I read this article about a year ago and has contemplated on it from time to time over the year. However, some recent developments prompted me to think about the notion of reading the news a bit more.
From an early age, I was taught that reading the news daily (and not just local news, but national/international news) is a good habit. After neglecting this habit during my teens, I picked it up again in my early 20s and hasn’t stopped since. When I encountered the article linked above, I was dismissive at first, because how can there be an advantage to being under-informed? However, I was forced to go back on that thought during a recent news wave.
There are two big financial stories being told right now. One is centred in the Eurozone, and more specifically about Greece. I quickly realized how polarized the reporting is and how differently the story is told from different perspectives. On the one hand, the ‘right wing’ segments all focus on how lazy and deceitful the Greek people are and how they are basically robbing everyone else. On the other, the focus is on how austerity measures have crushed the Greek economy and that there is genuine suffering in Greece. However, the most important thing to take away, in line with the ‘focus on the car and forget the bridge’ analogy in the above article, is the lack of focus on the big picture, or exaggerating the situation.
Let us first discuss how the big picture is neglected. Greece is a tiny part of Europe. It accounts for less than 2% of the EU GDP, its population is a meagre 10 million, and it is geographically disconnected from the rest of the Eurozone. Its economic impact on the rest of the Eurozone, while not negligible perse, is not significant. So what is the big fuss about? It cannot be about the actual economic realities in Europe, because Greece is such a small part of it. One cannot suggest that the real economic impact will be catastrophic unless one is implying some sort of domino effect.
Next, how things are exaggerated. The biggest suggestion from the ashes of the Grexit debacle is that this might lead to the dissolution of the Eurozone (see here, for example). However, this conclusion seems odd, because it seems like the exact opposite happened. Despite tough rhetoric and strong defiance from the Greeks for weeks, at the last minute they caved, because they realized how important staying in the Eurozone is for their continued existence. Germany also folded in some sense, because they realized the fallout for being the black-hand in the death of the Eurozone would be disastrous for them. Therefore, the Eurozone is not really going anywhere because all parties from top and bottom have a vested interest in keeping it intact.
The next major instance of news distorting your perception rather than improving it is with China and its recent stock market crash. One can hardly find an objective analysis of what happened without the author injecting more of their own opinions on the matter. However, when one talks to someone actually on ground level, the situation seems not so bad. Most Chinese citizens are not involved directly with the stock market. In fact, even if claims that “millions” of Chinese people are buying stocks, in a country of 1.4 billion, that amounts to a lot less than 1% of the population. The true percentage is actually higher, which is an embarrassing testament to how a lot of news writers fail to comprehend basic arithmetic when trying to exaggerate (i.e. in their attempt to exaggerate the numbers they actually made the numbers underwhelming).
Next, the news is full of suggestions about the political ramifications for the Chinese government. Every time there is the slightest economic upheaval, suggestions abound that the end of the ‘Chinese miracle’ is near, and that the whole thing will come crashing down. This type of hysteria has existed for 30 years, since the ‘Chinese miracle’ began in the 1980s. This is the result of knee jerk reactions based on personal prejudices rather than a careful analysis. One has to remember that news writers are not scholars; their role is to write a good story that sells, rather than solid research that can hold up to peer review. Therefore, it is better to stick to sources closer to being the latter than the former.