The Case of Newspapers

The Case of Newspapers

The Office of Policy Planning at the FTC has just issued the “Federal Trade Commission Staff Discussion Draft: Potential Policy Recommendations to Support the Reinvention of Journalism.”

This is a very strange document. It is written by “FTC staff in the Office of Policy Planning” but we cannot tell who actually wrote the draft. Moreover, no reason is given for writing the document. It is not a research paper (of the sort written in the Bureau of Economics) and there is no indication that it has been written in response to a Congressional inquiry. The missions of the FTC are antitrust and consumer protection, and this draft has little to do with either of these areas of responsibility.

Basically, this report is an exercise in industrial policy.

Is There a Problem?

The report tells us (as is obvious) that traditional print media are suffering. It also claims, with little rationale, that this is a public policy problem. The problem arises because “studies have shown that newspapers typically provide the largest quantity of original news to consumers…” But in a document with 180 footnotes, there is no source for the “studies” and so we cannot tell, for example, when these studies were completed. Moreover, just because newspapers have traditionally performed an important function does not mean that they are the only way this function could be done. A similar report in 1600 would have lamented the downfall of town criers.

Although the Draft on page 1 claims to be interested in policies which are “platform neutral,” on page 2 we learn that “most of the discussion in this document will use the perspective of newspapers…”  On page 5 we are told that because “newspapers have not found a new, sustainable business model…it is not too soon to start considering policies that might encourage innovations to help support journalism into the future.” In other words, the problem that this report is addressing is the problem of newspapers, not of news.

In a world where everyone with an internet connection has access to huge amounts of raw news and where anyone with a telephone camera who observes a newsworthy event can instantly post the video on numerous sources such as YouTube, it is difficult to understand why the FTC staff thinks we are in a situation where there is not enough news.

Moreover, the Tea Party movement has shown that people can learn about actionable news in time to actually take action. Newspapers were not the major source people used to learn about this movement, but the information spread quickly.

The True Purpose of the Report

In fact, this document is a defense of a traditional liberal ally, the American newspaper. Newspapers are in trouble but that does not mean that news is in trouble. One way to see the FTC perspective is to note that neither opinion blogs nor talk radio are mentioned in the report. These are two of the types of media that are replacing traditional news, but not supporting the liberal causes that the current FTC favors.

Economists are aware of the danger of industrial policy – of trying to pick winners and losers (or, in this case, of trying to turn a loser into a winner). Such policy is always wasteful because markets are better than governments at figuring out what investments are worthwhile. But when the industry involved is responsible for informing people about important issues of the day, and especially political issues, then the dangers of government involvement are especially large. This report tries to appear neutral, but it illustrates the dangers that we should be protected from by the First Amendment.

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