There’s a pedantic style in British political journalism. It’s in the view that what counts is the letter and never the spirit of the argument. It’s in the obsession with the minutiae of pre-election spending pledges and their precise revenue sources. As if politics is really just a complex form of accounting and not about whose interests particular policies serve. This is not to say that politicians should get away with making up their figures. But where any sensible person looks at the spirit rather than letter of policy, BBC journalists can’t resist looking for either lies or errors in the sums.
The working assumption is that all human civilisation is the victim of some cosmic stupidity. Because ideas, values, and conflicts over the fundamental direction of society are precluded from their remit, they prefer to believe that politics is really about lies, errors, and blindness. Thus, if they didn’t see something coming, it must be because not only they - but all - were inevitably and unavoidably blinded. Hence BBC Daily Politics presenter and burly right-wing tribune Andrew Neil’s insistence on Twitter that nobody saw the financial crash of 2008 coming. Those who now claim to have seen it coming are fantasists, he says.
Various people took up his challenge to name those who had spotted the disaster coming: the economist and anti-debt activist Anne Pettifor; the NYU economist Nouriel Roubini; the risk analyst Nassim Nicholas Taleb. Neil’s response was to deny that anyone had foreseen the specific conditions surrounding the Lehman Brother collapse. Imagine for a moment that this conversation was taking place at a dinner party or a restaurant. You’d rightly dismiss Neil as a bore and a pedant. Because what he’s pigheadedly refusing to do is respond to the spirit rather than the letter of the argument.
Let’s take one particular warning about the financial system from 2005. Raghuram Rajan, at that time an IMF economist and later the head of the Indian Central Bank, argued that the growth of financial markets had created perverse incentives to take on greater ‘tail risk’, to ‘herd’ into similar investment practices, and to clutter up bank balances sheets with the costliest, riskiest debt. He also goes on to identify the increased funding issues associated with over-reliance on money market liquidity. Indeed, it was precisely the latter that dried up in 2007-08 and left banks cut out of the markets, unable to borrow or to lend. At a speech on the occasion of Fed Chair Alan Greenspan’s retirement, Rajan voiced his concern over the broader implications if trillion dollars of CDS (Credit Default Swaps, a product that provided insurance for debt holders in the event of default) being suddenly claimed if the mortgage market turned downward. He worried about the seizure of the money markets. Consequently, Rajan was dismissed as a Luddite. Tim Geithner, then chair of the Nee York Fed, declared he was ‘misguided.’
Rajan is not a radical - he was careful to couch his language in perfectly orthodox terms. His paper makes it clear that even in the narrow analytical frame provided by conventional economics, the conditions leading to the crash were perfectly visible. Yet, rather proving the point of Andrew Neil’s interlocutors on Twitter, he was largely ignored, his position receiving little coverage in current affairs reporting or in the business press.
Neil’s point is that no one correctly predicted the date, time, and precise quantities involved in the Lehman collapse. It’s an attempt to deny the validity of deeper political reflection on the causes of the crisis, the cheerleaders for this kind of financial exploitation, and its treatment by the organisations like the BBC. It’s also a way of letting the moral universe of elite finance off the hook: they all appeared to be doing a good job.
A large content analysis of the BBC’s output, conducted by researchers at Cardiff University, found that the organisation’s business coverage was heavily slanted towards voices from the world of high finance. During the six weeks surrounding the collapse of Lehman even orthodox voices such as Rajan were invited to speak five time less often than representatives of business. There is no data on the politics of the academics in question, but the study suggests these were ‘mostly neo-classical economists.’ This suggests that there was little challenge to the dominant view of what was happening, why it was happening or how to respond. The BBC failed to hold the big banks responsible for the crisis accountable.
It did this in the belief that perhaps such crises really were just accidents - that no one could have seen it coming. That ‘the numbers’ just weren’t showing the underlying risk. But this is nonsense, nonsense that may perhaps help figures like Andrew Neil sleep at night. For the more circumspect, the lesson is that those few siren voices were looking at the broader horizon and could see the tsunami coming.
A review of the Cardiff research is available here: https://www.newstatesman.com/broadcast/2013/08/hard-evidence-how-biased-bbc#amp
Rajan’s text is here: http://www.nber.org/papers/w11728.pdf