African journalist has tough questions to answer

Northwestern Financial Review, Jul 15-Jul 31, 2003 by Dullum, Justin

I recently attended a financial journalists' seminar in Minneapolis hosted by the Federal Reserve Bank here and the University of Minnesota School of Journalism. I learned a great deal at the meeting, not only about economics and journalism but about what it means to struggle with questions.

During the seminar, distinguished reporters from The Washington Post and The Star Tribune of Minneapolis gave presentations on how to approach financial topics. They discussed the craft of writing about the inside while being an outsider. The economists focused on principals and theory: supply and demand curves, cost and benefit, correlation vs. causation and so on. Each presenter - journalist and economist alike - kept coming back to one particular idea: there is no such thing as a free lunch.

The idea is simple enough but the trick is figuring out who's paying for lunch. How do you quantify the figurative cost of things like legislation? And what about the monetary impact of any policy change? For example, if banks pay fewer taxes by converting to subchapter S incorporation, who might the government tax to make up for the lost revenue?

That's the way discussion went at the journalists' meeting. As an exercise, we'd talk about logical ways to take lines of questioning. I met one fellow at the seminar who asks a lot of difficult questions. The complexity of his issues made me grateful that in my work I grapple with comparatively simple issues like sub S.

Dean Mulumba, a banking and economics reporter at The Monitor Newspaper of Uganda, was one of three African journalists who attended the seminar. I made a point to sit with him during dinner. Mulumba knows his fair share about "no free lunch." His job isn't only to ask "who's paying for lunch" but also "did anyone even bring lunch?"

He told me business and financial stories in Uganda appear sporadically throughout his paper. Eighty-five percent of Ugandans are rural, subsistence farmers, Mulumba said. Most are illiterate and unable to read newspapers. They do not care who steers monetary policy or what direction it's taken. They do not borrow money, nor do they owe, nor do they deal with any form of structured bank.

In modern Ugandan cities, money loaned to entrepreneurs comes at high rates of interest, usually more than 20 percent. Banks in Uganda do not enjoy the good reputation of banks here. People are wary of fraud.

Uganda has a central bank not unlike our Fed, but its officials rarely will talk to the press, Mulumba said. Officials give out scraps of information only when it serves the political purposes of the bank.

A comment made at the seminar by Boston University Economics Professor Russ Cooper helped me put Mulumba's job into perspective - not to mention my own.

As an undergraduate in college, Cooper imagined that the Federal Reserve, when it comes to monetary policy, was like an airline pilot. "The windshield is clear, visibility is 100 percent, and they know exactly what each lever does," said Cooper. "Now as an economist, I know they can't see much of anything out of the windows and they aren't exactly sure what the different buttons and levers do."

I asked Mulumba what he thought about Cooper's aircraft analogy. He said that's an improvement over his country, where the plane is not flying.

The next time I'm grudgingly looking up some cryptic word uttered by Alan Greenspan, I'll think of Mulumba over there in Africa, sitting at his desk and wondering what page his hard fought story might appear on.

By Justin Dullum, Associate Editor