Wait - the news is not as bad as it looks

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The Independent Online
THE TELEVISION presenter Martyn Lewis put the cat among the pigeons last week by suggesting that the British news media, particularly television, overemphasised bad news and neglected good news. The response from professional broadcasters was predictably hostile. Readers' letters to this newspaper, on the other hand, plus the responses to radio phone-in programmes, suggest that many ordinary people agree with him.

But why is there this apparent bias? Martyn Lewis explored some of the reasons why this should happen in television, where the dramatic visual image tends to crowd out the factual analysis. In newspapers, less driven by violent film footage and with the space to present a much wider range of stories, it is less of an issue.

But there is one area of coverage - economic and business affairs - where the argument takes on a different dimension. For here it is actually very hard to know what is good news and what is bad.

Most people are pretty clear about general news values. Few would regard the direction of the civil war in Bosnia as encouraging, or welcome the Bishopsgate bomb - though in each case there will be some politically motivated people who cheer. Most people welcome news of a royal wedding - though the past performance of such marriages would suggest a certain caution.

They are clear about their response to economic news too. Take three examples: job losses are bad news; the run- down of manufacturing is bad news; new industrial investment is good news. The way the stories are presented reflects these priorities. Yet in all three cases the truth may very well be quite the reverse.

In the case of job losses, while a rise in total unemployment is pretty unequivocably bad news (and therefore gets far more media play than a fall, witness the last two months) individual job losses may reflect good news. In individual human terms, of course, it is miserable, and nothing should deflect attention from that. But when, say, National Westminster or Barclays announces that it is slimming its staff, it is in effect saying that it has found ways of increasing its productivity, of giving the same service to customers with fewer people - and the only way a country can grow richer is by using labour more efficiently. In this sense, job losses are actually a sign of rapidly increasing productivity. What ultimately matters is the ability to create the new jobs somewhere else, a type of story which is much harder to pin down.

Or take the run-down of manufacturing. It is so widely accepted that the country made a strategic error by its alleged neglect of manufacturing in the Eighties that people become quite angry if anyone suggests the opposite. But while the pace of change may have been too rapid and the whole process handled badly, cutting back the size of the manufacturing was probably right - taking a long strategic view. The trend in every so-called industrial country is for manufacturing to take a smaller and smaller share of output. Countries which have been relatively tardy in scaling back manufacturing, like Germany, now face grave strategic problems.

Or take investment. The popular reaction is that investment is good. Yet some of the really serious policy mistakes have been in large investment projects - the easiest way for a country to blow a couple of billion of real resources. Recent errors include the Thorp nuclear reprocessing plant at Sellafield, our nuclear power programme in general, and overinvestment in the financial services factories in the City and London Docklands. The jury is still out on Eurotunnel, and will be until the end of the century at least.

Unlike countries as diverse as Japan and Sweden, we did not in the Eighties make the error of investing in too much manufacturing capacity: both are busy shutting down car plants, including, in the case of Volvo, one that has been open for only five years. Moral: investment is not good in itself; it is good only if it produces a return.

These three examples should help to explain why it is so hard in economic matters to know what is good and what is bad. In all three there is a long lag between the event and the outcome: between people losing their jobs and new ones being created; between the run-down of manufacturing and the rise of the new service industries that will replace them; and between the time an investment is made and the time when it pays off . . . or fails to do so.

So judgements about things like economic performance really only make sense on a very long view. On such a view, Britain comes out not too badly. In 1913, when our industrial and commercial power seemed at its height, Britain's real GNP per head (the best long-run measure of living standards) was about 70 per cent of that of the United States. The figure is pretty much the same now. We have lost a little ground against France, for we were then some 5 or 10 per cent richer and now are that much poorer. We have lost more against Germany, which was significantly poorer on the eve of the First World War, and still more against Japan. But both of those countries had started their industrial revolutions long after the UK, and were at that stage still catching up. On the other hand we have gained ground against Australia, which at that stage was richer than Britain and now is marginally poorer.

Looking ahead on a long view (though perhaps not as long as that]) there are a couple of features which are quite encouraging for the UK. These are rarely reported, not so much because they are encouraging, but more because they are not immediate. One is the changing age structure of the UK relative to other industrial countries: we are getting older, but not as fast as the others. We were, with France, the oldest of the Group of Seven economies in 1955, in terms of the proportion of over-65s. We will, by 2020, be the youngest, along with the US. That relative change ought to make Britain a more dynamic economy than most of our competitors. (The real economic winner of the post- war era, Japan, goes from being the youngest to the oldest over that period.)

The other is that the structure of the UK economy may be quite well suited to a world that spends more of its wealth on services and craft products and less on mass-manufactured goods. That seems to be the way the developed world economy is moving.

Neither of these features has much to do with governments. They are not news as such. But they will be shaping our lives when the top five items on the television news tonight are long forgotten.

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