Ours is a media culture obsessed with celebrities. We care what celebrities think about politics: witness Alec Baldwin writing about politics. We care what politicians think about sports, like when we ask Obama about the NCAA tournament. So it’s no surprise that this recession has seen the rise of the celebrity economist, whose opinions make headlines, no matter how bland or obvious. And while these financial hotshots have earned their high stature by being right and getting rich in the process, their celebritization makes for shallow economic coverage. Right now, the mechanics of the economic recovery are in the hands of the government, not high-profile finance gurus, making this focus on Warren Buffett and his ilk lazy journalism. Let’s delve.
Last week, while covering an economic forum in South Korea, Reuters treated economist Nouriel “Dr. Doom” Roubini ’s speculative and generic remarks as news and deep analysis:
“We are not yet at the bottom of the U.S. and the global recession,” said Roubini. “The contraction is still occurring and the recession is going to be over more toward the end of the year rather than in the middle of the year.”
“There is still too much optimism that a recovery is just around the corner,” said Roubini.
“A more sober analysis suggests we’re closer to the bottom; there is light at the end of the tunnel, but it’s going to take a while longer, and the recovery is going to be weaker than otherwise expected.”
Earlier in the month, CNBC interviewed Roubini on air, eliciting these gems of insight:
“People talk about a bottom of the recession in June, but I see it more like six to nine months from now,” Roubini said. “The green shoots everyone talks about are more like yellow weeds to me.”
And, Warren “the Oracle of Omaha” Buffett also made headlines with vague observations: “Warren Buffett Says Economy Has ‘Fallen Off a Cliff’”, proclaimed a Bloomberg headline.
“We are doing things now that are potentially very inflationary,” Buffett said.
“Corporate America has a lot of room to behave better,” Buffett said.
None of these comments are particularly astute, and if they were made by any average joe, they’d get no play. But when they can be attributed to the wealthy and successful, they’re treated as gospel. And, being rich and successful doesn’t prevent anyone from being wrong. That’s one lesson that we must have learned from the financial meltdown, right? Ultra-powerful CEOs make mistakes. To anoint them with super-hero powers of intuition is a treacherous task.
Granted, Roubini and Buffett earned their fame, wealth, and reputations by being right enough and smart enough. When smart, successful people talk, we should listen, right? Well, sort of. But pieces like these create cults of personality around extraordinary individuals whose lives and insights have very little relevance to how everyday Americans live their lives. The question of when the recession will end, which has been the subject of endless speculation, is much less relevant than how it will end, and who the winners and losers will be in the reckoning.
The over-prominence of these celeb-gurus also speaks to reporters’ over-reliance on a small number of sources. Roubini and Buffett are two names known all over newsrooms, and some journalists find it easy to turn to familiar sources over and over again, instead of seeking out less well-known, more original, innovative thinkers. Plus, some reporters may not feel as comfortable pressing either man as hard as they would with someone who is less intimidating. So, there’s lots reasons to avoid the big shots.
There might be one more reason why these so-called celebrity experts may not be the best sources of wisdom for economic prognostication. There are lots of studies that suggest that, compared with non-experts, experts may not be as good at making predictions as we expect them to be. But experts will sell their guesses with much stronger conviction than novices, and that’s a problem that journalists would be wise to notice. Everyone wants to know when the economy will recover, but so far celebrity economists’ guesses are just that—guesses. Let’s treat them as such.