Economics

Is media slant determined by the market?

Sunday, March 2nd, 2008

In “Lean Left? Lean Right? News media may take cues from customers” by Chicago School professor Austan Goolsbee, we are given yet another argument for market determinism, this time with regard to the slant of the media.

One of the most interesting things coming out of research on the economics of the media industry has been the notion that media slant may simply reflect business rather than politics.

The author then cites a few Chicago School studies that analyze the media in terms of slant of articles vs. readership. They find that readership is a stronger indicator of slant than ownership or big corporate donations. But then the dangerous conclusions begin.

[…] there is certainly good news in the finding. If slant comes from customers, then the views of the owners and the reporters do not matter. We do not need to fear that some partisan billionaire will buy up newspapers and use them for propaganda.”

This is a little presumptuous. Of course there is a fear of a partisan billionaire buying up all the newspapers. In history, we had William Randolph Hearst. In modern times, we have Silvio Berlusconi of Italy. He owned all the media in that country, slanted it, and then maintained control over it while presiding as Prime Minister. The market, for all its virtues, cannot solve these problems.

Let’s take one angle. Partisan billionaires can control the slant of their writing just by controlling the kinds of journalists they hire.

For example, let’s assume Rupert Murdoch would not hire very many bleeding-heart liberals to work as financial reporters in the WSJ. WSJ’s staff becomes more right-leaning, therefore there is a partisan slant. I’m not saying this is actually true, but it’s quite absurd to claim it isn’t likely, or that reporters only choose their slant based upon their readership’s expectations.

So although politicians from both sides tend to accuse the news media of partisanship and negativity, the data suggests that they ought to blame the public. The papers basically reflect what their readers want to hear.

Ick. This is the classic chicken and egg problem. It assumes that the public exists in a vacuum, and that the public’s opinions are not influenced by the media. Of course, this vacuum does not exist. The public may have views in alignment with the newspaper precisely because the newspaper shaped the views of the public. In other words, if I read the WSJ every morning on my way to work, I may very well start voting Republican. It’s not that the WSJ reflects my opinion: it’s that my opinion and the WSJ’s start to converge, since the WSJ is influencing my opinion.

The whole point of propaganda is that you don’t realize it’s propaganda while you’re reading it. Did Pravda just “represent what the worker’s wanted to hear”? According to this analysis, it certainly could have: I’m sure workers would have declared that their personal views were in line with Pravda’s slant.

As much as researchers of the Chicago School of Economics would love to believe the market can explain the media’s slant, I don’t buy it. That said, the market is certainly a factor — just not the only one, and IMO, not the primary one.

“Facile anti-intellectualism is the order of the day”

Thursday, October 25th, 2007

A book review by Thomas Frank, on a biography of John Kenneth Galbraith.

What astonishes the contemporary reader is, first of all, that a genuine, independent intellectual like Galbraith was permitted to serve in government, let alone become the confidant of presidents. Facile anti-intellectualism is the order of the day now, as even Democrats race to embrace the free-market logic of the Chicagoans. The ”New Industrial State” that the great liberal economist described in 1967 is now Public Enemy No. 1 of financiers and rebel C.E.O.’s determined to, as Tom Peters put it in 1992, blast ”the violent winds of the marketplace into every nook and cranny in the firm.”

Yet reading Parker’s comprehensive account of the 20th century’s economic battles, I can’t help thinking that this ought to be Galbraith’s moment. An old-school scoffer like Galbraith would remind us that all our elected officials have done with their heady incantations of the virtues of privatizing Social Security and the glories of deregulation is resurrect the superstitions of our orthodox ancestors, and trade in our affluent society for a faith-based 19th-century model in which the affluence accrues only to the top.

Or, as I sometimes like to put it, “Economics is too important to be left to economists.” Galbraith would have agreed.

Seemed particularly relevant to me as I have just finished reading books by Galbraith and Frank in the last few months.

What is Libertarianism?

Sunday, September 2nd, 2007

From an interesting thread on /.

My definition of “libertarianism” stands from a firm principle of “live and let live”. That is, everyone is free to do what they want as long as they are not doing any direct harm to others against their will.

I put in the phrase “direct harm” because it is all to easy to declare anything you want as an “indirect harm” without any justification. When I say “direct harm”, there has to be actual clearly identifiable victims of that harm, and also clear, identifiable harm. Alas, much of what in politics and the law today that is declared “harm” isn’t really.

So, in essence, unless you see me actually doing something that is clearly harming someone else, you are to leave me alone. And I, of course, will do likewise.

I have lost count of how many times in my own life, for instance, someone has phoned the police on me simply because they *thought* I was dangerous, regardless of the fact that I had not done anything wrong nor had any intentions of doing so. And that has caused much damage — much harm — to me and my family, and yet no one learns from this. Police still encourages the public to phone everything in at the drop of a hat. Then they go out and harass innocent individuals, doing harm to them.

