Is Media Harming The Economy?

Yes, I absolutely believe that the mainstream media are harming the economy. Good news is no news, and having no news is bad for business, particularly for a 24-hour TV news channel or an online site which is desperate for content.

The "expert" commentators so beloved of these media channels are much more likely to be gloomy about future business because, often, their business depends on helping people during difficult business climates - so promoting the difficult times serves their interests.

Something that disappoints me is that the mainstream print media have been so busy telling us what a bad time we're in for (which thus becomes a self-fulfilling prophecy) that they have, until now, neglected to use their collective power as a possible force for improvement.

Only now, some months after the initial meltdown, does it seem to have occurred to many publishers and editors that a lot of the people who have been responsible for the current situation have got away pretty much scot-free.

I'm not one to encourage a media witch-hunt, but might it not be satisfying to the mere mortals whose lives have been anything from somewhat hurt to completely blighted if journalists' energy could be channeled into identifying the perpetrators and ensuring that their credibility is shattered, along with their ability ever again to be in a position to repeat their errors?

Media, and its "so-called" negative stories, are not harming the economy. I say "so-called" because these stories shouldn't even be viewed as either negative or positive. It just is. There's no hiding the fact that certain executives at Citi or WaMu or others approached their jobs irresponsibly. There's no way to spin that either way. It's just plain truth. In certain ways, yes, media does amplify the magnitude of stories and topics in many ways. However, the state of the economy was already in a bad place that even media couldn't affect it any worse. My final point is that media uncovering these "negative" stories sometimes helps in lessons learned. Sometimes we learn better from other people's mistakes and stumbles.

I do believe negative stories have an effect over how the general public perceives things. But, how can we blame them? They are in the thick of it, in the midst of a huge transformation through lay-offs and prominent publications closing their doors. Just yesterday the WSJ laid off 14 editors. It would be practically impossible for them NOT to report negative news.

I think it’s our job as responsible readers to take in what we learn from a number of sources and draw our own conclusions.

I think that media does affect our thinking and our psychology--but only to a degree. Media also reflects reality, to the degree that it can, and that means it is often lagging reality.

If media alone could pull us out of this economic downturn it would be a lot less expensive than any stimulus package. But I don't believe that's possible unless there is an underlying strength in the economy to justify positive stories. It's the same with PR, you can't get far if your product or service is not that good.

I believe we're dealing with something far, far larger than a "mental recession" or the media's power to shape it.

Key global fundamentals are massively in decline. Even global political + economic leaders at Davos were in shell shock about what to do. The media is simply reporting this reality.

If anything, the media were complicit in propping up the total unreality of the past few years. With few exceptions, most didn't flag that banks, governments and individuals were living beyond our means; that we shouldn't have been purchasing houses we can't afford; that overheating housing, energy and stock prices couldn't climb forever. Now their stories are finally reflecting the true magnitude of what's happening.

During times of economic bubbles, the "power of positive thinking" can easily descend into the "power of delusional thinking". Now the bubble has popped, and it's high time we all woke up -- even if we don't like what we're reading.

media coverage concerning the economy today, to me, seems cyclical. and i think the negativity will continue to feed on itself for a while, until people get tired of reading about how bad everything is. while looking for the next way to dissect the changes that are happening around us, the standard right now is to find the news angle that stings the most -- not to find the angle that hints at the light at the end of the tunnel. at some point one has to consider that all this extreme change is going to create things that are new and positive -- maybe not right away, but eventually.

RightNow Technologies' CEO, when he returned from a customer visit tour in Europe in mid December shared his perspective on the European perception of the US economy and how media was helping to shape it. here's the link. http://tinyurl.com/dcg5fn. interesting to think about.

sorry, that link doesn't work. this one should: http://www.rightnow.com/blog/life-experiences/european-perception-of-the-us-economy.

It's interesting that media often gets blamed for not uncovering the truth about bubbles. That's a crusading and muckraking role that has almost disappeared from today's journalism which is focused on reporting rather than investigating.
Investigating requires taking an opinion about an issue, and that is frowned upon in the objective school of reporting that dominates the mainstream media.
Also, it is curious that the media cannot protect its own reputation. Therefore what is the power of the media?

Tom,

This is a great question/discussion you've raised. I've watched carefully in all manner of media - Main stream, SM's, blogs, and various list serves. I've watched blatant histeria being fomented as news broke. What bothers me is not that they report news, but that NOTHING that's been a positive gets covered. Admittedly there are few positives, but why aren't they highlighted as much as the negatives to provide some comfort to the public?

