Yesterday, 2001 College graduate Binyamin Appelbaum, a reporter for The New York Times and former Daily Pennsylvanian executive editor, gave an insightful talk hosted by the Penn Undergraduate Economics Society on the role of the current financial crisis in shaping economics and public policy.
College junior and Penn UES Vice-President Charles Rubenfeld said, “I was familiar with Binyamin’s work at The New York Times and knew he was a Penn alumnus, so I thought it would be great for him to come back and talk to Penn students about economics.”
At last night’s talk, Appelbaum’s speaking style was just as straightforward and logical as his journalistic writing.
To begin, he explained the central problem surrounding the financial crisis — that in the United States, economic policymaking dictates foreign policy, and the government is run by lawyers who occasionally take advice from economists.
Unfortunately, he added, the policies that usually end up being passed are bastardized, compromised versions of actual economic theories.
Over the past few decades, he continued, the focus has shifted so much from achieving equity to optimizing efficiency that policymakers often lose sight of their actual goal: stability. Even after economists gained influence in policymaking, Appelbaum explained, they encountered two principle failures that resulted in the crisis today.
First is the overconfidence of modern economists. Despite the fact that most economic models — no matter how sophisticated — make major oversimplifications, they remain the premises upon which policies are built.
While the revolution in big data computing made it seem possible to find the “Black Swan” of economic events, this can be a particularly dangerous illusion “because more data is not going to solve the problems we face now,” Appelbaum said.
Secondly, behavioral economic studies were “responsible for some of the worst failures,” he added, with “federal stimulus going nowhere … leaving the Obama administration unable to ask for further stimulus.”
Both of these failures are rooted in a lack of effective communication from policymakers to the general public, and that is the role that Appelbaum believes modern economic journalism attempts to fill.
“Quick, broad and high-profile policies are usually the most effective way to bring up consumer confidence,” he said, since economics is a volatile discipline that “studies the past and talks about the future.”
He added that “public perception of policies can be very costly, as many predictions are based on what the Fed is speculated to do, for example.”
Though the country now lives in the golden age of communication — with more academics speaking directly to their audiences than ever before — the public has yet to break through the barrier of jargon and technicalities.
“The greatest challenge for journalists,” Appelbaum said, “is grasping and explaining complicated concepts and make them seem important, tangible.”
Based on his experiences so far, Appelbaum lamented the lack of financial literacy in the country, and encouraged Penn students to “pay a lot more attention to economics because there are plenty of things that are happening which even the professors don’t have answers to. There is tremendous potential to make a difference in the world through journalism.”
College and Wharton senior Vandit Shah valued Appelbaum’s perspective as a journalist rather than as an academic.
“[Appelbaum] is interesting because he’s reporting on banking not just from the banking perspective,” Shah said, “but also on how the crisis shaped the future of economic and public policy … It was a watershed moment.”
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