If I were libertarian-leaning before, such experiences have firmly pushed me into that camp.

My response:

You’re conflating social libertarianism and economic libertarianism. Not your fault, so is everyone else on this forum.

“Live and let live” is social libertarianism. You’re saying, “personal / private freedoms must not be infringed”. Economic libertarianism says, “there should not be ANY government regulation on the ‘free’ market”. Someone who buys into both of these ideas (or, more commonly, conflates them) is a social/economic libertarian. In other words, a modern libertarian.

Most American-style liberals (i.e., people who believe in the power of government to help society) are also social libertarians, just not economic ones. An example of a policy offensive to an economic libertarian but not a liberal is the minimum wage, or the 40-hour work-week. Interestingly, most American-style conservatives are economic libertarians, but NOT social ones. They don’t mind eliminating the minimum wage, but they do want to tell you what you can and can’t do in your bedroom with your consenting adult partner.

You would think that modern libertarians would hate both parties, and some do, but you find many more of them supporting Republicans than Democrats.

The reason? Modern-day libertarianism really has more to do with Milton Friedman than it does with the ACLU. Many are just brainwashed Chicago school amateur economists. They think that the “invisible hand of the market” will fix everything, while they benefit from the fruits of a century of progressive policies that are only recently being dismantled.

They conflate social and economic libertarianism because it is convenient to do so; the latter is so vulgar that if presented alone to most compassionate human beings, it would seem completely insane. No 40-hour work week? No controls on foods and substances? No safety labels on medicines? No nutrition labels on food? No seatbelts in cars? No environmental regulations on dumping and pollution? Yep — that’s economic libertarianism. The “market” will sort things out. Just let the invisible hand do its work, and all these things will magically be taken care of. [You often hear economic libertarians making the mistake of applying Darwin’s principle of natural selection to the market — those with the most money and skills are “selected”, and the rest should be left in the dust.]

Social libertarianism, on the other hand, jives with American sensibilities and our Constitution. And so, through the sheep’s clothing of social and personal freedoms, comes the wolf of the business-run “free” market.

Update: A Wikipedia article on the Nolan Chart, as well as the chart itself, elaborates this distinction. If I were producing the chart today, instead of making the x-axis “economic freedom,” I’d label it “opposition to government regulation of the market.” Certainly less succinct, but more accurate.

Another Update: I was revisiting the /. thread, and found a particularly good description of the difference between economic liberals and economic libertarians:

[…] the question fundamentally comes down to, “What do you fear the most?”

1. An inefficient government running roughshod over you (taxation, interference in property rights, tyranny of the majority, etc).
2. Powerful, unaccountable private entities running roughshod over you (monopolies, externalities, inequity of power, etc).

Of course, this is a bit of an oversimplification (as is the notion that most people fit into these little political boxes), but it mostly suffices. I find that most libertarian and most liberal points of view come down to concerns that their favorite bogeyman will ruin everything if left unchecked and powerless. More nuanced views come from realizing that they both are pretty bad and that you have to make a choice how to balance them (even if you tend to throw the balance almost entirely one way or the other). The crazy ideologues you see here on Slashdot and elsewhere are the people who seem to never acknowledge that the other side’s feared enemy is a problem too.

I love this explanation. My personal belief, as elaborated in earlier posts in this blog, is that careful government regulation of business is a good thing. But the modern US administrations strip away regulation of businesses, while growing the government in its ability to censor, to control social and personal behavior, to use the national purse for foreign wars, etc. In other words, the worst of both worlds!

Double-header for Friedman

Tuesday, July 24th, 2007

To be honest, I’ve completely ignored the “Thomas Friedman phenomenon” going on in this country. If I had a nickel for every time I saw someone reading The World is Flat on the train…

For some reason, people are in love with globalization and outsourcing as “the great leveler.” I have a different take on this. And precisely because The World is Flat was the most popular book about globalization, I never bothered to read it.

But the other day, someone came over and saw the book in my bookshelf. This person was definitely no fan of globalization. Mind you, I’m no Friedman fan — I only own the book to try to understand what the fuss is about. I haven’t turned a page yet. Yet, this person sat there and stared at this book. And I knew what she was thinking. “Another one of these schmucks? Another cheerleader?”

Well, it’ll take more research and time for me to declare my overall opinion of Friedman.

But today, by pure chance, I encountered two hilarious pieces on Friedman:

One, a cartoon by Tom Tomorrow: M is for Moustache.

Two, a review of The World is Flat by Matt Taibbi of New York Press.

