“ Read all about it… ” the financial crisis as a story

1. “Read all about it…”the financial crisis as a story Karel Williams + Ewald Engelen University of Manchester + University of Amstedam

2. How capitalism works(and why journalism matters) Capitalism runs on stories which motivate political action and inaction; good vs. bad stories: whether justified by evidence and get the result politically Crisis is a story/as a story so far = financial elites have a story, everybody else is struggling to find a story • The distributive coalition around finance has a bad old story about finance + national interest • Journalists struggled to find a good new story, not helped by the academics and technocrats • Politicians default onto populism eg Darling bonus tax • Political message: the only way to fight a bad story is with a good story; journos need to tell a better story

3. Finance’s good/ bad storyabout national interest After Reagan and Thatcher dismantle corporatism + with EU Scheherezade phase: DIY representation by giant firms in loose distributive coalitions, PR and lobbyists tell stories to influence regulation (R&D in pharma, green diesels in cars) Finance’s story pre + post crisis is about finance in the national interest : • Varies by country eg City of London success which pays taxes + creates jobs etc; other centres about getting a bit of the action from London • One political corollary = light touch regulation before the crisis, don’t damage competiveness by re-regn A good/bad story: intelligible and actionable so it does the job politically; but selects and distorts evidence and is no basis for economic policy ( employ base is limited, bail outs cost more than taxes paid)

4. technocrats and academics: embarrassed by knowledge failure • Knowledge failure overwhelmed technocrats and academics: regulators + economists pre-2007 believed financial innovation was a good thing; post-2008 denial or remorse about how they hadn’t seen crisis coming….. • Knowledge recovery for technocrats = like utility companies renewing mains i.e. lots of disruption at many different points without any clear immediate benefit • Confusing causal disagreements e.g. macro imbalances vs. etbics; or differences about paradigm shift e.g. Akerlof/Shiller for behavioural vs. Haldane for ecological/epidemiological understanding • Panaceas meet scepticism e.g. narrow banking and boundary problem; macro prudential regulation is the big new idea not a working control practice

5. Journos searching for a new story (find bad bankers) • Honest struggle with a complex crisis: multiple causes from macro imbalance to financial innovation; no one best way solution of bank design or financial regulation • Broadsheet response = make a virtue of complexity: analysis in instalments exGillian Tett in FT or Robert Peston on the BBC = soap opera for fans • Tabloids and TV got a mass story by scapegoatingbonuses and bankers; high spot of UK + US media coverage = televised grilling of bad bankers • Scapegoating was a bad, bad story: delivered red top catharsis but (a) economically reductionist with crisis caused by greed and incompetence (b) politically diversionary with solution of bonus reform

6. Politicians default to populism(with media as commentators) • Politicians can’t wait for a good story: extreme intervention after Lehman bankruptcy in autumn 09; Greece + euro crisis in real time. • Politicians default onto populism eg Obama bank levy and Darling bonus tax; ex mixed motives ie fix the banking system + get re-elected • Media then become Wimbledon tennis commentators as politicians serve, return and volley for the electorate • How can journalists and academics do better? • add research depth and analysis • turn analysis into intelligible and actionable stories The good news is that this isn’t insluble; we can find causes + basis for intervention

7. Mapping the crisis…

8. Zigzag Narrative...

9. Zigzag Narrative...