Spin or: the Anatomy of an Ideological Argument – Dr. Gurdgiev Vs. Inflation in the Irish Healthcare Sector

A philosophical question: do Fox News lie? “Yes,” I think, would be the instinctive answer to that.

But I don’t think that’s right. What Fox News do, rather, is they ‘slant’ or ‘spin’ the news. They do this generally by conflating fact and opinion. So, one minute you’re getting factual news – X happened in Y on Z – and then suddenly the commentator butts in subtly, but definitively with their opinion. This opinion then leads to an over-arching narrative that might, if we were to be very academic about it, be referred to as an ‘ideological opinion’.

This is in no way benign. Due to the presentational method it encourages viewers to confuse fact for opinion and vice versa. And convinces them to take their ideology to be reality plain and simple.

This observation raises important issues for the entire media. I, for example, certainly have strong opinions – opinions that I air on this blog regularly. But I do try to distinguish between when I’m presenting facts or opinions. Indeed, this often makes me sound less than certain about the issue – and this, in turn, makes for a weaker writing style. But, nevertheless, I think it’s important and necessary to try one’s hardest to be honest and up-front about this. If someone desires a ‘stronger’ more ‘self-assured’ opinion, they can go elsewhere – the tabloids, perhaps, or to Kevin Myers’ column in the Indo (good luck with that, by the way…).

I’m sure that sometimes I might drop my guard and allow my opinion overtake established the facts. But I’m fairly sure that whenever I’m presenting the hardest of facts – say, raw data – I don’t overstep my bounds.

I also have an awful tendency to do a little bit – and sometimes a lot – of preliminary research on what I’m writing. Many journalists don’t do this – and it shows in their copy. Whereas twenty (or sixty) minutes spent on Google with a discerning eye could have made for a much stronger article.

I raise these issues because I recently came across Dr. Constantin Gurdgiev’s blog ‘True Economics’. If you’re Irish you probably know Dr. Gurdgiev – he’s the Trinity macroeconomics professor who often appears on the TV and radio airing his views on economic and political matters. Those in the opinion-forming classes – at least those that are good at their jobs – will also know that he is generally known to be a strongly free-market economist and take his views with the according pinch of salt.

So, here’s my problem with Dr. Gurdgiev’s blog. It presents itself as a friendly resource for raw data – and as far as I can see, that data looks good. But then you read a bit of it and you see multiple interjections amidst the data which are, well, I can’t put it otherwise, they’re Dr. Gurdgiev’s opinion.

Now, that should be fine. He provides a disclaimer that the views expressed on the blog are his own opinions and all that. But its the presentational style that irks me. He switches so quickly from analytics to opinion that you’re led to conflate the two. (The more careful reader is also led to think that Dr. Gurdgiev might conflate these two in his own mind, but that’s another day’s discussion…).

What’s worse, sometimes these opinions are complete conjecture – no, worse than that, they are misleading. And were this misleadingness to be acknowledged people would quickly see that the facts and the data that Dr. Gurdgiev puts forward rarely, if ever, lead the argument – instead the facts are often bent into the argument.

Consider the following – pulled pretty much at random:

“Health is a standout in the above chart [charting price inflation]. Down 0.6% mom but up 4.1% yoy. No need to explain why the cost of hospital services rose 11.5% – say ‘Thanks’ to our semi-state insurance company policies and the Budget…”

From this I get the impression – note that it isn’t precisely written, so it’s hard to pin down definitively – but I get the impression that rising health care costs are due to ‘semi-state insurance company policies’ and ‘the Budget’. I’m not helped in my understanding by the fact that Dr. Gurdgiev goes on to compare private and public sector inflation – showing that inflation is greater in the public sector. This seems to imply that what we have here is a classic Thatcherite ‘inefficient, inflationary public sector’ vs. ‘efficient, stable private sector’. Caught up in the flow of Gurdgiev’s argument, I assume that it is the facts themselves that are leading this argument – but they’re not.

In the present case, a quick Google search tells me that this is a far more complex issue than simply semi-states and the recent Budget leading to inflated heath costs. And it most certainly is not some vague battle between the ‘evil’ public and the ‘benevolent’ private sector, for that matter.

First, an OECD report from 2010, delineating the reasons for rising health costs in the Eurozone:

“Factors pushing health spending up — technological change, population expectations and population ageing – will continue to drive cost higher in the future.”

Next, a WHO report published this month, probably in response to the above OECD report:

“Rising health care costs are primarily driven by technological change (accounting for 50-75% of growth in costs) rather than other commonly perceived factors such as an ageing population (accounting for less than 10% of cost growth).”

Quinn blame Big Guv’ment; but I think we can assume that there might be some political jockeying here, right?

Asked why it has imposed two price increases in 12 weeks, a Quinn spokesperson told Irishhealth.com that its January 1 increase had been announced last November, before the Budget measures which had a further effect on its cost base were introduced.

The spokesperson said the Government had since increased the health insurance levy, had increased the cost of private beds in public hospitals and changed age-related tax relief.

The CAI in 2010 (Consumer Association Ireland) pointed the finger in the complete opposite direction than Dr. Gurdgiev, blaming the removal of State subsidies to many sectors as the cause of inflation:

The Government’s decision to abolish State subsidies for dental care last month has led to the potential cost of a visit to the dentist for most people to go through the roof.

