Airbrushing the news

Posted on March 2, 2013 by Nicholas Gruen
Posted in Economics and public policy

In this OECD report of falling investment, the culprits are "international uncertainty", "the euro crisis" and catchall "a deepening mistrust in the global state of affairs". Inadequate demand? Well it doesn't rate a mention.

8 Comments

  1. Tel
    March 2, 2013

    Not the confidence fairy? Noooooo!

  2. paul walter
    March 3, 2013

    Just keep writing well, Dr Gruen. I'd comment further but have a deep headache just now and and am set to abandon the screen for a bit.

  3. derrida derider
    March 4, 2013

    Feh - its an OECD Economic Directorate document. Having been involved in some of these things I can tell you they're not ALLOWED to say anything that might offend their EU fellow bureaucrats (there is quite a revolving door between these two sets of officials). They can get stuck into pretty well anyone else, including the yanks.

  4. Pedro
    March 4, 2013

    Is that really so deceitful? Investment is a bet on the future, so people declining the bet are expecting a lack of sufficient demand for the products of their investments foregone. Now, do you think that they simply decide there's not enough demand coming; or do they think about particular factors that might impact on the extent of future demand?

    Saying that aggregate investment is low because of an expected lack of aggregate demand is to state something that is both trite and useless.

  5. Pedro
    March 4, 2013

    Here's an argument for you. Though I still think a discussion of the causes of falling investment is pretty clearly talking about expected lack of demand as the transmission mechanism unless they are claiming a lack of investment funds. http://www.themoneyillusion.com/?p=19719

  6. Tel
    March 5, 2013

    Speaking of the confidence fairy...


    A new Rasmussen Reports national telephone survey finds that just 25% of American Adults now think the economy will be stronger a year from today. Nearly twice as many (48%) believe it will be weaker in a year's time. Eighteen percent (18%) expect it to be about the same.

    http://www.rasmussenreports.com/public_content/business/general_business/march_2013/new_low_25_say_u_s_economy_will_be_stronger_in_one_year

    Possibly this could be distantly related to the lack of investment. I know Rasmussen have a somewhat anti-Obama bias, but I think the overall sentiment is pretty bad right now.

  7. Labor Outsider
    March 16, 2013

    That is not true at all DD. I was a co-author of two European surveys in the Econnomics directorate and European policies came in for considerable critical review in both of them. Of course the survey process is meant to be a dialogue with governments and guide them in a better direction so it would be rather pointless to trash them. For the record, there are plenty of OECD documents citing inadequate demand in developed countries, hence why most have negative output gaps according to OECD estimates.

  8. Labor Outsider
    March 16, 2013

    Pedro's point is also valid - it is somewhat useful to think about why there is a lack of demand isn't it?