Well-known economist Dr. Wade Locke came out swinging yesterday.
His target was The Telegram, and reporter Peter Walsh.
Walsh is not happy about it, and claims he was "defamed" by Locke's comments.
There are three inter-connected pieces to this story, which I shall summarize shortly. But it's clear to me that one person owes the other an unqualified apology.
The story starts with a report by the Atlantic Provinces Economic Council (APEC), written by seven of Atlantic Canada's leading economists to help inform the federal budget planning process. A portion of the report was written by Wade Locke and Scott Lynch of Memorial University. You can access the report at the APEC site.
Heck, it's brief. Let's look at the whole report, to really clear the air, and remove any possible suggestion that some was taken out of context. I will include just the bullet points for the recommendations because these are less relevant, self-evident and make no prognostications. Here's the report:
Depressed commodity prices continuing throughout the year and longer would have a disastrous impact for Newfoundland and Labrador from a fiscal perspective and for the continuation and expansion of major resource projects within the province. A continuation of the existing tight credit market conditions will adversely impact small export firms and fishing enterprises and will be felt disproportionately in rural parts of the province.
If the U.S. economy continues to lose jobs as it did last quarter, then real GDP would decrease by 5% on an annual basis, which would produce a significant deep and prolonged recession. Forecasts of U.S. growth at -2.5 to -3% with recovery in late 2009 assumes that the Obama stimulus package removes deflationary expectations and returns the economy to its trend growth rate. For this optimistic scenario (successful stimulus and late 2009 recovery) Canada could experience a 1 to 2.5% decrease in real GDP, with the earliest recovery in September/October.
However, should the U.S. recession reflect the 5% decline in real GDP then Canada, as a small open economy, will follow the U.S. and be faced with a significant period of rising unemployment and declining economic activity, with recovery occurring in 2010. If, on the other hand, the recession in the U.S. is closer to the pessimistic scenario, then this may produce a decoupling of the Canadian/U.S. trade relationship and in that case, predicting possible outcomes becomes very murky.
The items that we might consider for the stimulus package/budget are:
a)Speed up and lengthen Employment Insurance benefits
b)Split marine infrastructure expenditure geographically
c)Support the Lower Churchill energy corridor
d)Implement a massive training program to prepare for the inevitable labour shortage
e)Offer a payroll subsidy to stimulate employment
f)Construct social housing throughout Canada
Boost spending on post-secondary education infrastructure
Then there is the article about that report, by Peter Walsh of The Telegram. It's not available online, but here is the headline, in boldface, the smaller subhead, in italic, followed by the first paragraph of the story.
N.L. economy facing disaster: experts
Report says plenty riding on stimulus packages
Two Memorial University economists say the face of Newfoundland and Labrador's economy in 2009 is riding on the success of soon-to-be-announced stimulus packages in Canada and the United States.
The article goes on to summarize the findings and recommendations in the report, and is true to the report's content.
Finally, there are Wade Locke's Thursday morning comments on Open Line. It should be noted that Open Line called for Locke for comment; he did not call the station of his own accord. However, Locke was sharply critical of the Telegram article.
The call is five minutes long, so a full transcript would eat up too much space here. I will summarize portions of the call, and quote verbatim the most relevant excerpts.
The call opens with the usual niceties, then Locke says he is "surprised" about the story.
"That is not what we said, just for the record. I don't normally react to (newspaper) stories I wasn't talked to on this particular thing."
Locke points out that the piece is based entirely on what appeared at the APEC web site, explain what was in the report, and encourages listeners to read it for themselves. "Anybody reading that and drawing this conclusion from it, I'd be terribly surprised," he said.
Locke talks a little about recommendations, then explains the questions the report's participants were asked to address. I agree with Locke you need to read the report to draw an informed conclusion. However, he summarizes the report's findings, in language that is far less dramatic than the report's language itself.
Locke: "If oil and mineral prices continue to fall for the next year and more, that would be disastrous for Newfoundland and we also said that, if the credit situation doesn't improve for small businesses, then rural parts of the province would be affected as well. But those two things being said, Randy, we haven't changed our mind on how bright we think the economy is here. It is bright. We are going through some short-term hiccups here, and the short-term could be four months. It could be six months. It may even be a year. But everything we are seeing, appears that we are starting to bottom out and things are starting to improve. And when they do this is going to be a very good place to live. But for the next year there is going to be some difficulties because production in the offshore is going down and prices are depressed. Consequently, the government will face depressed revenues and may indeed rerun a deficit. That in my assessment is a correct statement. That is not what we mean by a disaster. That is unfortunate."
Simms: "Really when I read the news story, now listening to your comment I guess what you take umbrage with here is not so much what's in the story as the headline; the headline sends a message that you think is over the top.
Locke: "Let me say the following to you. If anybody read the article on the APEC web site, I find it difficult to believe that they would even mistakenly come to this conclusion. That is not what we said, that is not what we implied, and, let me say for the record now, that is not what we believe. We believe that the future is bright and will continue to be bright here."
