Going to journalism school does nothing to prepare journalists to write on economics and finance, and not surprisingly, it is exceptionally difficult to find people who are both excellent writers and knowledgeable about economics. Henry Hazlitt is of course a notable exception (he never went to college) as is James Grant. (Grant, by the way has a new book due out later this year on the Depression of 1921.)
In today’s Mises Daily, Dale Steinreich mentions how one of the main obstacles to understanding the S&L crisis is the fact that most of the people in the media who worked on the issue were incapable of understanding the problem as anything more than a failure to regulate (read: government regulation) the economy properly. In the minds of people with no significant economics training or knowledge (i.e., most journalists) economies can be made to do whatever people want them to do, simply by issuing government edicts. So, if more mortgages should be granted in low income neighborhoods, the government shall simply issue a command that it shall be so. What could go wrong? If something does go wrong it is because people didn’t follow the regulations or because government agents weren’t vigilant enough.
Speak to most journalists (especially ones who like to cover political beats) about the problem of economic calculation or the role of the price system, and you’ll receive a blank stare. (I’ll be the first to admit that there are lots of smart local business reporters out there who are actually interested in this sort of thing, though.)
Nonetheless, a perfect illustration of this blind spot for the complexities of markets and economics is a little book about the Silverado Savings and Loan called Silverado: Neil Bush and the Savings and Loan Scandal. Remember Silverado Savings and Loan? It was notable for two reasons: when it went under, about $1 billion disappeared. Back then, that was a lot of money, and it marked Silverado one of the biggest S&Ls to collapse. The other reason Silverado made headlines was Neil Bush was a member of the board.
The book Silverado is by a person named Steven Wilmsen who now works the metro beat at the Boston Globe, working on local personal interest stories about murders and immigrants, which tells you something about how interested he is in the financial system. The title of the book implies it is largely about Neil Bush, and if that were the case, it would likely be a very boring book. Fortunately, however, the mention of Bush in the title is really just an attempt to make the book marketable to a larger audience. The book is really a rather interesting case study about a large Savings and Loan in the 1980s, and its rise and fall. As a record of numerous relevant events about S&Ls in general and that S&L in particular, and as a little snapshot on the regional economy in the Western US during the 80s, it’s quite well done.
Where the book fails badly is in its attempt to explain to the reader the causes of the S&L crisis and the industry’s role in the larger economy. Monetary policy, if it is mentioned at all, certainly occupies no significant place in this book at all, nor does the interaction between the political system and interest rates. Steinreich’s article today covers a lot of this ground, but you wouldn’t know anything about it at all from reading Wilmsen’s book.