Last week on NBC’s “Meet the Press,” moderator Chuck Todd played a clip from a recent CBS News interview with Attorney General William Barr. Unfortunately, the clip had been edited in a way that gave the opposite impression of what Barr was trying to say. NBC was publicly taken to task and has now apologized.
The fiasco is one more example of general problems we’ve seen over time with the media: a decline in the quality of reporting and news coverage; an increase in media partisanship; and a tendency to pursue viewers through flash and style rather than substance. Their desire to appeal to customers shouldn’t be surprising. Even though our reflex might be to think of media serving “the public interest,” they are certainly passionate about profit and their employees are interested in career advancement.
The current episode is also an illustration of two concepts in economics: “negative externalities” and “implied cartels.” First, a “negative externality” is a harmful by-product of a person’s actions or a market exchange that is imposed on another party. COVID-19 provides a great contemporary example. An infected person is contagious and can spread the virus to others.
The classic textbook example is pollution. The goal of a company is to produce, not to pollute. But pollution is part of the “bargain” — and unfortunately its costs are imposed on others. For example, when you buy a car from Ford, you’re asking Ford to pollute for you. If a negative externality is significant enough, government intervention may be helpful. Then again, government action itself routinely creates significant negative externalities.
When “Meet the Press” creates buzz for itself and partisan viewers with a fraudulent claim, it causes “pollution” — damage to society. If the fraud is detected, the entire industry is harmed. It also hurts itself, so that’s good news in terms of incentives and fairness. But the damage extends well beyond itself.
Second, the media acts as an “implied cartel.” A cartel is a collusion of sellers or buyers — to manipulate prices and gain more money. (Think about OPEC in oil, the NCAA in college athletics and labor unions in the market for labor.) An implied cartel functions like a cartel but without explicitly organizing.
Without help from the government, it’s difficult to keep cartels together. The incentives to cheat on the agreement (to gain even more profit) — or to enter the market (to compete with the cartel members) — are too great. As such, it’s common for interest groups to ask government to restrict their competition — to establish or strengthen a cartel.
So, cartels, whether explicit or implicit, are likely to degenerate and fail, if they can form at all. “Black Friday” is a good example. Remember when it started years ago? Businesses opened early on the Friday morning after Thanksgiving and offered special prices. And then, the start of Black Friday moved back to midnight. And then it moved back to Thursday.
And now, it goes for the entire week. Nobody formed a cartel, but the arrangement acted like a cartel —before it fell apart.
The media is in a similar position. It had an implied cartel to be relatively objective, fact-oriented and serious. And for a long time, top-tier news providers stayed in line and were punished if they got out of line. But now, this line has eroded tremendously. So, the incentive to cheat the standards of truth and to grab viewer eyes has undermined the credibility of the media over time.
Negative externalities are difficult to stop without government regulation. But government regulation of the press is a troubling solution for many reasons. The best answers are in the market. But if enough people value “news” like this, it’s difficult to imagine how we avoid the continuing degeneration of news. Likewise, media are trying to make a buck. Their “greed” will continue to encourage them to cheat on the cartel — to buck the “standards of journalism” they’re supposed to pursue.
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