Should Washington save the newspaper industry?

Professor Bob McChesney and journalist John Nichols* recently appeared on PBS to promote a scheme they have outlined in their new book The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again.

McChesney and Nichols argue that the American newspaper industry is crumbling and that could mean the end of democracy in America. They say the founding fathers wanted newspapers subsidized to keep the flow of ideas moving and provide a watchdog on government corruption. They have outlined an expensive voucher system that would provide every community in America with it's own newspaper.

There's a lot of little painful details McChesney and Nichols expressed that are tempting to cover, but I don't want to lose sight of the big picture. It's easy to spot the hatred print reporters have for our cousins in the broadcast world, there's labeling of "public notices" as a subsidy instead of an advertisement and there's the idea that we had the "correct" number of people employed in journalism before, and laying people off always shows decline and injury, but never progress or efficiency.


The good points

McChesney and Nichols are correct that the media plays a role in keeping our republic alive. Bruce Bueno de Mesquita argues that fair elections are not enough to have a true democracy. It also requires freedom of assembly and freedom of the press. Without the other two, there's no way for an opposition party to mobilize and get its message out.

So that means the media provides a positive externality, and some economists believe things with positive externalities should be subsidized. That's a debatable topic, but it's an acceptable position to take.

I'm glad to see that McChesney and Nichols are advocating for a voucher system over a system directly controlled by the government. There is the obvious consequence of a conflict of interest when reporting on government issues. In addition, a voucher system would let the public choose which newspaper gets their share of the funding. This is superior to something like PBS or NPR. Neither of these attract a large audience with their constant beg-a-thons, dull news stories and outdated musical performances.

However, it's naive to think there will be a way to isolate a public media system from political influence. Who chooses what newspapers are eligible for the vouchers? How much funding will there be in a given area? How often are the vouchers paid? There is a lot of room for corruption to slip in.

McChesney and Nichols like to list the abolitionist press as an example of when journalists influenced American politics, and claim it shows that they can be free of political influence. I'd like to remind them that journalists also did the complete opposite, and rallied support for the revolutionary war by printing lies about atrocities committed by British soldiers.

This was before the nation was founded, so of course a reasonable person could say that that's irrelevant to this issue of funding. But perhaps the founding fathers were such fans of the press in the first place because they could remember using it as propaganda to gain public support for the revolution. I really don't know enough about the press at that time, but McChesney and Nichols' example of the abolitionist press wasn't enough to prove their was no government influence of the press through these subsidies.


The proposed cost and the historic cost

McChesney and Nichols said their plan will cost about $30 billion. That's a ridiculously high amount of money for this program, but read closely how McChesney justifies it:

"We went back and looked at the size of the public subsidy that the US government had for journalism in the first half of the nineteenth century and if we had the same percentage of GDP today dedicated to journalism subsidy as they did in the United States routinely in the first 75 years of our country's history it would be roughly 30 billion dollars."

There's a lot of escape hatches built into that sentence, such as only including 1800 to 1850 and saying it "routinely" equaled $30 billion in that time. The most striking oddity in that statement is that McChesney has not merely adjusted for inflation, he's also adjusted for GDP.

This is a strange way to play with numbers, and it looks like he's thrown GDP in there to bulk the figures up. Since McChesney didn't give us any hard data to work with, I had to un-adjust$30 billion for GDP for both 1800 and 1850 to compare to the 2005 GDP, the most reliable year I had access to. With the GDP adjustment removed, this gave me a yearly inflation-adjusted subsidy of $17.5 million for 1800 and $117.7 million for 1850. These are rough numbers because McChesney himself was vague about the figures, but it shows how big his GDP adjustment skewed things.

So what does that mean in plain English?

When McChesney "adjusted" for GDP, he's letting you assume that this is a fair way to update the numbers for modern times. An average person may think this is OK to do. Let's break it down into logical chunks to see how fair that really is.

Let's assume McChesney was correct with his figures, which would mean the newspaper subsidy was 0.2 percent of the GDP in the early nineteenth century and should remain 0.2 percent today at $30 billion. Does that seem like a smart thing to do?

Not really, if you factor in technology. McChesney is taking the figures for the total subsidized media of that time period and saying the same share of our GDP should go toward subsidizing a single branch of the media. In 1800, there was no radio, television or Internet to spread news around. As new technology comes along, it replaces a lot of the old ways of doing things. But in McChesney's world, the newspaper industry should be preserved and protected from both the market and competition with broadcast media.

So basically he's taken the amounts used to subsidize the entire media industry, and wants to use a comparable portion of our total wealth to pay for just the newspaper portion of our media. Since we've gotten wealthy, it's a much bigger piece.

This is like saying we should have the same percentage of our population working in agriculture as we did 200 years ago, so let's keep subsidizing farms that don't use tractors until we get back to 1800 levels.

Because broadcast and Internet news would still exist privately alongside a bloated newspaper industry, this scheme would make the media much larger than it's ever been before.

As a former newspaper reporter and editor, I would benefit from this plan in the short run. However, since I live in the same country that would have to funnel about 0.2 percent of it's GDP into this system, I would probably be hurt in the long run. My friends and neighbors wouldn't even profit in the short term - they'd be hurt right away.

McChesney tried to excuse the price in a different way, by saying;

"When we're being invaded by another country, we don't say, 'well, can we afford to fight back?' You fight back, and worry about the cost later. Well, when you're losing your information system so you can govern your society, you don't say, 'Well gee, can we really afford that?' It's like, you don't exist if you can't afford it."

Oh come on, I thought these guys were supposed to be liberals. Fight a war with no regard for the cost? What if that cost included bankrupting all of our social safety nets, waterboarding the enemy or nuking an entire continent? There are different ways to fight back, some have higher costs then others. It's the same with keeping a free press.

McChesney and Nichols picked a single study in Baltimore that said most news stories are discovered by print media, and broadcast and Internet news organizations just repeat them. They are implying that if print went away, that broadcast and Internet media wouldn't change gears and we'd have no-one to find new news.

That's nonsense. If the dominant source of news went away, the other media would fill that gap. Maybe they wouldn't do it the same way as print, but it's hyperbole to say that our republic would crumble under any different system.

With all of this in mind, the system they have outlined wouldn't pass the cost-benefit test.


Consider the sources

I didn't want to start off by poisoning the well on McChesney and Nichols, but their solution to the newspaper problem makes more sense if you consider their backgrounds.

John Nichols was introduced on the program as a reporter. It didn't say that he's a reporter for The Nation, which makes him a left-wing political activist.

Besides being a college professor, Bob McChesney hosts the Media Matters weekly radio show. At first glance, I thought this put him in connection with the left wing watchdog group Media Matters for America. It turn they are separate groups. Not to worry, McChesney was the editor of the socialist journal Monthly Review from 2000 to 2004 and is still active with the publication.

Suddenly their support of an expensive government-funded newspaper industry makes a lot more sense.

*Please see the Feb. 16 entry for my take on PBS's introduction of John Nichols as simply a "journalist."