A select excerpt from the review:

On an ideological level, Friedman’s new book is the worst, most boring kind of middlebrow horseshit. If its literary peculiarities could somehow be removed from the equation, The World Is Flat would appear as no more than an unusually long pamphlet replete with the kind of plug-filled, free-trader leg-humping that passes for thought in this country. It is a tale of a man who walks 10 feet in front of his house armed with a late-model Blackberry and comes back home five minutes later to gush to his wife that hospitals now use the internet to outsource the reading of CAT scans. Man flies on planes, observes the wonders of capitalism, says we’re not in Kansas anymore. (He actually says we’re not in Kansas anymore.) That’s the whole plot right there. If the underlying message is all that interests you, read no further, because that’s all there is.

Oh my…

I Choose the State

Monday, May 28th, 2007

On Robert Reich’s blog, aly k wrote:

“And without a normative justification for the State, whether it be in the form of democratic government or a horrific tyrant, taxes can’t be justified (philosophically).”

I responded with the below message:

The most moving argument from the state can be stated in economists’ terms. It is sometimes called “the public goods” justification. Goes something like this (paraphrased from Wikipedia):

A market may allow individuals to create and allocate many goods optimally. But there are some goods — “public goods” — that are not produced adequately in a market system. These collective goods are ones that all individuals want (hypothetically — this is often a normative judgment, but comes from very basic things we consider to be “human rights”) but for whose production it is often not individually rational for people to secure a collectively rational outcome. The state can step in and force us all to contribute toward the production of these goods, and we can all thereby be made better off.

For example, it is true that if we had only private schools, people with a lot of money could ensure the best education for their children without having to pay for both the private school and the taxes necessary to fund the public school. But poor parents will have no choice but to send their children to less well-maintained and more poorly-staffed schools.

Supposedly, for society to progress we would prefer if all members of society had access to good schooling, regardless of the social class into which they were born. (That is, whether my parent is a millionaire investor or a plumber, I should have access to a good education.) Therefore, it makes some sense for us to pay a tax to the state, and for the state to provide good (and equal) schooling for everyone. What’s more, because the state needn’t turn a profit on schools, their overall cost through taxation can be lower than private schools would be.

Schools are one of those things you would prefer not be left to the market, because supposedly it’s good for everyone that everyone else is educated above a certain level. These people, after all, will become your neighbors, employers, employees, clients, etc. They also will be voting in elections.

In other words, if you value a high level of education as a universal right which should be secured for all citizens regardless of the socioeconomic class they are born into, then you are essentially already arguing for the state, because the market, per se, will not secure a high quality education for every individual.

Similar arguments can be made about health care, large pieces of infrastructure (like highways, roads, traffic lights), and certain components of institutional security (like firefighters, police officers, etc.). The state shouldn’t do everything — it should only make the level of quality equal across a market for certain goods, due to moral concerns we have. People shouldn’t have access to worse roads, or worse health care, or less firefighter or police protection, just because they live in a town of poor people.

We are okay with poorer people having less access to shiny new BMWs, bottled water, and Starbucks coffee, because these are frivolous private expenditures anyway. The poor person who drinks less Starbucks coffee than me won’t grow up to be an ignorant, sick, armed and desperate person ready to murder me on the street for the $40 in my pocket. But the uneducated person, without access to healthcare and who lives in a violent neighborhood with no police officers will certainly slay me for the $40 in my pocket.

To bring out the goodness in Man, I choose the state.

(That said, some states are better than others!)

The Divine Right of Capital

Friday, March 30th, 2007

A playful paragraph from the book by Majorie Kelly, which I’ve lately been re-reading:

We might note that while employees in the community are left to the protection of the invisible hand, wealth is protected by the visible hand of government and corporations. But this is something, it is hoped, that will be overlooked.

To help us begin to see it, we might, for a moment, imagine a different arrangement of institutional power. Picture a free market in which labor rights are enthroned in law, and property rights are left to the invisible hand. This would be a world in which we believe employees are the corporation. They are, after all, the ones running the place. Hence only employees could vote for the board of directors, and the purpose of the corporation would be to maximize income for employees. In theory, stockholders would receive income they negotiated through contracts. In practice the corporation would dictate those contracts with little real negotiation and stockholders could accept the terms or go elsewhere, only to find other corporations offering nearly identical and dismal terms.

In this world, stock would be sold in a manner controlled entirely by the corporation, much as wages are set today. Stockholders would appear alone at the company where they would be taken into a room and made an offer. There would be no reliable way to compare current stock price to pass price, the return one person receives to what others receive, or to compare returns from one corporation to another. Wage and benefit data, on the other hand, would be published daily in “The Main Street Journal”, and the movement of the Dow Jones wage index would of course be tracked nightly on the news. But returns to shareholders would be considered proprietary information and would not be given out.

If stockholders tried to improve their negotiating position by organizing into mutual funds, corporations would threaten to cut off payments altogether. The companies would talk about replacing stockholder money with funds from people overseas were willing to accept lower returns.

