herald hired only four new trainees despite the hundreds who applied. So how do you get in? It helps to be able to show that you’ve already been doing journalism as an amateur - writing for the school newspaper or the university paper, or church newsletter or the local rag or whatever. In every job interview, young people are asked why they want to be a journalist. Most of them say: because I love to write. Wrong answer. It may be true, but the people who hire journalists have heard it too many times before and aren’t impressed. It’s better to be able to prove you love to write - by producing examples of what you’ve written - than just saying you love to write.

But let me tell you the perfect answer to the question of why you want to be a journalist: because I’m a sticky beak and a gossip. Why’s that the perfect answer? Because that’s what journalists are and what they do. They stick their nose into other people’s affairs, finding out new and interesting things about them, then they broadcast what they’ve just found out to as many people as possible. It’s called reporting. Another way to put it is that journalists are pushy people and curious people. They’re pushy because they’re always asking people questions about things those people would often prefer not to talk about. But that won’t stop the journalists. Journalists will ring important people at home in the middle of Easter, spend the first 10 seconds apologising for disturbing them, then spend the next half an hour or an hour asking them questions.

Journalists are curious. They are interested in a lot of things, and, because they’re so interested, they’ve acquired a lot of knowledge about a lot of things over the years. They know about everything from TV stars and pop stars to archbishops and politicians. Do you know when the second world war ended? When someone asked the woman who does all the hiring of journalists for News Ltd what kind of person she was looking for, she replied that she wanted someone who knew when the second world war ended. Don’t take that literally. What she meant was, someone who had a good general knowledge. And one of the ways we at the Herald whittle down the hundreds of mainly uni graduates who apply for a journalist’s job is to give them all a test of their knowledge of current affairs.

Journalism is so hard to get into that sometimes the only way to do it is to get a job working for a suburban paper or a country paper, then work your way up to the big city jobs.

But now I want to talk about how to write like a journalist. I have to warn you that, in doing so, I may not be doing you a favour. Journalists don’t write great literature. And I’m not sure the way they write would impress the people who mark the HSC English paper.

A journalist’s aim is to produce ‘a good read’. A good read is a piece of writing people will enjoy reading because it’s interesting, but also because it’s an ‘easy read’. An easy read is something people can read - get the sense of - quickly and easily. People read newspapers in a great hurry and often without applying their full attention. They are volunteers - they’re reading for pleasure not duty - and if they discover they’re wading through porridge they’ll stop reading and turn the page.

The first key to producing a good read is to start by thinking about your audience. What are they interested in, what do they want you to talk about? How much do they already know about the subject? You have to pitch it at the audience’s level, and never assume they know as much about the subject as you do. (The marker knows more about the subject than you do, but their object is to find out how much you know.) The school equivalent of thinking about what your audience is interested in is: Read the question. A good read always takes the reader’s point of view into account. That doesn’t mean telling the reader what she wants to hear, but it does mean answering the questions the reader is interested in and tackling the subject from the reader’s perspective. It means putting yourself into the reader’s shoes.

The second key to producing a good read is to write in a simple, unaffected way, as though you were having a conversation with one other person. It’s wrong to think you write in a different, far more formal, stilted way to the way you speak. You’re trying to communicate with the reader, not impress her with your erudition. So write the way people speak and address yourself to the reader, as you would in a conversation.

Third, keep your writing simple and straight forward. Don’t try to impress people with big words, but as much as possible write using short, simple words. That means avoiding Latinate words and preferring Anglo-Saxon words. For instance, intercourse is a Latinate word - it comes from Latin or French - whereas the Anglo-Saxon word is a short, four-letter word that starts with F. No, I’m not really saying you should use potentially offensive words in your essays. Try this: the Latinate word is employment, the Anglo-Saxon words are work, or job.

Fourth, use short, mainly simple sentences. Don’t think that to impress people you have to have long, complex sentences. If a sentence is getting to long, break it up. Insert a full stop and start again. And don’t buy the notion that a sentence can’t start with but or and.

Fifth, the way to make your writing more vigorous and striking is use stronger verbs and nouns, not stronger adverbs and adjectives. Don’t say going when you could say running or strolling. They’re strong, more descriptive, more colourful verbs. Be sparing in your use of weak strengtheners, such as very or really. All of us have two vocabularies, one much bigger than the other. The big one is the list of words whose meaning you know; the small one is the list of words you use regularly. Good writers work to reduce the gap between the two. They strive to use more words the meaning of which everyone knows, but which aren’t used all that often. This makes their writing fresh and striking rather than dull and clichéd. It also makes their writing more precise - they strive for exactly the right word to describe an action or a thing.

