Audit Notes: WSJ Editorial Misleads, That Flack, Respawning

The Wall Street Journal editorial page—surprise, surprise!—posts a misleading piece on the anemic recovery (emphasis mine):

White House economists and liberals say the financial roots of this recession have made the recovery unusually difficult, the fiscal stimulus saved the day, and thus we need more of it. Our view is that hyperkinetic government policies have done more harm than good, leading to uncertainty and higher costs that have undermined business and consumer confidence and slowed the economy’s otherwise natural recuperative powers.

But we have empirical research that shows that financial crises have long-lasting impacts on economies. Carmen and Vincent Reinhardt, who looked at the aftermath of financial crises, found:

Our research found real per capita gross domestic product growth tends to be much lower during the decade following crises. Unemployment rates are higher, with the most extreme increases in the most advanced economies that experienced a crisis. In 10 of the 15 episodes we studied, unemployment never fell back to its pre-crisis level, not in the following decade nor right up to the end of 2009.

It gets worse. Where house price data are available, 90 per cent of the observations over the decade after a crisis are below their level the year before the crisis. Median prices are 15 to 20 per cent lower too, with cumulative declines as large as 55 per cent. Credit is also a problem. It expands rapidly before crises, but post-crash the ratio of credit to GDP declines by an amount comparable to the pre-crisis surge. However, this deleveraging is often delayed and protracted.

Our review of the historical record, therefore, strongly supports the view that large destabilising economic events produce big changes in long-term indicators, well after the upheaval of the crisis. Up to now we have been traversing the tracks of prior crises. But if we continue as others have before, the need to deleverage will dampen employment and growth for some time to come.

In other words, it takes a decade or so on average to recover from a financial crisis. Don’t let the Journal editorial page fool you that this is a partisan concept.

— Michael Hiltzik reports on the frustrations of Apple Inc. public relations:

Forget about getting an answer from Apple. The PR rep I raised these issues with had clearly aced the company’s training course in Studied Obtuseness, which I believe is required of all Apple flacks before they’re let loose to deal with the media. She acted as if she couldn’t understand my question about whether Apple was leaving the audiophile market underserved, and kept repeating that there’s an iPod in the lineup for everyone.

You’ve dealt with that flack. I know I have—or at least a carbon copy thereof.

The Wall Street Journal keeps an eye on the digital privacy front, noting that a crop of lawsuits has appeared in the last couple of months—including ones that name its corporate cousins as defendants. And it highlights lawsuits that focus on a particularly pernicious form of online spying:

In August, Clearspring CEO Hooman Radfar said in a statement on the company’s blog that the company doesn’t use Flash cookies for tracking. He said that it used Adobe Flash local storage to count visitors to sites and how long they spent on the site. The company says the claims in the suit are “factually inaccurate,” adding, “Clearspring does not and never did collect, store, or sell Personally Identifiable Information.”

Mobile tracking is also on the rise, as online advertisers attempt to reach consumers on smartphones. Lawyers involved in the suit over mobile websites say companies are using technology that makes it difficult for users to block or prevent tracking. That suit alleges that a company called Ringleader Digital Inc. tracks users of Apple Inc.’s iPhone by assigning each phone a unique ID number, similar to a cookie. If a user deletes the ID number, the suit claims, it respawns itself moments later.

How can you not have a problem with that?

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.