1) Drop in cost of oil: I had to search hard to find a buried report which translated the savings. $1 Bln a day more in circulation as a result of the price drop. People are going crazy over the $800 Bln stimulus figure, but we (the US) just got a "raise" of $356 Bln for the year. I know everyone I've talked with was comforted to hear this. 2) Currently $9 Trillion sitting on the sidelines (money markets): With no competition from interest rates, this money will find a home. It will fuel a rally and/or real estate purchases, venture commitments, etc. 3) Housing sales figures released the other day: Only focus was on huge drop in "new construction" sales, while aso buried in the report: pending contracts on 'resales' ticked up a couple percent in December.

I believe they should not neglect to report the bad, but I also believe two factors are fueling this almost-sensationalism reporting. 1) The Media is worried about their shrinking ad revenues and maintaining 'eyeballs' and 2) A more fundamental issue, the media are not economists who know how to evaluate/extrapolate (beyond surface recognition)consequences and data. I could go on. Guess you know now where I stand!

The UK Government is asking the self same thing of certain journalists: http://www.timesonline.co.uk/tol/news/politics/article5663563.ece

I'm responding to Amy Grady's comment (and her link to Greg Gianforte's very apt insights from Europe). There is much truth to what Greg observes. But this relates more to European media, rather than US.

I have relatives and business colleagues in Europe who have asked me similar questions. But they're reading European media accounts that squarely blame the US for global economic troubles and report with a strong degree of schadenfreude at the excesses of "Anglo-Saxon" capitalism run amok. Since most of these media outlets have often been ambivalent about US-style capitalism during the best of times, they are mostly fanning the flames of opprobrium now.

This also relates to the shocking degree of economic illiteracy often on display in Europe. The protests in France & Greece are examples. Where citizens in the US are angry and dismayed at current realities (but inherently accept the vicissitudes of capitalism), many Europeans blame their governments for not shielding them from a global economic slump that is affecting most nations in some way. Those riots and the public's ignorance about cause/effect are partially a result of distorted media coverage in Europe.

I don't like it when blogs echo the misery meme, it's in all the newspapers and on TV.

If you just lost your job that's one thing, but repeating news of a massive layoff just to grab page-views from someone ease's misfortune doesn't increase your value to your audience.

I don't think it matters which part of the country you live in. If the media is the mainstream, whatever they say is going to affect the population as a whole. Not everybody is going to agree but think about it. If everyday all you hear is the economy is bad, what's the normal reaction? A normal Joe will say, "Maybe I should save my money and slow down the spending." Of course! Everybody will catch on to the idea of not spending if you hear everyday about how bad the economy is. What happens when everybody stops spending? I think we already know the answer to that.

These comments still miss the point. It's all far bigger than the media. Consumers trying to "spend their way out of recession" isn't wise or feasible when most have been over-spending for years. And if their local companies are laying off, they need to be aware of that and the media needs to tell them.

Do keep in mind that, unlike past recessions, this is a finance-initiated recession, with credit markets frozen due to banks' poor judgments on lending. That massive illiquidity is trickling down to all parts of the economy. Since gov't, corporations + individuals are over-extended, there's no wiggle room. The media would be remiss not to report that reality.

Blaming the messenger (media) misses the core lesson: countries, companies and individuals should not live beyond their means. If you do, you'll have no cushion when the economy hits an inevitable bump in the road. So in this case biz + consumers don't have the option of spending still more.

Yes, it's a vicious cycle. But it could have been avoided if everyone had been more prudent and saved for a rainy day. I'd like to think we'll all learn a lesson from these events. That means society should look in the mirror rather than just blame the media.

Paul: But what exactly is the lesson to be learned?

You say that borrowing and spending beyond our means got us into this mess.

Yet borrowing and spending beyond our means is now proposed as the way to get us out of this mess!

I love the irony.

Ironic design reveals the hand of the creator far more clearly than "intelligent design." :-)

obviously the media influences consumer sentiment and while they'd like to say they are "impartial" it's anything but. What might be interesting is the changing face of news and the Internet. Before news was obtained mostly via TV, radio and print. With the Internet it provides much more volume of information accessible anytime. People may feel they are better informed but does this increase the negative views on economy, etc? Also, I find it interesting that people receive "urban legend" emails and immediately take them as truthful and forward them on, who then some of these do the same. You may say people are better informed but it may also be that people are just more innudated with information. But that doesn't necessarily make people smarter or able to make better decisions. And if they are likely to believe anything they read on the net, it opens up a lot more opinions that may or may not be truthful. I've long been ashamed at News Media's coverage of local and world news but that's likely not going to change soon. As FDR said during the great depression, "We have nothing to fear but fear itself." I think the media is giving us more than our fair share.

Mark: Yes indeed. More information does not mean we are better informed.

It's the quality of the information that matters. Garbage in, garbage out.

That's why we need to have a healthy professional media, imho.

Yes the media is hurting the economy. Its the doom and gloom and they way they present the programs making things worse then they seem