Another trick to make your writing simpler, stronger and more vigorous is to almost always write in the active voice rather than the passive voice. The active voice means writing a sentence with the structure: subject, verb, object ie the person who’s doing whatever is being done to the thing it’s being done to. The passive voice uses the reverse structure: object, verb, subject ie what’s having something done to it by the person who’s doing it. Active: the cat sat on the mat. Passive: the mat was sat on by the cat. Which form is simpler and stronger? The passive voice is less personal, which is why it’s often used in bureaucratic and academic writing and why journalists try to avoid using it. There will be times, however, when you want to stick with the passive because it’s the object in the sentence that you’re wanting to highlight, not the subject.

Sixth, keep you writing readable by searching for potential ambiguities in any sentence you write - any way someone could take a different meaning from the sentence than the one you intended - and removing it. You recast the sentence - or maybe break it up - so it’s no long ambiguous. Another aid to readability is to signal to the reader every time you change direction. If you switch from giving arguments in favour of something to giving arguments against it, make sure you warn the reader that’s what you’re doing. You can do that as simply as starting the opposing thought with the word, however. When you change from discussing one aspect of an issue to discussing another aspect you should signal it. I’m doing that in this talk by the simple and inelegant but effective device of numbering my points. The reason for signalling every change of direction is to stop the reader getting lost, to help her follow the argument you’re developing. When people get lost they stop reading. If you give them enough sign posts to stop them getting lost, they say what a great writer you are.

If these tips are of any use to you it will probably be in your creative writing, not in essays arguing a point. But journalists do only non-fiction writing. Often - and particularly in economic journalism - we’re writing about concepts: inflation, unemployment, gross domestic product or whatever. Trouble is, people are far more interested in reading about people than about concepts. People are interesting; concepts are dry and hard to follow. So we try to get as much about people in while we’re discussing concepts - even if the people available are only the Prime Minister and the Treasurer. And whenever we’re explaining airy-fairy concepts, we try to quickly give a concrete example of the concept. People learn a lot more from concrete examples than explanations of concepts.

Finally, you want to write pieces that make an impact on the marker. They’re wading through a pile of essays on the same subject, but you want yours to stand out from the rest. You want them to be able to read it quickly and even enjoyably because, if they do, they’ll give you a higher mark. This is why I think it may help you to try a few of my tips on producing a ‘good read’. Most HSC essays are far from being a good read. I’m sure you know the standard essay-writing formula of introduction, body, conclusion. In the intro you tell them what you’re going to tell them; in the body of the essay you tell them then, in the conclusion, you tell them what you’ve told them. This formula has survived because it works, it’s effective. But, particularly in any creative writing, you want to do better - be less predictable and obvious. Start with an introduction that grabs the reader’s attention and makes them want to keep reading. Journalists put a lot more time into their first few sentences than into all the sentences that follow, and I think it’s worth your while to do the same.

Read more >>

WRITING A COLUMN

Talk to Fairfax trainees
February 19, 2008

Neroli has asked me to talk to you about writing a column, but also to say something about my career path and how I got into journalism, so I’ll start with that.

Thirty-five years ago I decided to take a break from my career as a chartered accountant, spend a year doing something interesting and then resume my accounting career. I spent the time doing the first year of what’s now the BA (Communications) at what’s now UTS. During that year I became the inaugural co-editor of the student newspaper at UTS, then called Newswit. As the year came to an end my journalism lecturer, Terry Mohan, asked me if I’d thought about making a career in journalism rather than accounting. I hadn’t, but on his prompting, I did. I applied to the ABC and the Fin Review and got nowhere, but Terry said he knew the cadet counsellor at the Herald and would get me an interview. It’s obvious to me now that he also put in a good word for me. I got the job and, at what was then considered to be the terribly mature age of 26, as a qualified chartered accountant, I started as a graduate cadet on a fraction of my former salary.