And:

The removal of State subsidies for dental and optical care and for medical appliances and equipment caused a major rise in the rate of inflation for these charges in January.

In fairness to Dr. Gurdgiev, Irishhealth.com also point out that the government has been raising charges – but, as we have seen, this is only a very minor part of a much bigger  and more complex problem:

Another key contributor to health cost inflation has been the Government.

In recent years we have had regular increases in A&E and hospital charges, in addition to increases in the drug payments scheme threshold and prescription charges.

Health costs – like energy costs – are rising. And they are, as Dr. Gurdgiev says, rising in an Irish economy that is experiencing broad deflation in most other sectors. But to allude that this is strictly because of ‘semi-state insurance policies’ and ‘the Budget’ and then to conflate this with inflation taking place in the public sector seems to me to be ‘spin’ in the worst sense of the term.

I expect this sort of thing out of Quinn, of course – they are, after all, a private company seeking to alleviate their tax-burden. But I don’t expect this in a blog post from an academic economist who is ostensibly dealing with the calculation of inflation and alluding to its causes.

The inflation of health care prices – as we’ve seen above – is a very complicated issue. It certainly doesn’t boil down to some crass economic distinction between the public and the private sector. To try to force the issue into this theoretical straitjacket is just spin, pure and simple. And it is this type of spin – spin mixed with the rawest of data – that leads me to be suspicious of the economics profession in general and, most particularly, their representatives in the media.

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About pilkingtonphil

Philip Pilkington is a London-based economist and member of the Political Economy Research Group (PERG) at Kingston University. You can follow him on Twitter at @pilkingtonphil.
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5 Responses to Spin or: the Anatomy of an Ideological Argument – Dr. Gurdgiev Vs. Inflation in the Irish Healthcare Sector

  1. Hi Phil,
    i’m unable to locate your contact details, could you pop one over to me so that i can pass an idea your way?

    Cheers,
    Rob

  2. David W. Dickey says:

    So the opinions of all free market economists are worth but a “pinch of salt.” Is this a factual statement that has no ideological bent to it?

    • That’s, em, very clever — in a sort of silly sort of way — but I don’t think you really understood the article. My main point was that this economist was spinning hard data. When I say that economists and their representatives in the media — note, I did NOT say free-marketeers, there’s many a Keynesian over at the FT that talks nonsense — are quite dubious, that’s an opinion, not a statement of fact. If you can’t distinguish between the two then I’d suggest you reread the post.

      Here, I’ll sum it up quickly because I’m in a good mood. If I claim that price-hikes in healthcare are caused by X and if, upon closer inspection, this turns out to be completely untrue, then I’m spinning data. If, however, I say that Irish doctors within the healthcare system are not to be trusted and are only out for profit, that’s an opinion (unless I link to a study or something — then we’re back to how much said study spins the facts).

      UPDATE: On closer inspection, I actually qualified that statement specifically as an opinion. It read: “…this leads me to be suspicious of…”. I don’t think you could get more of an opinion than that…

      UPDATE II: Apologies, that wasn’t the quote you were referring to (you should quote). I now see the quote you’re referring to — it’s the one about how journalists should take Gurdgiev (and other strongly free-market economists) with a pinch of salt. Yes, I think that this is moreso a statement of fact rather than an opinion — or, more accurately, its a standard of journalistic practice.

      Journalists are taught that they should never take what, for example, a politician says at face value. A journalist with a decent background in economics — as most business and financial journalists (hopefully) do — should be able to separate the ideologues from the neutral figures. Thus, you might get a different statement out of a more neutral figure on inflation than you would out of a free-market warrior. Example:

      Neutral: “Inflation is rising in the healthcare sector due to a number of different reasons — a leading factor is the deployment of new technology.”

      Free-marketeer: “Inflation is rising in the healthcare system due to government intrusion and stupid semi-state institutions.”

      If the journalist was in any way decent at his job he would not publish the latter statement — nor would he do so if he had interviewed a Marxist economist and he’d said something like: “Inflation is rising in the healthcare system due to Ireland operating under a capitalist economy”.

  3. I think you’re on to something here but not for all of the the reasons you list. Part of the reason is what the CPI actually measures. It does not measure the performance of the public health system.

    It is important not to confuse increased inflation with increased spending. It is possible to spend more even when prices are falling. The WHO report you cite primarily deals with the level of spending on health care rather than the price of health care. Improved technology provides for advances in medical care that doctors want to provide and patients what to use. There is an indirect link to prices but if there is a better service for a higher price is that really inflation?

    • It is important not to confuse increased inflation with increased spending.

      Trust me — I would never make this mistake. And I’m 100% sure that I haven’t in the above article.

      There is an indirect link to prices but if there is a better service for a higher price is that really inflation?

      No, it isn’t. That’s what I was implicitly getting at. I didn’t want to come out and say it because the point of the article was to discredit Gurdgiev’s ideological claptrap and not to talk about the actual causes of so-called ‘inflation’ in the healthcare sector. But, you’re absolutely right: there is no inflation in the healthcare sector. It’s just a new investment drive that’s being reflected in current prices. Thank you for noticing this — it’s VERY refreshing.

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