This is a lot to absorb, so let me cut in for a quick reality check. With all respect to Mr. Locke, that is not what he said in the report.
Locke says he finds it hard to believe that anybody could draw a "disaster" scenario from this report. I read it and can draw no other conclusion. In fact, with oil at $42 per barrel, we are in a disaster scenario right now. It's not a risk, it's reality. The question is, how long can this go on? Locke does not offer an opinion on this in the report. The Telegram headline was based fairly on those three paragraphs above, and it was not an overstatement.
Now, on to the Open Line call, picking up where we left off:
Locke: There is a short-term situation that is difficult for all of us, less so for Newfoundland than for other parts of the country, but nonetheless difficult. And we are facing issues, in terms of increased unemployment we are facing situations with reduced revenue for government, we are facing situations where some of the projects that were going to go forward are being delayed, at least for a period of time. Those are all unfortunate and not a pleasant experience for anybody. That is a far cry from a disaster scenario, and that is not what we intended and that is not what we said, and for someone to draw the inference that that is what we said is very suspicious."
Simms then thanks Locke for "clarifying" the story, before hanging up. Then he says, "Peter Walsh, you've got some explaining to do."
To the contrary, Walsh owes an explanation to no one. He has every right to be angry. And he is entitled to an apology from Locke (and Simms as well, for suggesting that he has "some explaining to do.")
For his part, Walsh called Locke on Thursday to clarify his issues with the piece, but was not satisfied with the outcome.
"From my understanding of our conversation, Locke's only concern was our headline," Walsh said. "(He) thinks it's too dramatic. The first part of the headline is dramatic, but accurate. Further, the sub headline gives it context, and then the article itself gives his comments further context. On the phone Locke does not dispute this.
"Yet, he agrees to go on Open Line and basically says I misunderstood the report and essentially suggests I should have called him. I'm upset about this attempt to damage my reputation based on false information. It's shocking. Someone of Wade Locke's media experience should know better, and I told him so when we spoke this morning."
Walsh said he called both APEC and Memorial University to register a complaint.
"I am feeling defamed by him," Walsh said. "I think Locke should call VOCM back, set the record straight, and apologize."
I sent an email to Locke last night, before hearing the Open Line item. I told him that I read his submission to the APEC report, and that the first paragraph does come out with some very tough language. "When I worked as a reporter, I would have written something very similar, through a process of distillation," I said.
Locke replied, saying that he was, "less concerned with what was in the story than the headline."
"However, given the opportunity I wanted to set the record straight, that the information we provided in the APEC article was not reflective of the headline. How someone could have inferred that the economy is facing disaster from the information in the APEC note is surprising."
(Interjection: We might not have formed that impression if he hadn't used the word "disastrous" in the first sentence. -GM)
"For the record, if prices continue to fall for an extended period of time, then that would be disastrous for NL. Even so, I do not believe this is a realistic scenario. I expect price to start to pick up and grow in the next couple of years, with prices rising above $80 within a two to three year period.
"If the reporter had bothered to call, which is his right not to, then I could have clarified any misinterpretation that might have resulted."
(Interjection: Reports always stand on their own, and should not require clarification. If it was incomplete, this is entirely the fault of the authors, and cannot be blamed on the reporter. -GM)
"If the headline had been economists put in their two cents worth', which is what we tried to do for the federal budget, then I would not have had an issue."
(Interjection: Only a bad headline writer would ignore the alarming statements in that first paragraph to write a bland headline like this. GM)
"I do not try to be defensive on these types of issues or respond to what reporters write In this case, I did react when given the opportunity because the headline is completely at odds with what we were trying to do in the article or believe, which is the economy is bright in the medium and longer term and there will be bumps and negative impacts in the short term (less than a year)
"In my mind, if prices continue to fall for an extended period of time, then that would be very negative for this province. The real question for people is whether this is a high probability risk or a low probability risk. I fall in the latter category and think the market is close to bottom or at bottom."
(Interjection: This is not in line with the three paragraphs of the report. The most optimistic scenario offered for Canada is "1 to 2.5% decrease in real GDP, with the earliest recovery in September/October." There are far more pessimistic scenarios than that, including a possible "decoupling of the Canadian/U.S. trade relationship," but there are no weightings or predictions attached to any scenario. GM)
I could go on and on, parsing words and dissecting statements, but I've said enough. It is patently obvious that Locke does owe Walsh an apology, without qualifiers.
In my note to Locke, I remarked that The Telegram story and headline is not the kind of message that is received well by the provincial government, which is terribly sensitive to bad news. I asked Locke if he had come under pressure from anyone connected with government to make yesterday's "clarification."
"The only pressure that I feel is to make sure that the message I gave was not misinterpreted because of the headline," Locke said.
NOTE: Ed Hollett has his own - though not dissimilar - take on this, over at Bondpapers.