That was in 1974, the year following the first OPEC oil shock which ended the post-war Golden Age, the year our economy fell apart under the Whitlam government and the year newspapers discovered that politics was mainly about economics and decided they’d better start finding people who could write about economics. I was an accountant, not an economist, but the Herald decided that was near enough. I had a fair bit of economics in my commerce degree, of course. I soon realised the Herald was making quite extensive use of my professional qualifications, so I suggested it start paying me more appropriately and after about four months my cadetship was cut short and I was made a graded journalist on the equivalent of what I guess today would be a J4. After less than a year I was sent to Canberra as the Herald’s economics correspondent. After a bit over a year I was brought back to Sydney as economics writer, replacing my mentor, Alan Wood, who had resigned as economics editor. About two years later - that is, about four years after I’d joined the Herald - I was promoted to economics editor. That was 30 years ago this year and I’ve been economics editor ever since. In those days the main thing the economics editor did was write leaders - unsigned editorials - but within two years or so Alan Mitchell - who’s now economics editor of the Fin - took over the economics leaders so I could concentrate on writing columns. Since 1980 I’ve written three columns a week (plus a few odds and ends) - the same columns on the same days and in the same parts of the paper.

I should warn you that journalistic careers today aren’t as meteoric as mine was then. I just had the immense good fortune to be in the right place at the right time. But think of it another way: I’ve been doing almost exactly the same job for the best part of 30 years. I haven’t gone anywhere, haven’t had a promotion in 30 years. My one ambition in journalism was to be the Herald’s economics editor; I achieved that ambition in four years - far sooner than I ever imagined I would - and in all the time since I haven’t been able to think of any job I wanted to do more or any paper I wanted to work for more than what I had. The one big advance I’ve had in that time was when, a long time ago, The Age started running my columns. In terms of combined circulation and quality, newspapers can’t offer any bigger or better platform that the Herald plus The Age.

Now let’s talk about writing a column. It’ll probably be a long time before any of you get invited to write a column - it’s a job reserved for senior journalists - but there’s no reason you can’t aspire to that goal and take an interest in what it involves. I should warn you, however, that only good writers get invited to write columns (or be feature writers).

One question is the subject matter of the column - politics, economics, business, sport, whatever - but another is the style of column. There’s a range of partly overlapping styles to pick from. You could write a controversialist or contrarian column, where you’re always aiming to provoke the reader and say the opposite of what most people think. Paul Sheehan’s column in the Herald would be an example. You could write a populist column, where you sought to reflect back to the reader what most people could be expected to think about any issue. This is the stance taken by radio shock jocks. You could write a partisan column, aimed at gratifying just one side of the ideological divide and annoying the other side. For the Herald, Miranda Devine and Gerard Henderson write such columns on the Right and Adele Horan on the Left. The nature of such columns is such that you soon alienate readers on the other side, who stop reading you. Young journos often wonder why the editor persists with columnists they - the young journos - disapprove of. He does so because he’s trying to cater to the range of political views among his readers. Sensible editors of soft-left papers such as the Herald and The Age will want to run a few right-wing columnists to run cover for all the lefties and avoid alienating too many conservative readers. Another style of column that’s sprung up lately is the Gen Y or Young Things column, of which Lisa Prior’s column is a good example. Newspapers worry that they’re not attracting a new generation of readers, that the paper’s dominated by ageing baby boomers like me, and want to run a few columns that stop the paper looking so old and that express the attitudes of the younger generation. There’s scope for more Young Things columns in papers, which may provide an opening for some of you. But perhaps the best way you could talk someone into giving you a column would be to think up some style or subject matter than had never been tried before. There’s a lot of emphasis on encouraging young journalists to learn the way things are always done; there ought to be more emphasis on encouraging them to think up new ways to do things and things to do we’ve never done. I think that, in a modest way, I did a bit of innovating in my youth - and I don’t think it did my career any harm.

That brings me to my style as a columnist, which is to write informative, explanatory columns. Many readers are interested in the economy, but don’t know much economics and find a lot of what they see on the topic hard to understand or boring. My life’s mission is to explain to readers how the economy, economics and economic management work. From the very beginning I’ve put an enormous amount of effort into trying to offer clear and seemingly simple explanations. I’ve also put a lot of effort into trying to do that in a readable, reasonably entertaining way. I commend the notion of ‘explanation journalism’ to you. It’s not fashionable or widely practiced, but it should be - and, I suspect, will be. The world becomes ever more specialised and complex and the people in it become ever more specialised in their own narrow areas of expertise. So the need for popularisers who can explain important aspects of life to people who’ve specialised in something else keeps growing. As the blizzard of news engulfing us grows ever worse, many people’s approach to information overload will be to find the one commentator they trust and can understand, and ignore the rest. As the internet feeds the public’s craving for ‘breaking news’ - news that’s indiscriminate, undigested and often wrong or misleading - the off-line Herald that lobs up to 24 hours later has to have something quite different to justify its existence, and it strikes me that explanation - explaining how and why whatever happened happened - is the obvious way to go.

