I’ve written before about the problems of a singular ‘you must predict’ the future mindset in the media. With that mindset in hand I was reading CJR (Columbia Journalism Review) recent cover story ‘Power Problem’about how the business press failed to challenge the institutions that brought down the financial system. Now if I ignore the fact that I think the author misunderstand the roots of the crisis (which I would argue are global imbalance not the US financial system…the US financial system facilitate the problem but did not cause it) and focus on his point that the media did not put the problems in our face, I find myself reflecting on a problem. In a world where traditional press media is dieing (in part because of bloggers who write commentary as a hobby not a job) how do we incentive truth discovery. Is this (and to what degree) damaging to our democracy?
The first thing that jumps at me is that market itself. The players who took credit away from the system in the form of shorting sub-prime mortgages did us a favor by making the problem smaller (although trivially so) than it otherwise would have been (an inverse example of this it that the Internet bubble in equities happened in large part because the shorts were gone…for the moment ignore the circular problem there). These players were rewarded and in a large way. The same thing is true of short sellers of the sub prime mortgage companies. One problem with this path is that these players are demonized not encouraged. We should think about policy which make shorting or taking a negative view easier not harder (Here’s the tough question: how do we politically insulate this?).
Is this enough? No, because not everything can be shorted. Corruption in politics and private fly by night shops are essential ‘private’ enterprise but can’t be sold short; so who cares about information discovery. There is still a new market for cracking big stories but maybe we should think about policy which enable recover for the investigator. Your first question might be ‘will this make the NYTimes like a treasure hunter guild?’ Maybe, but would that be bad. Depends…it is complicated and hard to see how it plays out but it would be an disaster if it made NYTimes into a lawyers hen house.
