« Why don't American kids respect their parents more? | Main | Untitled »
Why is the European press more pessimistic than the American press?
Paul Krugman points this out, for instance read today's FT article, titled in the print edition "Investors Fear New Turmoil: Credit markets Expect Recession in US." InTrade gives about a fifty percent chance of recession in the U.S., so you could argue the case for optimism or pessimism either way.
Does the greater pessimism of Europeans produce more disciplined and respectful children? Or just more pessimistic newspapers? I believe the "America is due for a comeuppance" view remains very popular across the Atlantic.
Addendum: Here is one optimistic account, from Oklahoma.
Posted by Tyler Cowen on November 26, 2007 at 08:40 AM in Economics | Permalink
Comments
I think a lot of people want to give good news, to name the best outcome that still might be possible. I know I do. I think we are headed for a recession, but it's hard to look at a co-worker with a difficult mortgage and tell him that.
So I say 'things might be ok because ..."
Posted by: odograph at Nov 26, 2007 8:49:00 AM
Nah, this is not pessimism. European media -- i.e. the journalists and editors -- would love an american recession. It is just your good ol' schadenfreud. In fact, I am definitely hit by it myself. I have to concentrate to avoid looking forward to a recession in the west.
Posted by: Sigve Indregard at Nov 26, 2007 9:12:30 AM
Well, the Larry Summers piece, also in today's FT, says the same thing. Is Mr. Summers American or European?
Posted by: floyd at Nov 26, 2007 9:17:42 AM
I think there are any number of reasons for this. The first and foremost is perspective. Things look rather different from here. It appears obvious that the American dream has been running on borrowed time. It is an economy that produces almost nothing outside of the agricultural sector; it has unsustainable current accounts and government deficits; it had, until very recently, an overvalued currency that was propped up by the stranglehold it had on the global oil trade.
If China bails out it will get very ugly indee.
Posted by: yank in london at Nov 26, 2007 9:19:23 AM
"It is an economy that produces almost nothing outside of the agricultural sector"
Congratulations sir, for writing the stupidest thing I've ever read. Wow. Well done indeed.
Posted by: angus at Nov 26, 2007 9:29:47 AM
In case anybody wants it, here's a direct link to InTrade's contract page for the probability of a US recession in 2008:
http://www.intrade.com/jsp/intrade/common/c_cd.jsp?conDetailID=508654
I'll second the "comeuppance" view ... a lot of people would seem to be hoping for a US downturn and (somehow) that Europe escape it.
Posted by: John Barrdear at Nov 26, 2007 9:39:30 AM
I doubt the FT is a very typical European newspaper., Most newspapers publish little texts "Crisis in US might be worsening, experts say", "Crisis in US might be almost over, experts say".
Posted by: Great Zamfir at Nov 26, 2007 9:43:18 AM
I suspect this is symmetrical: US newspapers seem generally keen on predicting the imminent doom of continental Europe.
I think the basic logic is "foreigners do things differently to us, so they must be doomed."
Posted by: Theophile Escargot at Nov 26, 2007 10:01:15 AM
The book "Cowboy Capitalism: European Myths, American Reality" by Olaf Gersemann poses an interesting hypothesis about European media negativity about the US.
The main points are:
(1) Unlike in the US, where multitudes of companies run the media and many different voices are heard, in European nations quite frequently governments run the media and fewer voices are heard.
(2) European governments tend to be dominated by parties with leftist/socialist (by American standards) agendas.
(3) These political parties have a vested interest in playing up negatives of the US system (greater crime, higher infant mortality, greater economic inequality, the less job security) because if they played up the positives of the US system (American make more money than Europeans do, live in bigger houses, have lower unemployment, find jobs much more quickly after being fired, tend to be much more optimistic about their economic futures, etc.) more Europeans might demand political / economic conditions similar to those that exist in America.
Posted by: Chuck Brown at Nov 26, 2007 10:03:31 AM
@Chuck:
As a European, I think that is just about right. Anti-americanism among
elites (academic, political) is a way of providing a distraction of our
own problems.
Posted by: JSK at Nov 26, 2007 10:35:16 AM
I believe the "America is due for a comeuppance" view remains very popular on this side of the Atlantic, too.
Posted by: Rich Berger at Nov 26, 2007 10:43:55 AM
"It is an economy that produces almost nothing outside of the agricultural sector; it has unsustainable current accounts and government deficits; it had, until very recently, an overvalued currency that was propped up by the stranglehold it had on the global oil trade."
This makes me laugh. But there are many people in Europe who believe in this garbage. I'm tired of hearing my socialist friends across the Atlantic scream, "Europe produces more steel than America, wait till the apocalypse occurs and we have steel."
Posted by: thehova at Nov 26, 2007 10:45:15 AM
I think the dollar and current credit crisis are overdone, but even if I accept that American problems are worse than European problems (and on three major ones, demographics, total debt to GDP and unfunded liabilities, the U.S. is in a far better position) does anyone doubt the U.S. won't respond better? Outside of Sarkozy in France, is any European nation pushing for reform as much as this year's political candidates in the U.S.? Where is Europe's Ron Paul?
Posted by: 8 at Nov 26, 2007 10:56:53 AM
Well there have been general studies on the liberal bias of some news outlets in the United States as well. Any media class that examines the press will tell you the same thing that has been known for generations: pessimism sells in the western world. At the same time however, the terms "pessimism" and "realism" are not mutually exclusive.
