Mainstream Journalism, RIP

17 December 2008 at 4:43 pm 6 comments

| Peter Klein |

Last week’s WSJ carried an op-ed from SEC Chair Christopher Cox, “We Need a Bailout Exit Strategy.” The op-ed was nothing special (mostly defending the SEC, of course, though there was a nice Hayekian line about “decentralized decision-making, in which millions of independent economic actors make judgments using their own money, [resulting] in the wisest allocation of scarce resources across our complex society”). What caught my eye was the headline, which suggests a connection between the bailout and the Iraq war, a connection I’ve been meaning to write about.

Remember how journalists felt deceived by the Bush Administration about the war? President Bush said that Saddam Hussein was a “grave and growing threat,” and the media repeated this line. Colin Powell showed pictures of the mobile weapons trailers and the New York Times reprinted them with enthusiasm. When the Administration’s claims proved false, the mea culpas began. Judith Miller resigned in disgrace. Never again, the media cried, will we be used as house propaganda organs. And yet, once the financial crisis began, the exact pattern was repeated. Bernanke and Paulson say there’s a “credit freeze,” that the financial sector is on the verge of collapse, that they alone know what to do — so that’s what the newspapers print. No time to investigate, to interview anyone outside the government, to hold these claims up to any critical scrutiny. If high officials say credit markets are frozen, that only “bold action” from the Treasury, the Fed, and Congress can prevent total meltdown, then that’s the way it is. Virtually every news report on the crisis followed the official script. It’s as if the financial reporters from the Times, the WSJ, the Washington Post, CNN, etc. were embedded with the Treasury. News reports have been little more than government press conferences. Shame, journalists, shame!

Why Oh Why, as Brad DeLong would say, can’t we have a press corps that investigates, rather than simply repeating what the government asserts?

Entry filed under: - Klein -, Bailout / Financial Crisis, Public Policy / Political Economy.

Bygrave on the State of Entrepreneurship Research EJPE Now Available

6 Comments Add your own

  • 1. Richard O. Hammer  |  17 December 2008 at 10:06 pm

    Peter asks: “Why … can’t we have a press corps that investigates, rather than simply repeating what the government asserts?”

    Because the mainstream media are part of the state, as I see it. Not formally of course. The US Constitution does not specify media. But such a constitution could not work as intended without media. Information must flow between the voters and the government.

    I propose we can expect to see biases in media which grow in this niche created by the state. Although my argument is fragmentary, I find it natural to believe these media will be supportive of the larger organization that makes their existence possible. After all, the more questions are decided in capitals, the more communication is needed between voters and capitals – the more work for mainstream media.

    On the other hand, if a medium investigates critically and convinces some voters that state action is inappropriate, this reduces the demand for communications between voters and capitals, and reduces the size of the market in which the medium makes a living.

    Maybe one day I will write this idea in greater length. I hope to.

  • 2. Matt C.  |  18 December 2008 at 9:18 am

    The answer to the question is because journalists, for the most part, go to school and study journalism. That means learning how to write a magazine or newspaper article. They learn to quote and regurgitate what they are told.

    They also don’t learn economics. What they learn is a basic form of Econ 101 and nothing more substantial. They don’t learn to understand the price mechanism and how important that is to understanding scarcity. Few understand Public Choice theory because they have absorbed the idea that the government is full of good intentioned people. They only question the ideals of those with whom they don’t see eye to eye ideologically.

    I would also add that journalist are afraid to lose their ability to get “close to the action,” if they were to begin to question the State’s actors. They would lose a source of power to influence public opinion. After all they take a job in which they hope people will find them insightful and important.

  • 3. Rafe  |  18 December 2008 at 7:25 pm

    What was that about no weapons of mass destruction in Iraq?

  • 4. Ali Shams  |  21 December 2008 at 12:49 pm

    I think the answer lies in Milgram’s electric shock experiment. Government has a high level of legitimacy which makes every one agree with them. It’s a pity that the nature of human behavior is so incomplete and prone to error.

  • 5. Charlie  |  29 December 2008 at 1:31 am

    Selection bias – for most, journalism doesn’t pay.

  • 6. Graham Peterson  |  7 August 2016 at 4:04 pm

    I imagine journalists end up carrying water for the government in these scenarios because they sincerely believe that the issues are so large and so dire that the government really is the only one who can do anything about it.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts


Former Guests | posts


Recent Posts



Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

%d bloggers like this: