Journalists Neil Irwin and Weiyi Cai kicked off 2021 with a typical business column in The New York Times.
It opened like this:
The central, befuddling economic reality of the United States at the close of 2020 is that everything is terrible in the world, while everything is wonderful in the financial markets.
It’s a macabre spectacle. Asset prices keep reaching new, extraordinary highs, when around 3,000 people a day are dying of coronavirus and 800,000 people a week are filing new unemployment claims. Even an enthusiast of modern capitalism might wonder if something is deeply broken in how the economy works.
As a proponent of capitalism – the greatest wealth creator and anti-poverty program of all time – I fully agree that something is deeply broken.
But it’s not “modern capitalism.” It’s modern journalism.
The selective use of facts, the near-total lack of context and the relentless negativity of the mainstream media distort the world we live in and keep us misinformed.
It also costs investors a lot of money.
This isn’t just my point of view. Hear out renowned public educator Hans Rosling.
In his book Factfulness, he describes how he posed hundreds of questions about poverty and wealth, energy and the environment, guns and violence, and global developments in health, education and gender equality to thousands of people in dozens of countries.
What he discovered was a story of massive ignorance, even – or especially – among well-informed, highly educated people, “including Nobel laureates.”
“Everyone seems to get the world devastatingly wrong. Not only devastatingly wrong, but systematically wrong… [The test results] are worse than the results I would get if the people answering my questions had no knowledge at all.”
As an investor, your first job is to ascertain the state of the world and develop an accurate view of potential risks and opportunities.
Yet – think about this – Rosling discovered that even the heaviest consumers of news were as poorly informed as if they “had no knowledge at all.”
In every case, they erred in being far more pessimistic than the data warranted.
No wonder the vast majority of Americans distrust the mass media – and the vast majority of investors underperform the market.
The problem, of course, is that we all depend on the media to learn what is happening around the world.
Most of us don’t have access to the data necessary to create an independent perspective on a wide variety of subjects.
Journalists do. But if the facts won’t lead the reader to see the world – and especially the United States – in a way that stokes fear, anger, resentment, envy or sorrow, they shoehorn it in.
Finding problems and setbacks isn’t difficult during a global pandemic, of course.
Millions of Americans have gotten sick. Hundreds of thousands have died. Millions of workers lost their jobs, at least temporarily. Thousands of small businesses closed, many for good.
American life expectancy declined last year. Poverty increased. Violence rose. So did domestic abuse.
And political polarization is worse than ever, fueled in part by (ahem) the media.
But let’s get back to the main point. The New York Times quote above was from a news article, not an editorial.
(The real gloom and doom is reserved for the opinion pages.)
But when “everything is terrible in the world” appears in a news piece, the jig is up. We know that reporters aren’t even pretending to be objective.
It used to be that journalists reported the facts: who, what, when, where, how and why.
But somewhere along the way, the mission changed.
Journalists realized that if a piece of reportage doesn’t tell readers (or viewers) what they’re supposed to think and feel, they might draw conclusions that don’t fit the desired narrative.
As I pointed out, there has been no shortage of negative developments in the country and around the world.
There always have been. There always will be.
But that’s not the whole story. And certainly not the most balanced or accurate one.
More to the point, if we live in a horrible world at a terrible time and the future looks awful, financial markets are reflecting a make-believe world of delusion and denial.
But that simply isn’t true.
There are lots of promising developments and positive trends that bode well for the future.
Indeed, it’s this perspective that investors need to adopt to take advantage of major opportunities.
But is it fact-based rather than opinion? Does objective data support this view? And is it really true that the mainstream media delivers a warped version of the world that clouds your perspective and costs you serious money?
Yes, yes and yes.
And in Monday’s column I’ll explain why.
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