Posted by: Samir Nurmohamed at Nov 26, 2007 11:06:49 AM
OK, so I am an American pessimist (that's actually true), but hasn't the sub-prime story come out in drips and drabs? With each stage told as "this could be the end of it"?
This certainly could be the end of it, but it could also be a sliding position in a longer tale.
Posted by: odograph at Nov 26, 2007 11:11:07 AM
Today's WSJ (a definitely American newspaper), top right corner of front page: "Recession Fears Weigh Heavily on Markets".
First sentence: "... markets are sending an increasingly ominous signal that a U.S. recession could be near."
Without an objective content analysis, I'm not sure I believe the premise that the European press is more pessimistic.
Posted by: ZBicyclist at Nov 26, 2007 11:25:25 AM
Forget about the papers and just look at the divergence between the Fed Funds Rate and LIBOR. I would call it fear more than pessimism, but that is a real impact indicator of European fear of U.S. debt markets.
Posted by: Patinator at Nov 26, 2007 12:10:03 PM
As someone who spent years as the US economist for a major European financial firm the hardest thing I always had to sell to Europeans was the idea that you could ignore government policy in analyzing the US economy. In Europe national economies are smaller, governments account for a larger share of the economy and government policy has a bigger impact. Consequently, their biases are to expect policy to work as advertised. So they look at US policy and think it is internally inconsistent and the same policies would not work in Europe. So they think the same thing about the US.
Posted by: spencer at Nov 26, 2007 12:14:22 PM
The FT is as economically right-wing as it gets so I don't think the smug European explanation works. It might do if it was the Guardian. Nevertheless, it is undoubtedly true that Europeans are quite pleased by the idea of a US recession. 15 years is a long time to have your nose rubbed in the sand about your economic shortcomings.
You have to understand the European perpective on this. What they have wanted to guard is a way of life that they think has value. A way of life in which all people have access to a decent minimum standard of living and where work and economic growth are not valued above family and security. The stakes are high. If America has a bump here for five years and Europe does not, the 25% wealth gap between the countries will shrink to something that can be explained away and we in Europe can happily believe that a version of our system can compete with the US. If, however, the US pulls further away even after all this, simply put, we lose.
You better believe Europeans want the US to fall into recession, even if it is only a deeper one than we do.
Posted by: Finnsense at Nov 26, 2007 1:12:41 PM
Finnsense-
If the Europeans value a "way of life in which all people have access to a decent minimum standard of living and where work and economic growth are not valued above family and security", why should a 25% wealth gap matter? Just a tradeoff, it is. In fact, many of us drones in the US have made decisions in favor of family and security over wealth, and vice versa. Nice to have the choice, rather than having it mandated by "us".
From what I can gather there is a considerable amount of room to the right of the FT, although a Guardian reader might not agree.
Posted by: Rich Berger at Nov 26, 2007 2:17:30 PM
Tyler,
With all due respect (I am a big fan), but you obv do not understand the depth of and moreover, the importance of irrational ant-Americanism in European culture. As a European, let me make it clear, Europeans are steeped in and indoctrinated with anti-Americanism at a young age.
All you have to know about European anti-Americanism is three broad things (yes, these are generalizations):
1) Europeans tend to define themselves by what they are not. That is, Europeans are not Americans, therefore they are Europeans (sort of a tautology, I know). Europeans do not guzzle cola and hamburgers etc etc --- while Americans tend to define themselves by what they are, they love apple pie, baseball, cowboys etc etc
I do not think that the European self-definition/psyche is a healthy one.
2) European anti-Americanism is the social glue what holds Europe/the EU together. What do, say, Hungary and Greece have in common? Really, not a whole helluva lot -- but get a bunch of Europeans together, they can all agree that Americans are barbarians/douchbags etc etc
3) Love/hate relationship of Europe with America. They are drawn to America but at the same time repelled. This is hard to reconcile.
There are many more valid generalities that one make to explain the European psyche, which in turn, explains European newspapers attitudes' on the American economy.
Posted by: Varangy at Nov 26, 2007 2:23:07 PM
The FT is English with a heavy American lean. They've covered the credit issues better than anyone and have not been ping ponged in their sentiments by which way equities are moving on a given day. I've no idea what the Europeans think of the situation but my guess is that the FT sits at a very informative nexus of credit market chatter.
Posted by: The Pragmatist at Nov 26, 2007 2:28:50 PM
Varangy,
Funny, you just described the Democrat Party in America, especially over the last five or six years.
Posted by: edh at Nov 26, 2007 4:43:37 PM
The Fin Times is indeed relatively pro-American and very well informed about
financial markets. It is probably the best newspaper in the world right now,
especially about financial markets. The sort of knee jerk anti-Americanism
that exists and is discussed in much of this commentary is more likely to be
found in Le Monde Diplomatique in France or La Repubblica in Italy.
Two differences between Europe and America that I have not seen mentioned
so far are 1) that the euro is about to hit an all time high against the
US dollar, which has many Europeans worried about the competitiveness of their
industries against Asian and American ones at such high rates, but which most
also see as a vindication of their system, and 2) a majority of the US population
does not accept the theory of evolution, in contrast to all but a couple of very
backward European countries and all of high income Asia. This fact is seen as
playing a role in our "cowboy" approach to foreign policy, and a lot of other
things that they neither like nor respect about the US.
Posted by: Barkley Rosser at Nov 26, 2007 4:53:40 PM
thehova,
I believe your socialist friends are right. Steel production will have vital impact on the outcome of the coming dreadnought race...
Posted by: Petrarca at Nov 26, 2007 4:55:46 PM
