Spinning the Economic Story

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The dismal science of economics lies at the heart of many public policy debates, but the range and quality of economic opinion appearing in Canada's news media has never been more dismal.

Not that long ago, editors seeking expert advice on economic policy would canvass a wide range of opinion in the nation's universities. Their sources would be scholarly economists whose research appeared in peer-reviewed economics journals.

Today, news coverage of economic issues ignores academic voices in favour of business-supported study mills flogging neo-conservative nostrums for the nation's economic ills.

Cloaked in pseudo-academic garb by virtue of their self-designation as "institutes," the Fraser Institute, the C.D. How Institute, the Atlantic Institute of Market Studies (AIMS) seek to influence news coverage and public policy toward a consistent agenda: less government, lower and less progressive taxes, fewer social programs, more freedom for the owners of capital, and less power for the purveyors of labour.

Their "studies" - often penned by junior varsity economists - are assiduously promoted to key journalists and influential bureaucrats with news releases and executive summaries that distil complex topics into easily digested simplicities.

Lars Osberg, a distinguished emeritus professor of economics at Dalhousie University, recently compared his relationship to the Atlantic Institute for Market Studies as that of a geographer to the Flat Earth Society. Economist Michael Bradfield refers to AIMS's Ontario counterpart as the "Seedy" Howe Institute.

Such criticism hasn't blunted the success of these organizations, which has been astonishing. Newspapers eat them up. A host of policy issues - the shift from income taxes to consumption taxes, the crippling of Canada's generic drug industry and the consequent stratospheric rise in drug prices, the pursuit of international trade unhampered by environmental safeguards or worker rights - were all promoted heavily by these study mills.

The left has responded haltingly, with counter-institutions like the Canadian Centre for Policy Alternatives, publisher of the Alternative Budget, but its effectiveness has been hindered by the stigma of union financing in a way that business-financing has not impeded the right wing institutes.

Readers with Internet access can find a useful antidote to the tendentiousness of media economic coverage in the work of Brian MacLean, an economist at Laurentian University.

Every few weeks, MacLean distributes an e-mail newsletter called "Canada's Economy in the Newspapers." Each issue reviews several recent articles on economics, pointing out questionable assumptions, faulty interpretations, and logical contradictions. His style is engaging and easy to follow without sacrificing academic credibility.

In one recent example, a pair of AIMS papers portrayed Canada's system of equalization as a millstone that, far from assisting have-not provinces, had imprisoned them in a welfare trap. The gist of the argument is that increased provincial revenues from economic development, particularly resource-based developments, are largely offset by reductions in equalization payments, with the result that provincial government's have little or no incentive to promote economic development.

Readers probably don't need MacLean's help to detect the real world absurdity of this conclusion. Since the Second World War, and likely for decades before that, economic development has been a nearly universal obsession for provincial and federal governments alike.

In the logic of AIMS's researchers, attempts by provincial governments to wheedle better royalty deals out of oil companies and mining corporations are misguided policies that could be eliminated if only the equalization program were gutted.

MacLean points out other distortions in the AIMS analysis, such as the fundamental misconception that equalization is somehow supposed to be a tool for economic development, and Atlantic Canada's continued lack of prosperity is proof of its failure. But equalization has nothing to do with economic development; its purpose is to ensure reasonable comparable levels of critical government services like health, education, and welfare, without wildly different levels of taxation.

It has been very successful at that achieving goal, at least until the recent attack on the program by Alberta and Ontario.

Readers can subscribe to "Canada's Economy in the Newspapers" by writing Brian MacLean at brian@nickel.laurentian.ca. Archived issues are available here.

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