And, of course, overseas, stockholders would have seen even less power. Although free trade agreements would provide intricate protections for labor and environmental rights, they would offer capital no protections. “What does capital have to do with trade?” pundits might ask. “Trade is about goods and services and the people who create them, it’s not about capital.”

More on Internet Radio: NPR Takes Action

Thursday, March 15th, 2007

From TFA:

This is a stunning, damaging decision for public radio and its commitment to music discovery and education, which has been part of our tradition for more than half a century. Public radio’s agreements on royalties with all such organizations, including the RIAA, have always taken into account our public service mission and non-profit status. These new rates, at least 20 times more than what stations have paid in the past, treat us as if we were commercial radio – although by its nature, public radio cannot increase revenue from more listeners or more content, the factors that set this new rate. Also, we are being required to pay an internet royalty fee that is vastly more expensive than what we pay for over-the-air use of music, although for a fraction of the over-the-air audience.

Save Internet Radio

Thursday, March 15th, 2007

Internet Radio is in danger.  (Thanks for the heads up, Jeff Evans.)  This means sites like Pandora may have to be shut down.  Do something about it.  I wrote the following letter to my NY representatives:

The Copyright Royalty Fees for Internet Radio broadcasters (like the hugely innovative Pandora.com) have been increased to the point where many of these stations will have to close down.

The music industry has certainly made a big fuss about threats coming from the Internet, but I don’t spend any of my nights crying for the music industry.  They make millions upon millions of dollars, and keep America locked in a relative monoculture where new and independent artists are left out of the musical discourse while mindless and mind-numbing music is played everyday on radio stations across the ClearChannel nation.

Yet, despite my relative dislike for this exploitive industry, I have to say that every technological innovation that we’ve seen — from LPs to tape cassettes to CDs, and now to MP3s — has seen an increasingly growing recording industry, usually due to, rather than in spite of, these technologies.

Interent Radio actually has more of a potential to benefit the music industry than any other one of these technologies.  If you don’t know, Pandora.com is an amazing site based upon “The Music Genome Project.”  The concept is simple: you enter a song or artist on the site, and it creates a playlist of songs that “sound like” that artist or song.  I can mix these intangibles (“The Doors” and “Michael Jackson” gives me classic rock tones with pop melodies) and discover new artists I had never even heard about, simply by exploring my “taste matrix.”  This amazing functionality comes in particular handy after I get my paycheck, since I go to Pandora.com, see which artists/songs I’ve listened to lately, and with a click I can purchase these songs from the music industry.

I hadn’t bought a CD in years, until discovering Pandora and, through it, independent music I liked.

Who, exactly, loses in this situation?  I discover songs I’ve never heard of, I buy CDs that probably don’t sell very well, I get to benefit from high-quality radio from work on my work PC, and Pandora makes a tiny slice of money on advertising.

I’m sure the music industry wishes they had thought of Pandora, so that the little money that it does make from advertising would be theirs.  But tough!  This is supposed to be a competitive economic system, and if you snooze, you lose.  (Given actions like these by government, I’m not sure that it is really a competitive economic system, unfortunately!)

This is only the beginning of the places these technologies can go.  Don’t allow their efforts to be quelled by big corporate interests!  Please strike down these ridiculous copyright fees!

Think Corporate Power is showing any signs of weakness?  Nope.  The big wheels keep on turning…

Catching up on the reading list

Friday, March 9th, 2007

Lately, I’ve been very diligent about catching up on my reading.

I have been perpetually delaying a review of Capitalism 3.0 and Dreaming in Code, both of whom deserve it. But I promise one soon. I use Hofstadter’s Rule of Thumb lately for estimating time: however long you think it’s gonna take, double it and add a unit of time. So if you think it’ll take two hours, it’ll really take four days. If you think it’ll take five days, it’ll really take 10 weeks. And so on.

In the meanwhile, I’ve been busy at work — actually working on some cool stuff from a technology standpoint, mainly in the realm of hacking with pieces of the Eclipse Modeling Framework, and its related projects like GMF, RCP, Eclipse Core, etc.

On my commute, I’ve been enjoying reading Making Globalization Work by Stiglitz. Although one of my friends mentioned to me that this book would be quite boring, and for the most part he was right. Not the lofty stuff of Barnes in Capitalism 3.0; but perhaps Stiglitz’s recommendations are much more practical for ways to improve the current system.

The other book I started recently is a long, written interview with John Kenneth Galbraith (much in the style of Socrates) which is entitled, Almost Everyone’s Guide to Economics. What’s amazing is to see Galbraith, this towering (literally) Keynesian economic thinker, speaking in the 70s of the growth of corporate power, the undermining of labor, and the insidious nature of market fundamentalism. And yet, here we are, 30 years later, heeding none of his warnings, and entering into the new “global age” of “The World is Flat”.

Oh yes indeed, I do need to write some reviews very soon.