Is the Press Too Big to Fail?

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(Photo: Javier Micora / Flickr)Everyone knows this story, though fewer and fewer read it on paper. There are barely enough pages left to wrap fish. The second paper in town has shut down. Sometimes the daily delivers only three days a week. Advertising long ago started fleeing to Craigslist and Internet points south. Subscriptions are dwindling. Online versions don’t bring in much ad revenue. Who can avoid the obvious, if little covered question: Is the press too big to fail? Or was it failing long before it began to falter financially?

In the previous century, there was a brief Golden Age of American journalism, though what glittered like gold leaf sometimes turned out to be tinsel. Then came regression to the mean. Since 2000, we have seen the titans of the news presuming that Bush was the victor over Gore, hustling us into war with Iraq, obscuring climate change, and turning blind eyes to derivatives, mortgage-based securities, collateralized debt obligations, and the other flimsy creations with which a vast, showy, ramshackle international financial house of cards was built. When you think about the crisis of journalism, including the loss of advertising and the shriveled newsrooms — there were fewer newsroom employees in 2010 than in 1978, when records were first kept — also think of anesthetized watchdogs snoring on Wall Street while the Arctic ice cap melts.

Deserting readers mean broken business models. Per household circulation of daily American newspapers has been declining steadily for 60 years, since long before the Internet arrived. It’s gone from 1.24 papers per household in 1950 to 0.37 per household in 2010. To get the sports scores, your horoscope, or the crossword puzzle, the casual reader no longer needs even to glance at a whole paper, and so is less likely to brush up against actual — even superficial — news. Never mind that the small-r republican model on which the United States was founded presupposed that some critical mass of citizens would spend a critical mass of their time figuring out what’s what and forming judgments accordingly.

Don’t be fooled, though, by any inflated talk about the early days of American journalism. In the beginning, there was no Golden Age. To be sure, a remark Thomas Jefferson made in 1787 is often quoted admiringly (especially in newspapers): “If it were left to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate for a moment to prefer the latter.”

Protected by the First Amendment, however, the press of the early republic was unbridled, scurrilous, vicious, and flagrantly partisan. In 1807, then-President Jefferson, with much more experience under his belt, wrote, “The man who never looks into a newspaper is better informed than he who reads them, inasmuch as he who knows nothing is nearer to truth than he whose mind is filled with falsehoods and errors.”

Two Golden Decades

If there was a Golden Age for the American press, it came in a two-decade period during the Cold War, when total per capita daily newspaper circulation kept rising, even as television scooped up eyeballs and eardrums. Admittedly, most of the time, even then, elites in Washington or elsewhere enjoyed the journalistic glad hand. Still, from 1954 to 1974, some watchdogs did bark. Civil rights coverage, for example, did help bring down white supremacy, while Vietnam and Watergate reportage helped topple two sitting presidents, Lyndon B. Johnson and Richard Nixon.

Of course, press watchdogs also licked the hands of the perpetrators when Washington overthrew democratic governments in Iran in 1953, Guatemala in 1954, and when it helped out in Chile in 1973. As for Vietnam, it wasn’t as simple a tale of journalistic triumph as we now imagine. For years, in manifold ways, reporters deferred to official positions on the war’s “progress,” so much so that today their reports read like sheaves of Pentagon press releases. Typically, all but one source quoted in New York Times coverage of the 1964 Tonkin Gulf incidents, which precipitated a major U.S. escalation of the war, were White House, Pentagon, and State Department officials (and they were lying). In the war’s early years, at least one network, NBC, even asked the Pentagon to institute censorship.

Nonetheless, the sense that the war was an unjustifiable grind grew, especially after the Vietnamese launched the Tet Offensive of January-February 1968, startling the U.S. military, Washington officials, and journalists alike. When, in 1969, Seymour Hersh reported for the tiny Dispatch News Service that a unit from the Americal Division had slaughtered hundreds of Vietnamese civilians in a village named My Lai, his story went mainstream.

Still, the long bombing campaign that President Nixon ordered in Cambodia and Laos did not feature on television, and barely made the newspapers. And even when, in a remarkable feat of reporting, it finally did in a major way, there was no journalistic sequel. The “secret” bombing of Cambodia — secret from Americans, that is — was reported on page one of the New York Times on May 9, 1969, and 37 years later, the reporter, William Beecher, said this about his story: “We’re not talking of some small covert operation here, but a massive saturation bombing campaign, with a false set of coordinates to mislead the Congress and the public… You would have thought that such a story would have caused a firestorm. It did not.”

After Watergate, whatever hard-won, truth-bound independence the mainstream press had wrested from its own history failed to hold. In the run-up to George W. Bush’s invasion of Iraq, for example, most Washington journalism once again collapsed into deference, and so, too, did the financial press on its own front. Washington’s war-making might and Wall Street’s financial maneuvers were both deemed too mighty, too smart, too hypermodern to fail.

