The WTC Attack, Sep 11 2001

Commentary and Analysis

Paul Krugman: disconnect between media and reality

An Alternate Reality
November 25, 2001
New York Times

Most Americans get their news from TV. And what they see is heartwarming - a picture of a nation behaving well in a time of crisis. Indeed, the vast majority of Americans have been both resolute and generous.

But that's not the whole story, and the images TV doesn't show are anything but heartwarming. A full picture would show politicians and businessmen behaving badly, with this bad behavior made possible - and made worse - by the fact that these days selfishness comes tightly wrapped in the flag. If you pay attention to the whole picture, you start to feel that you are living in a different reality from the one on TV.

The alternate reality isn't deeply hidden. It's available to anyone with a modem, and some of it makes it into quality newspapers. Often you can find the best reporting on what's really going on in the business section, because business reporters and commentators are not expected to view the world through rose-colored glasses.

From an economist's point of view, the most revealing indicator of what's really happening is the post- Sept. 11 fondness of politicians for "lump-sum transfers." That's economese for payments that aren't contingent on the recipient's actions, and which therefore give no incentive for changed behavior. That's good if the transfer is meant to help someone in need, without reducing his motivation to work. It's bad if the alleged purpose of the transfer is to get the recipient to do something useful, like invest or hire more workers.

So it tells you something when Congress votes $15 billion in aid and loan guarantees for airline companies but not a penny for laid-off airline workers. It tells you even more when the House passes a "stimulus" bill that contains almost nothing for the unemployed but includes $25 billion in retroactive corporate tax cuts - that is, pure lump-sum transfers to corporations, most of them highly profitable.

Most political reporting about the stimulus debate describes it as a conflict of ideologies. But ideology has nothing to do with it. No economic doctrine I'm aware of, right or left, says that an $800 million lump-sum transfer to General Motors will lead to more investment when the company is already sitting on $8 billion in cash.

As Jonathan Chait points out, there used to be some question about the true motives of people like Dick Armey and Tom DeLay. Did they really believe in free markets, or did they just want to take from the poor and give to the rich? Now we know.

Of course, it's not all about lump- sum transfers. Since Sept. 11 there has also been a sustained effort, under cover of the national emergency, to open public lands to oil companies and logging interests. Administration officials claim that it's all for the sake of national security, but when you discover that they also intend to reverse rules excluding snowmobiles from Yellowstone, the truth becomes clear.

So what's the real state of the nation? On TV this looks like World War II. But though our cause is just, for 99.9 percent of Americans this war, waged by a small cadre of highly trained professionals, is a spectator event. And the home front looks not like wartime but like a postwar aftermath, in which the normal instincts of a nation at war - to rally round the flag and place trust in our leaders - are all too easily exploited.

Indeed, current events bear an almost eerie resemblance to the period just after World War I. John Ashcroft is re-enacting the Palmer raids, which swept up thousands of immigrants suspected of radicalism; the vast majority turned out to be innocent of any wrongdoing, and some turned out to be U.S. citizens. Executives at Enron seem to have been channeling the spirit of Charles Ponzi. And the push to open public lands to private exploitation sounds like Teapot Dome, which also involved oil drilling on public land. Presumably this time there have been no outright bribes, but the giveaways to corporations are actually much larger.

What this country needs is a return to normalcy. And I don't mean the selective normalcy the Bush administration wants, in which everyone goes shopping but the media continue to report only inspiring stories and war news. It's time to give the American people the whole picture.

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