Should We Subsidize Media?
There has been much hand-wringing over the decline of traditional media. Katherine Mangu-Ward consoles those who fear a post-paper media environment and offers some helpful suggestions; in The Freeman Online, Ed Lopez asks whether the decline of newspapers is a market failure and explains why it isn’t. He shows that this is a case where a little bit of economics can actually be dangerous: there is a potentially plausible case to be made that news is a public good (non-rival and non-excludable), but as an argument for journalism subsidies this proves too much. As Ed argues, the decline of the dead-tree media is creative destruction, not market failure.
Rather than rehash his argument I want to press his public good discussion a bit further. First, it’s not clear that Media 2.0 is producing less news. It’s just taking new forms, from extreme examples like cell phone videos of cops behaving badly to more routine things like live-blogged City Council meetings. The idea that news is a public good assumes that those doing the reporting are getting their facts straight and interpreting those facts correctly. If a news outlet is reinforcing economic illiteracy (which is also non-rival and non-excludable), then it is producing a public bad.
Consider a case in point. A few weeks ago, the New York Times reported on teenage unemployment but failed to mention the 41% increase in the minimum wage that probably explains it. Fortunately, the econ blogosphere’s leading Man of Letters, Don Boudreaux, was there with another excellent letter to the editor of the Times, which is on Cafe Hayek for the world to see even if the editor chooses not to print it.
I wrote a very short blog post about it and linked it on Facebook with the question “Is there anyone at the New York Times who knows how to Google ‘teenage unemployment’?” The amount of information on the issue is overwhelming, and there are a lot of professional economists who are writing about this. Mark J. Perry is but one example: to my shame, I only recently started following his blog, but I learn much more from his discussions of the data than I do from most news reports.
And here’s where the economics of it all get interesting. First, the subsidies people are calling for are already there. Professor Perry is a professor at the University of Michigan-Flint, which means that taxpayers are probably footing at least part of the bill for his analysis. Second, I find that blogging and writing op-eds are useful inputs into my teaching and scholarship. By reading Ed’s article and by writing this post, I’ve thought harder about public goods and public bads than I otherwise would have this morning. It’s a problem that’s directly relevant to some of my research projects, and I’m looking for ways to revamp my introductory econ notes on market failure and government failure.
It’s also not at all clear that a smaller relative flow of information about politicians and what they’re up to is a bad thing. A healthy civilization is one in which voluntary and commercial relationships between people are maximized while coercive and political relationships between them are minimized. I learned yesterday that Lady Gaga has more Facebook fans than Barack Obama. This is a good thing. Lady Gaga creates wealth. At the very best, Barack Obama–like all of his predecessors before him–redistributes it.
The movement to increase subsidies to traditional media is a movement to fix a problem that markets and liberty are already solving. In a best-case scenario, media subsidies are superfluous. In a worst-case scenario, since he who pays the piper calls the tune, media subsidies are dangerous.