Although the New York Times and the Washington Post later acknowledged flaws in their Iraq reporting, neither paper nor other major outlets have owned up to the negligence that led up to the great global economic meltdown of 2007-2008. We are far from grasping how fully business journalism played cheerleader and pedestal-builder for the titans of finance as they erected a fantastical Tower of Derivatives, which grew way too tall to fail without wrecking the global economy.

Start to finish, financial journalism was breathless about the market thrills that led to the 2007-2008 crash: the financialization of the global economy, the metastasis of derivatives, and especially the deregulation underway since the late 1970s that culminated in the 1999 congressional repeal of the 1933 Glass-Steagall Act (with President Bill Clinton blithely signing off on it). That repeal paved the way for commercial and investment banks, as well as insurance companies, to merge into “too-big-to-fail” corporations, unleashed with low capital requirements and soon enough piled high with the potential for collapse.

A Proquest database search of all American newspapers during the calendar year 1999 reveals a grand total of two pieces warning that the repeal of Glass-Steagall was a mistake. The first appeared in the Bangor Daily News of Maine, the second in the St. Petersburg Times of Florida. Count ‘em: two.

On February 24, 2002, as the scandal of the derivative-soaked Enron Corporation unfolded, the New York Times’s Daniel Altman did distinguish himself with a page-one business section report headlined “Contracts So Complex They Imperil The System.” He wrote: “The veil of complexity, whose weave is tightening as sophisticated derivatives evolve and proliferate, poses subtle risks to the financial system — risks that are impossible to quantify, sometimes even to identify.” He stood almost alone in those years in such coverage. Most financial journalists preferred then to cite the grand Yoda of American quotables, Federal Reserve Chairman Alan Greenspan. And he was just the first and foremost among a range of giddy authorities on whom those reporters repeatedly relied for reassurance that derivatives were the great stabilizers of the economy.

On March 23, 2008, as the bubble was finally bursting, Times reporters Nelson Schwartz and Julie Creswell noted that “during the late 1990s, Wall Street fought bitterly against any attempt to regulate the emerging derivatives market.” They went on:

“A milestone in the deregulation effort came in the fall of 2000, when a lame-duck session of Congress passed a little-noticed piece of legislation called the Commodity Futures Modernization Act. The bill effectively kept much of the market for derivatives and other exotic instruments off-limits to agencies that regulate more conventional assets like stocks, bonds and futures contracts.”

“Little-noticed” indeed. According to Lexis-Nexis, not a single substantive mention of this law appeared in the Times that year. On October 1, 2000,Washington Post writer Jerry Knight did note ruefully, “What’s fascinating about the policy debate is the agreement on the guiding principle: The government should not stand in the way of financial innovation.”

In a syndicated column on Christmas Eve, way-out-of-the-mainstream columnist Molly Ivins was not so poker-faced. She called the new law “a little horror.” And in that she stood alone. That was it outside of financial journals like theAmerican Banker and HedgeWorld Daily News, which, of course, were thrilled by the act. That magic word “modernization” in its title evidently froze the collective journalistic brain.

Or in those years consider how the New York Times covered the exotic derivatives called “collateralized debt obligations,” among the principal cards of which the era’s entire international financial house was built. These tricky arcana, marketed as little miracles of risk management, multiplied from an estimated $20 billion in 2004 to more than $180 billion by 2007. The Times’s Floyd Norris drily mentioned them in a 2001 front-page business section article about American Express headlined “They Sold the Derivative, but They Didn’t Understand It.” He quoted the CEO of Wells Fargo Bank this way: “There are all kinds of transactions going on out there where one party doesn’t understand it.” From then on, no substantial Timesfront-page business section article so much as mentioned collateralized debt obligations for almost four years.

In 2009, in an enlightening article in the Columbia Journalism Review, Dean Starkman, a former staff writer at the Wall Street Journal, looked at the nine most influential business press outlets from January 1, 2000, through June 30, 2007 — that is, for the entire period of the housing bubble. A total of 730 articles contained what Starkman judged to be significant warnings that the bubble could burst. That’s 730 out of more than one million articles these journals published.

The formula was simple and straightforward: the business press served the market movers and shakers. It was a reputation-making machine, a publicity apparatus for the industry. In other words, the job of financial reporters in those years was to remain fast asleep as the most flagrantly abusive part of the mortgage industry, subprime mortgages, was integrated into routine banking.

Meanwhile, thanks to that same financial press, a culture of celebrity enveloped the big names of finance: CEOs of major banks, Wall Street investors, operators of hedge funds. They were repeatedly portrayed not just as fabulously successful tycoons doing their best for the society, but as fabulously giving philanthropists, their names engraved into the walls of university buildings, museums, symphony halls, and opera houses. They weren’t just bringers of liquidity to markets, but wise men, too. In an all-enveloping media atmosphere in which the press indulged without a blink, they were held to be not only creators of wealth but moral exemplars. Indeed, the two were essentially interchangeable: they were moral exemplars because they were creators of wealth.

