Posted 11:22 PM by Robert

The Why of It II

A prior post discussed how the classic incentive for executives and other insiders to convert corporate assets and opportunities to instead serve the personal agendas of the insiders is similar to the incentive of reporters and news media executives to spin "ordinary new coverage" towards their personal political agendas at the expense, at least in the case of liberal political agendas, of network viewership and corporate profitability. In each case, the well-known corporate economic concept of "agency costs" can be applied to gain an understanding of the issue. To the extent such behavior reduces corporate profitability (a phenomenon increasing apparent in the case of liberal-biased reporting), it constitutes a species of corporate corruption in many respects similar to other corporate scandals.

Because mainstream reporters and and media executives are overwhelmingly liberal, the Democratic Party has likely been a major beneficiary of this brand of corporate corruption for many years. That prior post noted that Messrs. Durbin, Daschle and Gore seem concerned to keep those benefits flowing.

Another, quite separate, example of how the personal economic agendas of news media representatives may be affecting the slant given to ordinary news appears in an article by Daniel Akst in today's New York Times:

Another explanation for the economic gloom [in current mainstream reporting] may be the sharp advertising downturn that started in early 2001. The resulting media recession, including layoffs and other cutbacks, has produced a grimmer-than-usual attitude in the perennially gloomy fourth estate. The industry's concentration in New York and Washington, both of which were struck by terrorists last year, has further darkened the industry's outlook.To raise consumer confidence, maybe the Federal Reserve should pay for free massages and other mood enhancers for the nation's journalists. Until then, you can expect to hear more pessimism, even though the current economy is one that economists might have considered darn near utopian just a generation ago.

In other words, news media representatives personally feel economically threatened, so they are reporting that everyone is economically threatened.

If Mr. Akst is right, then some economic reporting is less accurate and less useful to readers and viewers - and therefore likely less profitable to the media companies - than such reporting would be if media companies did a better job of filtering out the effects of their representatives’ personal economic agendas. Similarly, political and general reporting is less accurate and less useful to readers and viewers - and therefore likely less profitable to the media companies - than such reporting would be if media companies did a better job of filtering out their representatives' personal (generally liberal) political agendas.

There are differences: The affects on economic events which Mr. Akst suggests, such as overly-gloomy reporting that may deform investment and/or consumer decisions, are presumably inadvertant economic effects from such coverage, which could not be manipulated or encouraged by the likes of Messrs. Durbin, Daschle and Gore. But political and general reporters (including economic reporters) often deliberately politically spin their coverage of sensitive events.