While the ABC continues to tear itself into pieces trying to deal with Emma Alberici’s pieces on company tax, other material slips through on the ABC site that is, even compared to the worst accusations levelled at the ABC’s chief economics correspondent, more reckless.
This morning, a piece labelled “Analysis” and based on the Stan Grant program Matter of Fact, inquired “Does Australia have a ‘zombie economy’ that is at risk of a crash?” The piece was about 800 words, most of which were devoted to giving economist Steve Keen a platform to spruik his argument that the Australian economy is about to crash because of household debt.
“Very few experts saw the global financial collapse coming less than a decade ago. Some of those who did are warning that we stand again on the same precipice,” wrote Grant. There’s only a small section at the end noting positive overall economic conditions.
As we noted a month ago, the ABC is a serial offender in giving Keen, who has been repeatedly and badly wrong with his predictions of property crashes and recessions, and other professional doomsayers like Gerard Minack, an uncritical platform to frighten people with tales of impending doom.
Keen is obsessed with household debt, which he views as the product of a dangerous financial system seemingly little different to a Ponzi scheme. So let’s ask the Reserve Bank what it thinks about Australia’s level of household debt. Handily, Assistant Governor Michele Bullock (who oversees the financial system) devoted an entire speech to household debt just last week.
It’s worth reading — and one wonders whether Grant’s researchers did in preparing his program. She goes carefully through a wide range of metrics, both empirically testable and self-reported, for debt and another idea the media likes to push, “mortgage stress”, and struggles to find any evidence of a significant household debt problem. Indeed, “the number of households experiencing mortgage stress has fallen over the past decade.” Her overall conclusion:
The information we have suggests that, while there are some pockets of financial stress, the overall level of stress among mortgaged households remains relatively low. Furthermore, the banking system is strong and well capitalised, and is supported by prudent lending standards.
Nary a mention in Grant’s piece.
The ABC certainly isn’t alone in running stories of impending doom. Just yesterday, news.com.au ran a piece on serially wrong US doomsayer Harry Dent and his warnings that a downturn worse than the Great Depression was around the corner. At least news.com.au had the decency to note that Dent “incorrectly predicted a 50 percent wipe-out in Australian property prices in 2014”. No such context from the ABC for Keen’s wrong predictions.
Meantime, the real threat to growth and prosperity is staring us in the face: it’s the insidious threat of zero wages growth and what threatens to become the normalisation of expectations of income stagnation. But that’s not as sexy as yet another conspiracy theory about how the financial sector will ruin us all. And exploring it might prompt another angry letter from Malcolm Turnbull.