The Desertification of the News

Oh, and in case you think that the coverage from hell of the events leading up to the financial meltdown was uniquely poor, think again. On an even greater meltdown that lies ahead, the press is barely, finally, still haphazardly coming around to addressing convulsive climate change with the seriousness it deserves. At least it is now an intermittent story, though rarely linked to endemic drought and starvation. Still, as Wen Stephenson, formerly editor of the Boston Globe’s “Ideas” section and TheAtlantic.com and senior producer of National Public Radio’s “On Point,” summed up the situation in a striking online piece in the alternative Boston Phoenix: the subject is seldom treated as urgent and is frequently covered as a topic for special interests, a “problem,” not an “existential threat.” (Another note on vanishing news: Since publishing Stephenson’s article, the Phoenix has ceased to exist.)

Even now, when it comes to climate change, our gasping journalism does not “flood the zone.” It also has a remarkable record of bending over backward to prove its “objectivity” by turning piece after piece into a debate between a vast majority of scientists knowledgeable on the subject and a fringe of climate-change deniers and doubters.

When it came to our financial titans, in all those years the press rarely felt the need for a dissenting voice. Now, on the great subject of our moment, the press repeatedly clutches for the rituals of detachment. Two British scholars studying climate coverage surveyed 636 articles from four top United States newspapers between 1988 and 2002 and found that most of them gave as much attention to the tiny group of climate-change doubters as to the consensus of scientists.

And if the press has, until very recently, largely failed us on the subject, the TV news is a disgrace. Despite the record temperatures of 2012, the intensifying storms, droughts, wildfires and other wild weather events, the disappearingArctic ice cap, and the greatest meltdown of the Greenland ice shield in recorded history, their news divisions went dumb and mute. The Sunday talk shows, which supposedly offer long chews and not just sound bites — those high-minded talking-head episodes that set a lot of the agenda in Washington and for the attuned public — were otherwise occupied.

All last year, according to the liberal research group Media Matters,

“The Sunday shows spent less than 8 minutes on climate change… ABC’s This Week covered it the most, at just over 5 minutes… NBC’s Meet the Press covered it the least, in just one 6 second mention… Most of the politicians quoted were Republican presidential candidates, including Rick Santorum, who went unchallenged when he called global warming ‘junk science’ on ABC’s This Week. More than half of climate mentions on the Sunday shows were Republicans criticizing those who support efforts to address climate change… In four years, Sunday shows have not quoted a single scientist on climate change.”

The mounting financial troubles of journalism only tighten the muzzle on a somnolent watchdog. It’s unlikely that serious business coverage will be beefed up by media companies counting their pennies on their way down the slippery circulation slope. Why invest in scrutiny of government regulators when the cost is lower for celebrity-spotting and the circulation benefits so much greater? Meanwhile, the nation’s best daily environmental coverage takes a big hit. In January, the New York Times’s management decided to close down its environmental desk, scratching two environmental editor positions and reassigning five reporters. How could such a move not discourage young journalists from aiming to make careers on the environmental beat?

The rolling default in climate-change coverage cries out for the most serious professional self-scrutiny. Will it do for journalists and editors to remain thoroughly tangled up in their own remarkably unquestioned assumptions about what constitutes news? It’s long past time to reconsider some journalistic conventions: that to be newsworthy, events must be singular and dramatic(melting glaciers are held to be boring), must feature newsworthy figures (Al Gore is old news), and must be treated with balance (as in: some say the earth is spherical, others say it’s flat).

But don’t let anyone off the hook. Norms can be bent. Consider this apt headline on the cover of Bloomberg Businessweek after Hurricane Sandy drowned large sections of New York City and the surrounding area: “It’s Global Warming, Stupid.” Come on, people: Can you really find no way to dramatize the extinction of species, the spread of starvation, the accelerating droughts, desertification, floods, and violent storms? With all the dots you already report, even with shrunken staffs, can you really find no way to connect them?

If it is held unfair, or naïve, or both, to ask faltering news organizations to take up the slack left by our corrupt, self-dealing, shortsighted institutions, then it remains for start-up efforts to embarrass the established journals.

Online efforts matter. It’s a good sign that the dot-connecting site InsideClimateNews.org was just honored with a Pulitzer Prize for national reporting.

But tens of millions of readers still rely on the old media, either directly or via the snippets that stream through Google, Yahoo, and other aggregator sites. Given the stakes, we dare not settle for nostalgia or restoration, or pray that the remedy is new technology. Polishing up the old medals will not avail. Reruns of His Girl Friday, All the President’s Men, and Broadcast News may be entertaining, but it’s more important to keep in mind that the good old days were not so good after all. The press was never too great to fail. Missing the story is a tradition. So now the question is: Who is going to bring us the news of all the institutions, from City Hall to Congress, from Wall Street to the White House, that fail us?