That covers the basic question of the style of column you choose. The next big question is who you’re writing the column for. People who paint pictures often claim that they do it only to please themselves, but mere journos don’t enjoy that luxury. They write to impress or please someone else. You can write to impress other journos (including your boss), to impress your contacts if you’re in a specialised round, or to please the readers. I think it’s always an indulgence to write to impress your contacts, but it’s just as bad to write to impress other journalists. That’s wrong, it’s bad journalism - but I suspect a lot of people do it. They write for their mates or to impress their competitors.

I want to suggest to you that, right at the start of your journalistic careers, you adopt as your ethic or credo or raison d’etre the simple motto: Serve the Reader (or listener or viewer). Everyone needs an ideal that’s greater than themselves to give meaning and purpose and even a touch of nobility to what they do, and I can’t think of any better one for a journalist. Stay focused on the reader and it will help you resolve a lot of ethical issues as you go about your work. Sometimes serving the reader involves giving them the light-weight froth and bubble you know they’ll lap up, but often it involves giving them what they should want - and busting a gut to convince them it’s both important and interesting. Let the readers dictate the question - but not the answer to it.

There’s loads more I could say about writing columns, but I want to finish with something that’s much more general to your career as a journalist. In journalism, as in all aspects of life, we often face choices between equally desirable, but conflicting, objectives. We can write about stuff that’s important, or about stuff that’s interesting. We can focus on being commercially successful, or we can focus on maintaining high journalistic standards. We can beat stories up, or we can stick strictly to the facts and be boring. The point I want to make is simple: don’t let yourself think, and don’t let anyone convince you, that you face such either/or, black or white, good or bad choices. When you face a choice between equally desirable but conflicting objectives, you don’t opt for one or the other, you pick some combination of both. In the jargon of economics, you find the best trade-off between the two. And it’s getting to the best available trade-off - where you’re getting a fair bit of both - that’s the hard part and usually requires a lot more effort on your part. You want to write about things that are important - and bust a gut to make them interesting. You want to be commercially successful - to get promotions; to do you bit to help sell papers - and be true to journalistic ideals. You want to avoid beating stories up and avoid being boring. All these combinations are possible - but not without extra effort and ingenuity.

Other points

I don’t just assert my opinion, I try to argue a case, quoting lots of facts and acknowledging both sides of the argument (eg It’s true that X, but Y). Sometimes your role is to remind the reader of why they disagree with you. That’s fine by me. But no matter how judicious you are, you must, as a matter of artistry, come to a conclusion and state an opinion. Only during an election campaign would I limit myself to on the one hand, but on the other.

You have to combine information with entertainment. Well written and an easy, enjoyable read eg Ian Verrender. An informal, chatty style goes down well.

Should inject some of your own personality.

Predictability is the great enemy of all columnists. Try to avoid having obvious, run-of-the-mill opinions on a particular subject. That doesn’t mean always having a contrarian view, tho if you view happens to be opposite to everyone else, that’s a plus. No, you have to have a more thoughtful, better-informed and thus novel view, which you achieve by giving the subject more thought and research than the reader has.

But you also need to avoid being too predictable over time. ‘I stopped reading Paddy because I always knew what he was going to say about any subject’ is the kiss of death for a columnist. Good to have views that are complex - that acknowledge differing shades of grey - and that evolve over time as you learn more from your experience but also your reading.

Criticise from a fixed viewpoint - a fixed model or view of the way the world works or should work - don’t keep changing your vantage point until you’ve got something to criticise. That’s the mark of an amateur.

I sometimes write what you might call primativist columns (like primitive art) - columns intended to connect with the unsophisticated view ordinary readers might adopt towards some development and move them forward, not columns that simply contribute to a debate being conducted at the sophisticated level by my expert contacts. That is, I act as a populariser and a bridge between punter and expert.

My ambitions are horizontal, not vertical. Pyramid or star system.

Readers are more interested in stories about people than about ideas. And they like stories to be stories.

Read more >>